BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 994|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 994
Author: Hill (D) and Allen (D), et al.
Amended: 6/14/16
Vote: 27 - Urgency
SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 7-0, 4/11/16
AYES: Hill, Berryhill, Block, Galgiani, Jackson, Mendoza,
Wieckowski
NO VOTE RECORDED: Bates, Hernandez
SENATE HEALTH COMMITTEE: 6-1, 4/20/16
AYES: Hall, Mitchell, Monning, Pan, Roth, Wolk
NOES: Hernandez
NO VOTE RECORDED: Nguyen, Nielsen
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/29/16
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: Health care districts: design-build
SOURCE: Author
DIGEST: This bill 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.
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ANALYSIS:
Existing law:
1)Requires, pursuant to the Local Agency Public Construction
Act, that local officials must invite bids for construction
projects and then award contracts to the lowest responsible
bidder.
2)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.
This bill:
1)Allows, until January 1, 2022, the Beach Cities and Peninsula
Health Care Districts' board of directors, notwithstanding any
other law, to use the design-build procedure to construct
facilities or other buildings in those districts.
2)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.
3)Requires that, to the extent any project using the
design-build process authorized by this 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.
Background
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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
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, Chapter 931, Statutes of
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, Chapter 415, Statutes of 2008). Following SB 1699's
enactment, the Sonoma Valley Health Care District's voters
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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,
Chapter 18, Statutes of 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, Chapter
931, Statutes of 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 Hospital District (AB
1290, Dahle, Chapter 34, Statutes of 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
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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
extends 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.
Comments
Purpose of the bill. The Beach Cities Health Care District is
home to a rapidly growing senior population. This bill's grant
of design-build authority allows 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 rehabilitation 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
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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 this bill 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.
Non-provider districts. The four health care districts that
have design-build authority under existing law all own and
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 Health
Care 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, this bill 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.
Mandate. The design-build procedures that this bill 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
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penalty of perjury. By creating a new crime, this bill 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]).
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. This bill contains an urgency
clause declaring that it is necessary for its provisions to go
into effect immediately to facilitate construction of facilities
or other buildings in the two districts at the earliest possible
time pursuant to design-build authority.
Special legislation. The California Constitution prohibits
special legislation when a general law can apply (Article IV,
§16). This bill 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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
SUPPORT: (Verified8/1/16)
Association of California Healthcare Districts
Beach Cities Health Care District
Peninsula Health Care District
State Building and Construction Trades Council
OPPOSITION: (Verified8/1/16)
None received
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Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
8/3/16 19:14:36
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