New Law Updates Bidding Preferences for Various Public Agencies

November 2018
Number 75

The Legislature has significantly expanded local agencies’ ability to use a small business preferences on a public works projects, and has expanded the use of preferences for small businesses, disabled veterans businesses and social enterprises in some counties. This new law seems to indicate the Legislature is responding to the desire of local agencies to support local businesses.

Assembly Bill (AB) 2762, signed by Governor Jerry Brown, increases the small business preference from five percent to seven percent for all local agencies, including counties, cities, school districts, and other districts. The bill limits the value of a preference to a maximum of $150,000 on any contract, no matter the value of that contract. The small business preference authorizes a local agency, in facilitating contract awards to small businesses, to provide for a small business preference in construction, the procurement of goods, or the delivery of services.

AB 2762 also authorizes local agencies in the counties of Alameda, Contra Costa, Lake, Los Angeles, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma, to adopt preferences for disabled veteran businesses and social enterprises, and provides for the preferences to be a maximum of seven percent for an individual preference and up to fifteen percent for a single bid having two or more preferences. In these counties, an agency’s ability to use a small business preference is not different from agencies outside those counties.

This new law defines a social enterprise to include a nonprofit or for-profit business whose primary purpose is to benefit the economic, environmental, or social health of the community and which uses the methods and disciplines of business and the power of the marketplace to advance its social, environmental, and human justice agendas. The business must also have been in operation for at least one year providing transitional or permanent employment to a transitional workforce or providing social, environmental, or human justice services.

Under AB 2762, each local agency within the specified counties that chooses to utilize a disabled veteran business or social enterprise preference is authorized to define a disabled veteran business and social enterprise and to define their eligibility for the purposes of these preferences and goals. The statute granting authority in certain counties to utilize preferences is set to expire in 2024. However, the statute permitting small business preferences by all local agencies in the state has no expiration date.

To help local agencies meet these preferences, the new law permits a prime contractor, with the approval of the local agency, and subject to meeting specified conditions, to substitute one subcontractor for another, if doing so will help meet the preference adopted by the agency. This provision seems to create a scenario where a subcontractor could be substituted solely in the interest of meeting the agency’s adopted preference, but the new law explicitly states that subcontractors are still afforded all the protections of the Subletting and Subcontracting Fair Practices Act.

Takeaways

AB 2762 demonstrates a greater interest by the Legislature in allowing public agencies to adopt preferences for certain types of businesses. Agencies wishing to adopt such preferences should first review their existing policies and bidding practices for any needed updates to comply with the new law.

For more information on AB 2762, or preferences in bidding generally, including for assistance in drafting policies and bid documents to implement preferences, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Devon B. Lincoln

Partner

Alyse A. Pacheco

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

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New Law Indefinitely Extends Community College Use of Best Value Process in Bidding

November 2018
Number 74

An expiring law allowing special bidding procedures for community college districts has been amended and extended. Although competitive bidding is the default rule for procurement of personal property and non-construction related services by community college districts and other public agencies, under Public Contract Code section 20651.7, a community college district is allowed to award bids on the basis of “best value,” if the district determines that it can expect “long-term savings through the use of life-cycle cost methodology, the use of more sustainable goods and materials, and reduced administrative costs.” This allows community college districts to use factors other than price to determine the lowest responsible bidder for contracts that are competitively bid.

To utilize this method for awarding contracts, a community college district is required to establish policies and procedures for determining “best value,” and in doing so is required to consider certain factors like pricing and service levels. Community college districts are also permitted to consider a number of additional factors, including the economic benefits to the local community and job creation and retention. This alternative method was set to expire on January 1, 2019. However, Assembly Bill (AB) 3186, signed by Governor Jerry Brown, extends the requirement indefinitely to community college districts, as well as to the University of California. AB 3186 also deletes the requirement that the use of best value procurement be reported by the district to the Legislative Analyst, which then would report to the Legislature.

For more information on this bill or on best value procurement generally, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Devon B. Lincoln

Partner

Alyse A. Pacheco

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Mandatory Prequalification on Certain School District Projects is Here to Stay

November 2018
Number 73

California has extended a school district prequalification requirement that was nearing sunset. Prequalification of general contractors and mechanical, electrical, and plumbing engineers on certain school district projects has been mandatory since January 1, 2015. Specifically, under Public Contract Code section 20111.6, prequalification is required on all lease-leaseback projects and on other school district public works projects when all three of the following factors are met:

(1) the project will entail a projected expenditure of $1,000,000 or more;
(2) the school district has an average daily attendance of at least 2,500; and
(3) the school district intends to use state bond funds, either immediately or by potentially seeking reimbursement from state bond funds in the future.

Prequalification requires that a prospective bidder submit a prequalification questionnaire and financial statement, under oath, as part of the bidding process and requires each prospective bidder to submit a bid by completing and executing a standardized proposal form. This requirement was set to expire on January 1, 2019 (see 2015 Client News Brief No. 51). However, AB 2031, signed by Governor Jerry Brown, extends the requirement indefinitely.

For more information on this bill, or for assistance with the prequalification process, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Devon B. Lincoln

Partner

Alyse A. Pacheco

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Directory and Personal Information Must Be Withheld from Board Meeting Minutes upon Request

November 2018
Number 72

Governor Jerry Brown has signed into law Senate Bill (SB) 1036, which will allow parents and adult pupils to prevent the governing board of a local education agency from including the directory and personal information of a student and/or the student’s family in the governing board’s meeting minutes. SB 1036 is set to take effect on January 1, 2019.

Federal and State law define the extent to which local educational agencies (LEAs), including schools districts, charter schools, community college districts, and county offices of education, can collect and distribute information about students and their families. Under the federal Family Educational Rights and Privacy Act (FERPA) and California law, LEAs are generally prohibited from releasing a student’s “educational” or “pupil” records without written consent.

However, both Federal and State law exclude “directory information” from the definition of “educational” and “pupil records.” Directory information includes a student’s name, address, telephone number, date of birth, email address, major field of study, and dates of attendance.

SB 1036 was proposed to protect directory and personal information of students and their parents or guardians at school board meetings by not allowing their information to be published in the minutes of the meeting upon request. According to the author of the bill, some students and parents feel that the release of their information presents the potential for intimidation, harm, or other harassment based on their testimony during meetings. For this reason, SB 1036 authorizes students and their families to prevent their directory and “personal information” (defined to include a person’s address, telephone number, date of birth, and email address), from being disclosed in the minutes of an LEA board meeting if a student who is age 18 or older, or the parent or guardian of a student, so requests in writing to the secretary or clerk of the LEA governing body.

Takeaway

While SB 1036 provides students and their families with some basic protections against public disclosure of personal information, it is by no means a guarantee that such information will be protected. As stated by the Assembly Committee on Education, given the public nature of LEA meetings, excluding names from meeting minutes is not a guarantee of anonymity, as the names of speakers can be obtained from other meeting participants and attendees, other written reports, and video or audio tape recordings. Further, the new law explicitly states that the provision is not intended to affect the public’s right of access to information pursuant to any other law (e.g., the California Public Records Act or the Brown Act). Entities and individuals should, therefore, be aware of the limits of SB 1036.

Further, LEAs should make sure their staff are aware of SB 1036, and should consider adopting practices and procedures allowing them to properly respond to written requests from parents or adult students. LEAs should also ensure that their board policies pertaining to the release of directory information are updated to be consistent with the new requirements of SB 1036. Finally, school districts may consider alerting parents and the public of SB 1036 through their annual parental notification.

If you have any questions about SB 1036 or about data privacy laws in general, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Manuel F. Martinez

Partner

Bradley R. Sena

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Legislature Clarifies CEQA Lead Agency’s Scope of Consideration in Authoring EIR

November 2018
Number 71

The California Legislature has amended the California Environmental Quality Act (CEQA) in an effort to clarify a lead agency’s ability to consider both the broad benefits of a project and the negative impacts of denying the project when evaluating environmental impacts.

Under existing law, CEQA requires state and local agencies to assess the environmental impacts of projects they undertake. Unless an exception applies, the lead agency on the project must prepare one of three types of environmental review documents: a negative declaration, a mitigated negative declaration, or an environmental impact report (EIR). If the project will not have any significant effects on the environment or those effects can be mitigated to an insignificant level, a negative or mitigated negative declaration can be prepared. However, if the lead agency determines the project will have a significant environmental impact that cannot be mitigated, an EIR must be prepared. In preparing an EIR or mitigated negative declaration, the lead agency must identify each expected environmental impact and identify mitigation measures for those impacts. In addition, the lead agency must analyze and provide reasonable alternatives to the project, including the option of cancelling the project (known as the “no project alternative”).

If mitigation is not feasible for a given effect, the project is not necessarily prohibited. The CEQA guidelines provide that mitigation is not necessary if the lead agency determines, with support from substantial evidence in the record, that the “specific economic, legal, social, technological, or other benefits of a proposed project outweigh the unavoidable adverse environmental effects.” This is known as a “statement of overriding consideration.”

Assembly Bill (AB) 2782 adds a section to existing CEQA statutes that permits a lead agency authoring an EIR to:

“consider specific economic, legal, social, technological, or other benefits, including regionwide or statewide environmental benefits, of a proposed project and the negative impacts of denying the project. Any benefits or negative impacts considered pursuant to this section shall be based on substantial evidence in light of the whole record.”

The new language confirms that lead agencies may broadly consider all benefits of a project as well as any negative environmental impacts of denying the project. For example, canceling a bus lane improvement project could represent a missed opportunity to reduce greenhouse gas emissions as commuters drive their cars instead.

Senate and Assembly committee analysis points out that the language of AB 2782 allowing the lead agency to assess the broad benefits of a project is already reflected in the “statement of overriding consideration” section of the current CEQA guidelines. Similarly, the ability to consider the negative impacts of denying the project already exists in the “no project alternative” analysis. Thus, AB 2782 merely re-states and confirms a lead agency’s scope of consideration when preparing an EIR.

If you have questions about AB 2782 or CEQA issues in general, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Anne L. Collins

Partner

Jordan R. Fong

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Part-Time Playground Positions Now Part of Classified Service for All School Employers

November 2018
Number 70

Effective January 1, 2019, all part-time playground positions will become part of the classified service of school districts and community college districts, including those K-12 and community college districts that have incorporated the merit system. (For those unfamiliar with the terminology, a “merit system” district is a district that has adopted the systems of rules and procedures set forth in Education Code sections 45240 et seq. (K-12) and 88060 et seq. (community colleges), which govern the employment, pay and otherwise control the services of the district’s classified personnel.)

Prior to January 1, 2018, part-time playground positions were exempt from the classified service. This changed for K-12 public school districts with the passage of Assembly Bill (AB) 670 in 2017. Under AB 670, part-time playground employees joined the classified service, but only in school districts that had not incorporated a merit system. (For more information related to AB 670, see 2017 Client News Brief 76.) Recognizing that AB 670 created a difference in the treatment of the position depending on the type of employer, AB 2160 was passed to incorporate part-time playground positions into the classified service for merit system school districts and all community college districts.

AB 670 did not address when employees in part-time playground positions become permanent employees. AB 2160 now provides that part-time playground employees of school and community college districts that have incorporated a merit system, are deemed permanent without placement on an eligibility list or examination. This permanency language appears to require that any part-time person covered by AB 2160 become permanent on January 1, 2019, regardless of whether or not they have served the required probationary period as of that date. Therefore, school districts and community colleges should review a list of which employees will become permanent so that employees who are not meeting standards are identified and decisions may be
made about their continued employment.

As with AB 670, AB 2160 provides employees in part-time playground positions with due process rights in termination proceedings, statutory rights related to layoff and reemployment and all other rights of classified service, as provided by law, including leaves, vacation pay and holidays.

The inclusion of part-time playground positions in the classified service does not automatically mean that employees in these positions will become part of a classified bargaining unit. Depending upon the terms of its existing collective bargaining agreement, a union may need to seek a unit modification to include these positions within the bargaining unit. School districts should review the language of their collective bargaining agreements to determine the treatment of part-time playground positions under those the agreements.

To understand the potential fiscal impacts of these statutory changes, districts should analyze the increased cost of health benefits, leave rights, and other applicable rights and benefits.

For more information on AB 2160 and/or AB 670 or their impacts on classified service, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Sarah Levitan Kaatz

Partner

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

New Law Could Reduce Public School Energy Costs

November 2018
Number 69

A new law aims to reduce the high costs public schools pay for energy. Throughout California, K-12 schools are spending a significant portion of their general fund-nearly $700 million-just to keep the lights on. This amount is nearly equal to what public schools dedicate to books and supplies for students. Assembly Bill (AB) 2068 seeks to reduce energy costs in the future by requiring public utilities to evaluate and report the feasibility and economic impacts of establishing discounted utility rates for public K-12 schools.

Electrical and gas corporations (public utilities), in conjunction with the California Public Utilities Commission (CPUC), establish the amount a utility can collect from its customers to cover anticipated costs and reasonable profit. Once this amount is established, the CPUC and utility then create customer “classes” and rates for each class. This division into separate classes and rates reflects a recognition that different general categories of customers place different demands upon the electrical system and therefore it is appropriate to charge users differently. Public schools have generally been placed in a “nonresidential” or “commercial” class rate, despite the fact that public schools have electricity use patterns that differ from the other users placed in their same class. For example, schools typically experience a significant reduction in electricity demand in the mid-afternoon through the next morning and during the summer months, while electricity demand for typical commercial users would not be subject to school day and school year fluctuation patterns.

AB 2068 will require public utilities to evaluate the feasibility and economic impacts of establishing a utility rate class specific to public schools that would reflect a discount from the current rate structure. Public utilities are required to submit their findings to the CPUC by no later than January 1, 2020, which will then be forwarded to the California Legislature.

While AB 2068 does not offer immediate relief to public schools, it at least demonstrates the Legislature’s awareness of the issue and may provide a path to reduced energy costs in the future. In the meantime, schools may still pursue other options for increasing energy efficiency, like taking advantage of remaining Proposition 39 funding or the recently enacted Clean Energy Job Creation Program for energy efficiency projects. (For further discussion of Proposition 39 or the Clean Energy Job Creation Program, see Client News Brief No. 42.)

If you have any questions about AB 2068, or any questions about current options for increasing energy efficiency, please contact the authors of this Client News Brief or attorney at one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Devon B. Lincoln

Partner

Travis E. Cochran

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.