Local Law Changes: Ongoing Project Application And Compliance

Understanding when changes to local laws apply to ongoing projects is essential for ensuring legal compliance. The applicability of new laws to existing projects depends on various factors, including the nature of the law, the jurisdiction, and the stage of the project. In some cases, new laws may only apply to new projects or those starting after a specific date, while others may have immediate effects on all projects, including those already in progress. For example, in Queensland, Australia, new rental laws were passed in May 2024, with some provisions taking effect immediately upon assent in June 2024, while others were implemented in September 2024 and will continue until May 2025.

The process of enacting laws also varies by jurisdiction. For instance, in the United States, a bill becomes a law through a process involving both houses of Congress and the President. Understanding these dynamics is crucial for project managers to stay informed about potential legal changes that may impact their work.

Local government lobbying

Local governments account for about 10% of the total spending on lobbying state lawmakers and agencies in California. While this figure is dwarfed by the spending of industry groups and special interests, local governments are still able to exert influence on policies such as crime, land use, housing, and water. They also seek more money from the state budget.

In California, local governments, water districts, and transit agencies spent nearly $24 million on lobbying the state in a single year. The city of Los Angeles spent over $1 million, while smaller cities like Tulare in the Central Valley spent nearly $32,000. These smaller cities often hire lobbyists to help give them a voice in the state legislature, which is often dominated by the interests of larger metropolitan areas.

The Local Government Association (LGA) in the UK focuses its lobbying work on bills that are priorities for local government. This includes working with parliamentarians on legislation related to a range of issues, such as border security, digital information, planning and infrastructure, and renters' rights.

While local government lobbying can be effective in influencing policy and securing additional funding, it has also faced criticism for a lack of transparency. In California, there are no disclosure requirements for why a city lobbies on a particular bill or its position, and no statewide rules for soliciting input from residents. This has led to concerns about the use of taxpayer money for lobbying activities, with some calling for increased transparency and accountability in the process.

Rent and other payments

Construction Industry Payments:

The construction industry has unique payment structures that can impact ongoing projects. Unlike many other industries, construction workers are often not paid until a project is completed. This is done to protect the interests of both the property owner and the contractors. However, this can create cash flow issues for construction companies, especially when coupled with the practice of retention payments.

Retention Payments:

Retention payments, also known as retainage, are common in the construction industry. A portion of the agreed-upon amount, usually 5-10%, is withheld until the project is complete. While this is intended to prevent partial completion or poor workmanship, it can negatively affect contractors' cash flow and profitability, especially for lower-tier subcontractors. The delay in receiving full payment, especially for subcontractors who finish their work before the general contractor, can create financial strain.

Lease Agreements:

During periods of lockdown or unforeseen circumstances, lease agreements between landlords and tenants can become complex. Some leases may require tenants to continue paying rent even if the premises are closed, while others may allow for rent suspension for non-essential businesses. No Access Clauses, such as those introduced after the Christchurch earthquakes, can provide for a fair proportion of rent payments to be temporarily suspended during emergencies. However, the specific wording of the lease and applicable insurance policies play a crucial role in determining rent obligations.

Mechanic's Liens:

In the construction industry, mechanic's liens are a way for contractors and subcontractors to secure their right to payment. However, the laws surrounding liens often have strict deadlines, and contractors may need to act quickly to file a claim for missed payments. The interplay between retention payments and lien rights can be complex, and construction companies must carefully navigate these legal intricacies to avoid financial losses.

Planning and Preparation:

To mitigate the impact of retention payments and other payment delays, construction companies should plan and prepare accordingly. This includes understanding the contract terms, negotiating fairer retention payment options, simplifying the billing process, and accessing working capital to maintain cash flow throughout the project. Construction billing software can help streamline billing processes and improve income accuracy.

New regulations and enforcement

The application of new regulations and enforcement measures is a critical aspect of ensuring compliance with changing laws in ongoing projects. Here are some detailed insights into this process:

• Establishing New Regulations: In the context of rental laws in Queensland, Australia, three new Heads of Power (regulations) were established to oversee specific aspects of the industry. These included the development of a portable bond scheme, the implementation of a rental sector code of conduct, and the facilitation of applications for modifications related to safety, security, or accessibility.
• Greater Enforcement Actions: The Residential Tenancies Authority (RTA) in Queensland was empowered to take stronger enforcement actions to uphold compliance with the Residential Tenancies and Rooming Accommodation and Other Legislation Amendment Act 2024. This included addressing issues such as ending tenancies, goods left behind by tenants, and confidentiality requirements in cases of domestic and family violence.
• Information Sharing: The RTA was also authorised to share information with other government agencies and departments to enhance compliance and enforcement outcomes across the rental sector. This cross-agency collaboration ensures a more comprehensive oversight of industry practices.
• Penalty Provisions: While some penalty provisions were added or increased, it is important to note that specific details may vary based on the jurisdiction and the nature of the regulations.
• Permit Requirements: In the context of construction and renovation projects, obtaining the necessary permits is essential. Change-of-use permits, for example, are required when altering the use of a facility or building without making physical changes. These permits ensure compliance with local building codes and regulations.
• Permit Application Process: The process typically involves submitting the necessary plans, undergoing a comprehensive plan review, paying outstanding fees, conducting inspections, and obtaining final approval. It is crucial to engage with the local planning department to identify the specific permits required for a project.
• Collaboration with Government Agencies: Government agencies often play a significant role in the approval and inspection processes. In addition to the local planning department, other agencies such as the coastal commission or historical preservation society may need to be consulted, potentially extending the timeline for approval.
• Compliance with Building and Fire Safety Regulations: Construction projects must adhere to various codes, regulations, and statutory requirements related to building and fire safety. This includes obtaining the necessary permits to ensure safe construction practices.
• Contractor Insurance: In India, it is standard for construction projects to have Contractor's All Risk (CAR) insurance policies. Additionally, federal legislation mandates that any business, including construction projects, with more than 10 employees must obtain registration under the Employees' State Insurance Act, 1948, to provide insurance coverage for their workers.
• Labour, Tax, and Health and Safety Requirements: Construction contracts must comply with relevant labour legislation, tax obligations, and health and safety standards. This includes adhering to minimum wage requirements, ensuring timely wage payments, and providing social security benefits to workers.
• Dispute Resolution Mechanisms: Construction disputes can be resolved through various means, including litigation, arbitration, mediation, conciliation, dispute resolution boards, and judicial settlement. Arbitration is commonly used, especially in high-stakes disputes.

Labour, tax, and health and safety

Labour laws are ever-evolving, and it's essential to stay informed about any changes that may impact your industry or projects. In the UK, the government's plans to "Make Work Pay" will likely lead to significant alterations to employment law. These include the right to claim unfair dismissal from the first day of employment, earlier parental rights, the removal of qualification periods for statutory sick pay, and the right to disconnect. Most of these reforms are expected to be implemented by autumn 2026. It's important to note that these changes will not apply to Northern Ireland, where employment legislation is a devolved matter.

Regarding tax laws, the Internal Revenue Service (IRS) in the United States frequently updates its regulations. For instance, the IRS recently announced a delay in the Form 1099-K reporting threshold for third-party settlement organizations for the 2023 calendar year. This means that reporting will not be mandatory unless the taxpayer receives over $20,000 and has more than 200 transactions in 2023. The IRS also offers penalty relief in certain situations, such as for individuals, businesses, and tax-exempt organizations that did not receive automated collection reminders during the pandemic.

Health and safety regulations are a crucial aspect of any industry, especially in high-risk sectors like construction. These regulations are subject to change and evolution as well. For instance, in the UK, the Health and Safety at Work Etc Act forms the basis for specific health and safety regulations. The Construction (Design & Management) Regulations, or CDM, are applicable to all construction projects, regardless of their scale. Other regulations, such as the Personal Protective Equipment Regulations, ensure that PPE is legally required on construction sites. It's important to stay informed about these regulations and any updates to ensure compliance and maintain a safe work environment.

Permits and applications

When a Permit is Required:

A change-of-use permit is typically necessary when there is a significant alteration to the usage of a facility or building. This could include converting a commercial space into a new business or residential unit, opening a daycare centre, or creating a restaurant. It's important to note that a permit is generally not required if the use of the property remains unchanged, even with a new tenant or owner.

Plan Review and Approval:

When submitting a permit application, it undergoes a comprehensive plan review by the relevant authority, such as the LADBS (Los Angeles Department of Building and Safety). They verify that all necessary filing fees have been paid, the proposed plans adhere to local building codes, and the documentation meets the application requirements. If there are any discrepancies or errors, the review staff may request additional information or modifications. Once the plan review is successfully completed, the project can move forward to the next stage.

Construction and Inspections:

After obtaining the necessary permits, construction can begin. However, it is important to have the approved plans readily available on-site for review by the planning authority. Throughout the project, several inspections must be conducted to ensure adherence to the approved plans and documentation. These inspections are crucial to identify any deviations from the permitted scope of work. Failing to request these inspections in a timely manner could result in consequences.

Final Inspections and Approval:

Once the project is completed, a final inspection is conducted by the planning authority. If the project complies with the permit requirements and passes the final inspection, the necessary approvals are granted. It is important to securely store the permit and plans for future reference.

Additional Considerations:

The permit and application process can be complex and involve multiple government agencies, so it is highly recommended to engage the services of a permit expediter or a land-use attorney to navigate the process smoothly. They can provide valuable local knowledge and help resolve any issues that may arise during the application review.

Additionally, there may be specific requirements related to building and fire safety, environmental permits, and compliance with social security and labour laws, depending on the jurisdiction and nature of the project. It is essential to familiarise yourself with the applicable codes, regulations, and statutory requirements before commencing any construction or renovation work.

Frequently asked questions