BILL NUMBER: S7730A
SPONSOR: BASKIN
 
TITLE OF BILL:
An act to amend the state finance law, in relation to requiring
construction contracts entered into by the state include a provision on
the spending of soft cost funding
 
PURPOSE:
To support local economic development by requiring all construction
management firms contracted on state-funded construction projects to
submit a "spend plan" that commits to allocating at least 20% of the
total anticipated soft costs (or 15% for smaller cities) toward soft
cost purchases from small businesses located within a 10-mile radius of
the construction site.
 
SUMMARY OF SPECIFIC PROVISIONS:
This bill adds a new section 136-e to the state finance law, which:
Subdivision 1 defines key terms, including:
*"Soft cost" as non-construction specific materials, including office
supplies, catering, maintenance materials,and vendor services.
*"Professional firm" as any legal entity permitted by law to practice
the profession of construction.
*"Small business" as defined in Section 131 of the Economic Development
Law.
*"State agency" shall have the same meaning as defined in subsection
nine of section one hundred and sixty of this article. Subdivision 2
requires professional firms entering into construction contracts with
the state to submit a "spend plan" outlining how at least a percent of
the total project cost will be spent on soft cost purchases from small
businesses within a 10-mile radius of the construction site.
The spending plan shall account for 20% of the total anticipated soft
costs as listed in the spending plan if the construction site is located
in a city with a population of one million or more; for construction
sites located in cities with a population fewer than one million, the
spending plan shall account for 15% of the total anticipated soft costs
as listed in the spending plan.
Subdivision 3 obligates professional firms to submit a "spend plan" to
the contracting state agency before contract execution, detailing how
the required soft cost spending will be fulfilled in accordance with the
geographic and percentage criteria.
Section 2 states the act shall take effect immediately and apply only to
contracts executed on or after the effective date.
 
JUSTIFICATION:
State-funded construction projects are often the only new projects
occurring in many cities, towns, villages, and counties with limited or
no privately funded projects. While state law currently includes goals
for subcontracting and workforce hiring, there is no requirement or
guidance on how construction firms spend soft cost funds-soft costs and
non-constructionspecific materials.
This bill addresses that gap by requiring professional firms entering
into contracts with the state to submit a "spend plan" allocating five
percent of the total contract amount toward soft cost spending with
small businesses located within a ten-mile radius of the construction
site. This requirement will help ensure that the economic activity
generated by state construction projects also benefits local small busi-
nesses-those often most dependent on nearby development for sustained
growth and survival. This program would help multiply the local invest-
ment factor by not only the construction project's direct investment,
but also the ancillary spending that occurs from construction projects.
 
LEGISLATIVE HISTORY:
New Bill
 
FISCAL IMPLICATIONS:
Costs can likely be absorbed into other regulatory processes for utili-
zation and workforce usage.
 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply only to contracts
executed on or after such effective date.