BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2022|
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THIRD READING
Bill No: AB 2022
Author: Medina (D)
Amended: 8/18/14 in Senate
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMM. : 9-0, 6/16/14
AYES: Lieu, Wyland, Berryhill, Block, Corbett, Galgiani,
Hernandez, Hill, Torres
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/14/14
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters, Gaines
ASSEMBLY FLOOR : 55-20, 5/28/14 - See last page for vote
SUBJECT : Public contracts: Target Area Contract Preference
Act
SOURCE : Author
DIGEST : This bill makes changes to the Target Area Contract
Preference Act (TACPA) by redefining what qualifies as an
economically distressed area.
ANALYSIS :
Existing law:
1. Establishes TACPA and expresses legislative intent that it
is a benefit to the state to encourage and facilitate job
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maintenance and development in distressed and declining areas
of cities and towns in California.
2. Authorizes the Department of General Services (DGS) to apply
TACPA to bids from businesses that agree to perform the
contract work in designated "distressed areas" by offering 5%
worksite and 1% to 4% workforce bidding preferences in
specified state service and commodity contracts valued in
excess of $100,000.
3. Defines a distressed area to be determined by the Governor's
Office of Planning and Research (OPR) as an urban area with
at least 3,000 people living in a cluster of census block
groups with each meeting at least five of eight criteria
including that the census block groups:
A. Are in the upper quartile for having the least amount
of people over the age of 25 with a high school education;
B. Are in the upper quartile for highest unemployment
rate;
C. Are in the lowest quartile for per capita income;
D. Are in the upper quartile for having the highest
percentage of female head of households with children that
live in poverty;
E. Are in the upper quartile for having the greatest
percentage of people over the age of 65 living in poverty;
F. Are in the upper quartile for having the greatest
percentage of people under the age of 18 living in
poverty; and
G. Are in the upper quartile for having the highest
population of nonwhites and Hispanics.
4. Specifies that preference only applies to bidders who are
California-based firms.
5. Requires bidders to certify, under penalty of perjury, to
perform either 50% (for commodity contracts) or 90% (for
labor service contracts) of the labor hours in the eligible
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TACPA area worksite(s). TACPA work sites may be in, directly
adjacent to, or within a directly adjoining census tract
blocks that form a contiguous boundary with the distressed
area.
6. Limits TACPA preferences to 9% or a maximum of $50,000 per
bid. In combination with any other preferences, the maximum
limit is 15% of the lowest responsible bid; and in no case
more than $100,000 per bid.
7. Provides that TACPA preferences do not apply to contracts,
such as construction, where the worksite is fixed by the
contract terms.
This bill makes changes to TACPA by redefining what qualifies as
an economically distressed area. Specifically, a "distressed
area" is in the top quartile of census tracts for having the
highest unemployment and poverty in the state as determined by
the Department of Finance (DOF).
Background
TACPA . TACPA was enacted in 1983, as an effort by the
Legislature and the Governor to stimulate business development
in economically disadvantaged areas. TACPA is primarily
administered by DGS with help from the Office of Planning and
Research (OPR). Under TACPA, a 5% extra credit is awarded in
the contract bid evaluation phase to California firms that agree
to undertake the work in distressed areas and an additional 1%
to 4% may be included for committing to employ certain
individuals in completing the contract.
The geographic boundaries of the distressed areas are determined
by OPR based on eight statutorily defined criteria, as reported
at the census block level. Recently, the availability of this
data has changed. In 2003, the U.S. Census Bureau switched from
gathering socioeconomic data in the "long form" survey component
of the decennial census to an annual survey effort called the
American Community Survey (ACS).
In addition to the change in how the data was collected, the
U.S. Census Bureau no longer releases socioeconomic data for two
of the eight TACPA criteria at the block group level, although
it is released at the larger-scale census-tract level. In
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evaluating whether to simply change statute from census block
group to census tract level, OPR and others questioned whether
the current criteria was best suited for an employment
incentive. As an example, the existing locations include the
poverty level of people over 65 and children under the age of
18.
The California Research Bureau (CRB) produced a document in
2012, at the request of OPR to better understand the statistical
properties of past TACPA "distressed area" designations and of
the currently-available data from the ACS. The goal of the
report was to identify and evaluate options for meeting the
goals of the TACPA program with the U.S. Census information
currently available. The report found that current statute,
regulations, rules and guidelines do not clearly identify which
data should be used when constructing TACPA indicators, nor do
they provide guidance on how to determine eligibility when data
for any of the eight criteria are unavailable at the block-group
level. The report also noted that survey data provided by the
Census Bureau has inherent sampling errors, missing data and
missing measures and recommended that the creation and
implementation of future rules, regulations and guidelines could
clarify how the TACPA program ought to address these issues.
CRB identified several potential strategies for approaching the
data, each of which produces generally similar results. CRB
recommended that DGS adopt rules, regulations and guidelines
that identify the appropriate data to construct indicators of
each of the eight criteria, recognize and account for sampling
error, identify how to determine eligibility in the event that
data provided by the Census Bureau becomes unavailable, and
specify how to determine eligibility for block groups that are
missing data.
Comments
According to the author's office, this bill updates TACPA
geographic regions to those areas that DOF designates as having
the highest combined levels of poverty and unemployment in the
state. According to the author, "changes in the type of
information collected in the last Census have not only made data
collection more time consuming and expensive to obtain, it has
also rendered the existing TACPA unworkable, therefore, the
Department of General Services (DGS) has stopped considering
TACP preference in evaluating bids." The author's office
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believes that this bill will allow TACPA to continue to work by
redefining what qualifies as an economically distressed area.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
DGS indicates that it will incur first-year costs of $130,000
and ongoing annual costs of $113,000 (various funds).
Minor decennial savings to OPR related to eliminating the
workload of creating maps following each census.
Unknown costs. Revising the definition of distressed area
expands the eligible areas, and thus the number of firms,
eligible for a worksite bid preference under TACPA. The cost
of the TACPA bid preference over the last four years has
averaged $110,000.
SUPPORT : (Verified 8/13/14)
AFSCME
California Asian Pacific Chamber of Commerce
Coalition of Small and Disabled Veteran Businesses
National Federation of Independent Businesses
Veterans Caucus of the California Democratic Party
ARGUMENTS IN SUPPORT : According to AFSCME, this bill will
ensure that state contractors are better incentivized to hire
unemployed individuals and work in distressed areas of the
state.
The California Asian Pacific Chamber of Commerce notes that
targeted areas and areas in distressed communities need all the
help they can get in promoting jobs and economic growth because
of the high unemployment in those areas. They believe that by
reflecting new census tracts, this bill will allow small
businesses in these areas to take advantage of state contracts.
The Coalition of Small and Disabled Veteran Businesses believes
that this bill is extremely critical to help ensure that the
TACPA continues to function as it was originally intended and
that TACPA has allowed coalition members to not only hire, but
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retrain members from these highly distressed communities who
would not work without this preference in place.
According to the National Federation of Independent Businesses
(NFIB), this bill simply uses data currently compiled by DOF to
make workable a law already on the books. NFIB notes that there
are few tools available to help targeted and poor areas in our
state and this bill addresses that problem.
ASSEMBLY FLOOR : 55-20, 5/28/14
AYES: Achadjian, Alejo, Ammiano, Bloom, Bocanegra, Bonilla,
Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau,
Chesbro, Cooley, Dababneh, Daly, Dickinson, Eggman, Fong, Fox,
Garcia, Gomez, Gonzalez, Gordon, Gray, Hall, Roger Hern�ndez,
Holden, Jones-Sawyer, Levine, Linder, Lowenthal, Medina,
Mullin, Muratsuchi, Nazarian, Olsen, Pan, Perea, John A.
P�rez, V. Manuel P�rez, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting,
Wieckowski, Williams, Yamada, Atkins
NOES: Allen, Bigelow, Ch�vez, Conway, Dahle, Donnelly, Beth
Gaines, Gatto, Grove, Hagman, Jones, Logue, Maienschein,
Mansoor, Melendez, Nestande, Patterson, Wagner, Waldron, Wilk
NO VOTE RECORDED: Frazier, Gorell, Harkey, Weber, Vacancy
MW:k 8/16/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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