A recent Cuyahoga County Common Pleas ruling brings into question if, and when, the law prohibiting local residency requirements will go into effect. Earlier this summer, the Ohio legislature passed, and Governor Kasich signed, the law (HB 180) that prohibited public entities from insisting on residency requirements when procuring its construction services. HB 180 was expected to go into effect on August 31, 2016.
However, the City of Cleveland filed for injunctive relief on August 23, 2016, requesting that the Court issue an order enjoining the State from enforcing the law. The Court, at least temporarily, sided with the City when it granted the City’s motion for preliminary injunction. Specifically, the Court ordered that the “State of Ohio is immediately and preliminarily restrained and enjoined from enforcing HB 180 and R.C. §9.49 until determination of this matter by a trial on a permanent injunction.” The Court then ordered a full trial on the merits for November 7, 2016.
What Does This Mean?
Between now and November, public entities have solid legal support for continuing to insist on residency requirements when procuring construction services. However, should a public entity insist on a residency requirement, it also needs to be mindful of the risk associated with a later ruling upholding the legality of HB 180. For example, it is easy to see a scenario where a public entity would be in limbo should it receive and be evaluating bids based on a residency requirement when, at the same time, a court issues a ruling in favor of HB 180. Should that occur, a public entity’s award based on those bids could face a legal challenge, since the bid documents included the residency requirement that would now run afoul of HB 180. While the public entity could always rebid (based on revised bid documents in compliance with HB 180), that would take additional time and would otherwise delay the completion of the project. Meanwhile, bidding contractors will have no choice but to comply with residency requirements until the legality and constitutionality of this legislation is firmly established.