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.

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.

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.

New Laws Promote Student Health and Safety

November 2018
Number 68

California lawmakers demonstrated a concerted effort to promote student health and safety by approving several bills this session. Assembly Bills (AB) 1798, 2435 and 2816 were passed to create or expand requirements or funding for school districts in relation to bus transportation, air quality, and pesticide use.

Assembly Bill 1798 – Passenger Restraint Systems on All School Buses by July 1, 2035

Existing law requires passenger restraint systems on certain classes of school buses manufactured on or after July 1, 2005, and July 1, 2004, depending on capacity and weight. AB 1798 amends section 27316 of the Vehicle Code to require that, on or before July 1, 2035,all school buses in use in California must be equipped with a passenger restraint system, effectively phasing-in the requirement as old buses are retired and new buses are manufactured. While the new law creates a state mandated cost, the bill itself provides that no reimbursement is required because violation of the law is a crime.

Assembly Bill 1840 – Delays Implementation of School Bus Safety Alert Requirements until March 1, 2019

Following a few well-publicized incidents where students with special needs were left on school buses, in 2016 the Legislature enacted Senate Bill 1072, which required local educational agencies (LEAs) to install child safety alert systems in school buses and other specified student transport vehicles by the beginning of the 2018-19 school year. Many LEAs were unable to meet the original deadline due to a variety of factors, including the inability of manufacturers and installers to meet the demand for these devices. In response to these issues, the Legislature included a provision in the Education Budget Trailer Bill, AB 1840, that extends the deadline to install these safety devices until on or before March 1, 2019, with an additional six month extension for LEAs with average daily attendance of less than 4,000, or until September 1, 2019.

Assembly Bill 2453 – Air Quality

AB 2453 amends section 17074.25 of the Education Code and adds section 44391.3 to the California Health and Safety Code to expand the use of certain State aid apportionments to school districts, allowing modernization grant money to be used to update air filtration systems in order to limit student exposure to harmful air pollutants. The bill also authorizes schools and school districts located in communities with a “high cumulative exposure burden” to work with air districts to identify schools sites in need of air quality improvement and to be eligible for grants as part of a community emission reduction program. Improvements may include, but are not limited to, air filter installation or upgrade and vegetation buffer planting.

Assembly Bill 2816 – Report on Pesticide Use

The purpose of AB 2816 is to evaluate certain existing rules related to the use of pesticides at school sites, ostensibly in order for lawmakers and regulators to make improvements. Under the Healthy Schools Act of 2000 (the Act), school districts are required to follow the preferred method of managing pests, keep records of pesticide use for four years, and to notify staff and parents about expected pesticide use at school sites. The Act also requires the Department of Pesticide Regulation to establish a training program that must be annually completed by any person who intends to apply a pesticide at a school site. AB 2816 adds Section 17614.5 to the Education Code, directing the Department of Pesticide Regulation to submit a report to the Legislature on or before January 1, 2021, evaluating the implementation of the Act and providing recommendation for improvement. This new law will become inoperative on July 1, 2021, and be repealed on January 1, 2022.

Takeaways

Districts now have additional time to install child safety alert systems in their school buses and other student transport vehicles. Although these other new laws do not require immediate action on the part of local educational agencies, school districts should be mindful of future compliance with bus seatbelt requirements and opportunities for air quality funding. In connection with pesticide management, school districts should continue careful monitoring and compliance with existing law while awaiting the Department of Pesticide Regulation’s forthcoming report.

If you have any questions about AB 1798, 2453, or 2817 or about laws applicable to local educational agencies 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:

Ruth E. Mendyk

Partner

Nicholas G. Felahi

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.

Updates to Food Service and Nutrition Laws Affecting Students

November 2018
Number 67

Numerous California laws surrounding food service funding and nutritional guidelines for school districts, charter schools, and county offices of education are set to change next school year. Assembly Bills (AB) 2271 and 3043 will increase or expand the use of available state funding for food service equipment and other food services, and will modify certain pupil nutrition guidelines.

Existing State Aid Expansion and New State Matching Grant for Equipment

Existing state law requires public schools with students in grades K-12 to provide one nutritionally-adequate meal each school day to each student eligible for a free or reduced-price meal. The school is authorized to use funds available from any federal program, including the federal National School Lunch Program (NSLP), or state program, to comply with these meal requirements.

Starting July 1, 2019, contingent upon appropriation by the Legislature and allocations provided by the federal Consolidated Appropriations Act, AB 2271 will require the California Department of Education (CDE) to provide a state matching grant of up to $100,000 to a school food authority participating in the NSLP that applies for and is awarded a federal Equipment Assistance Grant for School Food Authorities. A “school food authority” is the governing body that is responsible for the administration of one or more schools and that has the legal authority or approval to operate the NSLP at that school or schools, which is usually a school district board or county board of education. The state appropriation will be for a minimum of two years, and the school food authority may use the federal and state grants for up to five individual school sites, or combine the federal and state grants for one purpose, such as creating a centralized industrial kitchen. The state matching grant must be competitively awarded, giving priority to high-need schools where 50 percent or more of the enrolled students are eligible for free or reduced-price meals, and must align with the federal Equipment Assistance Grant requirements.

Expanded use of Cafeteria Funds

Existing law prohibits expenditures from a school district’s cafeteria fund to pay costs associated with cafeteria or kitchen facilities, but starting July 1, 2019, AB 3043 will authorize districts to use cafeteria funds to purchase mobile food trucks, which will expand student access to meals.

Additionally, starting on July 1, 2019, AB 3043 will allow school districts, county offices of education, private nonprofit schools, charter schools, and residential child care institutions (together, educational entities) that participate in the federal School Breakfast Program to provide universal breakfast, meaning for all students, and use the entity’s cafeteria fund to cover the costs. Educational entities that do not currently qualify to provide universal meals must submit

specific documentation to CDE prior to using their cafeteria fund to pay for school breakfast programs, certifying that the entity will provide breakfasts at no charge to all pupils and cover costs of providing those breakfasts above the amount provided in federal reimbursement with nonfederal funds.

Pupil Nutrition Guidelines

Prior to AB 3043, the Education Code required CDE to maintain nutrition guidelines according to the California Daily Food Guide. Beginning July 1, 2019, the nutrition guidelines for breakfast and lunch must instead mirror nutrition guidelines for federal School Breakfast Program, and the NSLP, respectively, which are based on more recent nutrition studies.

If you have any questions about AB 2271 or AB 3043 or about other laws applicable to educational entities, 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:

Kelly M. Rem

Partner

Kate S. Holding

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.