BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 268| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 268 Author: Gaines (R) Amended: 1/27/14 Vote: 27 - Urgency SENATE GOVERNANCE & FINANCE COMMITTEE : 6-0, 1/15/14 AYES: Wolk, Knight, Beall, DeSaulnier, Hernandez, Liu NO VOTE RECORDED: Vacancy SUBJECT : Health care districts: public contracts: design-build SOURCE : Last Frontier Health Care District DIGEST : This bill allows the Last Frontier Health Care District's (District) board of directors, notwithstanding any other law, to use the design-build procedure to construct a building or improvements directly related to the construction of a hospital or health facility building at the Modoc Medical Center. This bill specifies that the District must use the design-build procedure that current law establishes for counties and provides that statutory references to a "county" and a "board of supervisors" also mean the Last Frontier Health Care District and its board of directors. ANALYSIS : Exiting law allows state and local officials to use the design-build method to procure both design and construction services from a single company before the development of complete plans and specifications. Under design-build, a public agency contracts with a single entity, which can be a single CONTINUED SB 268 Page 2 firm, a consortium, or a joint venture, to design and construct a project. Before inviting bids, the agency prepares documents that describe the basic concept of the project, as opposed to a complete set of drawings and specifications of what will be constructed. In the bidding phase, the agency typically evaluates bids on a best-value basis, incorporating technical factors, such as qualifications and design quality, in addition to price. This bill allows the District's board of directors, notwithstanding any other law, to use the design-build procedure to construct a building or improvements directly related to the construction of a hospital or health facility building at the Modoc Medical Center. This bill specifies that the District must use the design-build procedure that current law establishes for counties and provides that statutory references to a "county" and a "board of supervisors" also mean the Last Frontier Health Care District and its board of directors. This bill requires that a hospital building project using the design-build process authorized by the bill must be reviewed and inspected in accordance with the standards and requirements of the Alfred E. Alquist Hospital Facilities Seismic Safety Act of 1983. This bill finds and declares the Legislature's intent that health care districts use the design-build process solely for buildings associated with hospitals and health care and not for other infrastructure, including, streets, highways, public rail transit, roads, bridges, and water resources facilities. This bill contains findings, declarations and a contingency upon the enactment of SB 785 (Wolk-D). Background All counties can use the design-build method to construct buildings and related improvements and wastewater treatment facilities that cost more than $2.5 million. Similarly, all cities can use the design-build method to construct buildings and related improvements worth more than $1 million. A pilot program also permits cities, counties, and special districts to use the design-build method to construct 20 local wastewater treatment facilities, local solid waste facilities, or local CONTINUED SB 268 Page 3 water recycling facilities. The Legislature also has passed a number of bills authorizing some special districts to construct projects using the design-build method, including the Sonoma Valley Health Care District (SVHCD) (SB 1699, Wiggins, Chapter 415, Statutes of 2008). Following SB 1699's enactment, the SVHCD's voters approved a $35 million bond to finance earthquake safety improvements to bring the hospital's emergency room into compliance with the state's seismic safety standards for hospitals. The SVHCD's upgraded facility, which was constructed using design-build contracts, opened last year. The District operates the Modoc Medical Center in Alturas (Modoc County). The medical center is comprised of a critical access hospital, a skilled nursing facility, and a rural health clinic providing vital health services to a sparsely populated rural community. State law requires the District to move its hospital into a building that meets the state's seismic safety standards. District officials are in the early stages of planning the construction of a new building that is expected to be a single-story, 10 bed, 40,000 square foot facility. Related Legislation SB 785 (Wolk, 2013), which repeals state laws authorizing state and local government agencies to use design-build contracting and enacts new, uniform statutes governing agencies' design-build contracts. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 1/27/14) Last Frontier Health Care District dba Modoc Medical Center (source) Association of California Healthcare Districts California Association of Rural Health Clinics Design-Build Institute of America Modoc County Board of Supervisors ARGUMENTS IN SUPPORT : According to the author's office, with the increase in new patients under the Affordable Care Act, and, CONTINUED SB 268 Page 4 healthcare costs going up while reimbursement rates continue to decline, savings on construction are critical. The Design-Build method of project delivery can provide significant cost savings that will benefit the entire community. AB:nl 1/27/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED