Contracts

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371. Summarizes emergency rule which increased the threshold limits for prevailing wage rate determinations from $30,000 to $32,000 for single-trade projects and from $150,000 to $160,000 for multi-trade projects effective February 13th, 1998. 2/27/98.

372. Addresses questions concerning application of the competitive bidding requirements to situations where a proposed public construction project is to be constructed by volunteers, involves donated materials, or is funded by a gift. (3/31/98)

373. Concludes, consistent with earlier League opinions, that the purchase of materials or supplies earmarked for a particular public construction project is subject to the competitive bidding statutes if the entire cost of the project exceeds $10,000. Knuth v. Fidelity & Casualty Company, 275 Wis. 603, 608, 83 N.W.2d 126 (1957); Ozaukee Sand & Gravel Co. v. Milwaukee, 243 Wis. 38, 9 N.W.2d 99 (1943); Standard Oil Co. v. Clintonville, 240 Wis. 411, 3 N.W.2d 701 (1943). See also Contracts 268, 272, 289 & 291; and Natkins, Smith & Van Swearingen, Public Construction in Wisconsin (1985), at p. 50, footnote 3. 6/30/98

374. Discusses how a municipality should structure its public construction contracts to take advantage of the sales tax exemption under sec. 77.54(9a), Stats., for municipal purchases of tangible personal property when buying materials earmarked for a public construction project. Reviews sec. Tax 11.04(5), Wisconsin Administrative Code. 6/30/98

375. A local government cannot unilaterally modify an intergovenmental cooperative agreement unless the terms of the contract contemplate unilateral modification. An intergovernmental agreement under 66.30, Stats., is essentially a contract and under Wisconsin law, any modifications to a contract must be made by the contracting parties or someone duly authorized to modify, and one party to a contract cannot alter its terms without assent of the others. Nelsen v. Farmers Mut. Auto Ins. Co., 90 N.W.2d 123, 4 Wis.2d 36 (1958). 12/29/98.

376. As a general rule no single official or employee can obligate a municipality to an agreement or contract without the governing body's authorization. Only the governing body or an officer or employee authorized by the governing body to enter into a contract on behalf of the municipality, may enter into a contract binding the municipality. See Kocinski v. Home Insurance Company, 154 Wis.2d 621, 452 N.W.2d 360 (1990) (city attorney cannot make valid contract on behalf of city unless he has prior authority from the common council to do so); Probst v. City of Menasha, 245 Wis. 90, 95, 13 N.W.2d 504 (1944) (city engineer lacked authority to modify city construction contract); 10 McQuillin Municipal Corporations, sec. 29.15 (3d ed. 1999); League Legal Opinion Contracts 361. 3/31/99.

377. In general, municipalities may not be estopped to deny the validity of a contract which is ultra vires in the sense that it is not within the power of the municipality to make, and estoppel cannot make enforceable a municipal contract which is not executed in compliance with the mandatory or prohibitive conditions expressly prescribed by statute, or which violates public policy. Village of McFarland v. Town of Dunn, 82 Wis.2d 469, 263 N.W.2d 167, 170 (1978). Where, however, the power to make a contract is clearly vested in the municipality and the power may have been improperly or irregularly exercised by the municipality and its officers and agents, the doctrine of equitable estoppel is properly invoked. Id. 3/31/99.

378. The 1999-2000 State Budget Act, 1999 Wisconsin Act 9, which generally took effect on October 29, 1999, raised the competitive bidding threshold for city and village public construction contracts from $10,000 to $15,000. Secs. 61.55 (villages) and 62.15(1) (cities), Stats. (The Budget Act also raised the competitive bidding threshold for county public construction contracts from $20,000 to $25,000.). 11/30/99.

379. The 1999-2000 State Budget Act, 1999 Wisconsin Act 9, which generally took effect on October 29, 1999, created a new exemption from the competitive bidding requirements for public construction in which the materials for the project are donated or the labor for the project is provided by volunteers. Secs. 61.55 (villages) and 62.15(1) (cities), Stats.. 11/30/99.

380. Summarizes emergency rule which increased the threshold limits for prevailing wage rate determinations from $33,000 to $34,000 for single-trade projects and from $164,000 to $168,000 for multi-trade projects effective January 1, 2000. 1/6/00.

381. City may validly act within its discretion to award a public construction contract to the low bidder despite the bidder's failure to initially include a bid bond with the bid. Under the circumstances, the error was not material and it was corrected almost immediately. Moreover, the error did not provide an opportunity for the bidder to unfairly manipulate the process to its advantage. Thus, the integrity of the competitive bidding process would not be compromised by the city accepting the bid and awarding the contract to the bidder. See Power Systems Analysis v. City of Bloomer, 197 Wis.2d 817, 541 N.W.2d 214 (Ct. App. 1995) & Dillingham Constr., Inc. v. Milwaukee Metro. Sewerage Dist., 629 F. Supp. 406 (E.D. Wis. 1986). 4/28/00.

382. Concludes that the common council implicitly, if not expressly, ratified a potentially unauthorized contract which the department of public works entered into when it approved payment for the services performed under the contract. Also, even though the contract may not have been properly executed, the city is prohibited at this point in time by the doctrine of equitable estoppel from denying the validity of the contract. Village of McFarland v. Town of Dunn, 82 Wis.2d 469, 263 N.W.2d 167, 170-171 (1978). 5/31/00.

383. The State Department of Workforce Development (DWD) advises municipalities that combined contracts to renovate, paint and maintain municipally-owned water towers are subject to the prevailing wage law, sec. 66.0903(3)(am), and municipalities must apply to DWD for a prevailing wage rate if the project exceeds the thresholds set by DWD. 5/31/01.

384. Summarizes emergency rule which increased the threshold limits for prevailing wage rate determinations from $41,000 to $43,000 for single-trade projects and from $200,000 to $209,000 for multi-trade projects effective January 1, 2006. The rule also modified the thresholds governing certain payment and performance assurance requirements in Wis. Stat. sec. 779.14, that apply to contracts for the performance of labor or furnishing of materials for a public improvement project or public work. 1/31/06.

385. 2005 Wisconsin Act 202 amended secs. 61.55 and 62.15, Stats., and raised the minimum threshold for bidding public construction contracts from $15,000 to $25,000 effective April 11, 2006. Where public construction is estimated to cost between $5,000 and $25,000, municipalities must publish a Class I notice of the proposed construction before the contract for the construction is executed. 4/30/06.

386. Summarizes emergency rule which increased the threshold limits for prevailing wage rate determinations from $44,000 to $45,000 for single-trade projects and from $216,000 to $221,000 for multi-trade projects effective January 1, 2008. The rule also modified the thresholds governing certain payment and performance assurance requirements in Wis. Stat. sec. 779.14, that apply to contracts for the performance of labor or furnishing of materials for a public improvement project or public work. 1/3/08.

387. A contract executed between a county and utility company for payment of utility line relocation costs is void and not enforceable where a county ordinance obligates the utility company to pay such costs because a municipality has no power to contract contrary to its own ordinances. Wisconsin Electric Power Co. v. Outagamie County, 2008 WI App 75, 752 N.W.2d 388. 4/30/08.

388. In the absence of a written contract, the totality of the circumstances may be considered in response to a third-party beneficiary claim to determine whether an oral contract (1) specifically conferred a direct benefit on the claimant, (2) limited the benefit to a well-defined group of third parties, and (3) required a party to assume liability to third parties. Becker v. Crispell-Snyder, Inc., 2009 WL 80243, 2009 App __,  __ Wis. 2d __, __ N.W.2d __ (recommended for publication). 1/30/09.

389. A developer who was forced to use a township’s engineer for its residential development project is a third-party beneficiary to an oral contract for engineering services between the township and its engineer where (1) the developer secured the direct benefit of “engineering oversight” on the project from the contract  (2) was only one of two property owners who obtained the “engineering oversight” benefit during the relevant time period, and (3) the contract, in concert with a developer’s agreement executed by the developer and the township, imposed a liability on the developer for payment of the township engineer’s services. Becker v. Crispell-Snyder, Inc., 2009 WL 80243, 2009 App __,  __ Wis. 2d __, __ N.W.2d __ (recommended for publication). 1/30/09.

390. Describes major changes made by 2009 Act 28 to the prevailing wage law, including: lowering to $25,000 the threshold for when prevailing wage requirements apply to public works projects, whether single or multi-trade; making prevailing wage requirements applicable to the following public infrastructure paid for and constructed by private developers and dedicated to the municipality: roads, streets, sanitary sewer, water mains, and bridge projects. making prevailing wage requirements applicable for the first time to publicly funded private construction projects that receive $1 million or more in direct financial assistance from a municipality. 7/31/09.
 
391. Cash payments exceeding $1 million made by a municipality to a developer pursuant to a development agreement as a reward for job creation would not trigger application of the prevailing wage requirements under sec. 66.0904, Stats., since the payments were not for assisting in the erection, construction, repair, remodeling, or demolition of a private facility. 8/31/10.
 
392. The responsibility for complying with the prevailing wage requirements applicable to publicly funded private construction projects under sec. 66.0904, Stats., rests solely with the owner or developer receiving the direct financial assistance, not the municipality providing the direct financial assistance. 8/31/10.

393. It is unclear whether the prevailing wage law applies to situations in which it is unknown at the time a private project is constructed whether the owner or developer will receive $1 million in financial assistance from the local government. In light of the uncertainty, it seems safest for an owner/developer to assume that even if the total amount of direct financial assistance is contingent on the performance of a TIF district or some other contingency, the prevailing wage requirements in sec. 66.0904, Stats., would apply to the private construction project if the total amount of direct financial assistance from the municipality may exceed $1 million. 8/31/10.

394. Legal comment highlights key procedural and substantive limits on city and village contract authority. 12/30/10.

395. Describes changes to the prevailing wage law made by 2011 Act 32, which include an increase in the threshold for determining when prevailing wage requirements apply to public construction projects, and a repeal of sec. 66.0904, Stats., which had applied the prevailing wage law to publicly financed private construction projects. 6/30/11.

396. Legal comment answers the most common questions arising under Wis. Stat. secs. 61.54 and 62.15 which require cities and villages to competitively bid public construction exceeding $25,000 and includes information on recent amendments to the bidding laws. 9/30/11.

397. Legal comment explains authority provided in Wis. Stat. sec. 66.0133 for local governments to use energy savings performance contracting which is a combination of project financing, project design, project construction and/or implementation that permits local governments to modify buildings, equipment, and practices and pay for those energy saving improvements from a guaranteed pool of economic savings or costs avoided. Under the procedures set forth in Wis. Stat. sec. 66.0133, local governmental units can enter into a performance contract with a qualified provider to reduce energy or operating costs, ensure state or local building code compliance, or enhance the protection of property of the local governmental unit. (5/31/13).

398. In evaluating a claim brought under the Contract Clause of the Wisconsin Constitution, the court considers whether the contested state legislation has operated as a substantial impairment of a contractual relationship. This inquiry has three components: (1) whether there is a contractual relationship, (2) whether a change in law impairs that contractual relationship, and (3) whether the impairment is substantial. If the reviewing court finds a contractual relationship exists and that the change in law constitutes a substantial impairment of that contractual relationship, the legislative act will still be upheld if a significant and legitimate public purpose for the legislation exists. Sec. 62.623 which prohibits the City from paying the employee share of contributions despite Milwaukee charter ordinance providing that City will fund employee’s share of contribution to city retirement system did not violate the Contract Clause of the Wisconsin Constitution. Milwaukee charter ordinance did not contractually obligate Milwaukee to pay the employee share of contributions to the Milwaukee employee retirement system. Further, even if the contributions paid by the City were a contractual right, the contract was not substantially impaired by Wis. Stat. sec. 62.623. Plaintiffs failed to establish beyond a reasonable doubt that Wis. Stat. sec. 62.623 violates the Contract Clause of the Wisconsin Constitution. Madison Teachers, Inc. v. Walker, 2014 WI 99, ___ Wis.2d ___, 851 N.W.2d 337. 8/31/12.

399. Legal comment summarizes basic provisions found in contracts for public art and briefly summarizes the provisions of the Visual Artists Rights Act of 1990 (17 U.S.C. sec. 106A). 1/31/15.

400. The 2015-2017 state budget, 2015 Wis. Act. 55, repeals the prevailing wage law as it applies to local government public construction contracts, effective January 1, 2017. 7/31/15.