BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 969 (DeSaulnier) - Public works.
Amended: May 5, 2014 Policy Vote: T&H 11-0
Urgency: No Mandate: Yes
Hearing Date: May 19, 2014 Consultant: Mark McKenzie
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 969 would require an agency that administers a
transportation project with costs exceeding $1 billion to
establish a peer review group and comprehensive risk management
plan, as specified.
Fiscal Impact:
Likely minor, absorbable costs to the Department of
Transportation (Caltrans). It is rare that Caltrans has
jurisdiction over projects of this size, and the department
currently performs the activities specified in this bill.
(State Highway Account)
Potential reimbursable mandate costs for local
transportation entities that administer megaprojects to
establish peer review groups and risk management plans.
Costs are unknown, but could be up to $100,000 to $200,000
(General Fund) per megaproject, if a local entity
successfully filed a mandate claim with the Commission on
State Mandates (COSM). Some local entities would not have
standing to bring a claim before the COSM (see staff
comments below).
Background: Existing law, SB 425 (DeSaulnier), Chap. 252/2013,
establishes the Public Works Project Peer Review Act of 2103.
That bill authorizes local agencies that administer, plan,
develop, and operate public works projects to establish a peer
review group to provide expert advice on the scientific and
technical aspects of a public works projects. An agency that
establishes a peer review group must develop a transparent
process for selecting members of the group, draft a charter, and
post the charter on its website. The charter must include
specified information, including the group's objective and the
scope of its activities, a description of the duties for which
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the group is responsible, the estimated number of group meetings
and annual operating costs, and a statement declaring whether
the members have signed a conflict of interest disclosure form
identifying any real or perceived conflicts between a member and
the specific public works project.
Existing law requires the High-Speed Rail Authority to establish
an independent peer review group to review the planning,
engineering, financing, and other elements of its plans, as well
as issuing an analysis of HSRA's assumptions and viability of
its financing plan. Existing law also requires Caltrans to
establish the Toll Bridge Seismic Safety Peer Review Panel to
provide technical advice on issues related to the Bay Bridge
Project.
The Federal Highway Administration requires annual reporting on
risk assessment and management for projects with costs of over
$500 million that receive federal funding.
Proposed Law: SB 969 would require an agency administering a
transportation megaproject with total development and
construction costs of over $1 billion to establish a peer review
group to review the planning, engineering, financing, and other
plans, and issue an analysis to the agency's governing board or
to the Legislature, as applicable. The bill would also require
an agency administering a megaproject to do the following:
Establish a comprehensive risk management plan, as
specified.
Qualify the effect of identified risks in financial
terms.
Develop and maintain documents to track identified risks
and mitigation efforts.
Regularly update estimates of capital and capital outlay
support costs, and reassess reserves for potential claims
and risks.
Regularly integrate updated estimates for capital,
capital outlay support costs, and contingency reserves into
reports.
The bill also changes the name of the Public Works Project
Review Act to the Public Works Project Oversight Improvement Act
and specifies the provisions relating to peer review groups do
not apply to any group established prior to January 1, 2014.
SB 969 (DeSaulnier)
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Staff Comments: The California Constitution generally requires
the state to reimburse local agencies for costs associated with
state mandates that impose a new program or higher level of
service on local agencies. Existing law specifies that cities,
counties, K-12 school districts, county offices of education,
and community college districts are local government entities
eligible to claim reimbursement. Special districts, joint
powers authorities, and other prospective claimants must meet
additional criteria to qualify for reimbursement: (1) the
claimant's interest must be direct; (2) the claimant must be
subject to the tax and spend limitations of the California
Constitution, although the claimant may serve in a
representative capacity for costs incurred by eligible local
entities (e.g. a JPA may have standing to claim reimbursement on
behalf of local government members); and (3) there must be an
expenditure of local government proceeds of taxes and not just a
reduction in those revenues.
Legislative Counsel has indicated that this bill creates a
state-mandated local program by imposing new duties on local
agencies that administer a transportation megaproject. To the
extent that the requirements of the bill result in increased
expenditures of proceeds of taxes by those local agencies, such
as local transportation entities that spend transportation sales
tax revenues, this bill could create a reimbursable
state-mandated local program. Staff notes that there are no
known cases in which a local transportation entity filed a
successful claim for mandate reimbursements. If the COSM were
to accept such a claim as valid, this bill could result in
unknown state-reimbursable costs to the General Fund, likely in
the low hundreds of thousands per megaproject.
Caltrans indicates that any state costs attributable to this
bill would be minor and absorbable.