BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    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  
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          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  

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          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,  

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          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

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