DAR File No. 42347

Administrative Services, Facilities Construction and Management

Rule R23-5

Contingency Funds

Notice of Proposed Rule

(Amendment)

DAR File No.: 42347
Filed: 11/29/2017 02:03:55 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule establishes policies and procedures regarding contingency funds held by the Division. It also provides guidelines for the source, use, and reporting of contingency funds as provided in Title 63A, Chapter 5.

Summary of the rule or change:

This amendment is to correct statutory references in Sections R23-5-2 and R23-5-3 and correct a typo in the Section R23-5-4. Subsection R23-5-6(2)(e) is also removed.

Statutory or constitutional authorization for this rule:

• Section 63A-5-209

Anticipated cost or savings to:

the state budget:

There are no anticipated costs or savings to the state budget. Subsection R23-5-6(2)(e) is redundant and already addressed in Subsection R23-5-6(1).

local governments:

There are no anticipated costs or savings to local governments. Subsection R23-5-6(2)(e) is redundant and already addressed in Subsection R23-5-6(1).

small businesses:

There are no anticipated costs or savings to small businesses. Subsection R23-5-6(2)(e) is redundant and already addressed in Subsection R23-5-6(1).

persons other than small businesses, businesses, or local governmental entities:

There are no anticipated costs or savings to persons other than small businesses, businesses, or local government entities. Subsection R23-5-6(2)(e) is redundant and already addressed in Subsection R23-5-6(1).

Compliance costs for affected persons:

There is no compliance costs for affected persons as Subsection R23-5-6(2)(e) is redundant and already addressed in Subsection R23-5-6(1).

Comments by the department head on the fiscal impact the rule may have on businesses:

There is no fiscal impact that this rule may have on businesses. Subsection R23-5-6(2)(e) is redundant and already addressed in Subsection R23-5-6(1).

Jeff Reddoor, Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Administrative Services
Facilities Construction and Management
Room 4110 STATE OFFICE BLDG
450 N STATE ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Cecilia Niederhauser at the above address, by phone at 801-538-3261, by FAX at 801-538-9694, or by Internet E-mail at cniederhauser@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

01/16/2018

This rule may become effective on:

01/23/2018

Authorized by:

Ned Carnahan, Building Board Chair

R23. Administrative Services, Facilities Construction and Management.

R23-5. Contingency Funds.

R23-5-1. Purpose.

(1) This rule establishes policies and procedures regarding contingency funds held by the Division.

(2) It provides guidelines for the source, use and reporting of contingency funds as provided in Title 63A, Chapter 5.

 

R23-5-2. Authority.

This rule is authorized under Subsection 63A-5-103([1]2)([e]a), which directs the Building Board to make rules necessary for the discharge of the duties of the Division of Facilities Construction and Management.

 

R23-5-3. Definitions.

(1) "Appropriated Funds" means funds appropriated to the Division for capital projects to be administered by the Division. This includes state funds such as the General Fund as well as proceeds from state General Obligation Bonds.

(2) "Board" means the State Building Board established under Title 63A, Chapter 5, Part 1.

(3) "Division" means the Division of Facilities Construction and Management established under Title 63A, Chapter 5, Part 2.

(4) "Non-appropriated Funds" means any funds which are provided for a project which are not Appropriated Funds.

(5) "Project Reserve" means the account provided for in Subsection 63A-5-209 ([2]3).

(6) "Statewide Contingency Reserve" means the account provided for in Subsection 63A-5-209(1)(c).

 

R23-5-4. Applicability.

(1) The provisions of this rule shall apply to all projects or portions of projects funded through Appropriated Funds.

(2) The provisions of this rule may b[y]e waived to the extent necessary in order to comply with specific requirements associated with the project funds such as specific legislative direction or requirements associated with state revenue bonds.

 

R23-5-5. General Provisions.

(1) The balances in the Statewide Contingency Reserve and the Project Reserve may be redirected to other purposes by the Legislature.

(2) New projects may not be initiated from the Statewide Contingency Reserve nor from the Project Reserve unless authorized by the Legislature. This prohibition does not apply to remedial work associated with previously authorized and completed projects.

(3) The Division may utilize any number of subaccounts required to maintain separate accounting of Appropriated Funds as required by the source of the funds.

 

R23-5-6. Funding of Statewide Contingency Reserve.

(1) All Appropriated Funds budgeted for contingencies shall be transferred to the Statewide Contingency Reserve upon their receipt by the Division. This includes budget elements previously referred to as "design contingency" and "project contingency."

(2) The Division shall budget for contingencies based upon a sliding scale percentage of the construction cost.

(a) For new construction, the sliding scale shall range from 4-1/2% to 6-1/2%.

(b) For remodeling projects, the sliding scale shall range from 6% to 9-1/2%.

(c) The sliding scale shall be approved by the Board and kept on file by the Division.

(d) When projects are funded from both Appropriated Funds and Non-appropriated Funds, the amount budgeted for contingencies shall be prorated so that only that portion associated with the Appropriated Funds' share of the project is transferred to the Statewide Contingency Reserve.[

(e) Any remaining balance as of July 1, 1993 of Appropriated Funds budgeted for contingencies shall be transferred to the Statewide Contingency Reserve as provided in this rule.]

 

R23-5-7. Use of Statewide Contingency Reserve.

(1) The Statewide Contingency Reserve may provide additional funding to a project when:

(a) necessary construction costs arise on projects after the construction has been bid;

(b) costs for other elements of a project exceed the amount budgeted; or

(c) necessary costs arise which were not budgeted for.

(2) As previously directed by the Legislature, unbudgeted costs included in Subsection R23-5-6(1)(c) may include legal services, insurance, surveys, testing and inspection, and bidding costs.

(3) The Statewide Contingency Reserve may be used to fund changes in scope only if the scope change is necessary for the proper functioning of the program that was provided for in the approved project scope. The Division shall take steps as necessary to minimize the utilization of the Statewide Contingency Reserve for scope changes.

(4) With the prior approval of the Board, the Statewide Contingency Reserve may be used to fund unanticipated costs on projects funded through Non-appropriated Funds.

 

R23-5-8. Funding of Project Reserve.

(1) After all major construction contracts for a project have been awarded, and after setting aside adequate reserves for any remaining construction work which was not included in the construction contracts, any remaining balance of Appropriated Funds in the construction budget shall be transferred to the Project Reserve.

(2) Upon completion of the project, any residual balance of Appropriated Funds in any budget category shall be transferred to the Project Reserve; however, if the residual balance is the result of a reduction in a contract balance which had previously been funded from the Statewide Contingency Reserve, the residual balance shall be transferred instead to the Statewide Contingency Reserve.

 

R23-5-9. Use of Project Reserve.

The Division may utilize the Project Reserve only for the award of construction contracts which exceed the available construction budget. This may only be done after a review of other options to bring the cost within available funding and a determination that this action is necessary in order to meet the intent of the project.

 

R23-5-10. Reporting Requirements.

(1) The five-year building plan published annually by the Board shall include a summary report on the Statewide Contingency Reserve and the Project Reserve. This report shall include information on each Reserve summarized as follows for the most recently completed fiscal year:

(a) beginning balance;

(b) increases and decreases by type; and

(c) ending balance.

(2) At least annually, the Division shall analyze the balance in each Reserve and the projected needs based on already approved projects and determine if the balance is in excess of or less than the projected need. The results of this analysis shall be reported to the Legislature in its regular session.

(3) The Division shall report regularly to the Board on the status of the Statewide Contingency Reserve and the Project Reserve.

 

KEY: buildings, contingency fund[*]

Date of Enactment or Last Substantive Amendment: [1994]2018

Notice of Continuation: November 14, 2012

Authorizing, and Implemented or Interpreted Law: 63A-5-209 et seq.