BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |SB 994 |Hearing |6/29/16 |
| | |Date: | |
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|Author: |Hill |Tax Levy: |No |
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|Version: |6/14/16 |Fiscal: |Yes |
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|Consultant|Weinberger |
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Health care districts: design-build
Allows the boards of directors of the Beach Cities Health Care
District and the Peninsula Health Care District to use
design-build contracting for the construction of buildings in
those districts.
Background
The Local Agency Public Construction Act 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, and most
widely-used, approach to public works construction. This
approach splits construction projects into two distinct phases:
design and construction. During the design phase, the local
agency prepares detailed project plans and specifications using
its own employees or by hiring outside architects and engineers.
Once project designs are complete, local officials invite bids
from the construction community and award the contract to the
lowest responsible bidder.
State law also allows some state and local officials to use the
design-build method to procure both design and construction
services from a single company before the development of
complete plans and specifications. Under design-build, a public
agency contracts with a single entity - which can be a single
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firm, a consortium, or a joint venture - to design and construct
a project. Before inviting bids, the agency prepares documents
that describe the basic concept of the project, as opposed to a
complete set of drawings and specifications of what will be
constructed. In the bidding phase, the agency typically
evaluates bids on a best-value basis, incorporating technical
factors, such as qualifications and design quality, in addition
to price.
Until January 1, 2025, all counties and cities can use the
design-build method to construct buildings and related
improvements and other specified types of public works that cost
more than $1 million (SB 785, Wolk, 2014). The Legislature also
has authorized some special districts to construct projects
using the design-build method, including four local health care
districts:
The Sonoma Valley Healthcare District can 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 Sonoma Valley
Hospital (SB 1699, Wiggins, 2008). Following SB 1699's
enactment, the Sonoma Valley Health Care District's voters
approved a $35 million bond to finance earthquake safety
improvements to bring the hospital's emergency room into
compliance with the state's seismic safety standards for
hospitals. The District's upgraded facility, which was
constructed using design-build contracts, opened in 2013.
The Last Frontier Healthcare District can 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 268, Gaines, 2014).
The Marin Healthcare District can 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 Marin General Hospital (SB 785,
Wolk, 2014).
The Mayers Memorial Hospital District can 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 Mayers Memorial
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Hospital District (AB 1290, Dahle, 2015).
The Beach Cities Health Care District was established in 1955 to
serve residents in the Los Angeles County communities of Hermosa
Beach, Manhattan Beach, and Redondo Beach. The district is
governed by a five-member board of directors elected by voters
within the district's boundaries to serve four-year terms.
Subsequent to the closure of the District's South Bay Hospital
in 1998 the District has focused on providing its more than
120,000 residents with a variety of health and wellness programs
promoting healthy lifestyles, physical fitness, and emotional
health.
The Peninsula Health Care District serves more than 200,000
residents in San Mateo County, including the communities of San
Bruno, Millbrae, Burlingame, Hillsborough, and parts of San
Mateo and Foster City. The District is governed by a
five-member board of directors elected by voters within the
District's boundaries to serve four-year terms. The District
was established in 1947 and completed the construction of
Peninsula Hospital in 1954. A newly-constructed replacement for
Peninsula Hospital operated by Mills Peninsula Health
Services/Sutter Health opened in May 2011. That facility is
located on land owned by Peninsula Healthcare District, pursuant
to a long-term lease agreement. In addition to managing
property, the District supports a variety of community-based
health programs and partnerships, provides health-related
community grants, and invests in health care facilities.
This year, the Legislature is considering SB 957 (Hueso), which
would extend the authority to use the design-build contracting
method to any local health care district that own or operates
either a hospital or medical clinic. Because the Beach Cities
Health Care District and the Peninsula Health Care District do
not own or operate hospitals or medical clinics, district
officials want the Legislature to grant separate authority for
the two districts to use design-build contracting to build
buildings within their districts' boundaries.
Proposed Law
Senate Bill 994 allows, until January 1, 2022, the Beach Cities
and Peninsula Health Care Districts' board of directors,
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notwithstanding any other law, to use the design-build procedure
to construct facilities or other buildings in those districts.
SB 994 specifies that a health care district must use the
design-build procedure that current law establishes for local
agencies and provides that statutory references to a "local
agency" means a health care district and its board of directors.
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SB 994 requires that, to the extent any project using the
design-build process authorized by the bill must be reviewed and
inspected in accordance with the standards and requirements of
the Alfred E. Alquist Hospital Facilities Seismic Safety Act of
1983, the bill's provisions must not be construed as an
exemption from that act.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . The Beach Cities Health Care District
is home to a rapidly growing senior population. SB 994's grant
of design-build authority would allow the district to further
improve the health of older adults through the construction of a
therapeutic senior living community. This much-needed community
work would consolidate vital social services for older adults -
including rehab and fitness facilities, pharmacies, medical
offices, social workers and grocery stores - onto a single,
accessible campus. The planning process is already underway for
these development projects, and design-build authority will help
to keep costs down, expedite the design and construction
process, and save taxpayer dollars while fulfilling community
health care needs. Similarly, the Peninsula Health Care
District plans to develop the Peninsula Wellness Community,
which is envisioned as a "gathering place" that will engage all
ages and levels of wellness with services and activities. The
community will offer housing for older adults, health support
across generations, and working spaces for professionals and
researchers. It will become a hub for wellness and medical
services, and a catalyst for intergenerational connections. The
design-build authority granted by SB 994 will allow for more
cost-effective development of the Peninsula Wellness Community
by fostering more competition among general contractors and
allowing a general contractor to provide earlier input in the
design process.
2. Non-provider districts . The four health care districts that
have design-build authority under existing law all own and
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operate hospitals and were granted authority to use design-build
contracting for construction projects that are associated with
those hospitals. Like several other local healthcare districts
throughout California, the Beach Cities and Peninsula Healthcare
Districts no longer own or operate hospitals. Peninsula Health
Care District does not provide any direct health care services
to its residents. Instead, the districts rely largely on
property tax revenues and rental income to make grants to
support health care-related activities. By allowing district
officials to award construction contracts based on a "best
value" determination, SB 994 makes the procurement process for
the districts' construction projects more subjective. More
subjectivity increases the chances that inappropriate factors
could influence which bidders are awarded some contracts. For
some local governments, this additional subjectivity may be
justified by the time and cost savings associated with
integrating the design and construction process for complex
infrastructure, like hospitals or medical clinics. It is less
clear why a health care district that is only responsible for
managing property should be allowed to use the design-build
contracting model to construct medical office buildings,
market-rate housing units, or other common infrastructure that
will serve only to generate rental income for the district.
3. Mandate . The design-build procedures that SB 994 authorizes
the Beach Cities and Peninsula Health Care Districts to use
requires that specified information provided by bidders in
response to a request for qualifications must be certified under
penalty of perjury. By creating a new crime, SB 994 also
creates a new state-mandated program. But the bill disclaims
the state's responsibility for reimbursing local governments for
enforcing these new crimes. That's consistent with the
California Constitution, which says that the state does not have
to reimburse local governments for the costs of new crimes
(Article XIIIB, 6[a][2]).
4. Urgency . Regular statutes take effect on January 1
following their enactment; bills passed in 2016 take effect on
January 1, 2017. The California Constitution allows bills with
urgency clauses to take effect immediately if they're needed for
the public peace, health, and safety. SB 994 contains an
urgency clause declaring that it is necessary for its provisions
to go into effect immediately to facilitate construction of
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facilities or other buildings in the two districts at the
earliest possible time pursuant to design-build authority.
5. Special legislation . The California Constitution prohibits
special legislation when a general law can apply (Article IV,
§16). SB 994 contains findings and declarations explaining the
need for legislation that applies only to the Beach Cities
Health Care District and the Peninsula Health Care District.
6. Related legislation . SB 994 is not the first legislative
effort to allow all health care districts to use design-build
contracting. Early versions of SB 1699 (Wiggins, 2008) would
have granted all health care districts the authority to use the
design-build method, but the bill was subsequently narrowed to
grant the authority only to the Sonoma Valley Health Care
District. Similarly, an early version of SB 1005 (Cox, 2010)
would have allowed all health care districts to construct
projects using the design-build contracting method. That bill
died in the Assembly Appropriations Committee. SB 957 (Hueso,
2016) would authorize all health care districts that own or
operate a hospital or clinic to use design-build contracting
authority. The Senate Governance and Finance Committee approved
SB 957 at its April 13, 2016 hearing on a 6-0 vote.
Support and
Opposition (6/23/16)
Support : Association of California Healthcare Districts; Beach
Cities Health Care District; Peninsula Health Care District;
State Building and Construction Trades Council.
Opposition : Unknown.
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