SPRING/SUMMER 2014 RAISING THE BAR BY MONITORING THE CONSTRUCTION INDUSTRY The Monitwoww.iiifr fc.org P3s: Where Wall Street Meets Main StrePaeget 3 TFIC Proposes IL Infrastructure Plan Page 4 No IA Gas Tax Increase In 25 Years Page 10 Responsibility Reigns in Joliet, IL Page 16 RTAISINGh THE BeAR BY MOMNITORINoG THE nCONSTiRUCtTIOoN INDUr STRY IN THIS ISSUE From the Executive Director PAGE 4 Legal Corner PAGE 5 Focus on Illinois PAGE 6 Focus on Indiana PAGE 8 DBRA PAGE 9 Focus on Iowa PAGE 10 Monitor Profile The Monitor is a free biannual PAGE 13 publication of the Indiana, Illinois, Iowa Foundation Illiana Corridor Update for Fair Contracting, PAGE 14 6170 Joliet Road, Suite 200, Countryside, IL 60525 Public Body Spotlight: Phone: 815.254.3332 Joliet, IL www.iiiffc.org PAGE 16 Designed by Contactor Spotlight: J.V. Murphy & Associates. Valley Construction Company www.jvmurphy.com PAGE 18 P3sT:h We Phosesibreilit yW ofa Elxlp Santdrinege Wto Mrk eine thtes P Mublaici Innt eSretsrte et BY FRANK MANZO IV , POLICY DIRECTOR, ILEPI cross America, governments of all levels continue to face fiscal government to leverage private funds to increase internal investment conditions that limit their ability to provide more and better beyond dedicated amounts; to capitalize on the managerial efficiencies, services. In these tough budgetary times, however, governments technological innovations, and skills and talents of private companies; Aneed to spur long-term economic growth by finding ways to increase, and to provide projects of an acceptable quality at the lowest cost to rather than curb, internal investment. With fewer resources, the public the taxpayer. P3s also help foster an efficient network in which those sector has turned to the business community to help make up the who consume the infrastructure predominately pay for it instead of shortfall and expand investment beyond the amounts to which other taxpayers who do not. Finally, P3s have been found to build governments are already committed. infrastructure slightly less expensively and slightly more quickly in An April 22, 2014 policy brief by the Illinois Economic Policy both the United States and the United Kingdom. Institute (ILEPI) investigates the pros and cons of a new method of While private contractors face significant risks, the benefits of P3s providing public services – public-private partnerships (or “P3s” or for private entities often outweigh the costs. First, infrastructure assets “PPPs”) – in the construction industry. provide portfolio diversification for private sector actors. Annual A P3 is collaboration between the public sector and private sector usage volatility of “Core and Core Plus” infrastructure– such as roads, on a mutually beneficial project in which decision-making, risks, and bridges, water systems, and energy transmission systems– was generally benefits are shared by both parties. The “collaborative development” between just 1 and 2 percent from 1998 to 2008. Compared to the structure of P3s enables governments to invest in and reap the benefits 16 percent volatility in the stock market, infrastructure assets are safer of infrastructure improvements. In the short term, the direct jobs and more stable investments. P3s also effectively grant a monopolistic that are created are well paying, high-road jobs. Over the long run, position to the private actor. Even with government regulations to upgrading and expanding infrastructure increases a region’s economic curb the price of user fees, which can be collected, long-term returns growth, international competitiveness, worker mobility, and quality are typically linked to inflation or economic growth, providing a of life. predictable stream of annual revenues. Finally, P3s permit private P3s offer substantial benefits to the public sector. P3s allow the See PUBLIC INTEREST on page 15 Spring/Summer 2014 THE MONITOR 3 Illinois’ Infrastructure Needs Significant Investment Now million to support $5 billion ransportation and infrastructure spending is a in bonding for transportation over the next five years. frequent topic in The Monitor . This is because our The legislative push would fund both pay-as-you-go LETTER country is facing a critical time where many of our spending and a bonding program that would get the FROM THE Troads and bridges are nearly failing by American Society state’s roads up to 90% acceptable condition and of Civil Engineers’ standards. bridges up to 93% acceptable condition. Moreover, Executive One of the hardest hit states is in the III FFC’s millions of dollars would be allocated for much needed Director jurisdiction: Illinois. If no significant investment is transit improvements in the Chicagoland area. Marc R. Poulos made in Illinois, 1 in every 3 miles of roads and 1 in As a breakdown, TFIC’s plan would split funding every 10 bridges will reach a level that is unacceptable as follows: 80% for roads, bridges and airports and by 2018. Because of these conditions, motorists in the 20% for transit needs—with 40% of total funding going Chicagoland area spend an average $292 per year to state infrastructure and 60% to local infrastructure. If no significant in higher operating Revenues for the $1.8 billion plan would come investment is and repair costs. from reallocating current state sales tax revenue from Northeastern Illinois motor fuel, ending ethanol credit for gasoline, increasing made in Illinois, residents lose an the state motor fuel tax on gasoline by 4 cents per gallon 1 in every 3 miles estimated $8.2 billion and on diesel by 7 cents per gallon, raising motor vehicle of roads and 1 in per year in produc- registration fees, reprioritizing spending out of road tivity due to traffic funds (that currently support other government every 10 bridges congestion. services), and creating a state sales tax on certain driver- will reach a This has been an related services such as auto repair, oil changes and car level that is ongoing issue for washes. unacceptable Illinois. In 2002, an While we were successful in securing an additional estimated 6,089 miles $1.1 billion in transportation funding this year for state by 2018. of state highways and local roads, our job is not over. If passed, the plan needed repair. That number skyrocketed to 8,687 miles discussed above would be the first ongoing increase in by 2012. Without an immediate investment, the total local funding since 1999. Clearly, Illinois’ infrastructure investment needed from Illinois to bring infrastructure is in desperate need of repair. We need taxpayer up to an acceptable level is over $60 billion over the investment to help keep our citizens safe from collapsing next five years. bridges, sinking roads, and outdated transit systems. To address this problem, the Transportation for Illinois Coalition (TFIC), which III FFC is a member, proposed a plan that would support $1.4 billion in annual transportation revenues and an additional $450 4 THE MONITOR Spring/Summer 2014 LEGAL CORNER IIlllliinnooiiss SSuupprreemmee CCoouurrtt FFiinnddss EECCAA CCoonnssttiittuuttiioonnaall n Bartlow v. Costigan , the Supreme Court of January 1, 2014. Thus, the appellate court’s decision – Illinois determined that the Illinois Employee finding that the ECA did not violate due process, was Classification Act (ECA) is constitutional. 2014 IL vacated. The Court also determined that section 10 of 115152 (Feb. 21, 2014). the Act was not unconstitutionally vague; a person of Melissa Binetti The purpose of the ECA is to address ordinary intelligence had a reasonable opportunity to Counsel for the Imisclassification of employees as independent understand what constitutes an independent contractor, III FFC contractors in the construction industry. In March sole proprietor, or partnership, and how to qualify for 2010, Rhonda and Jack Bartlow, doing business as Jack’s an exemption under the law. The Court described the Roofing, and two other individuals who performed provisions of section 10 as “highly detailed and specific,” services for the Bartlows, filed an action alleging that and stated that the “exemptions contained in the ECA violates the due process clause of the United subsections (b) and (c) of section 10 unambiguously States and Illinois Constitutions, the special legislation demonstrate how and when an independent contractor, clause of the Illinois Constitution, and the equal sole proprietor, or partnership will be considered protection clause of the United States and Illinois exempt from the Act’s application.” Constitutions. The Bartlows filed the action after the Finally, finding that the Plaintiffs failed to fully Illinois Department of Labor (IDOL) made a brief the special legislation and equal protection claims preliminary determination that they may be assessed in their appeal, the Court determined these claims were Kara Principe a fine of $1,683,000 based on the Department’s finding forfeited. Thus, the Fifth District appellate court’s Counsel for the that individuals performing work for Jack’s Roofing decision, citing the well-established principle that the III FFC were employees and not subcontractors under the Act. legislature may limit application of a statute so long as Rejecting the constitutional challenges, the Court it is rationally related to a legitimate state interest, held that the procedural due process challenges were remains intact. Bartlow v. Costigan , 974 N.E.2d 937 (Ill. rendered moot by amendments to the Act, effective App. Ct., Aug. 21, 2012). I Spring/Summer 2014 THE MONITOR 5 Training a diverse workforce