BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 562|
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UNFINISHED BUSINESS
Bill No: SB 562
Author: Lara (D)
Amended: 6/16/15
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 5/6/15
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
SENATE FLOOR: 36-0, 5/18/15
AYES: Allen, Anderson, Bates, Beall, Block, Cannella, De León,
Fuller, Gaines, Galgiani, Hancock, Hernandez, Hertzberg, Hill,
Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire,
Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen,
Nielsen, Pan, Roth, Runner, Stone, Vidak, Wieckowski, Wolk
NO VOTE RECORDED: Berryhill, Hall, Pavley
ASSEMBLY FLOOR: 79-0, 7/13/15 - See last page for vote
SUBJECT: Infrastructure financing: City of Long Beach Civic
Center
SOURCE: Author
DIGEST: This bill allows the City of Long Beach to use a
public-private partnership procurement method to develop a new
civic center.
Assembly Amendments declare that this bill's provisions must not
be construed to authorize the City of Long Beach to use
tidelands trust revenues that are subject to specified state
laws for general municipal purposes or any other purpose
unconnected with the public trust. Amendments also make several
non-substantive clarifying amendments to this bill's provisions.
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Page 2
ANALYSIS:
Existing law:
1) Authorizes local governments to enter into public-private
partnerships (P3s) for fee-producing infrastructure projects
that might not be feasible without private-sector
involvement.
2) Allows local governments may solicit proposals and enter
into agreements with private entities for the study,
planning, design, financing, construction, maintenance,
rebuilding, improvement, repair, or operation by private
entities of specific types of fee-producing infrastructure
(AB 2660, Aguiar, Chapter 1040, Statutes of 1996).
3) Requires that a P3 agreement for the construction of
fee-producing infrastructure by a private entity must provide
for the lease of those facilities to, or ownership by, the
private entity for up to 35 years.
This bill:
1) Allows the City of Long Beach (City) to use a P3 agreement
to contract and procure a project to revitalize and redevelop
the Long Beach Civic Center with a new city hall, port
headquarters, public library, and public park, and
residential, retail, hospitality, institutional, and
industrial facilities.
2) Allows the City to enter into a P3 with one or more private
entities for delivery of the project through a concession
agreement, design-build agreement, design-build-finance
agreement, project agreement, lease-leaseback, or other
appropriate agreements that combine one or more major
elements of these agreements.
3) Requires the City to award the contract to the private
entity or entities whose proposal or proposals the City
determines, in writing, to be the most advantageous by
providing the best value in meeting the best interests of the
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City.
4) Requires the negotiation process to specifically prohibit:
a) Practices that may result in unlawful activity,
including rebates, kickbacks, or other unlawful
consideration.
b) City employees from participating in the selection
process when those employees have a relationship with a
person or business entity seeking a contract that would
subject those employees to specified statutory
prohibitions against financial conflicts of interest.
5) Allows the City to terminate the project prior to project
award should the City determine that the project is not in
the best interests of the City or should the negotiations
with the private entity or entities otherwise fail.
6) Requires that all documents related to the project must be
subject to disclosure under the California Public Records
Act, except those exempted from disclosure under that Act.
7) Requires the Long Beach Civic Center project to comply with
the California Environmental Quality Act (CEQA) before
project construction commences and directs that neither the
act of selecting a private entity, nor the execution of an
agreement with the private entity, requires prior compliance
with CEQA.
8) Requires that the City must own the public portion of the
project, unless the City elects to provide for ownership of
the project by the private entity through a separate lease
agreement.
9) Allows a lease agreement to provide for the lease of all or
a portion of the project to, or ownership by, the private
entity or entities, for a term up to 50 years and requires
the agreement to provide for complete reversion of the public
portion of the project to the City at the expiration of the
lease or transfer term.
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10)Prohibits the private portion of the project from being
financed or developed by the P3 or otherwise using public or
tax-exempt financing.
11)Directs that:
a) The plans and specifications for the project must
comply with all applicable governmental design standards
for that particular infrastructure project.
b) The studying, planning, designing, constructing,
developing, financing, operating, maintaining, or any
combination, of the project must utilize private sector
firms. However, a facility leased to a private entity,
during the term of the lease, must be deemed to be public
property for purposes of identification, maintenance,
enforcement of laws, and for purposes of the Government
Claims Act.
c) All public works constructed pursuant to this bill's
provisions must comply with specified provisions of the
California Labor Code relating to public works projects.
12)Defines the following terms:
a) "Best interests of the city" means a procurement
process that is determined by the City to provide the best
value and an expedited delivery schedule while maintaining
a high level of quality workmanship and materials.
b) "Best value" means a value determined by objective
criteria that must include a combination of price,
financing costs, features, functions, performance,
life-cycle maintenance costs and abatement offsets, and
development experience.
c) "Business entity" means a partnership, corporation, or
other legal entity that is able to provide appropriately
licensed contracting, architectural, engineering,
financial, operations, management, facilities maintenance,
and other services for development of a new Long Beach
Civic Center.
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d) "City" means the City of Long Beach and its
departments, including the City of Long Beach Harbor
Department.
e) "Long Beach Civic Center" means the area bounded by
Broadway, Pacific Avenue, Ocean Boulevard, and Magnolia
Avenue, containing approximately 14.98 acres and the
parcel on the south side of 3rd Street between Pacific
Avenue and Cedar Avenue, containing approximately 0.89
acres.
f) "Private entity" means an individual, business entity,
or combination of individuals and business entities.
g) "Private portion of the project" means those parcels
of land within the Long Beach Civic Center to be conveyed
to a private entity and developed as residential, retail,
hospitality, institutional, or industrial facilities.
h) "Project" means the revitalization and redevelopment
of the Long Beach Civic Center with a new city hall, port
headquarters, public library, and public park, and
residential, retail, hospitality, institutional, and
industrial facilities.
i) "Public portion of the project" means those parcels of
land within the Long Beach Civic Center to be developed as
a city hall, port headquarters, public park, public
library, or other government facilities.
j) "Public-private partnership" means a cooperative
arrangement between the public and private sectors, built
on the expertise of each partner, that best meets the
City's needs through the appropriate allocation of
resources, risks, and rewards for the purposes of, and,
including studying, planning, designing, constructing,
developing, financing, operating, maintaining, or any
combination thereof, the project.
13)Prohibits its provisions from being construed to authorize
the City to use tidelands trust revenues that are subject to
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specified state laws for general municipal purposes or any
other purpose unconnected with the public trust.
14)Contains legislative findings and declarations regarding the
necessity and benefits of using a P3 to develop a new Long
Beach Civic Center.
15)Directs that its provisions are severable.
Background
Confronted by aging infrastructure, growing populations, and
limited revenue sources, local governments sometimes turn to
non-traditional financing techniques to pay for the construction
of new public infrastructure and the replacement of existing
facilities.
Long-term lease-leaseback financing is one method that local
governments use as an alternative to issuing general obligation
bonds to pay for public infrastructure. Under this approach, a
local government leases public property to a third-party that
undertakes improvements to the property and leases the improved
property back to the local government. The rights to receive
the lease payments from the local government are used to secure
debt that was issued to pay for the costs of acquiring and
improving the public property.
In 1996, the Legislature authorized local governments to enter
into P3s for fee-producing infrastructure projects that might
not be feasible without private-sector involvement. Local
governments may solicit proposals and enter into agreements with
private entities for the study, planning, design, financing,
construction, maintenance, rebuilding, improvement, repair, or
operation by private entities of specific types of fee-producing
infrastructure. A P3 agreement for the construction of
fee-producing infrastructure by a private entity must provide
for the lease of those facilities to, or ownership by, the
private entity for up to 35 years.
In 2007, the City identified seismic deficiencies in its City
Hall and Main Library Buildings and found that substantial
seismic renovations would be required to protect lives during a
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major earthquake. The City evaluated the costs of retrofitting
the existing structures and concluded that the City Hall and
Main Library buildings should be replaced rather than repaired.
In 2013, the City initiated a procurement process for
development of a new Civic Center through a P3 agreement. The
City officials want to clarify their authority under state law
to finance the Long Beach Civic Center improvements through a P3
agreement that combines elements of state laws that authorize
cities to enter into lease-leaseback financing and
design-build-finance-operate-maintain financing agreements.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified7/14/15)
City of Long Beach
Downtown Long Beach Associates
Los Angeles/Orange Counties Building and Construction Trades
Council
Port of Long Beach
OPPOSITION: (Verified7/14/15)
None Received
ASSEMBLY FLOOR: 79-0, 7/13/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Dababneh, Dahle, Daly, Dodd,
Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,
Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,
Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
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Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Cooper
Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
7/15/15 9:46:02
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