BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          SB 374            Hearing Date:     9/11/2015
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          |Author:   |Hueso                                                 |
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          |Version:  |9/4/2015                                              |
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          |Urgency:  |No                     |Fiscal:      |Yes             |
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          |Consultant|Eric Thronson                                         |
          |:         |                                                      |
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          SUBJECT:  Local agency design-build projects:  transit districts


            DIGEST:  This bill specifies that the San Diego Association of  
          Governments (SANDAG) is authorized to utilize design-build for  
          transit capital projects and development projects adjacent or  
          related to transit facilities.

          ANALYSIS:
          
          Existing law:
          
          1)Enables certain local agencies to utilize an alternative  
            procurement method called design-build (DB) for public works  
            projects.

          2)Limits the local agencies authorized to use DB to the  
            following:

             a)   A city, county, or city and county.

             b)   A special district that operates wastewater or related  
               facilities.

             c)   Any transit district, operator, or local or regional  
               agency responsible for the construction of transit  
               projects.

          1)Limits the types of projects each type of local agency can use  
            DB to construct.  Specifically, limits transit districts to  







          SB 374 (Hueso)                                      Page 2 of ?
          
          
            transit capital projects that do not include state highway  
            construction or local street and road projects.

          2)Creates SANDAG as a consolidated agency and makes it, among  
            other things, responsible for all public transit and other  
            transportation planning and programming responsibilities in  
            San Diego County.



          This bill:

          1)Specifies that SANDAG is authorized to utilize DB for both of  
            the following:

             a)   A transit capital project that does not include state  
               highway construction or local street and road projects.

             b)   Development projects adjacent, or physically or  
               functionally related, to transit facilities developed or  
               jointly developed by SANDAG.

          COMMENTS:

          1)Background.  SANDAG is in the planning process for a project  
            to develop a bus stopover facility in downtown San Diego, with  
            multiuse options.  At present, buses park at temporary  
            curbside locations around downtown.  The stopover is needed to  
            maintain bus schedules and to provide a location where transit  
            operators can rest at the start and end of routes.  The  
            stopover will not be a transit station.  The stopover also  
            would provide restroom facilities for transit drivers,  
            allowing for the removal of existing portable restrooms from  
            city sidewalks.  SANDAG will oversee the entitlement, design,  
            and construction of the stopover, which will be operated by  
            the San Diego Metropolitan Transit System.  Roughly $16  
            million has been allocated to the project from TransNet, the  
            voter-approved half-cent sales tax for transportation projects  
            administered by SANDAG.

            According to SANDAG, "The potential multiuse aspect of the  
            facility is based on the goals of SANDAG owning the facility  
            that houses its office space at a lower cost than leasing as  
            well as providing an opportunity for multiuse development on a  
            block of land in a vibrant area of downtown.  In conjunction  








          SB 374 (Hueso)                                      Page 3 of ?
          
          
            with the stopover, the facility also could provide future  
            office space for SANDAG and other tenants as part of a  
            mixed-use development project.  This approach would enhance  
            integration into the character of the neighboring community  
            and aligns with the City of San Diego Downtown Community Plan  
            Ordinance."

          2)Design-build contracting.  State law generally requires public  
            agencies to invite bids for construction projects and then  
            award contracts to the lowest responsible bidder.  This  
            design-bid-build method is the traditional approach to public  
            works construction.  

            Under DB, a single contract covers the design and construction  
            of a project with a single company or consortium that acts as  
            both the project designer and builder.  The DB entity arranges  
            all architectural, engineering, and construction services, and  
            is responsible for delivering the project at a guaranteed  
            price and schedule based upon performance criteria set by the  
            public agency.  The DB procurement method can be faster and,  
            therefore, cheaper than the design-bid-build method, but it  
            requires a higher level of management sophistication since  
            design and construction may occur simultaneously.

            Advocates for DB contend that project schedule savings can be  
            realized because only a single request for proposals is needed  
            to select the project's designer and builder.  The more  
            traditional design-bid-build project approach requires the  
            separate selection of the design consultant or contractor,  
            completion of design, and then advertising for bids and  
            selection of the construction contractor.  Proponents add that  
            DB allows the overlap of design and construction activities,  
            resulting in additional time savings and lower project costs.   
            By avoiding the delays and change orders that result from the  
            traditional design-bid-build method of contracting, proponents  
            argue that DB can deliver public works faster and cheaper.

            Detractors of DB contend that it eliminates competitive  
            bidding, allows the private contractor or consortium to  
            inspect and sign off on their own work, and increases project  
            delivery costs.

            SB 785 (Wolk, Chapter 931, Statutes of 2014) repealed existing  
            law authorizing the Department of General Services (DGS), the  
            California Department of Corrections and Rehabilitation  








          SB 374 (Hueso)                                      Page 4 of ?
          
          
            (CDCR), and specified local agencies to use the DB procurement  
            process, and enacted more uniform provisions authorizing DGS,  
            CDCR, and most local agencies to utilize DB for specified  
            public works projects.  SANDAG has the authority under these  
            statutes to use DB for transit capital projects, but not for  
            the type of mixed-use development envisioned for its bus  
            stopover facility.

          3)What is a "development project?"  According to the sponsor,  
            this bill is intended to authorize SANDAG to build a specific  
            project.  It authorizes, however, SANDAG to build any  
            "development projects" adjacent or related to a transit  
            facility without any more specificity as to what type of  
            project that might include.  There is no clear definition of a  
            development project, and therefore it could mean any project  
            undertaken for the purposes of development.  For example, this  
            bill, as written, authorizes SANDAG to enter into a DB  
            contract to construct a housing project, an arena, or even an  
            airport as long as it is located adjacent to a transit  
            facility.  Existing law does not permit SANDAG to build an  
            arena, but the ambiguity of this language raises questions  
            about what might become available to SANDAG or other entities  
            seeking DB authority through this section of law.

          4)Concurrence hearing.  When this bill passed off the Senate  
            Floor in May, it related to the Indian Gaming Special  
            Distribution Fund.  The bill was amended on the Assembly Floor  
            to its current form.  Because of these amendments, the Senate  
            Rules Committee referred this bill back to this committee for  
            a hearing under Senate Rule 29.10(d).   At today's hearing,  
            the committee may not amend the bill further and may only,  
            with a majority vote, (1) hold the bill or (2) return the bill  
            as approved by the committee to the Senate Floor.

          Assembly Votes:
               
            Floor:    80-0
            L Gov:      9-0
          
          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  Yes


            POSITIONS:  (Communicated to the committee before noon on  
          Thursday,








          SB 374 (Hueso)                                      Page 5 of ?
          
          
                          September 10, 2015.)
          
            SUPPORT:  

          San Diego Association of Governments

          OPPOSITION:

          None received

                                      -- END --