BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 43|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
UNFINISHED BUSINESS
Bill No: SB 43
Author: Alquist (D)
Amended: 8/27/09
Vote: 21
PRIOR VOTES NOT RELEVANT
ASSEMBLY FLOOR : 56-14, 9/3/09 - See last page for vote
SUBJECT : Joint powers agency: City of Santa Clara
SOURCE : Author
DIGEST : This bill authorizes the City of Santa Clara and
the Redevelopment Agency of Santa Clara as a joint powers
agency, the Santa Clara Stadium Authority, to construct,
operate, and maintain a stadium for use by a professional
football team using a specified design-build authority.
Assembly Amendments delete the Senate version of the bill
dealing with health professionals. This bill currently
deals with the City of Santa Clara.
ANALYSIS :
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
CONTINUED
SB 43
Page
2
board of education, county superintendent of schools,
city, public corporation, public district, and regional
transportation commission in any state) to enter into a
joint powers agency (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
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.
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 the
Santa Clara Stadium Authority (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 of Santa Clara (City) and the
Redevelopment Agency of Santa Clara (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.
SB 43
Page
3
4. Authorizes SCSA to award a design-build contract related
to the stadium to a qualified design-build contractor
without 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.
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.
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
SB 43
Page
4
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 $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.
Comments
The author's office states that the San Francisco 49ers
SB 43
Page
5
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's office, 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's office says the City
would like to have the ability to consider a design-build
option other than having to amend its charter. The
author's office 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 other financing costs, and to
subcontracts awarded using the lowest responsible bidder
method. The author's office 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.
SB 43
Page
6
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 4XX (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 breaches 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 states that all
existing design-build laws are legally inapplicable in this
situation. According to the author's office, the City and
49ers have already agreed that 80 percent to 85 percent of
all subcontracting work will be required to be done with
local union labor. The Legislature may wish to 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
SB 43
Page
7
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).
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 9/4/09)
Patricia Mahan, Mayor of the City of Santa Clara
San Francisco 49ers
Santa Clara and San Benito Counties Building & Construction
Trades Council
ASSEMBLY FLOOR :
AYES: Adams, Arambula, Beall, Bill Berryhill, Blakeslee,
Block, Blumenfield, Brownley, Buchanan, Caballero,
Carter, Conway, Cook, Coto, De La Torre, De Leon,
Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes,
Furutani, Gaines, Galgiani, Gilmore, Hall, Hayashi,
Hernandez, Hill, Huber, Jones, Krekorian, Lieu, Bonnie
Lowenthal, Mendoza, Monning, Nava, Nestande, Niello,
Nielsen, John A. Perez, V. Manuel Perez, Portantino,
Ruskin, Salas, Skinner, Smyth, Solorio, Swanson, Torres,
Torrico, Villines, Yamada, Bass
NOES: Ammiano, Anderson, Tom Berryhill, Chesbro, Duvall,
Fuller, Hagman, Harkey, Huffman, Knight, Logue, Ma, Audra
Strickland, Tran
NO VOTE RECORDED: Charles Calderon, Davis, DeVore,
Garrick, Jeffries, Miller, Saldana, Silva, Torlakson,
Vacancy
AGB:mw 9/4/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****