BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 2551

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          Date of Hearing:  April 12, 2016


                                 Marc Levine, Chair

          AB 2551  
          (Gallagher) - As Introduced April 5, 2016

          SUBJECT:  Surface storage:  contracts

          SUMMARY:  Authorizes alternative contracting methods for surface  
          storage projects that receive Proposition 1funding. Conditions  
          the use of alternative project delivery methods on meeting  
          specific solicitation, qualification, and selection  
          requirements. Specifically, this bill: 

             1)   Authorizes the use of construction management at-risk,  
               design-build, public-private partnership or  
               design-build-operate project delivery methods for  
               Proposition 1 funded surface storage projects.

             2)   Specifies the process by which a local agency will  
               solicit bids on a project. 

             3)   Prohibits a bidder to prequalify unless they use a  
               skilled and trained workforce, as defined.

             4)   Requires the local agency to make a list of prequalified  
               bidders available to the public.


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             5)   Specifies the bid selection process to be made from the  
               pool of prequalified bidders.    

          EXISTING LAW:  

             1)   In various ways authorizes the use of alternative  
               project delivery methods for state and local agencies.

             2)   Establishes a Sacramento-San Joaquin Delta policy that  
               among other things lists expanded statewide water storage  
               as an objective.

             3)   Makes surface storage projects identified in the CALFED  
               Bay-Delta Program Record of Decision, except projects  
               prohibited by the California Wild and Scenic Rivers Act,  
               eligible for $2.7 billion funding continuously appropriated  
               to the Water Commission under Proposition 1.

          FISCAL EFFECT:  Unknown

          COMMENTS:  Authorizes alternative contracting methods for  
          surface storage projects that receive Proposition 1 funding.

             1)   Author's Statement: This bill would allow eligible  
               projects, including Sites Reservoir, expanding Los Vaqueros  
               Reservoir, Temperance Flat dam, and in-delta storage  
               projects to utilize alternative delivery methods.   
               Authorizing these water storage projects to utilize  
               alternative delivery methods will help expedite these  


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               projects and increase our water storage capacity.   
               Authorizing alternative methods of contracting also gives  
               these projects the needed flexibility to ensure the best  
               possible use of the public's money.

             2)   Background: 

               Alternative delivery methods

               Increasing use of alternative project delivery methods have  
               been occurring in the public sector over the last 15 years.  
                The adoption of alternative project delivery has been  
               driven by benefits that the private sector has achieved  
               from these methods.  Any benefit or downside of a specific  
               contracting method is going to be realized on a case by  
               case basis. Research on alternative project delivery  
               methods have shown those methods to have all of the  
               following benefits:

                           Greater flexibility in the contracting process
                           Greater accountability

                           Higher quality

                           Faster project completion

                           Lower project costs

                           Greater cost certainty


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                           More opportunity for innovation


               It remains an open question as to what delivery method is  
               best for a given project, but it seems that expanding  
               project delivery methods with parameters can be beneficial.

               Status of Surface Storage


               Proposition 1 appropriated $2.7 billion to the Water  
               Commission for storage.  Those funds are available for all  
               of the following projects:

                           Surface storage projects identified in the  
                    CALFED Bay-Delta Program Record of Decision, except  
                    projects prohibited by the California Wild and Scenic  
                    Rivers Act.
                           Groundwater storage projects and groundwater  
                    contamination prevention or remediation projects that  
                    provide water storage benefits.
                           Conjunctive use and reservoir reoperation  
                           Local and regional surface storage projects  
                    that improve the operation of water systems in the  
                    state and provide public benefits.

               In addition to providing funding for storage, Proposition 1  


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               conditioned funding on several requirements being met.   
               Among those requirements a project must:

                     Provide measurable improvement to the Delta  
                 ecosystem or to the tributaries to the Delta.
                     Create ecosystem improvements that contribute to  
                 restoration of aquatic ecosystems and native fish and  
                 wildlife, including those ecosystems and fish and  
                 wildlife in the Delta.

                     Create water quality improvements that provide  
                 significant public trust resources, or that clean up and  
                 restore groundwater resources.

               Development of storage is tied to improved operations in  
               the Delta.  Surface water storage for the State Water  
               Project and Central Valley Project is directly tied to the  
               Delta.  The origins of surface storage projects currently  
               before the Water Commission come from CALFED Bay-Delta  

               In 1994 after years of uncoordinated efforts to improve  
               fish restoration and reliability of Delta water, state and  
               federal agencies joined together to coordinate activities.   
               This coordination became the CALFED Bay-Delta Program  
               (CALFED).  CALFED initiated a long-term planning process.  
               As part of that process, CALFED considered surface storage  
               that would allow for improved operations for water quality  
               and water flows.  In an August 28, 2000, Record of Decision  
               CALFED identified several storage projects for further  
               evaluation.  Those identified projects were ultimately made  
               eligible for funding under Proposition 1.


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               This Legislation would provide for the use of several  
               alternative methods of project delivery for surface storage  
               projects that receive Proposition 1 funding.  The bill does  
               not alter the requirements currently required under  
               Proposition 1.  It lays out the specific process by which a  
               project could utilize the alternative methods. Only after  
               meeting the requirements of Proposition 1, receiving  
               Proposition 1 funding, and meeting the solicitation and  
               evaluation requirements in this bill will a surface storage  
               project be able to utilize alternative project delivery  

             1)   Prior and Related Legislation:

                  a)        AB 1649 (Salas) 2016, establishes a state  
                    policy to prioritize funding surface storage.  AB 1649  
                    is currently pending in this committee. 

                  b)        AB 1471 (Rendon), Chapter 188, Statutes of  
                    2014, placed Proposition 1, a $7.545 billion general  
                    obligation bond for water-related projects and  
                    programs on the November 4, 2014, ballot where it  
                    passed with 67% of the vote.

                  c)        SB 785 (Wolk) Chapter 931, Statues of 2014,  
                    authorized the use of design-build contracting methods  
                    for state and local agencies under specific  

                  d)        AB 1329 (Wolk) Chapter 228, Statues of 2005,  
                    authorized the use of design-build contracting methods  


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                    for state and local agencies under specific  

             2)   Supporting Arguments: 

               Allowing public agencies to be able to consider delivery  
               methods other than the traditional design-bid-build method,  
               allows greater flexibility.  For large complex projects  
               multiple procurements will be needed, each having a  
               distinct set of performance requirements and requiring  
               different and diverse skill sets.  Being allowed to use  
               alternative delivery will allow the procurement to be  
               tailored to achieve greater efficiencies.

             3)   Opposing Arguments: 

               Projects eligible for Water Bond funding must be able to  
               deliver public benefits.  Alternative delivery methods  
               involve beginning construction before a design is  
               finalized.  This cannot guarantee public benefits will  
               accrue, and may lead to impacts not included in an  
               Environmental Impact Report (EIR) required under the  
               California Environmental Quality Act (CEQA).  Under CEQA, a  
               project must account for its impacts and mitigate those  
               effects before a project can be approved.  Alternative  
               delivery methods feature vague planning.  Such vague  
               planning may mask impacts during the EIR process, and  
               changes after approval may lead to unmitigated impacts.



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          Sites Project Joint Powers Authority

          Teamsters Local 137


          Sierra Club California

          Analysis Prepared by:Ryan Ojakian / W., P., & W. / (916)