BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 495 |Hearing |6/10/15 |
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|Author: |Gordon |Tax Levy: |No |
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|Version: |2/23/15 |Fiscal: |No |
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|Consultant|Weinberger |
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REGIONAL PARK AND OPEN SPACE DISTRICTS' POWERS
Increases, from $25,000 to $50,000, the maximum value of
contracts which two regional park and open space districts may
enter into without using a formal bid process.
Background and Existing Law
Regional park and open space districts must advertise contracts
for supplies, materials, labor, and construction and award them
to the lowest responsible bidder. With the board of directors'
approval, a district's general manager can award smaller jobs
without advertising and without written contracts. The manager
must report this spending at the board's next regular meeting.
When the Legislature created regional park districts in 1933,
the threshold for advertising bids was $500. Currently,
Regional Park and open space districts can spend up to $25,000
for non-construction supplies, materials, and labor, and up to
$25,000 on new construction projects without going through a
formal bidding process (AB 745, Levine, Chapter 42, Statutes of
2014).
The $25,000 threshold for construction contracts has applied to
all regional park and open space districts since 1983 (AB 746,
Campbell, Chapter 48, Statutes of 1983). The bid threshold for
non-construction contracts was increased from $10,000 to $25,000
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for the East Bay Regional Park District (EBRPD) in 1999 (AB 584,
Aroner, Chapter 135, Statutes of 1999) and for the Midpeninsula
Regional Open Space District (MROSD) in 2002 (AB 953, Simitian,
Chapter 23, Statutes of 2002).
The EBRPD is a system of parklands and trails in Alameda and
Contra Costa counties. The system comprises 119,000 acres in 65
parks, including over 1,250 miles of trails. The EBRPD
acquires, manages, and preserves natural and cultural resources
and is one of the largest park districts in the country.
The MROSD has permanently preserved nearly 62,000 acres of
mountainous, foothill, and bay land open space, creating 26 open
space preserves (24 of which are open to the public). The MROSD
covers an area of 550 square miles and includes 17 cities,
covering parts of Santa Clara County, San Mateo County, and a
small portion of Santa Cruz County. In June, 2014, more than
2/3 of the district's voters approved a $300 million general
obligation bond measure. Proceeds from bonds, which will be
sold in a series over approximately the next 20-30 years, will
be used to protect natural open space lands, open preserves or
areas of preserves that are currently closed, construct public
access improvements such as new trails and staging areas, and
restore and enhance open space land, which includes forests,
streams, watersheds, and coastal ranch areas.
The formal bid process for public contracts can be time
consuming and costly. Because inflation has eroded the
districts' buying power since their $25,000 bid thresholds were
enacted, EBRPD and MROSD must go through the effort and expense
of seeking bids for relatively low-value contracts. EBRPD and
MROSD officials want the Legislature to raise the dollar
threshold at which they must seek formal bids for their
construction, maintenance, and service contracts.
Proposed Law
Assembly Bill 495 allows the general manager of the EBRPD and
the general manager of the MROSD, with the approval of the
district's board, to bind the district, in accordance with board
policy, and without advertising, for the payment of supplies,
materials, labor, or other valuable consideration for any
purpose, including new construction of a building, structure, or
AB 495 (Gordon) 2/23/15 Page 3
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improvement, in amounts not exceeding $50,000.
AB 495 requires that all expenditures must be reported to the
board of directors at its next regular meeting.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . The East Bay Regional Park District
reports that in 2014, the District went through a formal bidding
process to award 75 contracts with a value that fell in the
$25,000 to $50,0000 range. At an average administrative cost of
$4,500 per contract, these contracts cost the district nearly
$340,000. Similarly, MROSD anticipates that, as a result of
expenditures on projects approved as part of its recent general
obligation bond measure, the district will be entering into
hundreds of contracts with values that fall in the $25,000 to
$50,000 range. Avoiding a formal bid process for contracts
worth less than $50,000 will allow EBRPD and MROSD to get many
projects completed more quickly and reduce staff time and
administrative costs associated with formal bidding. The
savings that the districts will realize as a result of the
higher bid threshold, in AB 495 will allow the districts to
devote more resources towards their core mission of preserving
open space lands, protecting natural environments, and providing
public access to nature preserves, trails, and other amenities.
2. Accountability and efficiency . State law regulating local
contracting attempts to balance the goals of accountability and
efficiency. Accountability asks public officials to spend the
public's money in full view, inviting bids and awarding
contracts to the lowest possible bidder is an effective method
of ensuring transparency for the expenditures of public funds.
While increasing the limits on the amount for which districts
may contract without the formal bid process, allows for greater
efficiency in local government spending, it may also result in a
loss of accountability and transparency on the use of public
funds.
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3. Next in line ? Just last year, AB 745 (Levine) raised the
non-construction contract bid thresholds for several park and
open space districts, bringing their thresholds up to the same
$25,000 level that state law had previously granted only to a
few districts. The Committee may wish to consider whether, by
raising the bid thresholds for only two Regional Park and open
space districts, AB 495 will invite legislative proposals to
raise the threshold for the remaining districts sometime in the
near future. As an alternative to the Legislature's
periodically adjusting and equalizing various districts' bid
thresholds, the Committee may wish to consider amending AB 495
to require that park and open space districts bid thresholds
should be periodically adjusted to reflect increases in
construction costs as measured by a specified inflation index.
Using the Consumer Price Index (CPI) to adjust for inflation,
the $25,000 threshold for construction contracts that was
enacted in 1983 would be the equivalent of a $59,000 threshold
in 2015. The $25,000 thresholds for non-construction contracts
enacted in 1999 and 2002 would be the equivalent of roughly
$36,000 and $33,000 thresholds, respectively, in 2015. However,
using a measure other than CPI, like the California Construction
Cost Index, may be a more appropriate method to ensure that
district's bid thresholds are adjusted accurately to reflect
increasing costs.
4. Special legislation . The California Constitution prohibits
special legislation when a general law can apply (Article IV,
§16). Assembly Bill 495 contains findings and declarations
explaining the need for legislation that applies only to the
East Bay Regional Park District and the Midpeninsula Open Space
District.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Floor: 79-0
Support and
Opposition (6/4/15)
Support : East Bay Regional Park District; Midpeninsula Regional
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Open Space District.
Opposition : Unknown.
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