BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1360


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          Date of Hearing:  June 15, 2016


                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT


                           Susan Talamantes Eggman, Chair


          SB  
          1360 (Bates) - As Amended March 31, 2016


          SENATE VOTE:  36-0


          SUBJECT:  Local government:  municipal service agreements:  law  
          enforcement services.


          SUMMARY:  Creates parity for counties and cities that provide  
          law enforcement services to cities by requiring a city that  
          contracts with another city for law enforcement services to  
          charge all costs incurred in providing those services.   
          Specifically, this bill:  


          1)Requires a city that provides law enforcement services through  
            its appropriate departments, boards, commissions, officers, or  
            employees to another city pursuant to a contract or any other  
            agreement authorized by statutes governing municipal service  
            agreements to charge that city all the costs that are incurred  
            in providing those law enforcement services, except for any  
            costs that the city providing the services reasonably  
            determines are general overhead costs.



          2)Defines "general overhead costs" to mean those costs that a  








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            city would incur regardless of whether or not it provided law  
            enforcement services pursuant to a contract or agreement to  
            the other city.



          3)Requires any determination of general overhead costs made by a  
            city providing law enforcement services to be subject to  
            judicial review as to the reasonableness of that  
            determination.



          4)Applies to contracts or agreements entered into, or renewed,  
            on and after January 1, 2017.



          EXISTING LAW:   


          1)Allows local agencies to contract with other local agencies to  
            provide municipal services or functions, and requires such  
            agreements to be for "valuable consideration."



          2)Requires a county that provides services to any city pursuant  
            to a contract to charge the city all those costs that are  
            incurred in providing the services.  



          3)Prohibits a county from charging a city contracting for  
            services, either as a direct or an indirect overhead charge,  
            any portion of those costs that are general overhead costs of  
            operation of the county government.  










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          4)Defines "general overhead costs" as those costs that a county  
            would incur regardless of whether or not it provided services  
            under contract to a city.  



          5)Requires any determination of general overhead costs to be  
            subject to court review as to the reasonableness of such  
            determination.  



          FISCAL EFFECT:  None


          COMMENTS:  


          1)Bill Summary.  This bill aims to create parity for counties  
            and cities that provide law enforcement services to cities.   
            It requires a city that provides law enforcement services to  
            another city to charge that city all the costs that are  
            incurred in providing those law enforcement services, except  
            for costs that the city providing the services reasonably  
            determines are general overhead costs.  General overhead costs  
            are defined as "those costs that a city would incur regardless  
            of whether or not it provided law enforcement services  
            pursuant to a contract or agreement to the other city."  This  
            determination is subject to judicial review.



            This bill applies to contracts or agreements entered into, or  
            renewed, on and after January 1, 2017.  This bill is sponsored  
            by the Association of Orange County Deputy Sheriffs.











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          2)Author's Statement.  According to the author, "Different rules  
            apply to cities and counties when bidding for police service  
            contracts.  Counties must charge all costs 'which are incurred  
            in providing the services so contracted or authorized,' while  
            cities need only charge 'valuable consideration.'  Because  
            counties and cities are playing by two separate sets of rules,  
            counties are severely disadvantaged when bidding head-to-head  
            with cities for police service contracts.



            "Residents of cities who bid police services below cost are  
            also burdened by the disparate treatment of cities and  
            counties.  When a city gives a low bid to undercut a county's  
            bid, it is that city's taxpayers who get saddled with the  
            extra costs.  Essentially, the bidding city's residents will  
            be forced to make up the difference between the cost of the  
            services provided and the amount of the bid.  SB 1360  
            represents a commonsense approach toward ensuring that both  
            counties and cities are able to competitively bid law  
            enforcement contracts and ensures that all of the services  
            provided will be paid for by the city receiving services,  
            rather than the taxpayers of another municipality."





          3)Background.  Current law allows local agencies - including  
            counties and cities - to contract with each other for  
            municipal services and functions.  Statutes governing this  
            authority require these agreements to be for "valuable  
            consideration," but do not further specify what this "valuable  
            consideration" must include.  However, current law specifies  
            that, when counties provide services to cities, they must  
            charge all costs incurred in providing those services (with  
            the exception of any costs that can be attributed to services  








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            provided to all portions of the county).  



            This bill's sponsor, the Association of Orange County Deputy  
            Sheriffs, explains that these conflicting statutes allow  
            cities to pick and choose what they will charge and not charge  
            for and, therefore, to bid contracts at far lower prices than  
            counties.





            This bill is modeled after statutes that govern what counties  
            must charge when providing services to cities, although it is  
            limited to law enforcement services only (as opposed to any  
            and all services a city might provide to another city).





          4)Arguments in Support.  The Association of Orange County Deputy  
            Sheriffs, sponsor of this bill, writes, "(W)e strongly support  
            SB 1360, which would create parity between counties and cities  
            who bid for municipal police services contracts?(Current law)  
            creates a lack of parity that advantages cities over counties  
            when both are bidding head-to-head for police service  
            contracts.  SB 1360 would remedy this problem by simply  
            requiring cities to charge all those costs incurred in  
            providing the law enforcement services contract."



          5)Arguments in Opposition.  None on file.











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          REGISTERED SUPPORT / OPPOSITION:




          Support


          Association of Orange County Deputy Sheriffs [SPONSOR]




          Opposition


          None on file




          Analysis Prepared by:Angela Mapp / L. GOV. / (916)  
          319-3958