BILL ANALYSIS
SB 43
Page 1
SENATE THIRD READING
SB 43 (Alquist)
As Amended August 27, 2009
Majority vote
SENATE VOTE : 37-2
LOCAL GOVERNMENT 5-2
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|Ayes:|Caballero, Arambula, | | |
| |Davis, | | |
| |De La Torre, Skinner | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Knight, Duvall | | |
| | | | |
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SUMMARY : Authorizes the City of Santa Clara (City) and the
Redevelopment Agency of Santa Clara (Agency) as a joint powers
agency (JPA), the Santa Clara Stadium Authority (SCSA), to
construct, operate, and maintain a stadium for use by a
professional football team using a specified design-build
authority. Specifically, this bill :
1)Prohibits anything in this act to be construed to affect any
contract relating to the development of the stadium for use by
a professional football team between SCSA and any private
party other than a design-build contract awarded pursuant to
the provisions of this act.
2)Authorizes the creation of a joint powers agreement between
the City and the Agency to create and operate a JPA, SCSA, for
the construction, operation, and maintenance of a stadium and
related facilities located within the North Bayshore
Redevelopment Project Area that are suitable for use by a
professional football team.
3)Prohibits SCSA and the Agency from expending any property tax
increment revenue allocated to the Agency to operate or
maintain a stadium.
4)Authorizes SCSA to award a design-build contract related to
the stadium to a qualified design-build contractor without
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utilizing an otherwise applicable competitive bid process,
provided:
a) The governing body of SCSA determines a ballot measure
endorsing the development of a stadium for use by a
professional football team is approved by the voters in the
City in a citywide election;
b) The governing body of SCSA determines the cost of the
contract is reasonable; and,
c) The award of the contract without utilizing the
competitive bid process is in the best interest of SCSA.
5)Prohibits SCSA from awarding a design-build contract related
to the stadium unless:
a) The design-build contract does not require an
expenditure of money from the City's general fund or
enterprise funds;
b) The obligation of the Agency to contribute funding
toward the amount due under the design-build contract is
limited to a specified maximum amount, provided the
specified maximum amount need not apply to debt service and
other financing costs. The Community Redevelopment Law
(Part 1 (commencing with Section 33000) of Division 24 of
the Health and Safety Code) must apply with respect to the
financial obligations of the Agency to SCSA; and,
c) A private party is responsible for any construction cost
overruns.
6)Requires SCSA to establish a competitive bid process for
awarding subcontracts and requires the design-build contractor
to award the subcontract using this process. The competitive
bid process is required to provide subcontracts be awarded
using either the lowest responsible bidder or best value
method. Funds contributed by the Agency or a community
facilities district must be limited to subcontracts awarded to
the lowest responsible bidder in a manner consistent with the
process applicable to the City under its charter.
7)Authorizes SCSA to specify the payment bond for a design-build
contract be in a sum not less than half the contract price or
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$300 million whichever is less.
8)Requires SCSA, when it uses the design-build method to
construct a stadium for use by a professional football team,
to submit to the Legislative Analyst's Office, within six
months following the completion of construction of the
stadium, a report regarding the project containing specified
information.
9)Declares it is not the intent of the Legislature to authorize
design-build for other infrastructure, including, but not
limited to, streets and highways, public rail transit, or
water resource facilities and infrastructure not located on
the stadium site or adjacent city streets and property.
10)Requires, if the Department of Transportation (Caltrans)
determines improvements to the state highway system are
required for the construction, operation, or maintenance of a
stadium, Caltrans to be the responsible agency for the
performance of project development services and for the
preparation of documents. Caltrans is authorized to use
Caltrans employees or consultants to perform these services
consistent with Article XXII of the California Constitution.
11)Requires, if any provision, clause, sentence, paragraph, or
phrase of this act is for any reason held invalid,
ineffective, or unconstitutional by a court of competent
jurisdiction, that the remainder of this act not be affected
and be in full force and effect.
12)Requires nothing in this act to be construed to affect the
application of any other law.
EXISTING LAW :
1)Authorizes, under the Joint Exercise of Powers Act, two or
more public agencies (i.e., federal government, any state, any
state department or agency, county, county board of education,
county superintendent of schools, city, public corporation,
public district, and regional transportation commission in any
state) to enter into a JPA to exercise jointly any power
common to the contracting agencies and to form a separate JPA
at their option.
2)Requires local officials, under the Local Agency Public
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Construction Act, to invite bids for construction projects and
then award contracts to the lowest responsible bidder under
the traditional design-bid-build project delivery system.
3)Authorizes cities to use the design-build method for projects
costing more than $1 million.
4)Authorizes redevelopment agencies, until January 1, 2016, to
use the design-build method for infrastructure projects
costing more than $1 million, provided the State Public Works
Board approves the project as one of 10 design-build projects
statewide.
FISCAL EFFECT : None
COMMENTS : The author states the San Francisco 49ers (49ers)
professional football team would like to use the design-build
method to construct a new $937-million stadium in an existing
redevelopment project area in the City. Because the City's
charter mandates all public contracts be awarded to the lowest
bidder, the City is unable to take advantage of the state's
design-build authorization that has been extended to all cities.
According to the author, on June 2, 2009, the Santa Clara City
Council and the 49ers approved a proposal that outlines the
financing for the stadium construction. To assist this project,
this bill will give the City a legislative option to award a
design-build contract through the newly created SCSA.
On June 23, 2009, the City established a Charter Review
Commission to consider amending its charter to allow for
design-build authority. The author says the City would like to
have the ability to consider a design-build option other than
having to amend its charter. The author says a design-build
method will allow for greater project collaboration, cost
control, faster construction, and a streamlined construction
process for a stadium that is projected to be completed in 2014
provided the City's residents in spring 2010 approve the charter
amendment allowing the City to utilize design-build.
By entering into a JPA with the Agency, the City will have
access to the Agency's tax-increment revenue in the Bayshore
North Development Project Area. The use of the Agency's funds,
however, will be limited to a specified maximum amount provided
the specified maximum amount need not apply to debt service and
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other financing costs, and to subcontracts awarded using the
lowest responsible bidder method. The author states that, in
the City's agreement with the 49ers, the Agency will contribute
$59 million in redevelopment funds. The rest of the $114
million in public contributions for the $939 million needed for
the stadium construction will be $20 million from a utility fund
for a substation relocation and $35 million from a Mello-Roos
tax imposed on the surrounding hotels. In addition, the 49ers
have agreed to be responsible for any cost overruns.
The design-build language in current law is based on a
compromise struck in 2000 among local officials, labor groups,
and contractors. Local officials wanted the flexibility and
potential cost savings offered by design-build contracts. Labor
unions wanted to ensure that counties pre-qualify employers to
protect workers' interests. Contractors wanted to be sure they
had fair access to county contracts. Further changes to the
language, consistent with the principles of the 2000 compromise
were made by SB 287 (Cox), Chapter 376, Statutes of 2005; SB 416
(Ashburn), Chapter 585, Statutes 2007, which extended this
authority to use design-build contracting for the construction
of buildings and directly related improvements to all 58
counties in the state; SB 642 (Wolk), Chapter 314, Statues 2008,
which extended this authority to use design-build contracting
for the construction of buildings and directly related
improvements to all cities in the state; SB 1699 (Wiggins),
Chapter 415, Statutes 2008, which extended this authority to use
design-build contracting for the construction of buildings and
improvements in excess of $2.5 million directly related to a
Sonoma Valley Health Care District hospital or health facility
building; and SB 4 X2 (Cogdill), Chapter 2, Statutes 2009-10
Second Extraordinary Session, which extended this authority to
use design-build contracting for infrastructure projects in
excess of $1 million to redevelopment agencies, provided the
State Public Works Board approves the project as one of 10
design-build projects statewide.
This bill would breach the carefully crafted compromise reached
in 2000 between all interested stakeholders by not including any
of the language included in every other design-build
authorization law. This bill even states that all existing
design-build laws are legally inapplicable in this situation.
According to the author, the City and 49ers have already agreed
80% to 85% of all subcontracting work will be required to be
done with local union labor. The Legislature may wish to
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consider whether it wishes to diverge from the well-established
precedent of the 2000 compromise language.
Furthermore, this bill grants design-build authority to a JPA,
the first time this has been done. In addition, this bill
grants the design-build authority to a JPA whose public agency
members do not have the authority to use the design-build
contracting method on their own (the City is limited by its
charter to using only competitive bidding and the Agency is
authorized by state law to use design-build only for
infrastructure projects in limited circumstances).
Analysis Prepared by : Jennifer R. Klein / L. GOV. / (916)
319-3958
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