BILL ANALYSIS Ó
AB 1290
Page 1
ASSEMBLY THIRD READING
AB
1290 (Dahle)
As Amended May 18, 2015
Majority vote
-------------------------------------------------------------------
|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+--------------------+----------------------|
|Local |9-0 |Maienschein, | |
|Government | |Gonzalez, Alejo, | |
| | |Chiu, Cooley, | |
| | |Gordon, Holden, | |
| | |Linder, Waldron | |
| | | | |
| | | | |
-------------------------------------------------------------------
SUMMARY: Allows the Mayers Memorial Hospital District (District)
to use the design-build contracting method for the construction of
a building or improvements directly related to construction of a
hospital or health facility building at the District.
Specifically, this bill:
1)Allows the District, upon approval by its Board of Directors
(Board), to use the design-build procedure described in existing
law governing the use of design-build by local agencies to
assign contracts for the construction of a building or
AB 1290
Page 2
improvements directly related to construction of a hospital or
health facility building at the District.
2)Requires a hospital building project utilizing the design-build
process authorized by this bill to be reviewed and inspected in
accordance with the standards and requirements of the Alfred E.
Alquist Hospital Facilities Seismic Safety Act (Hospital Seismic
Safety Act) of 1983.
3)States legislative intent that the design-build process be used
by health care districts solely for buildings associated with
hospitals and health care and not for other infrastructure,
including, but not limited to, streets, highways, public rail
transit, roads, bridges, water resources facilities, and related
infrastructure.
4)Finds and declares the following:
a) Utilizing a design-build contract requires a clear
understanding of the roles and responsibilities of each
participant in the process;
b) Cost benefits for health care districts are achieved by
shifting the liability and risk for cost containment and
project completion to the design-build entity; and,
c) A special law is necessary and a general law cannot be
made applicable within the meaning of California Constitution
Article IV, Section 16 because of the unique circumstances of
the Mayers Memorial Hospital District.
EXISTING LAW:
AB 1290
Page 3
1)Requires, pursuant to the Local Agency Public Construction Act
(LAPC Act), local officials to invite bids for construction
projects and then award contracts to the lowest responsible
bidder under the traditional design-bid-build project delivery
system.
2)Authorizes, until January 1, 2025, cities, counties, and
specified special districts and transit agencies to use
design-build for their public works contracts in excess of $1
million using either a low bid or best value process.
3)Provides for local health care districts, which govern certain
health care facilities. Each health care district has specific
duties and powers respecting the creation, administration, and
maintenance of the districts, including the authority to
purchase, receive, take, hold, lease, use, and enjoy property of
every kind and description of property within and without the
limits of the district.
4)Establishes, pursuant to the Hospital Seismic Safety Act,
timelines for hospital compliance with seismic safety standards.
5)Authorizes the Sonoma Valley Health Care District, the Marin
Health Care District or the Last Frontier Health Care District
to use the design-build contracting rules specified for local
agencies in 2) above, to assign contracts for the construction
of a building or improvements directly related to construction
of a hospital or health facility building at the Sonoma Valley
Hospital, the Marin General Hospital, or the Modoc Medical
Center, respectively.
FISCAL EFFECT: None
AB 1290
Page 4
COMMENTS:
1)Bill Summary. This bill allows the District to use the
design-build contracting method for the construction of a
building or improvements directly related to construction of a
hospital or health facility building at the District. This bill
is sponsored by the District.
2)Author's Statement. According to the author, "With the increase
in new patients under the Affordable Care Act, and, 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 1290 would authorize the Mayers Memorial Hospital District
to use the design-build process for buildings associated with
hospitals and healthcare and not for other infrastructure. This
would create cost saving benefits by shifting the liability and
risk for cost containment and project completion to the
design-build entity."
3)Background. The LAPC Act generally requires local officials to
invite bids for construction projects and then award contracts
to the lowest responsible bidder. This design-bid-build method
is the traditional approach to public works construction.
Under the design-build method, a single contract covers the
design and construction of a project with a single company or
consortium that acts as both the project designer and builder.
The design-build entity arranges all architectural, engineering,
and construction services, and is responsible for delivering the
project at a guaranteed price and schedule based upon
performance criteria set by the public agency. The design-build
AB 1290
Page 5
method can be set by the public agency. The design-build method
can be faster and, therefore, cheaper, than the design-bid-build
method, but it requires a higher level of management
sophistication since design and construction may occur
simultaneously.
Advocates for the design-build method of contracting for public
works contend that project schedule savings can be realized
because only a single request for proposals is needed to select
the project's designer and builder. The more traditional
design-bid-build project approach requires the separate
selection of the design consultant or contractor, completion of
design, and then advertising for bids and selection of the
construction contractor. Proponents add that design-build
allows the overlap of design and construction activities,
resulting in additional time savings and lower project costs.
By avoiding the delays and change orders that result from the
traditional design-bid-build method of contracting, proponents
argue that design-build can deliver public works faster and
cheaper.
Detractors of design-build contend that it eliminates
competitive bidding, allows the private contractor or consortium
to inspect and sign off on their own work, and increases project
delivery costs.
4)Design-Build and Healthcare Districts. California currently has
80 health care districts. Health care districts were known as
hospital districts prior to 1994. Health care districts are
formed to "establish, maintain, and operate health care
facilities," including, but not limited to, hospitals. Health
care districts are governed by elected boards of directors.
Health care districts throughout the state need to retrofit
existing buildings or build new facilities in order to comply
with the Hospital Seismic Safety Act. These districts are faced
with escalating construction costs and are looking for the most
AB 1290
Page 6
cost-effective ways to meet seismic standards and provide
well-designed and built state-of-the-art facilities to provide
health care to the people of the state. One of these methods is
design-build contracting.
5)Mayers Memorial Hospital District. Mayers Memorial Hospital,
located in Fall River Mills, offers a variety of services,
including an emergency room physician on duty 24 hours a day,
obstetrics, tele-medicine and a 99-bed skilled nursing facility.
Mayers Memorial Hospital opened as a 10-bed facility in 1956 to
provide healthcare services to the Intermountain community. In
the late 1960s, various regulations and the need for increased
operational funding led the community to establish Mayers
Memorial as a District Hospital, which provided the funding
needed to draw new caregivers and specialists to the region.
From 1970 through the 1990s, the District constructed various
additions to the building and remodeled older sections to make
room for growth. In 1993, another facility was built in the
growing community of Burney. This facility now houses
additional skilled nursing rooms, including a secure Alzheimer's
unit.
The Hospital Seismic Safety Act requires acute care hospitals be
designed and constructed to withstand a major earthquake and
remain operational immediately after a quake. The District must
comply with these requirements by 2020. According to the
District, "The biggest obstacle to meeting these requirements
was, of course, lack of funds. In 2001, Mayers Memorial
Hospital District converted to a Critical Access Hospital, which
increased the reimbursement amount, and improving operations.
The Board has recognized the need for a comprehensive strategic
plan to address the mandates and regulations that could threaten
the future of the District if nothing is done. The goal of the
recently completed Master Facility Plan was to clearly address
the pending seismic and retrofit issues and lay the foundation
for the District's capital campaign to fund the comprehensive
building reconstruction.
AB 1290
Page 7
"Design-Build will be a more cost effective way for us to
build/renovate our facility to be compliant with state seismic
mandates. If we use traditional (design-bid-build) it will
require more steps and take longer to complete the project. It
will also cost more. We have limited funding and limited time.
If we are approved for (design-build), once we select a firm,
they handle everything and in doing so it will streamline the
process, reduce the cost and shorten the time frame."
6)Previous Legislation. SB 268 (Gaines), Chapter 18, Statutes of
2014, allowed the Last Frontier Health Care District to use the
design-build process when contracting for the construction of a
building and improvements directly related to a hospital or
health facility building at the Modoc Medical Center.
SB 785 (Wolk), Chapter 931, Statutes of 2014, repealed existing
law authorizing the Department of General Services (DGS), the
Department of Corrections and Rehabilitation (CDCR), and local
agencies to use the design-build procurement process, and
enacted uniform provisions authorizing DGS, CDCR, and most local
agencies to utilize the design-build procurement process for
specified public works projects. SB 785 did not allow the use
of design-build for health care districts generally, but did
include a provision allowing the Marin Healthcare District to
use the design-build method established for local agencies under
SB 785 and required the Sonoma Valley Health Care District to
use the design-build procedure outlined in SB 785, instead of
its prior design-build authority.
SB 1005 (Cox) of 2010 would have authorized the Tahoe Forest
Health Care District and a health care district authorized by
the Office of Statewide Health Planning and Development to use a
design-build procedure when assigning contracts for the
construction of a hospital or health facility building. SB 1005
AB 1290
Page 8
was held in the Assembly Appropriations Committee.
SB 1699 (Wiggins), Chapter 415, Statutes of 2008, authorized the
use of design-build for the Sonoma Valley Health Care District.
7)Arguments in Support. The Association of California Healthcare
Districts, in support, writes, "Mayers Memorial Hospital
District must rebuild its facility before 2020, in compliance
with the Alfred E. Alquist Hospital Facilities Seismic Safety
Act. As a rural critical access hospital, Mayers Memorial
Hospital faces a greater disadvantage than larger, urban
hospitals, as financing options are more difficult to obtain in
a small rural community. The design-build method provides cost
savings that is hard to achieve with the current bid process.
Given the uncertain nature of the healthcare industry at this
time, access to care in rural areas is extremely vulnerable.
Meeting this seismic mandate is critical to the community served
by the District."
8)Arguments in Opposition. None on file.
9)Urgency Clause. According to the District, "Our original plan
has not come to realization because we have not been able to
obtain the funding for the project? This has required us to
pursue a scaled back version and basically start over,
shortening our time frame to required completion. The Urgency
Clause is needed because we don't have the time to wait until
January 2016 to begin this process. We are actually waiting on
the approval of this legislation to proceed. This is the most
viable option for us financially and time wise to build and meet
the seismic requirements by January 2020 in order to continue to
provide quality healthcare to our community. We cover a
geographic area of 8000+ square miles and are the only
healthcare option for much of our population. The closest
hospital is 70 miles away."
AB 1290
Page 9
The author has asked to add an urgency clause to this bill for
the reasons outlined above.
Analysis Prepared by:
Angela Mapp / L. GOV. / (916) 319-3958 FN:
0000443