Existing law authorizes local agencies to use the design-build method of project delivery for specified projects, except for projects on the state highway system. Existing law defines local agency for purposes of these provisions as cities and counties, certain special districts relating to wastewater, solid waste, water recycling, and fire protection facilities, joint powers authorities formed to provide transit service, and specified types of local public entities responsible for the construction of transit projects. These provisions further define project specifically for each category of local agency. Existing law requires specified information submitted by a design-build entity, as defined, in the design-build procurement process to be certified under penalty of perjury.

This bill would specify that the definition of a local agency authorized to use the design-build method of project delivery includes the San Diego Association of Governments. The bill would define projects, as it pertains to the San Diego Association of Governments, to include development projects adjacent, or physically or functionally related, to transit facilities developed by the association. By expanding the design-build authorization of the San Diego Association of Governments to additional development projects, the bill would expand the scope of crime of perjury and would impose a state-mandated local program.

This bill also makes a technical correction to a cross-reference.

This bill would make legislative findings and declarations as to the necessity of a special statute for the San Diego Association of Governments.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law authorizes local agencies to use the design-build method of project delivery for specified projects, except for projects on the state highway system. Existing law defines local agency for purposes of these provisions as cities and counties, certain special districts relating to wastewater, solid waste, water recycling, and fire protection facilities, joint powers authorities formed to provide transit service, and specified types of local public entities responsible for the construction of transit projects. These provisions further define project specifically for each category of local agency. Existing law requires specified information submitted by a design-build entity, as defined, in the design-build procurement process to be certified under penalty of perjury.

This bill would specify that the definition of a local agency authorized to use the design-build method of project delivery includes the San Diego Association of Governments. The bill would define projects, as it pertains to the San Diego Association of Governments, to include development projects adjacent, or physically or functionally related, to transit facilities developed by the association. By expanding the design-build authorization of the San Diego Association of Governments to additional development projects, the bill would expand the scope of crime of perjury and would impose a state-mandated local program.

This bill also makes a technical correction to a cross-reference.

This bill would make legislative findings and declarations as to the necessity of a special statute for the San Diego Association of Governments.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law creates in the State Treasury the Indian Gaming Special Distribution Fund for the receipt and deposit of moneys received by the state from certain Indian tribes pursuant to the terms of gaming compacts entered into with the state. Existing law authorizes moneys in that fund to be used for specified purposes, including for grants for the support of state and local government agencies impacted by tribal government gaming. Existing law, until January 1, 2021, creates a County Tribal Casino Account in the treasury of each county that contains a tribal casino, which is funded according to specified formulas. Existing law requires the Controller to divide the County Tribal Casino Account for each county that has gaming devices that are subject to an obligation to make contributions to the Indian Gaming Special Distribution Fund into a separate account, known as an Individual Tribal Casino Account, for each tribe that operates a casino within the county. Each Individual Tribal Casino Account is required to be funded in proportion to the amount that each individual tribe paid in the prior fiscal year to the Indian Gaming Special Distribution Fund, and used for grants to local agencies impacted by tribal casinos, as specified. Existing law establishes an Indian Gaming Local Community Benefit Committee in each county in which gaming is conducted, specifies the composition and responsibilities of that committee, and requires that committee to make the selection of grants from the casino accounts. Among other things, the committee is responsible for establishing all application policies and procedures for grants from the casino accounts.

Existing law requires funds not allocated from a County Tribal Casino Account or an Individual Tribal Casino Account for the grants by the end of each fiscal year to revert back to the Indian Gaming Special Distribution Fund, except for moneys allocated for specified fiscal years, which are required to be eligible for expenditure through the calendar year.

This bill would delete the obsolete provisions relating to allocations made in those specified fiscal years.

SENATE COMMITTEE ON TRANSPORTATION AND HOUSING

Senator Jim Beall, Chair

2015 - 2016 Regular

Bill No: SB 374 Hearing Date: 9/11/2015

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:

1. A city, county, or city and county.

2. A special district that operates wastewater or related facilities.

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

3. Limits the types of projects each type of local agency can use DB to construct. Specifically, limits transit districts to transit capital projects that do not include state highway construction or local street and road projects.

4. 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:

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

2. 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 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 (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,

September 10, 2015.)

SUPPORT:

San Diego Association of Governments

OPPOSITION:

None received

-- END --

 UNFINISHED BUSINESS  

Bill No: SB 374

Author: Hueso (D), et al.

Amended: 9/4/15

Vote: 21

PRIOR VOTES NOT RELEVANT

SENATE TRANS. & HOUSING COMMITTEE: 9-0, 9/11/15 (pursuant to Senate Rule 29.10)

AYES: Beall, Cannella, Allen, Bates, Gaines, Leyva, McGuire, Roth, Wieckowski

NO VOTE RECORDED: Galgiani, Mendoza

ASSEMBLY FLOOR: 80-0, 9/10/15 - See last page for vote

SUBJECT: Local agency design-build projects: transit districts

SOURCE: Author

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.

Assembly Amendments remove the original contents of this bill related to the Indian Gaming Special Distribution Fund and replace it with the current language.

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:

1. A city, county, or city and county.

2. A special district that operates wastewater or related facilities.

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

3. Limits the types of projects each type of local agency can use DB to construct. Specifically, limits transit districts to transit capital projects that do not include state highway construction or local street and road projects.

4. 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 specifies that SANDAG is authorized to utilize DB for both of the following:

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

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

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 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.”

Comments

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 (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.

What is a “development project?” According to the author, 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.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Assembly Appropriations Committee, this bill has no fiscal effect.

SUPPORT: (Verified 9/10/15)

San Diego Association of Governments

OPPOSITION: (Verified 9/10/15)

Air Conditioning Trade Association

American Fire Sprinkler Association

Associated Builders and Contractors - San Diego Chapter

Plumbing-Heating-Cooling Contractors Association of California

Western Electrical Contractors Association

ASSEMBLY FLOOR: 80-0, 9/10/15

AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins

Prepared by: Eric Thronson / T. & H. / (916) 651-4121

9/11/15 15:06:33

**** END ****

SENATE THIRD READING

STR Bill Id:SB 374

Author:(Hueso)

As Amended Ver:September 4, 2015

Majority vote

SENATE VOTE: Vote not relevant

SUMMARY: Allows the San Diego Association of Governments (SANDAG) to use the design-build (DB) procurement process for specified development projects related to transit facilities developed or jointly developed by SANDAG. Specifically, this bill:

1. Allows, until January 1, 2025, SANDAG to use the DB procurement process for development projects in excess of $1 million that are adjacent, or physically or functionally related, to transit facilities developed or jointly developed by SANDAG.

2. Finds and declares that a special law is necessary and that a general law cannot be made applicable within the meaning of the California Constitution because of SANDAG's unique responsibilities as the consolidated transportation agency with capital project implementation responsibilities, as specified.

3. Makes technical and conforming changes.

EXISTING LAW:

1. Establishes, pursuant to the Local Agency Public Construction Act (LAPCA) within the Public Contract Code, the procedures local agencies must use when soliciting and evaluating bids or proposals for the construction of a public work or improvement, which generally require contracts to be awarded to the lowest responsible bidder after a competitive bidding process.

2. Allows, until January 1, 2025, local agencies to use DB for public works contracts in excess of $1 million using either a low bid or best value process.

3. Defines, for purposes of local agencies' authority to use DB, "local agency" to include any transit district, included transit district, municipal operator, included municipal operator, any consolidated agency, any joint powers authority formed to provide transit service, any county transportation commission, or any other local or regional agency responsible for the construction of transit projects, as specified.

4. Defines, for purposes of transit agencies' authority to use DB, "project" to mean a transit capital project that begins project solicitation on or after January 1, 2015. "Project" does not include state highway construction or local street and road projects.

FISCAL EFFECT: None

COMMENTS:

1. Bill Summary. This bill provides a narrow expansion of SANDAG's existing authority to use the DB procurement process for transit projects in excess of $1 million, to also allow SANDAG to use DB for development projects adjacent, or physically or functionally related, to transit facilities developed or jointly developed by SANDAG. This bill is sponsored by SANDAG.

2. 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 the sponsor, "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 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."

3. 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 the DB method, 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 method can be set by the public agency. The DB 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 the DB method of contracting for public works 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 (CDCR), and specified local agencies to use the design-build (DB) procurement process, and enacted more uniform provisions authorizing DGS, CDCR, and most local agencies to utilize the DB procurement process 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.

4. Arguments in Support. The San Diego Association of Governments states, "SANDAG has been studying the feasibility of acquiring a Downtown San Diego property to develop a stopover facility for short-term bus parking to accommodate the increase in Rapid transit routes that terminate or originate routes in Downtown San Diego. The proposed facility would provide an off-street location in Downtown San Diego where transit vehicles can be parked for short periods between runs."

5. Arguments in Opposition. None on file.

Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958 FN: 0002278

Date of Hearing: September 8, 2015

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Brian Maienschein, Chair

SBPCA Bill Id:SB 374

Author:(Hueso) – As Amended Ver:September 4, 2015

SENATE VOTE: Vote not relevant

SUBJECT: Design-build: San Diego Association of Governments.

SUMMARY: Allows the San Diego Association of Governments (SANDAG) to use the design-build (DB) procurement process for specified development projects related to transit facilities developed or jointly developed by SANDAG. Specifically, this bill:

1. Allows, until January 1, 2025, SANDAG to use the DB procurement process for development projects in excess of $1 million that are adjacent, or physically or functionally related, to transit facilities developed or jointly developed by SANDAG.

2. Finds and declares that a special law is necessary and that a general law cannot be made applicable within the meaning of the California Constitution because of SANDAG's unique responsibilities as the consolidated transportation agency with capital project implementation responsibilities, as specified.

3. Makes technical and conforming changes.

EXISTING LAW:

1. Establishes, pursuant to the Local Agency Public Construction Act (LAPCA) within the Public Contract Code, the procedures local agencies must use when soliciting and evaluating bids or proposals for the construction of a public work or improvement, which generally require contracts to be awarded to the lowest responsible bidder after a competitive bidding process.

2. Allows, until January 1, 2025, local agencies to use DB for public works contracts in excess of $1 million using either a low bid or best value process.

3. Defines, for purposes of local agencies' authority to use DB, "local agency" to include any transit district, included transit district, municipal operator, included municipal operator, any consolidated agency, any joint powers authority formed to provide transit service, any county transportation commission, or any other local or regional agency responsible for the construction of transit projects, as specified.

4. Defines, for purposes of transit agencies' authority to use DB, "project" to mean a transit capital project that begins project solicitation on or after January 1, 2015. "Project" does not include state highway construction or local street and road projects.

FISCAL EFFECT: None

COMMENTS:

1. Bill Summary. This bill provides a narrow expansion of SANDAG's existing authority to use the DB procurement process for transit projects in excess of $1 million, to also allow SANDAG to use DB for development projects adjacent, or physically or functionally related, to transit facilities developed or jointly developed by SANDAG. This bill is sponsored by SANDAG.

2. 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 the sponsor, "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 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."

3. 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 the DB method, 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 method can be set by the public agency. The DB 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 the DB method of contracting for public works 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 (CDCR), and specified local agencies to use the design-build (DB) procurement process, and enacted more uniform provisions authorizing DGS, CDCR, and most local agencies to utilize the DB procurement process 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.

4. Arguments in Support. The San Diego Association of Governments states, "SANDAG has been studying the feasibility of acquiring a Downtown San Diego property to develop a stopover facility for short-term bus parking to accommodate the increase in Rapid transit routes that terminate or originate routes in Downtown San Diego. The proposed facility would provide an off-street location in Downtown San Diego where transit vehicles can be parked for short periods between runs."

5. Arguments in Opposition. None on file.

REGISTERED SUPPORT / OPPOSITION:

Support

San Diego Association of Governments

Opposition

None on file

Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958

SENATE THIRD READING

STR Bill Id:SB 374

Author:(Hall)

As Introduced Ver:February 24, 2015

Majority vote

SENATE VOTE: 35-0

SUMMARY: Deletes obsolete allocation provisions relating to the Indian Gaming Special Distribution Fund (SDF) and makes other code maintenance changes.

EXISTING LAW:

1. The federal Indian Gaming Regulatory Act of 1988 provides for the negotiation and execution of compacts for the purpose of authorizing class III gaming on Indian lands within a state. Additionally, the California Constitution authorizes the Governor to negotiate and conclude compacts, subject to ratification by the Legislature.

2. Creates in the State Treasury, the SDF for the receipt and deposit of moneys received by the state from certain Indian tribes pursuant to the terms of gaming compacts entered into with the state.

3. Authorizes the Legislature to appropriate money from the SDF as follows: a) grants for programs designed to address gambling addiction; b) grants for the support of state and local government agencies impacted by tribal government gaming; c) compensation for regulatory costs incurred by the California Gambling Control Commission (CGCC) and the Department of Justice (DOJ) in connection with the implementation and administration of compacts; d) payment of shortfalls that may occur in the Indian Gaming Revenue Sharing Trust Fund (RSTF); e) disbursements for the purpose of implementing the terms of tribal labor relations ordinances promulgated in accordance with the terms of the 1999 compacts; and, f) any other purpose specified by law.

4. Provides that the "priority" for funding from the SDF is in the following descending order: a) to make payments of any shortfalls that may occur in the RSTF; b) grants for programs designed to address gambling addiction; c) compensation to the CGCC and DOJ for regulatory functions that directly relate to Indian gaming; and, d) grants for the support of local government agencies impacted by tribal gaming.

5. Creates, until January 1, 2021, a County Tribal Casino Account in the treasury of each county that contains a tribal casino, which is funded according to specified formulas.

6. Requires the State Controller to divide the County Tribal Casino Account for each county that has gaming devices that are subject to an obligation to make contributions to the SDF into a separate account, known as an Individual Tribal Casino Account, for each tribe that operates a casino within the county. Each Individual Tribal Casino Account is required to be funded in proportion to the amount that each individual tribe paid in the prior fiscal year to the SDF, and used for grants to local agencies impacted by tribal casinos, as specified.

7. Requires the State Auditor to conduct an audit every three years and report its findings to the Legislature regarding the allocation and use of SDF grant moneys.

This bill deletes obsolete allocation provisions from specified fiscal years relating to the SDF and takes other minor code maintenance changes.

FISCAL EFFECT: Unknown. This bill is keyed non-fiscal by the Legislative Counsel.

COMMENTS:

Purpose of this bill: According to the author's office, this bill is simply intended to make technical, clarifying and conforming changes to current statutes pertaining to the SDF. The author's office also notes that at some point this bill may be used as a vehicle to address issues brought forth by various entities at a March 24, 2015, informational hearing conducted by the Senate Governmental Organization Committee titled, "Confronting Shortfalls in Indian Gaming Funds – the Special Distribution Fund (SDF) and the Revenue Sharing Trust Fund (RSTF)."

During the informational hearing, the Legislative Analyst's Office (LAO) reported that the Legislature has ratified tribal-state gaming compacts with 73 of the State's 110 federally recognized tribes. Of these tribes, 58 currently operate 60 casinos. These compacts require that the tribes make payments to various state accounts under certain conditions. Specific payment requirements differ across tribes and depend on various factors, such as the number of slot machines operated and/or the average slot machine net win. Currently, 46 tribes make payments into the following three state accounts: 1) the RSTF receives payments from 37 tribes; 2) the SDF receives payments from 26 tribes; and, 3) the General Fund receives payments from 11 tribes.

The LAO indicated that "as a result of amendments to several tribal state compacts that were ratified beginning in 2007, the SDF has seen significant decline in its fund balances. This is because the amended compacts decreased the amount of revenue that certain tribes are required to pay into the SDF by requiring that these tribes instead make payments to the General Fund." Furthermore, the LAO stated that "the expenditures in excess of revenues were supported by using prior-year fund balances in the SDF and that the SDF fund balance is expected to be exhausted in the current year."

Prior legislation: AB 1916 (Hall), Chapter 600, Statutes of 2014. Created the "Tribal Nation Grant Fund" in the State Treasury, to be administered by the CGCC, for the receipt and deposit of moneys received by the state from Indian tribes, pursuant to the terms of tribal-state gaming compacts.

AB 1042 (Hall), Chapter 746, Statutes of 2013. Required the Department of Finance, in consultation with the CGCC, to calculate the total revenue in the SDF that will be available for the current budget year for local government agencies impacted by tribal gaming. In addition, appropriated $13 million from the SDF to the CGCC to provide grants to local agencies for the 2013-14 Fiscal Year.

AB 2515 (Hall), Chapter 704, Statutes of 2012. Among other things, revised the procedures governing the award of grants from the SDF to ensure that the funds are properly used to mitigate costs associated with tribal gaming and appropriated $9.1 million from the SDF for grants to mitigate the impacts of tribal gaming on local governments for the 2012-13 Fiscal Year.

AB 1417 (Hall), Chapter 736, Statutes of 2011. As introduced, this measure would have reorganized statutes pertaining to Indian gaming compacts primarily by moving them to a newly created Title 16.5 on Tribal Gaming in the Government Code. AB 1417 was subsequently gutted in this committee to become the vehicle for the distribution of $9.1 million from the SDF to the CGCC to provide grants to local agencies.

SB 856 (Budget and Fiscal Review), Chapter 719, Statutes of 2010. Among other things, appropriated $30 million from the SDF to restore funding deleted from the Budget Act of 2007 for grants to mitigate the impact of tribal gaming on local governments.

AB 158 (Torrico), Chapter 754, Statutes of 2008. Enacted several recommendations proposed by the California State Auditor relative to the allocation and uses of proceeds from the SDF.

SB 288 (Battin), Chapter 13, Statutes of 2006. Appropriated $20 million from the SDF for grants to local jurisdictions impacted by tribal gaming.

SB 621 (Battin), Chapter 858, Statutes of 2003. Among other things, established priorities and procedures for specified funding to local governments from the SDF for mitigating impacts from tribal casinos and appropriated $25 million from the SDF to mitigate the impact of tribal gaming on local governments

AB 673 (J. Horton), Chapter 210, Statutes of 2003. Among other things, specified that money in the SDF may be used to make payment of shortfalls that may occur in the RSTF and provided that payment for those shortfalls in the RSTF shall be the priority use of moneys in the SDF. Also, established a mechanism by which funds may be transferred from the SDF to the RSTF pursuant to specified provisions of the tribal-state compacts and appropriated the sum of $50.6 million for the purpose of making payments to eligible Indian tribes for the preceding fiscal year.

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531 FN: 0002039

Date of Hearing: July 15, 2015

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Adam Gray, Chair

SBPCA Bill Id:SB 374

Author:(Hall) – As Introduced Ver:February 24, 2015

SENATE VOTE: 35-0

SUBJECT: Tribal gaming: local agencies.

SUMMARY: Deletes obsolete allocation provisions relating to the Indian Gaming Special Distribution Fund (SDF) and makes other code maintenance changes. Specifically, this bill:

EXISTING LAW:

1) The federal Indian Gaming Regulatory Act of 1988 provides for the negotiation and execution of compacts for the purpose of authorizing class III gaming on Indian lands within a state. Additionally, the California Constitution authorizes the Governor to negotiate and conclude compacts, subject to ratification by the Legislature.

2) Creates in the State Treasury the SDF for the receipt and deposit of moneys received by the state from certain Indian tribes pursuant to the terms of gaming compacts entered into with the state.

3) Authorizes the Legislature to appropriate money from the SDF as follows: (a) grants for programs designed to address gambling addiction; (b) grants for the support of state and local government agencies impacted by tribal government gaming; (c) compensation for regulatory costs incurred by the California Gambling Control Commission (CGCC) and the Department of Justice (DOJ) in connection with the implementation and administration of compacts; (d) payment of shortfalls that may occur in the Indian Gaming Revenue Sharing Trust Fund (RSTF); (e) disbursements for the purpose of implementing the terms of tribal labor relations ordinances promulgated in accordance with the terms of the 1999 compacts; and, (f) any other purpose specified by law.

4) Provides that the “priority” for funding from the SDF is in the following descending order: (a) to make payments of any shortfalls that may occur in the RSTF; (b) grants for programs designed to address gambling addiction; (c) compensation to the CGCC and DOJ for regulatory functions that directly relate to Indian gaming; and, (d) grants for the support of local government agencies impacted by tribal gaming.

5) Creates, until January 1, 2021, a County Tribal Casino Account in the treasury of each county that contains a tribal casino, which is funded according to specified formulas.

6) Requires the State Controller to divide the County Tribal Casino Account for each county that has gaming devices that are subject to an obligation to make contributions to the SDF into a separate account, known as an Individual Tribal Casino Account, for each tribe that operates a casino within the county. Each Individual Tribal Casino Account is required to be funded in proportion to the amount that each individual tribe paid in the prior fiscal year to the SDF, and used for grants to local agencies impacted by tribal casinos, as specified.

7) Requires the State Auditor to conduct an audit every three years and report its findings to the Legislature regarding the allocation and use of SDF grant moneys.

This bill deletes obsolete allocation provisions from specified fiscal years relating to the SDF and takes other minor code maintenance changes.

FISCAL EFFECT: Unknown

COMMENTS:

Purpose of the bill: According to the author’s office, this bill is simply intended to make technical, clarifying and conforming changes to current statutes pertaining to the SDF. The author’s office also notes that at some point this bill may be used as a vehicle to address issues brought forth by various entities at a March 24, 2015 informational hearing conducted by the Senate Governmental Organization Committee titled, “Confronting Shortfalls in Indian Gaming Funds – the Special Distribution Fund (SDF) and the Revenue Sharing Trust Fund (RSTF).”

During the informational hearing, the Legislative Analyst’s Office (LAO) reported that the Legislature has ratified tribal-state gaming compacts with 73 of the State’s 110 federally recognized tribes. Of these tribes, 58 currently operate 60 casinos. These compacts require that the tribes make payments to various state accounts under certain conditions. Specific payment requirements differ across tribes and depend on various factors, such as the number of slot machines operated and/or the average slot machine net win. Currently, 46 tribes make payments into the following three state accounts: (1) the RSTF receives payments from 37 tribes; (2) the SDF receives payments from 26 tribes; and, (3) the General Fund receives payments from 11 tribes.

The LAO indicated that “as a result of amendments to several tribal state compacts that were ratified beginning in 2007, the SDF has seen significant decline in its fund balances. This is because the amended compacts decreased the amount of revenue that certain tribes are required to pay into the SDF by requiring that these tribes instead make payments to the General Fund.” Furthermore, the LAO stated that “the expenditures in excess of revenues were supported by using prior-year fund balances in the SDF and that the SDF fund balance is expected to be exhausted in the current year.”

Prior legislation: AB 1916 (Hall), Chapter 600, Statutes of 2014. Created the “Tribal Nation Grant Fund” in the State Treasury, to be administered by the CGCC, for the receipt and deposit of moneys received by the state from Indian tribes, pursuant to the terms of tribal-state gaming compacts.

AB 1042 (Hall), Chapter 746, Statutes of 2013. Required the Department of Finance, in consultation with the CGCC, to calculate the total revenue in the SDF that will be available for the current budget year for local government agencies impacted by tribal gaming. In addition, appropriated $13 million from the SDF to the CGCC to provide grants to local agencies for the 2013-14 fiscal year.

AB 2515 (Hall), Chapter 704, Statutes of 2012. Among other things, revised the procedures governing the award of grants from the SDF to ensure that the funds are properly used to mitigate costs associated with tribal gaming and appropriated $9.1 million from the SDF for grants to mitigate the impacts of tribal gaming on local governments for the 2012-13 fiscal year.

AB 1417 (Hall), Chapter 736, Statutes of 2011. As introduced, this measure would have reorganized statutes pertaining to Indian gaming compacts primarily by moving them to a newly created Title 16.5 on Tribal Gaming in the Government Code. AB 1417 was subsequently gutted in this committee to become the vehicle for the distribution of $9.1 million from the SDF to the CGCC to provide grants to local agencies.

SB 856 (Budget and Fiscal Review), Chapter 719, Statutes of 2010. Among other things, appropriated $30 million from the SDF to restore funding deleted from the Budget Act of 2007 for grants to mitigate the impact of tribal gaming on local governments.

AB 158 (Torrico), Chapter 754, Statutes of 2008. Enacted several recommendations proposed by the California State Auditor relative to the allocation and uses of proceeds from the SDF.

SB 288 (Battin), Chapter 13, Statutes of 2006. Appropriated $20 million from the SDF for grants to local jurisdictions impacted by tribal gaming.

SB 621 (Battin), Chapter 858, Statutes of 2003. Among other things, established priorities and procedures for specified funding to local governments from the SDF for mitigating impacts from tribal casinos and appropriated $25 million from the SDF to mitigate the impact of tribal gaming on local governments

AB 673 (J. Horton), Chapter 210, Statutes of 2003. Among other things, specified that money in the SDF may be used to make payment of shortfalls that may occur in the RSTF and provided that payment for those shortfalls in the RSTF shall be the priority use of moneys in the SDF. Also, established a mechanism by which funds may be transferred from the SDF to the RSTF pursuant to specified provisions of the tribal-state compacts and appropriated the sum of $50.6 million for the purpose of making payments to eligible Indian tribes for the preceding fiscal year.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531

 CONSENT  

Bill No: SB 374

Author: Hall (D)

Introduced: 2/24/15

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 7-0, 4/28/15

AYES: Hall, Block, Hernandez, Hill, Hueso, Lara, McGuire

NO VOTE RECORDED: Berryhill, Gaines, Galgiani, Vidak

SUBJECT: Tribal gaming: local agencies

SOURCE: Author

DIGEST: This bill deletes obsolete allocation provisions relating to the Indian Gaming Special Distribution Fund (SDF) and makes other code maintenance changes.

ANALYSIS:

Existing law:

1. The federal Indian Gaming Regulatory Act of 1988 provides for the negotiation and execution of compacts for the purpose of authorizing class III gaming on Indian lands within a state. Additionally, the California Constitution authorizes the Governor to negotiate and conclude compacts, subject to ratification by the Legislature.

2. Creates in the State Treasury the SDF for the receipt and deposit of moneys received by the state from certain Indian tribes pursuant to the terms of gaming compacts entered into with the state.

3. Authorizes the Legislature to appropriate money from the SDF as follows: (a) grants for programs designed to address gambling addiction; (b) grants for the support of state and local government agencies impacted by tribal government gaming; (c) compensation for regulatory costs incurred by the California Gambling Control Commission (CGCC) and the Department of Justice (DOJ) in connection with the implementation and administration of compacts; (d) payment of shortfalls that may occur in the Indian Gaming Revenue Sharing Trust Fund (RSTF); (e) disbursements for the purpose of implementing the terms of tribal labor relations ordinances promulgated in accordance with the terms of the 1999 compacts; and, (f) any other purpose specified by law.

4. Provides that the “priority” for funding from the SDF is in the following descending order: (a) to make payments of any shortfalls that may occur in the RSTF; (b) grants for programs designed to address gambling addiction; (c) compensation to the CGCC and DOJ for regulatory functions that directly relate to Indian gaming; and, (d) grants for the support of local government agencies impacted by tribal gaming.

5. Creates, until January 1, 2021, a County Tribal Casino Account in the treasury of each county that contains a tribal casino, which is funded according to specified formulas.

6. Requires the State Controller to divide the County Tribal Casino Account for each county that has gaming devices that are subject to an obligation to make contributions to the SDF into a separate account, known as an Individual Tribal Casino Account, for each tribe that operates a casino within the county. Each Individual Tribal Casino Account is required to be funded in proportion to the amount that each individual tribe paid in the prior fiscal year to the SDF, and used for grants to local agencies impacted by tribal casinos, as specified.
   
   

7. Requires the State Auditor to conduct an audit every three years and report its findings to the Legislature regarding the allocation and use of SDF grant moneys.

This bill deletes obsolete allocation provisions from specified fiscal years relating to the SDF and makes other minor code maintenance changes.

Background

Purpose of SB 374. According to the author’s office, this bill is simply intended to make technical, clarifying and conforming changes to current statutes pertaining to the SDF. The author’s office also notes that at some point this bill may be used as a vehicle to address issues brought forth by various entities at a March 24, 2015 informational hearing conducted by the Senate Governmental Organization Committee titled, “Confronting Shortfalls in Indian Gaming Funds – the Special Distribution Fund (SDF) and the Revenue Sharing Trust Fund (RSTF).”

During the informational hearing, the Legislative Analyst’s Office (LAO) reported that the Legislature has ratified tribal-state gaming compacts with 73 of the State’s 110 federally recognized tribes. Of these tribes, 58 currently operate 60 casinos. These compacts require that the tribes make payments to various state accounts under certain conditions. Specific payment requirements differ across tribes and depend on various factors, such as the number of slot machines operated and/or the average slot machine net win. Currently, 46 tribes make payments into the following three state accounts: (1) the RSTF receives payments from 37 tribes; (2) the SDF receives payments from 26 tribes; and, (3) the General Fund receives payments from 11 tribes.

The LAO indicated that “as a result of amendments to several tribal state compacts that were ratified beginning in 2007, the SDF has seen significant decline in its fund balances. This is because the amended compacts decreased the amount of revenue that certain tribes are required to pay into the SDF by requiring that these tribes instead make payments to the General Fund.” Furthermore, the LAO stated that “the expenditures in excess of revenues were supported by using prior-year fund balances in the SDF and that the SDF fund balance is expected to be exhausted in the current year.”

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 4/28/15)

None received

OPPOSITION: (Verified 4/28/15)

None received

Prepared by: Arthur Terzakis / G.O. / (916) 651-1530

5/1/15 14:36:29

**** END ****

 CONSENT  

Bill No: SB 374

Author: Hall (D)

Introduced: 2/24/15

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 7-0, 4/28/15

AYES: Hall, Block, Hernandez, Hill, Hueso, Lara, McGuire

NO VOTE RECORDED: Berryhill, Gaines, Galgiani, Vidak

SUBJECT: Tribal gaming: local agencies

SOURCE: Author

DIGEST: This bill deletes obsolete allocation provisions relating to the Indian Gaming Special Distribution Fund (SDF) and makes other code maintenance changes.

ANALYSIS:

Existing law:

1. The federal Indian Gaming Regulatory Act of 1988 provides for the negotiation and execution of compacts for the purpose of authorizing class III gaming on Indian lands within a state. Additionally, the California Constitution authorizes the Governor to negotiate and conclude compacts, subject to ratification by the Legislature.

2. Creates in the State Treasury the SDF for the receipt and deposit of moneys received by the state from certain Indian tribes pursuant to the terms of gaming compacts entered into with the state.

3. Authorizes the Legislature to appropriate money from the SDF as follows: (a) grants for programs designed to address gambling addiction; (b) grants for the support of state and local government agencies impacted by tribal government gaming; (c) compensation for regulatory costs incurred by the California Gambling Control Commission (CGCC) and the Department of Justice (DOJ) in connection with the implementation and administration of compacts; (d) payment of shortfalls that may occur in the Indian Gaming Revenue Sharing Trust Fund (RSTF); (e) disbursements for the purpose of implementing the terms of tribal labor relations ordinances promulgated in accordance with the terms of the 1999 compacts; and, (f) any other purpose specified by law.

4. Provides that the “priority” for funding from the SDF is in the following descending order: (a) to make payments of any shortfalls that may occur in the RSTF; (b) grants for programs designed to address gambling addiction; (c) compensation to the CGCC and DOJ for regulatory functions that directly relate to Indian gaming; and, (d) grants for the support of local government agencies impacted by tribal gaming.

5. Creates, until January 1, 2021, a County Tribal Casino Account in the treasury of each county that contains a tribal casino, which is funded according to specified formulas.

6. Requires the State Controller to divide the County Tribal Casino Account for each county that has gaming devices that are subject to an obligation to make contributions to the SDF into a separate account, known as an Individual Tribal Casino Account, for each tribe that operates a casino within the county. Each Individual Tribal Casino Account is required to be funded in proportion to the amount that each individual tribe paid in the prior fiscal year to the SDF, and used for grants to local agencies impacted by tribal casinos, as specified.
   
   

7. Requires the State Auditor to conduct an audit every three years and report its findings to the Legislature regarding the allocation and use of SDF grant moneys.

This bill deletes obsolete allocation provisions from specified fiscal years relating to the SDF and makes other minor code maintenance changes.

Background

Purpose of SB 374. According to the author’s office, this bill is simply intended to make technical, clarifying and conforming changes to current statutes pertaining to the SDF. The author’s office also notes that at some point this bill may be used as a vehicle to address issues brought forth by various entities at a March 24, 2015 informational hearing conducted by the Senate Governmental Organization Committee titled, “Confronting Shortfalls in Indian Gaming Funds – the Special Distribution Fund (SDF) and the Revenue Sharing Trust Fund (RSTF).”

During the informational hearing, the Legislative Analyst’s Office (LAO) reported that the Legislature has ratified tribal-state gaming compacts with 73 of the State’s 110 federally recognized tribes. Of these tribes, 58 currently operate 60 casinos. These compacts require that the tribes make payments to various state accounts under certain conditions. Specific payment requirements differ across tribes and depend on various factors, such as the number of slot machines operated and/or the average slot machine net win. Currently, 46 tribes make payments into the following three state accounts: (1) the RSTF receives payments from 37 tribes; (2) the SDF receives payments from 26 tribes; and, (3) the General Fund receives payments from 11 tribes.

The LAO indicated that “as a result of amendments to several tribal state compacts that were ratified beginning in 2007, the SDF has seen significant decline in its fund balances. This is because the amended compacts decreased the amount of revenue that certain tribes are required to pay into the SDF by requiring that these tribes instead make payments to the General Fund.” Furthermore, the LAO stated that “the expenditures in excess of revenues were supported by using prior-year fund balances in the SDF and that the SDF fund balance is expected to be exhausted in the current year.”

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT:

(Verified 4/28/15)

None received

OPPOSITION: (Verified 4/28/15)

None received

Prepared by: Arthur Terzakis / G.O. / (916) 651-1530

4/29/15 16:13:06

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Isadore Hall, III

Chair

2015 - 2016 Regular

Bill No: SB 374 Hearing Date: 4/28/2015

SUBJECT: Tribal gaming: local agencies

DIGEST: This bill deletes obsolete allocation provisions relating to the Indian Gaming Special Distribution Fund (SDF) and makes other code maintenance changes.

ANALYSIS:

Existing law:

1. The federal Indian Gaming Regulatory Act of 1988 provides for the negotiation and execution of compacts for the purpose of authorizing class III gaming on Indian lands within a state. Additionally, the California Constitution authorizes the Governor to negotiate and conclude compacts, subject to ratification by the Legislature.

2. Creates in the State Treasury the SDF for the receipt and deposit of moneys received by the state from certain Indian tribes pursuant to the terms of gaming compacts entered into with the state.

3. Authorizes the Legislature to appropriate money from the SDF as follows: (a) grants for programs designed to address gambling addiction; (b) grants for the support of state and local government agencies impacted by tribal government gaming; (c) compensation for regulatory costs incurred by the California Gambling Control Commission (CGCC) and the Department of Justice (DOJ) in connection with the implementation and administration of compacts; (d) payment of shortfalls that may occur in the Indian Gaming Revenue Sharing Trust Fund (RSTF); (e) disbursements for the purpose of implementing the terms of tribal labor relations ordinances promulgated in accordance with the terms of the 1999 compacts; and, (f) any other purpose specified by law.

4. Provides that the “priority” for funding from the SDF is in the following descending order: (a) to make payments of any shortfalls that may occur in the RSTF; (b) grants for programs designed to address gambling addiction; (c) compensation to the CGCC and DOJ for regulatory functions that directly relate to Indian gaming; and, (d) grants for the support of local government agencies impacted by tribal gaming.

5. Creates, until January 1, 2021, a County Tribal Casino Account in the treasury of each county that contains a tribal casino, which is funded according to specified formulas.

6. Requires the State Controller to divide the County Tribal Casino Account for each county that has gaming devices that are subject to an obligation to make contributions to the SDF into a separate account, known as an Individual Tribal Casino Account, for each tribe that operates a casino within the county. Each Individual Tribal Casino Account is required to be funded in proportion to the amount that each individual tribe paid in the prior fiscal year to the SDF, and used for grants to local agencies impacted by tribal casinos, as specified.

7. Establishes an Indian Gaming Local Community Benefit Committee in each county in which gaming is conducted, specifies the composition and responsibilities of that committee, and requires that committee to make the selection of grants from the casino accounts. Among other things, the committee is responsible for establishing all application policies and procedures for grants from the casino accounts.
   
   

8. Requires the State Auditor to conduct an audit every three years and report its findings to the Legislature regarding the allocation and use of SDF grant monies.

This bill deletes obsolete allocation provisions from specified fiscal years relating to the SDF and makes other minor code maintenance changes.

Background

Purpose of SB 374: According to the author’s office, this measure is simply intended to make technical, clarifying and conforming changes to current statutes pertaining to the SDF. The author’s office also notes that at some point this measure may be used as a vehicle to address issues brought forth by various entities at a March 24, 2015 informational hearing conducted by the Senate Governmental Organization Committee titled, “Confronting Shortfalls in Indian Gaming Funds – the Special Distribution Fund (SDF) and the Revenue Sharing Trust Fund (RSTF).”

During the informational hearing, the Legislative Analyst’s Office (LAO) reported that the Legislature has ratified tribal-state gaming compacts with 73 of the State’s 110 federally recognized tribes. Of these tribes, 58 currently operate 60 casinos. These compacts require that the tribes make payments to various state accounts under certain conditions. Specific payment requirements differ across tribes and depend on various factors, such as the number of slot machines operated and/or the average slot machine net win. Currently 46 tribes make payments into the following three state accounts: (1) the RSTF receives payments from 37 tribes; (2) the SDF receives payments from 26 tribes; and, (3) the General Fund receives payments from 11 tribes.

The LAO indicated that “as a result of amendments to several tribal state compacts that were ratified beginning in 2007, the SDF has seen significant decline in its fund balances. This is because the amended compacts decreased the amount of revenue that certain tribes are required to pay into the SDF by requiring that these tribes instead make payments to the General Fund.” Furthermore, the LAO stated that “the expenditures in excess of revenues were supported by using prior-year fund balances in the SDF and that the SDF fund balance is expected to be exhausted in the current year.”

Prior/Related Legislation

AB 1916 (Hall), Chapter 600, Statutes of 2014. Created the “Tribal Nation Grant Fund” in the State Treasury, to be administered by the CGCC, for the receipt and deposit of moneys received by the state from Indian tribes, pursuant to the terms of tribal-state gaming compacts.

AB 1042 (Hall), Chapter 746, Statutes of 2013. Required the Department of Finance, in consultation with the CGCC, to calculate the total revenue in the SDF that will be available for the current budget year for local government agencies impacted by tribal gaming. In addition, appropriated $13 million from the SDF to the CGCC to provide grants to local agencies for the 2013-14 fiscal year.

AB 2515 (Hall), Chapter 704, Statutes of 2012. Among other things, revised the procedures governing the award of grants from the SDF to ensure that the funds are properly used to mitigate costs associated with tribal gaming and appropriated $9.1 million from the SDF for grants to mitigate the impacts of tribal gaming on local governments for the 2012-13 fiscal year.

AB 1417 (Hall), Chapter 736, Statutes of 2011. As introduced, this measure would have reorganized statutes pertaining to Indian gaming compacts primarily by moving them to a newly created Title 16.5 on Tribal Gaming in the Government Code. AB 1417 was subsequently gutted in this committee to become the vehicle for the distribution of $9.1 million from the SDF to the CGCC to provide grants to local agencies.

SB 856 (Budget and Fiscal Review), Chapter 719, Statutes of 2010. Among other things, appropriated $30 million from the SDF to restore funding deleted from the Budget Act of 2007 for grants to mitigate the impact of tribal gaming on local governments.

AB 158 (Torrico), Chapter 754, Statutes of 2008. Enacted several recommendations proposed by the California State Auditor relative to the allocation and uses of proceeds from the SDF.

SB 288 (Battin), Chapter 13, Statutes of 2006. Appropriated $20 million from the SDF for grants to local jurisdictions impacted by tribal gaming.

SB 621 (Battin), Chapter 858, Statutes of 2003. Among other things, established priorities and procedures for specified funding to local governments from the SDF for mitigating impacts from tribal casinos and appropriated $25 million from the SDF to mitigate the impact of tribal gaming on local governments

AB 673 (J. Horton), Chapter 210, Statutes of 2003. Among other things, specified that money in the SDF may be used to make payment of shortfalls that may occur in the RSTF and provided that payment for those shortfalls in the RSTF shall be the priority use of moneys in the SDF. Also, established a mechanism by which funds may be transferred from the SDF to the RSTF pursuant to specified provisions of the tribal-state compacts and appropriated the sum of $50.6 million for the purpose of making payments to eligible Indian tribes for the preceding fiscal year.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT:

None received

OPPOSITION:

None received