New Surety Bond Requirements in California 2018-19

With the adjournment of the California legislature last August 31, 2018,

some enacted bills have affected some surety bond requirements for the state of California. Please read below for the specific changes. 

Alternative Project Delivery Methods

1. Assembly Bill 2654  – According to AB 2654, which will be effective this coming January 1, 2019, Orange County is now authorized to use the design-build process for flood protection improvements, harbor, and beach improvements and bike way improvements. These new laws will be added to Sections 22162.6 and 22162.7 of the Public Contract Code. The law also states that the County is only allowed no more than an average of one project per year in excess of $5 million and the District is limited to no more than 12 projects in excess of $5 million before January 1, 2025. The performance and payment bond that needs to be submitted is still at one-half of the project contract price.

2.Senate Bill 848 – this bill revises the existing law authorizing the use of the construction manager/general contractor project delivery method for expressway and bridge projects to allow the Golden Gate Bridge, Highway, and Transportation District to use this project delivery method for the Golden Gate Bridge.

3.Senate Bill 914 – With the new law, public entities who have members of the county board of supervisors as its governing body are also allowed to use the Construction Manager at Risk Method. The limit for this project delivery method is $1 million, and the construction manager at risk will need to post a surety bond for the project.

Commercial Surety

4. AssemblyBill 38 – the bill would authorize the commissioner to establish contracts with the Nationwide Multi-state Licensing System and Registry and other designated entities to collect and maintain records and process transaction fees. The bill also states that the bond required for student loan servicers’, which is set at $25,000 may be required to be submitted electronically.

5.Assembly Bill 3126 – the bill would revise part of the Contractor’s License Law where license applicants are allowed to post a cash deposit in lieu of a bond. With the new bill, certificates of deposit would be prohibited and instead would be required to deposit the appropriate amount of lawful money or a cashier’s check. The bill would require all existing alternatives in lieu of a bond or the specified deposit with the registrar, currently filed with the board, to be replaced for a surety bond or the specified deposit with the registrar by January 1, 2020.

Reclamation Bonds

6. Senate Bill 1147 – the bill would require the State Oil and Gas Supervisor to evaluate and estimate the costs associated with the decommissioning of offshore oil and gas wells under its jurisdiction before July 1, 2020. If they deem it necessary, they will develop a schedule to increase the bond amounts. There will also be additional infrastructure bonding to cover the infrastructure at the site.

Public Official Bonds

7. Assembly Bill 2050 – the bill would authorize small system water authorities to take over a water system that does not comply with the present rules and regulations. The authorities would need to present a surety bond to ensure that they will perform their duties.

Fidelity Bonds

8. Assembly Bill 2912 – this bill will be effective on January 1, 2019 and it will require an association for a common interest community development to submit a fidelity bond that should be equal to about three months of the combined amount of the reserves and total assessments.

Public Official Bonds

9. Senate Bill 965 – this bill will establish the California Cattle Council, who will have 20 members appointed by the Secretary of Food and Agriculture and will perform various duties relating to the California Beef Industry. If the council will ask private agents to get their assessments of the sale of cattle and calves, these agents must be bonded by a fidelity bond, not less than $25,000.