LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6433 NOTE PREPARED: Apr 12, 2021
BILL NUMBER: SB 304 BILL AMENDED: Apr 1, 2021
SUBJECT: Indemnity Agreements in Public Works Contracts.
FIRST AUTHOR: Sen. Messmer BILL STATUS: Enrolled
FIRST SPONSOR: Rep. Torr
FUNDS AFFECTED: X GENERAL IMPACT: State & Local
X DEDICATED
FEDERAL
Summary of Legislation: Indemnity Agreements: The bill provides that a statute that invalidates indemnity
agreements in construction contracts relating to providing certain professional services is applicable to such
contracts relating to public works projects. It provides that a specified chapter does not apply to: (1) projects
covered by INDOT's contractor qualification statute; or (2) a project that is the construction, improvement,
alteration, repair, or maintenance of a highway, street, or road.
BOT Agreements: The bill provides that a BOT agreement may provide for the transfer of a public facility
to a governmental body by means of a lease or an installment contract.
It defines certain terms.
Effective Date: July 1, 2021.
Explanation of State Expenditures: Indemnity Agreements: The bill could increase expenditures by
increasing state agencies’ potential liability on professional services contracts for public works projects. By
specifying that IC 26-2-5-4 applies to public works contracts, the bill would prohibit a professional (design
professional, architect, engineer, surveyor, etc.) from being required to indemnify a public agency from
certain liability and from being required to defend a public agency against a professional liability claim. A
design professional would only be required to cover its proportion of the fault. The Attorney General’s
workload and expenditures could increase by being required to defend public agencies against professional
liability claims.
The bill applies to all state agencies, state educational institutions, and bodies corporate and politic created
SB 304 1
by statute. The bill does not apply to judicial or legislative departments or the Indiana Department of
Transportation.
BOT Agreements: To the extent a state agency enters into a lease to reacquire the rights to a BOT asset, state
expenditures to make lease payments could increase. These expenditures could be offset to the extent the
state entity is able to collect a user fee from the BOT asset. The bill’s net impact on state expenditures and
revenue is indeterminable.
Explanation of State Revenues: BOT Agreements: See Explanation of State Expenditures.
Explanation of Local Expenditures: Indemnity Agreements: The bill applies to counties, municipalities,
townships, school corporations, certain conservancy districts, fire protection districts, departments of
aviation, and airport authorities, but does not apply to a highway, street, road, or railroad project. [See
Explanation of State Expenditures for further information regarding the bill’s impacts to public agencies.]
BOT Agreements: To the extent a local unit of government enters into a lease to reacquire the rights to a BOT
asset, local expenditures to make lease payments could increase. These expenditures could be offset to the
extent the local entity is able to collect a user fee from the BOT asset. The bill’s net impact on local
expenditures and revenue is indeterminable.
Explanation of Local Revenues: BOT Agreements: See Explanation of Local Expenditures.
State Agencies Affected: Attorney General, state agencies, state educational institutions, and bodies
corporate and politic created by statute.
Local Agencies Affected: Counties, municipalities, townships, school corporations, certain conservancy
districts, fire protection districts, departments of aviation, and airport authorities; potentially all local units.
Information Sources: https://www.in.gov/idoa/files/standard_contract_language_designer_agreement.pdf;
https://www.in.gov/idoa/2484.htm.
Fiscal Analyst: Heather Puletz, 317-234-9484; Bill Brumbach, 317-232-9559.
SB 304 2


Statutes affected:
5. Engrossed Senate Bill (H): 26-2-5-4, 5-23-3-2
6. Enrolled Senate Bill (S): 26-2-5-4