BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON GOVERNANCE AND FINANCE
                         Senator Robert M. Hertzberg, Chair
                                2015 - 2016  Regular 

                              
          
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          |Bill No:  |SB 1082                          |Hearing    |4/13/16  |
          |          |                                 |Date:      |         |
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          |Author:   |McGuire                          |Tax Levy:  |No       |
          |----------+---------------------------------+-----------+---------|
          |Version:  |3/28/16                          |Fiscal:    |No       |
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          |Consultant|Favorini-Csorba                                       |
          |:         |                                                      |
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              Regional park and open-space districts:  general manager:   
                                       powers



          Increases, from $25,000 to $50,000, the maximum value of  
          contracts which the Sonoma County Agricultural Preservation and  
          Open Space District may enter into without using a formal bid  
          process.


           Background 

           Regional park and open space districts must advertise contracts  
          for supplies, materials, labor, and construction and award them  
          to the lowest responsible bidder.  With the board of directors'  
          approval, a district's general manager can award smaller jobs  
          without advertising and without written contracts.  The manager  
          must report this spending at the board's next regular meeting.

          When the Legislature created open space districts in 1933, the  
          threshold for advertising bids was $500.  Currently, nearly all  
          open space districts can spend up to $25,000 for  
          non-construction supplies, materials, and labor, and up to  
          $25,000 on new construction projects without going through a  
          formal bidding process (AB 745, Levine, 2014).  

          The $25,000 threshold for construction contracts has applied to  
          all open space districts since 1983 (AB 746, Campbell, 1983).   
          The bid threshold for non-construction contracts was increased  







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          from $10,000 to $25,000 for the East Bay Regional Park District  
          in 1999 (AB 584, Aroner, 1999) and for the Midpeninsula Regional  
          Open Space District in 2002 (AB 953, Simitian, 2002). In 2015,  
          AB 495 (Gordon) allowed those two districts to sign contracts  
          for any purpose of up to $50,000 without bidding.  In addition  
          to being subject to board approval, AB 495 required any  
          expenditures in this manner to be reported to the board.

          Sonoma County voters authorized the creation of the Sonoma  
          County Agricultural Preservation and Open Space District  
          (SCAPOSD) in 1990 to permanently protect the greenbelts, scenic  
          viewsheds, farms and ranches and natural areas of Sonoma County.  
           To date, SCAPOSD has acquired or protected 106,000 acres of  
          farmland and open space.  A quarter cent sales tax, authorized  
          through 2031, supports the majority of the district's roughly  
          $36 million annual budget.  The Sonoma County Board of  
          Supervisors serves as the governing board of SCAPOSD.  The  
          district's activities include acquisition, protection, and  
          maintenance of open space and agricultural lands, conservation  
          planning to identify high-priority lands for protection or  
          acquisition, and administration of a grant program.  

          The formal bid process for public contracts can be  
          time-consuming and costly.  Because inflation has eroded the  
          districts' buying power since their $25,000 bid thresholds were  
          enacted, SCAPOSD must go through the effort and expense of  
          seeking bids for relatively low-value contracts.  Sonoma County  
          officials want the Legislature to raise the dollar threshold at  
          which the district must seek formal bids on contracts.


           Proposed Law

           Senate Bill 1082 allows the general manager of SCAPOSD, with the  
          approval of its board of directors, to bind the district, in  
          accordance with board policy, and without advertising, for the  
          payment of supplies, materials, labor, or other valuable  
          consideration for any purpose, including new construction of a  
          building, structure, or improvement, in amounts not exceeding  
          $50,000.  

          SB 1082 requires that all expenditures must be reported to the  
          board of directors at its next regular meeting.









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           State Revenue Impact

           No estimate.


           Comments

           1.  Purpose of the bill .  The Sonoma County Agricultural Preserve  
          and Open Space District reports that in 2015, the district went  
          through a formal bidding process to award 6 contracts with  
          values that fell in the $25,000 to $50,000 range. At an average  
          administrative cost of $7,360 per contract, these contracts cost  
          the district over $44,000.  Avoiding a formal bid process for  
          contracts worth less than $50,000 will allow SCAPOSD to complete  
          numerous projects more quickly and reduce staff time and  
          administrative costs associated with formal bidding.  Moreover,  
          the Sonoma County Board of Supervisors increased the bid  
          threshold for other departments and affiliated agencies within  
          the county on March 15, 2016.  Since the Board of Supervisors  
          serves as the board of the district, they want to also increase  
          the threshold for SCAPOSD, but state law prevents them from  
          doing so.  SB 1082 makes the necessary change to allow this to  
          occur, and the savings that the district will realize as a  
          result of the higher bid threshold in SB 1082 will allow the  
          district to devote more resources towards its core mission of  
          preserving open space and agricultural lands.

          2.   Accountability and efficiency  .  State law regulating local  
          contracting attempts to balance the goals of accountability and  
          efficiency.  For decisions to be accountable, public officials  
          must spend the public's money in full view.  Inviting bids and  
          awarding contracts to the lowest possible bidder is an effective  
          method of ensuring transparency for the expenditures of public  
          funds.  While increasing the limits on the amount for which  
          districts may contract without the formal bid process, allows  
          for greater efficiency in local government spending, it may also  
          result in a loss of accountability and transparency on the use  
          of public funds. 

          3.   Next in line  ?  In 2014, AB 745 (Levine) raised the  
          non-construction contract bid thresholds for several park and  
          open space districts, bringing their thresholds up to the same  
          $25,000 level that state law had previously granted only to a  








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          few districts.  Just last year, AB 495 (Gordon, 2015) raised the  
          threshold for the East Bay Regional Park District and the  
          Midpeninsula Regional Open Space District to $50,000 for all  
          types of contracts.  Other districts may follow suit in asking  
          for the same authority.  Moreover, inflation has eroded the  
          value of the amounts that open space districts may contract for  
          without bidding.  For example, using the Consumer Price Index to  
          adjust for inflation, the $25,000 threshold for construction  
          contracts that was enacted in 1983 would be the equivalent of a  
          $62,000 threshold in 2016.  The $25,000 thresholds for  
          non-construction contracts enacted in 1999 and 2002 would be the  
          equivalent of roughly $37,000 and $33,500 thresholds,  
          respectively, in 2015.  As an alternative to the Legislature's  
          periodically adjusting and equalizing various districts' bid  
          thresholds, the Committee may wish to consider amending SB 1082  
          to automatically adjust bid thresholds periodically to reflect  
          increases in construction costs as measured by a specified  
          inflation index.  

          4.   Special legislation  .  The California Constitution prohibits  
          special legislation when a general law can apply (Article IV,  
          §16).  SB 1082 contains findings and declarations explaining the  
          need for legislation that applies only to the Sonoma County  
          Agricultural Preservation and Open Space District.  


           Support and  
          Opposition   (4/7/16)


           Support  :  Sonoma County Agricultural Preservation and Open Space  
          District (sponsor); Sonoma County Board of Supervisors.

           Opposition  :  Unknown.


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