Senate Standing Committee on Governance and Finance

The Senate Committee on Governance and Finance will come to order. Welcome everybody. Good morning. The Senate continues to welcome the public in person and via the teleconference services for individuals wishing to provide public comment. Today's participant number is 877-226-8163 and the access code is 161-8051. We are holding our Committee hearings here in the old street buildings and I want to ask all of the Members of the Committee to be present in room 2200 so we can establish our quorum and begin our hearing. We're going to start as a Subcommitee, so we'll wait on taking up the proposed consent agenda items and voting on items. But our first author is here. So I'd like to welcome Assemblymember Patterson, who's number one on the agenda, and that is AB 314. Yes, sir.

Well, thank you for allowing me to present AB 314. This extends the sunset for five years. On a sales and use tax exemption that allows commercial trucks and trailers to be purchased from California dealers tax free without a lot of additional burdensome requirements, and also brings parity to the law by simply clarifying that used trailers also qualify for this provision. In addition to remanufactured when I brought the original Bill, AB 321 before this Committee in 2019 for a commercial truck purchased in California to qualify as interstate commerce for tax purposes, it had to meet two qualifications. It must. Be out of the state more than 51% of the time, and the vehicle must make its initial trip where they load into the state, even if it was purchased in California. Mandating this unnecessary inbound trip requirement increased traffic, pollution, cost wear and tear on the roads, et cetera. So we extend the sunset ensures that both now commercial trucks and trailers will continue to be exempt from that inbound trip requirement. Chris Shimoda with the California Trucking Association. Is here to testify in support if that is deemed necessary.

Mr. Shimodo, welcome.

Thank you, Madam Chair and Committee Members. Chris Shamoto with the California Trucking Association in strong support of the Bill. Equipment purchased for use in interstate commerce has long been exempt from sales and use tax, but required that the equipment first be used out of state. As mentioned, Assembly Member Patterson's prior Bill on this issue, AB 321 repealed this first use requirement, which has reduced out of state shipments by truck dealers in the associated fuel, greenhouse gases and road wear created by those shipments. This provision sunsets in 2024. The Legislative Analyst was tasked with assessing the provision's impact and found that it cannot quantify any fiscal impact from AB 321, and if the sunset were to lapse, no additional tax revenue would accrue to the state or local governments as out of state shipments would simply continue. This Bill, AB 314 extends the sunset provision to 2029 and would add used trailers to this section. As new trailers are already exempt from the first use requirement. This will benefit air quality and congestion by reducing unnecessary truck trips by dealers and keep California's truck dealers competitive in an increasingly difficult operating environment. We thank the Committee for the Time and respectfully ask for an aye vote. Thank you.

Thank you very much. Is there anybody else in room 2200 that would like to speak in support of this Bill? Anybody who wishes to speak in support? Is there anyone here that would like to speak in opposition? Seeing no movement in room 2200, check in with a moderator. Welcome today to the Senate Committee. Moderator, if you could queue up Members of the public that would like to speak either in support or in opposition.

Thank you, Madam Chair, and if you wish to speak in support or opposition, please press one, then zero at this time. And Madam Chair, we have no one queuing up to speak at this time.

Thank you very much. I'll bring the Bill back to the Committee. Are there any questions, comments or concerns? There are none. You may conclude.

I appreciate that.

That's a good sign. By the way, we don't have a quorum.

Yes. And my staff had conversations with other Members and I think this has strong support bipartisan for obvious reasons. It's a good Bill. We appreciate the Trucking Association for helping us put it together. And also a large dealer in Fresno operated by the Howard family came to me with the problem and helped us navigate through in 2019. So we're grateful for that support and thank you.

Thank you very much. When we get a quorum, we'll take this right up. I probably should have announced at the beginning that we have 11 bills on today, or actually 1011 bills on today's agenda and four are proposed for consent. So, item number two AB 511 by Senator Assemblymember Dixon. Item number four AB 559 by assemblymember. Berner. Item number six AB 759 by assemblymember. Grayson. And item number 12, AB 1753 by the local government Committee.

So those will be on consent and we won't have any testimony. So if you're calling in regards to that, you can send in information. We're going to take a brief break for a secondary. Neglected to say in addition that item number five on the agenda, AB 592 by Assemblymember Wilson, has been put over by the Committee to next week's hearing on June 14. So next we're going to move on file item number two is part of the consent agenda item.

So we're going to move on to file item number three AB 557 by Assembly Member Hart. Welcome to the Committee.

Chair and Senators. I'm pleased to present AB 557, a measure to continue giving local governments the flexibility to teleconference during the State of emergencies that are declared by the Governor. The COVID-19 pandemic and recent storms have underscored the ongoing need to provide local agencies with the ability to meet remotely. This Bill will simply remove the sunset on existing law to give local governments the option to teleconference during Governor declared emergencies.

AB 557 will ensure our locally elected bodies can do the essential work they're elected to do without jeopardizing their health and safety. I'm aware of the concerns raised by the opposition and some Members of this Committee. I appreciate the feedback on the language in this Bill. I'm committed to amending the Bill in the next Committee to clarify that in order for a local government to continue to meet remotely, there must be requirements for social distancing during an active State of emergency.

Testifying in support of the Bill are Ron Duncan, General manager of the So Cal water district, and Marcus Detwiler, representing California special districts Association.

Welcome.

Thank you for that Assembly Member Hart. Good morning, Madam Chair. Members. My name is Marcus Detwiler, a proud sponsor of this measure with the California Special Districts Association. I'm also joined by my fellow sponsors. The California State Association of Counties, the League of California Cities, and the California School Boards Association.

Outside of the amendment that you heard Assemblymember Hart committing to taking today, this Bill is a modest Brown Act Bill that only does two things. Number one, this Brown Act Bill removes the January 2024 sunset that was placed.

On the provisions added to the Brown Act by AB 361, a Bill from a few years ago by Assemblymember Robert reevas. This removal of this necessary the removal of this sunset is necessary in order to permit local agencies to continue to avail themselves of the emergency remote meeting procedures that were put into place by AB 361. The second and only other thing that.

This Bill does is modify the duration of the AB 361 renewal resolutions that. Were part of the procedural requirements of AB 361. It changes that time frame from 30 days to 45 days. The reason for this change is to accommodate those local agencies with regular fixed meeting schedules that, for example, were on the second Tuesday or the third Thursday of a month. Normally, 30 days is enough to accommodate.

These sorts of schedules, but in some instances, during the regular calendar year, 30 days is just short of that time frame. And so this change to 45 days will accommodate these agencies and avoid the. Situations that have arisen where we've had local agencies gaveling in merely to pass a resolution and then gavel out with this.

We believe that AB 557 is a narrowly tailored measure, and I respectfully ask for your aye vote. Thank you.

Thank you.

We are the example. Good morning. Ron Duncan SoCal Creek Water District, serving about 50,000 residents in Santa Cruz County. We are the why or your poster child for this Bill. AB 361 already has helped our agency and community, and AB 557 will allow this good policy to continue. Our March 21 board meet may not have happened without AB 361, and certainly public participation would have been highly compromised. Our area was hit this year with storms, and previous to that, fires and droughts. This whiplash climate is expected to intensify over the years. This year, areas that we serve, City of Capitola, were engulfed in waves and the whole portions of the city were closed down for months at a time. The wharf was cut in half, another wharf was completely demolished. Landslides and road closures were common, and one road in dramatic fashion was washed out, stranding 50 households with no egress or water. The Governor declared a State of emergency for our county. About a week before we posted the agenda for our March 21 board meeting, we saw the forecast of significant storms arriving in our area, with the storms hitting hardest during the night of the meeting. We are worried about board Members, staff and public being able to attend the meeting and agenda items needed to be approved by the board in a timely manner. Thankfully, we were able to hold the meeting remotely under the provisions of 361, which AB 557 will continue. Also, I'd like to just say that a couple of our meetings we had to adjust due to the 30 day requirements. So the 45 day modification is also an excellent addition. Thank you for your hard work during these times.

Thank you very much. Is there anyone else in room 2200 that would like to testify in support of the Bill?

Good morning, Madam Chair and Members. Dorothy Johnson. On behalf of the Association of California School Administrators Pleased to be in support.

Good morning. Johnnie Pina with the League of California Cities and on behalf of the California State Association of Counties, proud co sponsors of the Bill and in strong support. Thank you.

Good morning, Madam Chair and Members. Kyra Ross, on behalf of the Marin County Council of Mayors and council Members in support.

Jeff Neal. On behalf of the County of San Diego in support.

Ethan Nagler on behalf of the California Association of Recreation and Park Districts, the City Clerks Association of California and the cities of Belmont, Mountain View, Rancho Cucamonga, Carlsbad, Santa Rosa and Redwood City in support thank you.

Good morning. Carlos Michelle, with California School Board Association, a co sponsor on the Bill, in strong support.

Good morning. Jean Hurst. Here today on behalf of the urban counties of California and the Boards of Supervisors of the counties of Santa Cruz and Santa Barbara. In support.

Good morning. Kim Rothschild, on behalf of the California Association of Public Authorities, in support of the Bill.

Yarelie Magallon on behalf of San Mateo County and California Travel Association in support. Thank you.

Good morning. Steve Wallauch on behalf of the Nava Valley Transportation Authority. In support.

Good morning. Brian Ricks with the Los Angeles Unified School District in support.

Thank you. Is there anyone else in support? Seeing none, we'll move on to opposition in room 2200. Is there anyone in opposition? Welcome.

Thank you. Chair and Members. I'm Laurel Brodzinsky. I'm the Legislative Director for California Common Cause. Respectfully in opposition at this time. Generally, Common Cause believes that the state's current robust open meeting laws and policies which protect face to face access for the public and press to officials are really foundational for a healthy democracy. But we do recognize that in extreme circumstances, like a true emergency, which would endanger the health and safety of the public or the officials in meeting in person, there is a place to successfully utilize remote meetings. But unfortunately, AB 557, as currently drafted, would permanently enshrine encode the ability for local agencies to hold teleconference meetings without abiding by the long standing transparency protections of the Brown Act under certain circumstances related to state of emergencies or social distancing which extends a scheme created in law only a couple of years ago as part of the rapid response to COVID-19 to keep government functioning and the Executive Order, as well as AB 361, which precedes this Bill, were really created with COVID in mind. And so the reference of recommending social distancing measures is really with that frame of reference. While under AB 557, the first teleconference meeting held under this scheme does have to be held during a specified kind of emergency. The jurisdiction can continue to meet remotely, not subject to the transparency safeguards of the Brown Act, even after the State of emergency is no longer active, if the local jurisdiction is recommending social distancing measures, and in common causes research, we were not able to find either a definition of social distancing in code or any regulations by a state agency as to when and why it would be appropriate for a local jurisdiction to recommend or impose social distancing measures. So while this did all make sense to us when we were thinking about COVID-19 as we're putting this into law permanently, there was really no guardrails as to what that could mean in the future. That said, in the past few days we have had constructive conversations with the author's office and really appreciate the author's commitment today to taking a look at that language and look forward to seeing those amendments. But today we do have to remain opposed to the Bill in print and urge a no vote.

Thank you very much for your testimony. Is there anyone else that would like to speak in opposition? Seeing none, if I could take a real quick break, it appears that we have a quorum, so let's call the roll.

Senators. Caballero. Here. Caballero, Present. Seyarto? Here. Seyarto. President. Blakespear? Here. Blakespear, President. Dahle Durazo. Durazo, Present. Glazer? Glazer? Present. Skinner. Wiener? You have a quorum.

Quorum is present. That's a good thing. So we're going to move on to the teleconference line and see if there's anybody queued up to testify here in the Committee today.

And if you wish to speak on this item, please press one, then zero. At this time, Madam Chair, we have four in queue at the moment. We'll start with line 10. Please go ahead.

Good morning. IsabelLA Arguedo with the Health Officers Association of California in support. Thanks.

Line number 13, please go ahead.

Good morning. Sylvia Solis Shaw here on behalf of the City of Santa Monica and the City of Goleta in support. Thank you.

Line 12, please go ahead.

Thank you. Madam Chair. Excuse me. Matt Robinson with Shaw Yoder Antwih Schmelzer & Lange. On behalf of the California Transit Association, the San Mateo city county Association of governments, Caltrains, the San Mateo county transit district, and the Monterey Salinas transit district, all in support.

Thank you very much.

Line 14, please go ahead.

Good morning, chair Members. Priscilla Quiroz on behalf of Stop Waste in support. Thank you.

Line 11, please go ahead.

Thank you. Tyler Munzing on behalf of the American Council of Engineering Companies, in support. Thank you.

Line number nine, please go ahead.

Good morning, chair Members Richard Filgas on behalf of the Association of California Water Agencies in support.

And Madam Chair, we have no one else in queue wishing to speak on this item.

Very good. We're going to bring this item to Committee. Are there comments, questions or concerns? Senator Seyarto.

Thank you for your Bill and ordinarily I'm very wary about infringing on that face to face meeting contact and the Brown Act. However, we've seen some activity in the last couple of years that has taught us sometimes we need to be a little bit of flexible, have some flexibility in what we're doing in order to conduct business that's necessary. And the opponent points out that we don't know what the social distancing requirement really is going through the list of social distancing issues. It's a pandemic that's all the social distancing would probably be able to be applied to. And if there's a pandemic and it's been considered declared an emergency by the Governor, I think that covers that. I don't see it expanding because I think of all the other wildfire, all the other stuff that creates states of emergencies, flooding and things like that, those don't have social distancing things to them. So I don't see how that would necessarily infringe on the Brown Act in a case of a stated declared national I'm not national, but declared State of emergency. So we're going to support your Bill today. I think hopefully this will put to rest because we've seen a few of these future attempts at addressing this without going too far. I think that's what this Bill does and I appreciate your work on it. Thank you.

Senator Durazo.

Thank you. Thank you. Just a couple of questions, and I apologize if you included this, I'm sure, in your opening, but going to the issue of the social distancing, that's a much, much broader description of a circumstance of a situation than an emergency. And so can you explain why you think it needs so broad? I do think that social distancing, who knows what that could be like in the future? And it could be taken very loosely by governments that want to take advantage of this as an opportunity to not follow the Brown Act. So I'm very concerned. It's one thing to do it temporarily, it's one thing to do it under emergencies, but it's another thing to broaden it so much that I think we do jeopardize the purpose of the Brown Act. So you can do that.

Thank you for the question. And I appreciate the critique that Common Cause offered to get us to clarify that the Bill will only trigger social distancing remote testimony when there is an active State of emergency declared by the Governor. And I think that will solve the problem. And I'm committed to adding those amendments before the next Senate Committee.

Senator Glazer.

That's left me a little bit confused. So did the provisions of this Bill not apply in the case of an emergency unless there's a social distancing requirement? Is that the amendment?

No, the trigger is the declared State of emergency, and then the social distancing would be a subset of that. If there were declared State of emergency and social distancing are required, then both would be available as a reason, but only when there's an active declared State of emergency.

So it sounds like you've limited the Bill then.

Yes.

So if we have an earthquake and things are not the way we'd like them to be, and an entity wants to have a meeting has nothing to do with the pandemic, is your Bill going to provide that flexibility?

Yes, it will, because it'll be under a declared State of emergency by the Governor.

Okay, so again, social distancing then, isn't a limitation on the declared State of emergency provisions of your Bill? That's what's again confusing me.

Well, we'll have the language precisely nailed down for the next Committee hearing, but I'm committed to solving the problem that Common Cause has identified where they're concerned that social distancing outside of a declared State of emergency would be used as a reason for local governments to meet remotely. That's not the intent of the Bill.

So you're saying if there's no emergency and yet social distancing is required.

I can't imagine that scenario, and I think that's the language we're trying to find. We have a pandemic, I think. I'm assuming that there's going to be a declared governor's State of emergency.

Right? Because my concern would be that you'd be unduly limiting your Bill by this amendment. That's what leaves me confused.

We need to get the language right, and I'm committed to doing it.

Well, is there a reason then, to hold this Bill open, Madam Chair, till we get that language? I mean, this has left me confused. I'm generally supportive, so I think that pragmatic. We have to be pragmatic in our world. But I don't understand this amendment.

Well, three Members of your Committee are on the Judiciary Committee where this Bill is going to be heard next. So I'm hopeful that they can provide the continuity and certainty that the Bill is going to be what you need it to be.

Well, I'm not a Member of the Judiciary Committee, so let me be clear on that. And so I am supportive of what you're doing, but I don't understand this amendment. And maybe it can be explained again more clearly to me, that it doesn't really affect the body of this Bill. It just handles a situation where there's a health emergency that's not a declaration of emergency, that somehow social distancing is required under that health emergency, that the provisions of this Bill would allow the body to have that in place. These provisions is that.

Well, I want to rely on what the author thinks he's saying, because my understanding of it is that there's an opportunity to have a two pronged, but if it's an active State of emergency, you can meet. And then secondarily, I don't think the social distancing adds anything to it, quite frankly, because it has to be an active.

Right, But it's not a limitation on what the provisions of the Bill are, which I'm supportive of.

No, it's not. As I read it, it's not.

Very good. Thank you.

Senator Blakespear.

Well, thank you, Assemblymember. I think this is a good Bill, except for this little confusion right here. I mean, to me, it seems the simplest just to eliminate social distancing completely from discussion. So just to say that it allows teleconferencing during an active State of emergency and have it be left at that, what would be your response to that?

I think that's where we're going to end up.

Okay. That seems much simpler because there's no reason to go off into that other unnecessary redundancy. Okay, good. Well, otherwise, I like the Bill. So thank you.

Thank you.

Any other comments, questions? Senator Wiener?

Thank you. Actually, I think Senator Glazer and I may be coming from different directions. I'm extremely skeptical of creating broad, permanent, remote public meeting for public bodies, public meeting authorization for public bodies, because I think it significantly degrades the public process. And there was a Bill on the floor a week or two ago that I did not support. I'll support this because I totally agree, if there was a State of emergency, we should have that flexibility, but it should be strictly limited to a State of emergency. And so I'll support the Bill today and be on the lookout for that titan language and judiciary.

I'll move to Bill.

There is a motion and for my position, I've joined Senator Wiener in the skepticism. I appreciate the need and I really appreciated the testimony from the witness from Santa Cruz that really unprecedented rainfall created havoc in a way that we've never seen before. Roads washed out real danger to the public. We wouldn't want them on the road trying to get to a meeting. And so it's necessary, I think, to have the ability to meet remotely when there is an active State of emergency. I just think the question is going to be because we have State of emergencies still in place for a whole bunch of events that happened a number of years ago. And I wouldn't want local government to think, zero, you know what? It's still a State of emergency, so we don't need to meet in person. And having served for 15 years in local government, the benefit of making a decision in public face to face with people who may agree with you or may not, along with other people who are trying to figure out what's the solution. Given a difficult issue, it's beneficial to have people in the same room talking to each other and trying to work things out. And so I'm a much bigger proponent of it now that I've seen what happens when you do teleconferencing, there's a certain distance that's created when you're on a zoom call that you don't see people's body language. It's easy to turn off the video and go get a cup of coffee. And we wouldn't want people treating really important government decisions in that way. So I'm going to support your Bill. I think it's got, any amendments you do we'll take a look at them very carefully, and we'll reserve the right to bring it back to Committee if we feel that it deviates from what we think we're passing here today. Senator Glazer.

Chair, I just wanted to make sure there was no confusion. The Senator from San Francisco, I think, made an implication that didn't, I don't think applied to my comments. In the normal course of affairs, I support the Brown Act, of course, and the requirements of the Brown Act. We're only talking about this narrow frame of an emergency. Only in a State of emergency, an earthquake, a pandemic, whatever it is, to allow these provisions, as noted in the Bill, to be operative. And that, under those narrow circumstances, is why I'm supportive of the Bill, not for any other reason that somehow I want to erode or undercut the requirements of the Brown Act.

I apologize. I misunderstood Senator Glazer's comment before. Although one thing I just want to bring up that the chair just mentioned, because it is a good point that there are some states of emergencies that last for a very long time, and not just COVID, but wildfire and other emergencies. And so have you sort of contemplated how that would impact us. If you have one of these states of emergencies where it's really no longer not a hindrance for people to meet, but it's still technically on the books because it triggers federal aid or whatever. What's your thinking on that?

I think the protection is the governor's declared State of emergency, which generally is much more limited. The local declared emergencies, I think, are the things that have lasted longer. I'm not aware that Governor declared emergencies linger to that same extent.

Actually, that's not true. We have a number of fires that happened years ago that are currently on the books as emergencies. Probably close to 65 or so as the last time we looked at it. And part of that is because they don't get closed out until the Federal Government does something. I mean, I'm not sure what that certifies that it's done or they pay out or something like that. So that is an issue. This is going to be going to Judiciary, and we may just key it as an issue that we need to figure out the specific language. Because I think the amendment that was referenced was an active State of emergency, but I'm not sure if that's a legal term that will be easily identifiable by the local government and by the public. Senator Blakespear.

I just wanted to add my voice to support, that all my colleagues have said here that there is a very real risk of people in these positions taking advantage of the opportunity to stay remote. And I feel like that happened in my county around the Pandemic when we could go back or could stay remote. Some really decided to stay remote till the very last second that they could. And even when the drive was short, there was really no ongoing risk. There could be protections that were put in place for public safety so that they would have felt safe. I am concerned about this somehow becoming abused as well, especially if a Governor State of an emergency does end up lasting years for something like a statewide wildfire. I can't think of what the limiting factor would be, but hopefully at the Judiciary Committee, that can be discussed because I do think that that is something that really should be thought about. Thank you.

Any other comments? If not Assembly Member, you may conclude.

Well, I very much appreciate the Committee's questions and comments, and we'll work diligently to address them before we get to Senate Judiciary Committee, but I respectfully request an aye vote today. Thank you.

Thank you very much. Please call.

The roll motion is to pass to the Committee on Judiciary. Senator Caballero. Aye. Caballero. aye. Seyarto. Aye. Seyarto. aye Blakespear. Aye. Blakespear. aye. Dahle. Durazo. Durazo aye. Glazer? Aye. Glazer. aye. Skinner. Wiener. Aye. Wiener aye. Six to zero.

Six to zero. We'll put that on call for absent. Members. Members I'll entertain a motion on the consent agenda items. There is a motion. Please call the roll. Consent Agenda items.

Motion is adopt a consent calendar. Senators Caballero aye. Caballero aye, Seyarto. Aye. Blakespear. Blakespear. aye. Dahle. Durazo. Durazo. aye. Glazer. Glazer aye. Skinner. Wiener. Wiener aye. Six to zero.

We'll put that on call as well. That Bill is out the agenda. Okay. We can also entertain a motion on file item number one. There is a motion. Please call the roll.

Motion is to pass to the Committee on Appropriations. Senators Caballero aye. Caballero. Aye Seyarto. Seyarto. Aye Blakespear. Blakespear. Aye Dahle Durazo Durazo. Aye Glazer Glazer. Aye Skinner. Wiener. Aye.

Wiener, aye. Six to zero.

That bill is out; we'll put it on call as well. We're now up to File Item Number Seven: AB 939 by Assembly Member Pellerin. Welcome.

Did we vote on Lori Wilson's?

Good morning.

Good morning. So the mics are hot. You don't need to touch them a lot because they'll be adjusted. So I just say that because people start moving them around a lot and it's not necessary.

Okay, thank you so much. I'd like to begin by thanking the Chair and the Committee staff for taking the time and consideration they have dedicated to this bill. AB 939 is a district bill that updates a state law that applies only to the Santa Clara Valley Water District, also known as Valley Water. The agency is responsible for regional water supply, groundwater management, flood protection, and environmental stewardship of streams for the two million people of Santa Clara County.

This bill updates antiquated limits on bond issuance that force Valley Water to finance some of the largest water supply and flood protection projects in the state, using costly, contractual borrowing rather than issuing water system revenue bonds or general obligation bonds. AB 939 fixes Valley Water's revenue bond authority, allowing the agency to issue revenue bonds based on the net revenue of their water system which is favored by bond markets and is in the interests of water ratepayers.

The bill also authorizes Valley Water to propose general obligation bonds for the countywide ballot. Proposition 13 and its two-thirds voter approval threshold would still apply, thereby letting a supermajority of voters decide if water supply and flood protection projects should be paid through general obligation bonds. These bond reforms will save millions of dollars in unnecessary financing costs just by giving Valley Water the same bond authority that other regional water agencies like the Metropolitan Water District, already have.

The bill would also remove a sunset date on current law, allowing up to 15 compensable meeting days per month for the Valley Water Board. If the board members don't work the days, they don't get their per diem. However, the record shows board members do work 15 days and often many more. Again, AB 939 only maintains the per diem at its current level. I have two witnesses to offer brief testimony. Antonio Alfaro is the Government Relations Manager for Valley Water, and Doug Brown is the Bond Counsel for Valley Water.

Hi. Good morning, Madam Chair, Members of the Committee. Antonio Alfaro, Government Relations Manager for Valley Water. AB 939 removes a sunset date on the existing law provisions that allow 15 compensable meeting days per month. Each of our seven elected board members represents approximately 275,000 people and make multibillion dollar water supply and flood protection infrastructure decisions. These are big jobs, and unlike other boards, our directors are not mayors, county supervisors, or city council members with compensation from other governmental roles.

By keeping the modest per diem in current law, AB 939 will enable a more social, economic diverse board and allow more people to afford to serve on our board, including people of color and those of disadvantaged communities. Valley Water is on the front lines of climate change adaptation and is responsible for Silicon Valley's defense against extended drought, groundwater overdraft, intensified urban flooding, and sea level rise.

AB 939 provides new options to finance these projects and will help Valley Water keep water rates more affordable for low income communities. We respectfully ask for your aye vote. Thank you.

Thank you.

Madam Chair, Members of the Committee, my name is Doug Brown. I'm a bond attorney with the law firm of Stradling Yocca Carlson and Rauth, and I'm here representing Valley Water. The financing provisions of the Santa Clara Valley Water District Act have not been significantly revised in many decades. While the District Act does allow Valley Water to issue revenue bonds, the act requires debt service on those bonds to be paid prior to the district's own O&M expenses.

AB 939 would permit Valley Water to issue revenue bonds payable after it pays its operation and maintenance costs, which is consistent with current bond market preferences and other borrowings by the agency. Like other regional water agencies, Valley Water believes it should be able to propose to the voters general obligation bonds which would require a two-thirds voter approval. AB 939 would provide Valley Water with that authority, but would need to be consistent with Prop 13.

The District Act also includes a short-term debt cap of just eight million dollars which is quite small for an agency with annual revenues exceeding half a billion dollars. This bill would authorize Valley Water to issue short-term debt in amounts consistent with the other short-term debt statutes that are generally applicable to public agencies. Valley Water urges an aye vote.

Thank you very much. Is there anyone else that would like to testify in support in Room 2200? Is there anybody that would like to testify in opposition to this bill? Seeing none, we will move on to the teleconference line and ask the moderator if there's anybody that would like to testify either in support or in opposition on the teleconference line.

To testify in support or opposition to AB 939, please press one then zero at this time. And we have a comment from line nine. Please go ahead.

Good morning, Chair and Members. Richard Filgas on behalf of the Association of California Water Agencies in support. Thank you.

Thank you.

And we have no further comments at this time.

Thank you very much. Someone may have walked in that wanted to testify, but just didn't move fast enough. Come forward. Don't be shy.

Apologies, Madam Chair and Members.

Marcus Detwiler of the California Special Districts Association in support. Thank you.

No problem.

Very good. Thank you. Is there anyone else? Okay, we'll bring it back to the Committee for questions, concerns. Senator Blakespear.

Yes. Thank you, Assembly Member. How much is the compensation for one day?

I'm not sure of that.

Or is it one meeting or how does the compensation work?

It's by day. That's it.

It's by day. On any day that a meeting occurs, the board members would get compensated. It's 365 dollars.

365 dollars. Okay. 15 days of work is three weeks of work. Three times five is 15, right. So are they doing this as their full time job?

Essentially, our agency board members work what amounts to a full time job. We are a water supply agency, flood control agency. We do groundwater management. We're a federal and state water contractor. We have a lot of responsibilities, several multibillion dollar projects, and our board members are constantly busy.

How many board Members do you have?

Seven.

Okay. That seems to me like a steep rate, 365 dollars for board members. I mean, even people who are on city councils don't work full time in many cities in the state.

It amounts to about 65,000 dollars a year at maximum if the board members work all 15 days for the month.

And how are the board members chosen? You said they're not elected officials.

They are elected officials, but--yeah.

Oh, okay. But they're not city council members or mayors?

Correct. Yes.

Okay.

And this just removes the sunset of that provision.

Right. So these people are making 5,475 dollars. That's basically what it would work out to for the month?

Correct. Yeah.

Okay. Okay, thank you.

Other questions, comments, or concerns? I have a question in regards to the questions that were asked. You indicated that part of the reason that it's set up this way is to encourage members from disadvantaged communities to participate as well, and do you have anybody on your board that you would classify or would say is a member of a disadvantaged community from Santa Clara?

We have several members of the board that are of different ethnic backgrounds and from different communities like Alviso and the South Bay which is representative of a low income disadvantaged community. We have several members that are Latino, several members that are different backgrounds. The compensation piece without the 15-day authorization would amount to about 40,000 dollars a year, which in Silicon Valley and Santa Clara County doesn't go very far at all.

It would be severely low income, and essentially what the compensation is meant to do is to allow those that are interested to potentially run for office and represent their communities to maybe be able to do that. It's still very low salary in comparison with other elected officials in the county, but the intent is to support people that would like to run for office.

Understood. Yeah. Well, you indicated disadvantaged communities, so I just want to make sure that there actually are people from disadvantaged communities, and I'm very familiar with Alviso and so, that makes me feel more comfortable. Senator Glazer. And again, this isn't increasing the number, this is just taking off the sunset.

Right, but was there any review by staff or our Committee consultants in terms of how the compensation for this board relates to others? Because this does surprise me that a water board would meet this often and have this level of compensation versus a volunteer part time job, which I think it is in many places. So has there been any analysis to examine whether this is out of the ordinary?

I believe that--I don't know that there's ever been a study of water board--water districts, for example, which is what you would compare to. The other water districts have a maximum of ten days. This is, to my knowledge, the only one that has a maximum of 15 days.

Right, but it's not just the maximum. It's the amount of actual meetings that are taking place.

Right.

I mean, I think of some of the water boards in my area that have substantial responsibilities, and I'll have to check to see it, but I am uncomfortable hearing this testimony and the feedback about the amount that is being paid, so I think, given that, unless there's further explanation, I think I'll stay off the bill today.

Very good. Senator Wiener.

Thank you. Yeah, I don't know if there's been a motion yet.

There is not.

I move the bill. I support the bill. In terms of the removing the sunset on the compensation, there is this very highly outdated sort of 19th century view that anyone in elected office is like a wealthy property owner who does this on the side as like a gentleman farmer who does it on the side--can be paid 100 dollars a meeting or whatever, and that's just not the reality of the world.

And if we want people to serve in elected office, and this is not--if you're doing 15 days a month, that's like three quarters of a full time job. When I moved to San Francisco, the San Francisco Board of Supervisors, supervisors were paid 24,000 dollars a year under, again, this outdated notion that--and it excludes so many people from public service, and this is a huge agency, right? It's not like a micro water--it's a massive agency.

I'm all in favor of making sure local elected officials are paid. I mean, you look at school board members. School board members work so hard and spend so many hours, and today, I mean, are getting horribly harassed--look what happened in Glendale last night--and have to put up with all sorts of right-wing extremism and they should be paid more too. So I think a lot of these local elected officials are very underpaid and so I support this. Happy to move it.

There is a motion. Other comments, questions? If not, Assembly Member, we'll allow you to conclude.

So thank you for the comments, and like I said, this is just removing the sunset on the compensation and I respectfully ask for your aye vote on this smart financing measure for Valley Water. Thank you so much.

Thank you. Please call the roll.

Motion is 'do pass to the Senate Floor.' Senators Caballero? Aye. Caballero, aye. Seyarto? Aye. Seyarto, aye. Blakespear? Aye. Blakespear, aye. Dahle? Durazo? Aye. Durazo, aye. Glazer? Skinner? Wiener? Aye. Wiener, aye. Five to zero.

Thank you.

That bill is out; we'll put it on call. Thank you.

I see Assembly Member Wood and Assembly Member--

Okay. The next up is Assembly Member Friedman. I don't see her here, so we'll move on to Assembly Member Wood. Welcome.

Good morning, Madam Chair. Thank you, Madam Chair and Members. I'd like to start by thanking the Committee for their work on this bill. AB 1256 would authorize the Humboldt County Board of Supervisors to impose a transition and use tax for the support of countywide transportation programs at a rate of no more than one percent if an ordinance proposing the tax is approved by the voters.

Earlier this year, the Humboldt County Board of Supervisors voted to approve a resolution asking the state Legislature to pass a bill allowing the county to put a proposed roads tax on the local ballot, that if approved by voters, would surpass the two percent limit California has on combined local transaction and use taxes.

Humboldt County, which is recovering from recent natural disasters, needs legislation due to parts of the city-county partnership having reached their limit with respect to how high certain taxes can go. With me to testify in support of this bill is Supervisor Michelle Bushnell from Humboldt County.

Welcome.

Hi. Good morning.

If you could speak up just a little bit louder. I think the mic's usually pretty hot. Or maybe we need somebody to. Why don't you go ahead and try it again?

Madam Chair, Committee Members, the current economic situation in the state and county is uncertain and influx. The County of Humboldt has a responsibility to address the needs of its region and communities, especially in the face of emergencies and natural disasters. Collaboration with municipalities is essential to effectively address the needs of residents, businesses, and stakeholders, regardless of economic conditions. The County of Humboldt has experienced ongoing funding challenges in meeting essential needs.

Natural catastrophics such as earthquakes, storm damage, sudden snowstorms, and flooding had affected the county and its cities and unincorporated regions. Recovery from the catastrophics is ongoing, and proper planning and responsibility are necessary to address future needs. Locally controlled sources of funding are essential. Long-term fiscal sustainability strategies for meetings and addressing local needs. Preserving flexibility to augment or expand local sales tax funding options is necessary to address safety and infrastructure needs.

California Revenue and Taxation Code 7251.1 and 7285.3 limit combined district tax rates in any county to 2%. The City of Eureka has already reached the maximum rate allowable under current code. Eureka is half of our local tax base and a countywide measure would not make fiscal sense if it does not apply to Eureka. This Bill is needed in order to apply any new voter-approved tax to the City of Eureka.

Without enabling legislation to allow voter approved ordinance to exceed the current state limit sales tax rate in our county, it would not be possible to expand this critical local funding source in our region. AB 25 excuse me.

1256 has so far passed Assembly Local Government April 19, Assembly Revenue and Taxation Committee Monday, May 1, Assembly Floor Session Monday, May 15 enabling legislation to allow a voter-approved ordinance to exceed the current state limit sales tax rate in Humboldt County is necessary to expand critical local funding sources in the region.

With availability of local funding, Humboldt will have more ability to repair our deteriorating roads, better response to emergency and natural disasters like floods, storms and earthquakes, avail ourselves of more state and federal funding to address local needs. And I did not introduce myself. Michelle Bushnell. Nice to meet you all.

Welcome. Is there anyone else that would like to testify in support? Seeing no movement, is there anyone who would like to testify in opposition to this Bill here in room 2200? Seeing none. We'll go to the teleconference line. Mr. Moderator, if you could queue up individuals that might want to talk in support or in opposition.

Thank you, Madam Chair. To provide testimony in support or opposition to AB 1256, please press 1 and 0 at this time. And we do have a comment coming through. One moment please, while we provide them with their line number and they're ready. Line 20, please. Go ahead.

Thank you. Good morning, this is Tyler Munzing on behalf of the American Council of Engineering Companies California, in support. Thank you.

Thank you very much.

And Madam Chair, there are no further comments at this time.

Very good. I'll bring it back to Committee for questions, comments or concerns. The real quick question. I'm assuming the City of Eureka is in support?

Yes.

I usually always ask that before the hearing, but it just occurred to me, since Eureka is such an important part of the tax base, you want to make sure that the council is in support. Senator Seyarto, did you have a question?

No.

No. Anyone else? Seeing no questions, we'll allow you to conclude.

Well, thank you, Madam Chair. I think Humboldt County has experienced some pretty unusual circumstances just in the last year alone. We've had fires, we've had earthquakes, and we had snow and that's just in the last few months. So we face some unique challenges. And as such, I think what they're asking for is reasonable. And once again, this is just to put something before the voters and let the voters decide that they want to do this.

Very good. So I'll entertain a motion on this Bill. Someone want to make a motion? There is a motion. Please call the roll.

Motion is do pass to the Senate Floor. [Roll call]. Four to zero.

We'll put that on call for the absent Members.

Thank you. Madam Chair and Members.

Thank you so much.

We'll move back to Assembly Member Friedman, File Item Number Eight: AB 1132.

Good morning, Madam Chair and Members. I am bringing you a common sense bill today that's had bipartisan support and no no votes. AB 1132 seeks to expand the statewide cap on solar permit fees levied by municipalities from 2025 to 2034. The extension would ensure that solar installation costs continue to be reasonable and consistent, allowing solar panel installations to grow across the state and keeping municipalities from price gouging their customers unnecessarily.

Prior to 2012, solar permitting costs varied widely in California, even for the exact same system in neighboring cities. Current law allows building departments to exceed the caps if they pass an ordinance or resolution justifying the higher costs, and if we don't extend the deadline on this bill, homeowners and business owners might fall into the risk of having to pay excessive and unnecessary fees and then possibly passing on the chance to add that resiliency to their home.

Passing on the chance of offering a small entrepreneur in a business the chance to do an installation. So this makes a lot of sense, and I would request an aye vote. We have today Kim Stone, representing the California Solar Storage Association to testify in support.

Thank you so much. Good morning, Chair and Members, and thank you to the author and the Committee staff for their work on this bill. Sometimes a sunset extension seems like an unimportant bill because they're kind of routine, but this is an important bill.

The regulatory agencies, the Energy Commission, the PUC, and Air Resources Board put a joint report out achieving the SB 100 California goals, how we're going to reach our clean energy goals by 2045, and that report says we need three times the amount of solar that we have, eight times the amount of storage that we have, reducing or at least not increasing soft costs for customers to use.

Rooftop solar will be one part of how California will be able to reach our clean energy goals. As the author said, this bill extends the sunset on existing fee caps, so right now, many jurisdictions have automated permitting and have received--there's a free app that the Federal Government came up with called the Solar App that they can put on their website to automate the permitting, and then there was discretionary grants that the state gave the local governments to adopt that.

So for routine installs, the solar contractor puts the information in, and so in terms of the local government costs, they're not really going up, and so we believe that this is justified extension and urge your support.

Very good. Thank you very much. Is there anyone in Room 2200 that would like to speak in support of this bill? Seeing none, is there anybody that would like to speak in opposition?

Good morning, Chair and Members. Brady Guertin on behalf of the California Building Officials in a respectful opposed unless amended position. Since AB 1124 became law, a lot of our departments have been struggling with some of the new definitions of solar energy systems, include: ground mounted systems, solar carports, solar shade structures.

They haven't been able to get the fee study and get it approved under a local ordinance, either not agendized because of local political needs to go above the cap that this bill allows them to do, so there's a lot of concerns that extending the sunset date without some kind of inflationary adjustment makes it harder to the point where some of our building departments are subsidizing permit review with the adoption of the automated solar permitting system.

These don't work for some of these larger structures: solar carports, solar trade structures, et cetera, so there's a lot of concern from our members that we don't have an adjustment to get to match inflation and although we appreciate the ability to go over the caps, some local jurisdictions just don't have the need locally or don't have the approval locally to do that. So it makes it really hard, so we're subsidizing permit review.

So that's why we're looking for an inflationary adjustment in exchange with the sunset date. We just think it would make it easier for our local building departments to be able to get cost reimbursement, so some type of inflationary adjustment would be acceptable for us, hopefully with some future amendments, and we'll look forward to those continued conversations with the author's office on the bill. Thank you, and we look forward to working with the author's office on this one.

Thank you very much, and I appreciate that, but you know what, this is the second House, and we're running out of time, so whatever ideas you have need to have been presented to this Committee because that's the one that would make any adjustments, but I appreciate your testimony. I didn't see any specifics in regards to the opposition.

So going to check in and see if there's anyone else that would like to speak in opposition that are here in Room 2200. Seeing none, we will move to the teleconference line, and Mr. Moderator, if you could check to see if there's anybody that would like to testify either in opposition or support.

Thank you, Madam Chair. To provide testimony in opposition or support for AB 1132, please press one then zero at this time. And we have a comment from line 19.

Chair and Members, Silvia Solis Shaw here on behalf of Tesla in support. Thank you.

Thank you very much.

And Madam Chair, there are no further comments at this time.

Very good. We'll bring it back to the Committee for Committee questions, concerns. Senator Glazer.

Just wanted to know, I don't see the League of Cities in any direction here. Any feedback from them on your bill?

Not that I'm aware of.

Not at all?

I have not heard of any. I'd have to check with my office to see if they've had communication. I don't want to speak to my Leg Director, but we can certainly find out and let you know.

That's fine. Very good. Thank you.

Senator Blakespear.

Yes, thank you. I appreciate the testimony from the opposition, but I also think that there's a really important policy reason that we do this, and there are certain things that local government needs to be able to absorb as part of the cost of doing business. So if there's an occasional more complex solar installation that needs a building official to go out there, I think that that's something that should be able to be absorbed within the local government budget. So I'm excited by this bill, thank you for bringing it, and I will move approval.

There is a motion. Other comments? Seeing none, the issue that was raised, is this new to kind of the discussion you've had on this bill?

This is not new. I can tell you, having been a mayor and in local government, we didn't have inflationary escalators on any of our fees. We routinely, as a city, would review all of our fees on a schedule every few years, and that's certainly what's permissible under this bill.

Right. Well, I think from my position, I agree with you 100 percent. Inflationary increases is not what I was looking for. I was looking for a distinction between kind of the regular, run of the mill, I'm going to put solar on my house or my business, as opposed to something that's more complicated. If it's the first time you've heard it's--

No, no, and actually, in the original bill, we do have exemptions for large installations, so this is supposed to be more of your routine, but I would like to let my witness also speak to that.

The larger the solar project is, the higher the fee can be, and then the routine applications are for the sort of the smaller projects so that they can use their inspectors for the harder ones that they actually need to figure out and then if there is an ordinance passed and if they state a reason, they can charge whatever it costs.

So those more complicated cases that do require more inspector time, absolutely they should be able to charge more for them. Actually, I thank you for your kind comments, but they don't need to absorb those costs. They just need to state what the reason was for the higher costs, and then they're able to charge them.

Yeah. Appreciate that, and for political reasons, it may be difficult for a council to decide they're going to charge more for installation and that's just not something that we can--I mean, there is an alternative, I guess is my point, which is what we want to give local government is an alternative.

So I appreciate that. Thank you for answering my questions. If there's no other comments or concerns, we do have a motion. I'll allow you to conclude.

Justice has been now the law for a number of years. I don't think it's caused any problems, but it has allowed for ordinary people to be able to afford installations and to know that your price is not going to be different if you're in one county than in the next. So I would appreciate an aye vote. Thank you.

Very good. Please call the roll.

Motion is 'do pass to the Committee on Appropriations.' Senators Caballero? Aye. Caballero, aye. Seyarto? Aye. Seyarto, aye. Blakespear? Aye. Blakespear, aye. Dahle? Durazo? Aye. Durazo, aye. Glazer? Aye. Glazer, aye. Skinner? Aye. Skinner, aye. Wiener? Aye. Wiener, aye.

I. Seven to zero. Thank you all. Seven to zero.

We'll put that in call and add it to the rest. And so then we come to Assemblymember Carillo, oh kox. I'm sorry but you're right, this was on the consent agenda, no? Okay nevermind, I have an old agenda, Assemblymember Kalra my apologies I had this one um, as a consent. So it could've been but something happened and so now you're on. File item number 10, AB 1649.

Thank you. AB 1649 would increase change order thresholds for the County of Santa Clara until January 1, 2027. County would also be required to submit a report to the Legislature by July 1, 2026. The provisions are exactly the same as AB 712 from 2021, authoring the same changes for LA County. Change orders are amendments to a construction contract that changes the contractor's scope of work, such as moving location of a wall to accommodate some other design element and usually increases the contract price.

Existing law limits the maximum amount a delegated officer engineer can approve without requiring a vote by the Board of Supervisors. These limits have not been updated since 2011 and do not reflect inflation, changes in construction, market pricing, or changes in the scale of projects. The result is that the maximum threshold requiring a Board of Supervisors vote is frequently reached, often leading to costly delays as the number of necessary change orders increases.

The County of Santa Clara has a series of relatively large projects in the construction pipeline, including a new Behavioral Health Services Center and seismic retrofits for the hospital buildings. Adjusting the change order thresholds to the same cap as Los Angeles will allow the county to avoid possible delays on these large, time-sensitive projects. With me to provide supporting testimony is Doug Koenig, Deputy Director of the Santa Clara County Facilities and Fleet Department.

Very good. Welcome.

I'm Doug Koenig. I'm a Deputy Director for capital programs with the facility and Fleet Department. Facility and Fleet Department with the County of Santa Clara. Thank you for the opportunity to provide some comments in support of our county-sponsored Bill 1649. This Bill, as Assembly Member Caballero said, seeks to increase the change order thresholds for the County of Santa Clara until January 1, 2027 for up to seven projects.

The County of Santa Clara has a series of relatively large projects in the construction pipeline, including a Behavioral Health Services Center and several seismic retrofits to our hospitals. Adjusting the change order thresholds will allow the county to avoid possible delays and associated costs resulting from those delays on these important large and sensitive and time sensitive projects. Thank you for your time and appreciate your consideration for this measure.

Very good. Thank you very much for your testimony today. We'll move on and see if there's anyone else that would like to testify in support of this Bill. Anyone here in room 2200 that would like to testify in support, seeing none? Is there anybody that would like to testify in opposition here in room 2200 saying none will go to the Teleconference line? Is there anybody that would like to testify in support or in opposition of AB 1649?

If you would like to testify in support or opposition to AB 1649, please press one, then zero at this time. And Madam Chair, there are no comments.

Very good. We'll bring it to the Committee for questions. Senator Glazer.

Yeah. Okay. So for the record, I did vote for the Calderon Bill, and a part of that was to have a report to the Legislature, which we were not going to see until 2026. So I am a little skeptical. And I guess the question is you're not just eliminating the four-fifths as a high standard, you're eliminating any public vote on these kinds of change order issues.

I'll be clear that that's really what you're saying you're not "let's make it a majority let's make it easier, make it a majority vote." You just don't want to have any vote, is that right?

Well, this is something that this allows for the facilitation of change orders that happen during the course of large projects, limited to seven projects, just like in Los Angeles. It has a report back just like the Los Angeles Bill. So it's identical to what has been approved previously.

And your Bill just doesn't affect the caps because that's another option, right, is to change the caps and not change the review by the elected board. And you're choosing to do both, to change the caps and to change any review.

Well, it's a limited increase in the cap increase, and it allows for the facilitation of the engineers and those overseeing the projects to be able to, in a timely fashion, make changes to help facilitate the construction of the projects in General.

I don't have a problem with the cap change, but eliminating the review, I mean, I know this is something we hear often about time creates a problem, right? The review creates a problem. But these change orders I'm not saying that this agency is a place where there's abuse, but change orders has been a place of a lot of abuse in construction contracts where they bid low and then the change orders come in and they could be double the price of the project.

So I guess my worry is that there's just no elected official review of these types of activities. I mean, you could say they select the management, so there's some accountability there, right? And if the management is making these choices, then the elected bear some responsibility for bad choices that are made. But a part of this world of contracting is to make sure there's enough transparency that the public can follow things can follow change orders.

And when it's on a public agenda, then the public can at least review that proposed change. I think most recently of the change orders for high-speed rail in the multi multimillions and millions of dollars. And you look at the cost changes that have occurred on that project. So I know your intentions are good here, and I know that you have a good agency that's trying to do their best work. But these are the issues that worry me a little.

And if I could, Madam Chair, I mean, holding Santa Clara County to account for what may happen in other agencies, yes, there may be abuses in other agencies, but let's keep in mind, for contracts up to $50 million, the extra cost must not exceed $400,000. For contracts over 50 million must not exceed $750,000. There's nothing here that's going to double or triple the cost of anything.

And so there are reasonable limitations in here that allow for the facilitation for efficiency in these large-scale projects limited to seven projects, just like the LA Bill. And it has caps that do not allow for the change orders to exceed a nominal amount. Considering the value of these contracts, these are major projects. And so having extra cost to not exceed $400,000 for a project from $25 to $50 million, I don't think is excessive. It still allows for efficiency oversight. And all these change orders are public as well, or public record.

Senator Dahle.

Thank you, Madam Chair. So I actually worked in this area where we tried to get the limits up, but I also worked for a contractor who we bid jobs at the bare minimum because we knew we were going to make a killing on change orders. So I've been on both sides of this. But I do have a question. What about design build? So are any of these projects design build where you actually are working with the contractor to build these projects?

None of them would be design build. If it were design build, that would certainly eliminate the majority of change orders.

Okay, thank you. And then the second question I have is, is that per occurrence a change order at $400,000? Because if you have five change orders and they're all $400,000, you're talking about $2 million in a $50 million project, which is real money.

Well, one thing I'd like to point out, when the board approves the project, they approve the project up to the contract amount, and they also approve a supplementary work allowance. And that's normally 10% of the contract amount. At no time could anyone delegated this authority to approve these change orders, approve an amount that would cause that supplementary work allowance be exceeded without going back to the board and getting additional budget authority. So there is a limit on that.

The other point I'd like to make is when you're talking about large projects, particularly this Behavioral Health Services Center project, that's a $420,000,000 project. Written into it are delay fees, that if the owner causes that delay, they are entitled to $51,000 per work day. Right. And it's not always that a change order would result in stopping the contractor from working, but those that impact the so called critical path of the project, the contractor would be entitled to that $51,000 per day per workday.

And typically, even if you expedite it, it could take at least three weeks to get that change order in front of the board. So if you do that, you take that 15 days times that $50,000 a day. You've already exceeded the amount of the authority that we're asking for. Now, from my perspective, being the deputy for capital programs, always being beat up on maintaining cost and schedule, this would be an incredible tool to use to keep the cost down and keep the project on schedule. Thank you.

Senator Seyarto.

So I always have these concerns about change orders and things, but this kind of lands on the being efficient and effective and allowing the organization to ultimately save people tax money, because as you have delays. Guess what? You have increases in costs. Unfortunately, in California we have an environment that we have a lot of volatile costs and even a one-month delay can cost a lot of money. So when you're looking at change orders related to this, I look at it in a bigger package.

The board does have somebody to hold accountable and that person is him in their case and also the county CEO. We've had these issues when I was on the council's course in a little bit smaller thing, but huge projects. Ultimately it was easier to deal with the CEO and the persons in charge of making sure the project is managed correctly than it was to take something to the board and then try to decipher these costs.

Because at the end of the day, what are you going to do as a board? You're going to turn down the change order? Well then what? Then what are you going to do? So for me, I think this is for Santa Clara, their county and the size of their projects. This probably means the difference between saving people a lot of money and those are taxpayers. So not the agencies or whatever.

They're taxpayers and being more efficient, but still ultimately they have the ability, the board has the ability to hold people accountable. So I'm going to be supporting your Bill today because of that.

Senator Ross,

Move the Bill. There is a motion. Any further comments? I appreciate what you're trying to do here. I had the same comment as Senator Dahle. This would have been a good design build project. I hate change orders.

And frankly, in the jurisdiction that I was in, we kept a list of the contractors that had no change orders on projects that the city funded because those were the people who I thought did the best job and knew what they were doing and weren't going to saddle us with an extra cost that was unplanned. So I'll be supporting the Bill today. There's a motion. Please call the roll. zero, I'm sorry. Allow you to close.

I'll have Senator Seyarto's words as my close and respectfully ask your aye vote.

Very good.

[Roll Call]

That Bill is out. We'll put it on call for the absent members and our final bill up. Assembly Member Carrillo, thank you so much for your patience. This is file item number 11. AB 1736.

Thank you, Madam Chair and Members. Thank you for allowing me to present AB 1736, a bill with bipartisan support. This bill would simply authorize the Governing Board of the Water Replenishment District to negotiate a contract constructive public works project if it receives no bids. For background, the Water Replenishment District manages groundwater resources within the Central Basin and the West Coast Basin in Southern Los Angeles County. Under current law, different public agencies have specific provisions relating to the next steps the agency can take.

When an advertisement forbids, those come back with no proposals. However, that is not the case for the Water Replenishment District. In 2022, the WRD had two projects in which they did not receive bids by their deadline, which forced them to revise the scope of the work and reissue the bid solicitation. This resulted in loss of time, additional use of staff resources, and delayed construction. In addition, delaying construction has a negative effect on the ability of the district to carry out its duties and responsibilities, and in the present inflationary financial environment, it increases construction costs.

All added costs place upward pressure on WRD's water replenishment assessment, which is reflected in commercial and residential water rates imposed by local agency water systems and water corporations. This bill is a simple fix that would align WRD with other local agencies that already have this authority and flexibility to proceed with constructing critical regional water infrastructure. And joining me today to testify and to answer technical questions is Bob Reeb with the Water Replenishment District of Southern California. Thank you.

Very good. Welcome.

Good morning, Madam Chair and Members. Bob Reeb with Reeb Government Relations on behalf of the WRD today. The WRD was created after two groundwater basins were adjudicated back in the 1950s because the adjudication allowed for more pumping than safe yield would allow. So the Replenishment District was created by the Legislature and approved by the voters to add that additional water to the basin that would allow it to be operated in a safe manner.

Initially, they were the largest purchaser of imported water through Metropolitan Water District of Southern California to accomplish that replenishment, but since that point in time, they have evolved to capture stormwater, put recycled water into percolation basins. More recently, they've built and are operating a regional brackish groundwater desalting project and an advanced water treatment plant that's in operation that allows them to not rely on any imported water for replenishment purposes.

So over 60 years, they've gone from solely relying on imported water to now being locally self-reliant. The type of projects that they are now engaged in are very complex. They're built in dense, urban environments, sometimes in neighborhoods. The projects are not simple. They require noise attenuation, hours of operation, flagging, digging in the streets. It's not just a contractor to drill a well. There's a lot that goes with it when you're in these dense, urban environments.

So what happened is, for the first time last year, they had two bids that--solicitations that received no responses, and that caused delay and increased costs for the district, so we're asking for this authority. When they were created, they were given the ability when they received no bids to build projects with their own employees, but they didn't have employees.

They instead rely on the private sector and labor unions to bring these projects online when they're needed, so we're asking for an aye vote and pleased to answer any questions that the Committee may have.

Very good. Is there anyone else who would like to testify in support here in Room 2200? Seeing no one, is there anybody that would like to testify in opposition in Room 2200? Seeing none, we'll move on to the teleconference line and ask the moderator to please queue up anybody that would like to testify in support or in opposition.

To testify in support or opposition to AB 1736, please press one zero at this time. And we have a comment from line 17. Please go ahead.

Good morning, Madam Chair and Members. This is James Thuerwachter with the California State Council of Laborers. We are in proud support. Thank you.

Thank you very much.

And Madam Chair, there are no further comments at this time.

Very good. We'll bring the bill back to the Committee. Is there anybody that would like to testify or that would ask a question or make a comment? Senator Glazer.

Thank you, Chair. First, I want to compliment the staff for the analysis that's been provided to the Committee. It's pretty thorough and it does raise a number of issues. I certainly wanted to give the author the opportunity to respond to those, but in particular, the analysis points out that just this past year, of 18 projects bid, only two had no bids associated with it.

It points out that part of the reason that problems can occur on a no-bid situation is when a timeline can be so short that the agency sets up that it doesn't receive bids and it allows them the opportunity to negotiate the terms of the project instead of accepting a lowest responsible bidder.

And then they conclude with, I thought, a very poignant point to the Committee, which they said this: 'for the public to have confidence in the decisions they make, public officials must spend the public's money in full view. Inviting bids and awarding contracts to the lowest possible bidder is the most effective method of ensuring transparency for the expenditure of public funds compared to negotiating a contract.' So I wanted to give you that opportunity.

I noticed in the testimony on behalf of the bill, there was no mention of the trouble this agency has been in for decades, the audits that have been done, the latest scandal on the selection of an acting general manager, and so here in this situation of a troubled agency that's had these problems, it seems that the staff analysis raises skepticism about whether this authority really should be granted. So I want to give you that opportunity.

Well, basically what this is doing is just having this agency play under the same playfield of other agencies that already have this authority when there is no bids that are received. Some of us come from public agencies. We know that that occurs from time to time. What that does is just basically delays the process. It delays services that agencies want to provide to their residents. Again, we've all experienced that.

In some instances, there are grant money available which come with limitation too, and some agencies will also face the fact that they will lose that funding if they're not constructed within the time allowed by those grants. That's another reason why. As far as what the history has been of this agency, I don't know.

I really cannot discuss that because I don't know what that is, but we're bringing this bill in front of you to see if we can give them the same playfield to other agencies that already have the ability to proceed with projects that, again, a lot of times come with time sensitive and the possibility of losing millions, if not billions of dollars for infrastructure that we all need in the state.

Mr. Reeb, would you like to address maybe some of the historical issues?

Just a point of clarification for the benefit of the Committee Members, the state law and the administrative code still require the district to issue competitive bid solicitations for construction projects. This doesn't change that requirement. What this does is provide them an option for when they receive no bids. They can still have the option under law for going out to rebid it. They can build it with their own employees, but they don't have their employees that do construction, or they can just abandon the project.

That is clearly not an option. So we're trying to give them another option of negotiating at that point when they don't receive a bid. The issue with--and I don't want to go too much over the history--most of it is over 25 years ago when there was a state audit that was provided to the Legislature. There was no malfeasance. There was no laws being broken. The district lacked the financial controls and written policies for entering into contracts, and in particular, construction contracts.

They didn't have that history, and so they're moving and transitioning toward that. Based on the audit, they complied with the audit recommendations and they now have those fiscal controls. For over 20 years, they received certificates of financial excellence from the Government Financial Officers Association. They really, I think, come into the modern era in dealing with these complex projects. They work with the State Water Resources Control Board.

They just completed two years ago, 125,000,000 dollar advanced water treatment project that Proposition One provide an 80 million dollar low interest loan and a 15 million dollar grant, so I think what happened 25 years ago is in the past. Today, I think they're a trusted local agency that has a good reputation with state agencies like the State Water Resources Control Board. With respect to the general manager issue, the general manager for long standing retired, and there was a difference on the board as to how to move forward with replacing that individual.

Having served on a city council at a younger age and managed a county water agency, I can assure you, as a general manager, I'd love to have a five/zero vote on everything, but that doesn't always happen, and I think in the end, they hired a very competent general manager, and he's been in place for a couple of years, but retaining a general manager is not a construction contract. It's an entirely different process, so I don't think that incident, that division on the board should be taken as an issue or concern for the district.

Thank you to the author and to the witness for the additional information. I appreciate that. I served on my city council and had situations where no bids have come in and that's unfortunate, and we go back to staff and we talk about what were the conditions we set and whether or not we should change those to make it easier for people to bid, and so that's a normal process. I know that we discussed in an earlier bill efficiency. Everybody wants efficiency.

We want to save the taxpayer money too, but this is a situation where it's a tougher call, for me at least, but I appreciate the author's strong advocacy for his district and for this agency.

Other comments, questions, concerns? Senator Durazo.

I basically support and I really appreciate your latest information that you provided, but one question is, how do you then go from no bids to negotiating a contract? How do you seek out--what do you do to make up for the fact that bids have not come in?

Sure. So I can give you an example. The second bid solicitation that failed to receive responses was for a multipurpose steel building to house equipment and vehicles, and it came at a time when the market was really--the construction market was very active. It was post-pandemic. Everything was gearing up, and so the district went back to the bidders that submitted an interest and pulled down the bid documents. They called them after they didn't receive any bids.

And some of them said, 'well, it's just too small for us to deal with right now.' A couple of others said, 'it's not really a type of building because it's a multi-use type of building that we do.' So what they ended up doing was negotiating, or I'm sorry, they rebid that in a better environment. I think when things calmed down in terms of the ramping up after the pandemic and they were able to secure bids for that building, but there's multiple options.

What they did with the Regional Brackish Project is they contacted the drillers that they had sent the bids out to and said, 'what were the issues here?' It was a timing issue and it was a complexity issue. It involved expanding the Regional Brackish Project, and so the area is very wide, but it's City of Torrance.

It's very developed, as you know, from your area, and so they had to look for locations where they could do this investigatory drilling and what have you that weren't going to impact neighborhoods and things like that. So it was a fairly complex because there's multiple sites involved. So they were able to break that project into two phases and get bids on Phase One, and then when they get to Phase Two, they'll hope to receive bids on that as well.

Any other comments, questions, or concerns? I'll entertain a motion. There is a motion. Assembly Member Carrillo, we'll allow you to conclude.

I just want to say thank you for the opportunity. I respectfully ask for an aye vote.

Very good. Please call the roll.

Motion is 'do pass to the Senate Floor.' Senators Caballero? Aye. Caballero, aye. Seyarto? Aye. Seyarto, aye. Blakespear? Aye. Blakespear, aye. Dahle? Aye. Dahle, aye. Durazo? Aye. Durazo, aye. Glazer? Skinner? Aye. Skinner, aye. Wiener? Aye. Wiener, aye. Seven to zero.

Bill is out; seven to zero. Thank you very much. So that concludes our bills for today. We're going to go back over the agenda and pick up anybody who missed. So let's be ready, folks. Thank you.

So we'll start with file item number one, AB 314 by Assemblymember Patterson.

Motion is to pass to the Committee on Appropriation. Senators. Dahle. Dahle aye. Skinner. Skinner aye. Eight to zero.

Eight to zero, that Bill is out. We have the consent calendar.

Motion is adopt the consent calendar. Senators. Dahle Dahle aye. Skinner. Skinner aye. Eight to zero.

That Bill is out. I mean, those bills are out. Eight to zero. File item number three. AB 557 by Assemblymember Hart.

Motion is due. Pass to the Committee on Judiciary. Senators. Dahle. Dahle, aye. Skinner. Skinner aye. Eight to zero.

Next is file item number seven. AB 939 by Assemblymember Pellerin.

Motion is to pass to the Senate Floor Senators Dahle. Dahle aye. Glazer. Skinner. Skinner aye. Seven to zero.

That Bill is up. Seven to zero. Next is file item number eight. AB 1132 by Assemblymember Friedman.

Motion is to pass to the Committee on Appropriations Senators Dahle, seven to zero. That Bill is out. Seven to zero.

Next, file item number nine. AB 1256 by Assemblymember Wood.

Motion is to pass to the Senate Floor Senator Seyarto. Dahle no. Dahle no. Glazer. Glazer aye. Skinner. Skinner aye. Six to one,

That Bill is out. Six to one. Next is file item number 10. AB 1649 by Assemblymember Kalra.

Motion is do passed to the Senate Floor. Senators Glazer. Skinner. aye. Now I thought it was pulled, so it's Skinner aye, seven to zero.

File item number 11, which we just took up. Very good. That concludes so the Senate Committee on Governance and Finance has concluded our hearing for today. If you would like to send information or comments or testimony comments, criticisms in regards to any of the bills, not in regards to any of the Senators. In regards to any of the bills, feel free feel free to get on our website and send them in and we'll include them in the official record. Thank you very much for attending today. Thank you to the moderator for all of your help. That concludes our hearing for today.