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 ----------------------------------------------------------------- |Author: |Hueso | |----------+------------------------------------------------------| |Version: |9/4/2015 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Eric Thronson | |: | | ----------------------------------------------------------------- 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 --