SB 616,
as amended, Wright. begin deletePublic works: payment bonds. end deletebegin insertAeronautics Account: California Aid to Airports Program.end insert
Existing federal law authorizes airport sponsors to submit applications to the Secretary of Transportation for financial assistance for airport improvement projects. Under federal law, upon approval by the Secretary of Transportation, the United States government may pay for certain project costs.
end insertbegin insertExisting law establishes the Aeronautics Account in the State Transportation Fund, and continuously appropriates the moneys in the account for expenditure by the Division of Aeronautics within the Department of Transportation and the California Transportation Commission. Existing law requires that funds in the account be paid to certain public entities owning and operating airports for projects for airport and aviation purposes, as defined, or operation and maintenance purposes, as defined. Existing law authorizes any balance remaining in the account to be used as a portion of the local match for federal Airport Improvement Program grants for certain airports. Existing law prohibits the California Transportation Commission from allocating funds until the federal grant offer is accepted by the public entity and authorizes the division, upon allocation of the funds by the commission, to pay a public entity 5% of the amount of a federal Airport Improvement Program grant.
end insertbegin insertExisting regulations implement the California Aid to Airports Program, which includes airport improvement program matching grants and acquisition and development grants. These regulations prohibit payments from the account for the California Aid to Airports Program for projects that the sponsor, as defined, has already started or completed prior to allocation of airport improvement program matching or acquisition and development funds, with the exception of projects for land acquisition, as defined, and project services, as defined.
end insertbegin insertThis bill would, until July 1, 2015, authorize payments from the account for the California Aid to Airports Program for projects that the sponsor has started or completed in accordance with a federal Airport Improvement Program grant.
end insertExisting law requires a direct contractor that is awarded a public works contract involving an expenditure greater than $25,000 to give a payment bond to, and approved by, the officer or public entity by whom the contract was awarded, as specified.
end deleteThis bill would, until January 1, 2017, exempt the Los Angeles Unified School District from this provision when the district enters into a public works contract in an amount less than $1,000,000 with a contractor that is a small business or microbusiness, as defined, that participates in the district’s self-insurance program. The bill would, in order for this exemption to apply, require the district to state in its call for bids that the self-insurance program is available to these small business and microbusiness contractors. The bill would require the district to establish guidelines and requirements for the small business or microbusiness to participate in the program, as specified. The bill would require the district to establish separate accounts for each project that participates in the program to cover the cost of the default or failure of a small business or microbusiness to make payments to subcontractors or material vendors. By increasing the duties of local officials, this bill would create a state-mandated local program.
end deleteThe California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
end deleteThis bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.
end deleteThis bill would provide findings as to the need for special legislation.
end deleteVote: majority.
Appropriation: no.
Fiscal committee: yes.
State-mandated local program: begin deleteyes end deletebegin insertnoend insert.
The people of the State of California do enact as follows:
Notwithstanding subdivision (a) of Section 4059
2of the California Code of Regulations, until July 1, 2015, payments
3from the Aeronautics Account for the California Aid to Airports
4Program shall be allowed for projects that the sponsor, as defined
5by subdivision (y) of Section 4052 of the California Code of
6Regulations, has started or completed in accordance with a federal
7Airport Improvement Program grant.
The Legislature hereby finds and declares all of
9the following:
10(a) It is the intent of the Legislature to demonstrate an alternative
11and optional procedure for the bidding of public works projects
12that is applicable only to the Los Angeles Unified School District
13(LAUSD).
14(b) The LAUSD should be able to utilize cost-effective options
15for the delivery of public works projects, to self-insure those
16projects involving an expenditure of less than $1,000,000 when
17the contractor is a
small business or microbusiness, as defined in
18Section 14837 of the Government Code.
19(c) Since 2000, the LAUSD has issued more than 3,100 contracts
20valued at less than $1,000,000. The total value of those contracts
21exceeded more than $1,000,000,000. The estimated cost of the
22payment bond passed along to the LAUSD totaled more than
23$31,000,000.
24(d) The benefits of the self-insurance program include cost
25savings through an increase in the pool of qualified contractors, a
26reduction in bid amounts when contractors pass along the costs to
27secure payment bonds to the LAUSD.
28(e) The benefits for the small business or microbusiness
29contractor include access to the LAUSD construction program,
30whereby the contractor may gain long-term experience that will
31translate to other public agencies and improve a small business or
32
microbusiness’s competitive capacity on future bids.
Section 9550 of the Civil Code is amended to read:
(a) A direct contractor that is awarded a public works
3contract involving an expenditure greater than twenty-five thousand
4dollars ($25,000) shall, before commencement of work, give a
5payment bond to and approved by the officer or public entity by
6whom the contract was awarded.
7(b) A public entity shall state in its call for bids that a payment
8bond is required for a public works contract involving an
9expenditure greater than twenty-five thousand dollars ($25,000).
10(c) A payment bond given and approved under this section will
11permit performance of and provide coverage for work pursuant to
12a public works contract that
supplements the contract for which
13the bond is given, if the requirement of a new bond is waived by
14the public entity.
15(d) For the purpose of this section, a design professional is not
16deemed a direct contractor and is not required to give a payment
17bond.
18(e) This section does not apply to either of the following:
19(1) A public works contract with a “state entity” as defined in
20subdivision (d) of
Section 7103 of the Public Contract Code.
21(2) The Los Angeles Unified School District for a public works
22contract in an amount less than one million dollars ($1,000,000)
23entered into with a contractor that is a small business or
24microbusiness, as defined in Section 14837 of the Government
25Code, that participates in the district’s self-insurance program
26pursuant to Section 9550.1. This paragraph shall remain operative
27only until January 1, 2017.
Section 9550.1 is added to the Civil Code, to read:
(a) In lieu of requiring a contractor that is a small
30business or microbusiness, as defined in Section 14837 of the
31Government Code, awarded a public works contract for an amount
32less than one million dollars ($1,000,000) to provide a payment
33bond to the Los Angeles Unified School District pursuant to
34Section 9550, the district may provide the small business or
35microbusiness contractor an opportunity to participate in the
36district’s self-insurance program if the district states in its call for
37bids that this program is available.
38(b) As part of the district’s self-insurance program, the district
39shall establish guidelines and requirements for the small business
40or microbusiness to participate. The guidelines and requirements
P5 1shall include,
but will not be limited to, a requirement that the
2small business or microbusiness complete the district’s small
3business training program, complete the district’s prequalification
4process, and adhere to the district’s project stabilization agreement.
5(c) The district shall establish a separate account in which funds
6shall be set aside for each project in the event the small business
7or microbusiness defaults or fails to make payment to their
8subcontractors or materials vendors.
9(d) If the contractor fails to make payment to the subcontractor
10or materials vendor, the district shall assume responsibility and
11ensure prompt payment is made to the subcontractor and materials
12vendor.
13(e) At the conclusion of a contract, any funds remaining in the
14separate account shall be retained by the district to be applied to
15any
future project.
16(f) This section shall remain in effect only until January 1, 2017,
17and as of that date is repealed, unless a later enacted statute, that
18is enacted before January 1, 2017, deletes or extends that date.
The Legislature finds and declares that a special law
20is necessary and that a general law cannot be made applicable
21within the meaning of Section 16 of Article IV of the California
22Constitution because of the unique resources of the Los Angeles
23Unified School District to implement a self-insurance program
24and self-monitor public works projects to minimize disruptions to
25the completion of its public work projects. These include an
26in-house labor compliance program, a project stabilization
27agreement, a small business boot camp program, and in-house
28project managers.
If the Commission on State Mandates determines that
30this act contains costs mandated by the state, reimbursement to
31local agencies and school districts for those costs shall be made
32pursuant to Part 7 (commencing with Section 17500) of Division
334 of Title 2 of the Government Code.
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