Honorable Mayor and Members of the Hermosa Beach City Council
Regular Meeting of September 26, 2023
Title
ADOPTION OF AN ORDINANCE ADDING CHAPTER 3.14 TO THE HERMOSA BEACH MUNICIPAL CODE TO BECOME SUBJECT TO THE UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT (UPCCAA OR ACT) FOR ALL PUBLIC PROJECTS, AMENDING SECTION 3.12.140 TO INCREASE THE CITY MANAGER’S AUTHORITY TO AWARD CONTRACT FOR MAINTENANCE SERVICES UP TO THE INFORMAL BIDDING LIMIT AND FINDING THE SAME EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT
(Public Works Director Joe SanClemente)
Body
Recommended Action:
Recommendation
Staff recommends City Council:
1. Waive the full second reading and adopt by title only an Ordinance of the City of Hermosa Beach, California, adding Chapter 3.14 to the Hermosa Beach Municipal Code, providing alternative bidding procedures as specified in Public Contract Code (PCC) § 22000-22045 and amending Chapter 3.12.140 of the Hermosa Beach Municipal Code, delegating to the City Manager signatory authority for award of contracts for maintenance services up to the informal bidding limit as defined in PCC 22032(b) (Attachment 1); and
2. Direct City Clerk to print and publish a summary ordinance in a newspaper of general circulation within 15 days following adoption and post it on the City’s bulletin for 30 days.
Body
Executive Summary:
At its September 12, 2023 meeting, City Council adopted a resolution declaring its intent to become subject to the Uniform Public Construction Cost Accounting Act (UPCCAA or Act) for all public projects as defined in Public Contract Code (PCC) § 22002(c) and established City Manager signatory authority for award of contracts for public project and maintenance service contracts.
City Council also introduced and waived full reading of an ordinance adding Chapter 3.14 to the Hermosa Beach Municipal Code, providing alternative bidding procedures as specified in PCC § 22000-22045 and amending Chapter 3.12.40 to the Hermosa Beach Municipal Code, delegating to the City Manager signatory authority for award of contracts for maintenance services up to the informal bidding limit as defined in PCC 22032(b).
Background:
The City of Hermosa Beach is currently required, per the Public Contract Code (PCC), to formally bid all capital projects, including repair and replacement projects, valued at $5,000 or greater. This low threshold proves to be extremely cumbersome for smaller projects that could otherwise be completed expeditiously due to the staff effort involved in two time-consuming endeavors-putting together full bid packages (i.e., design plans, specifications, estimates, and contract) for what would otherwise be simple projects; and preparing and presenting corresponding staff reports.
The Hermosa Beach Municipal Code requires also requires all maintenance services (e.g., minor painting, roofing, landscape work, etc.) valued at $30,000 or greater to be awarded by City Council. This requirement also necessitates additional time to prepare a staff report and seek Council approval for projects that often need to be resolved quickly, but which do not meet the legal definition of an emergency.
To create efficiency and accelerate project approval, the State of California allows municipalities that adopt the alternative bidding procedures available under the Uniform Public Construction Cost Accounting Act (UPCCAA) to expedite bidding for public projects, in particular those currently valued under $60,000 (Level 1 projects, as defined in PCC § 22032(a)) and those valued between $60,000 and $200,000 (Level 2 projects, as defined in PCC § 22032(b)).
Should a municipality desire to adopt the alternative procedures, it may do so by adopting a resolution electing to become subject to the UPCCAA’s bidding procedures, adopting an ordinance allowing those bidding procedures, and raising the signature authority of the City Manager to execute capital, maintenance, and repair contracts for projects valued below the Level 2 threshold. By doing so, its staff would be able to significantly reduce the time it takes to award and implement projects valued at less than $200,000.
By further delegating authority to approve the plans and designs for these lower cost capital projects to the Public Works Director and/or City Engineer, cities can retain its design immunity without compromising expedient implementation of the projects.
At its September 12, 2023 meeting, City Council adopted a resolution declaring its intent to become subject to UPCCAA and established City Manager signatory authority for award of contracts for public project and maintenance service contracts (Attachment 2). Council also introduced and waived the full reading of ordinance Chapter 3.14 and amended Chapter 3.12.140 of the Hermosa Beach Municipal Code.
Past Council Actions
|
Meeting Date |
Description |
|
September 12, 2023 |
City Council adopted a resolution declaring its intent to become subject to UPCCAA and established City Manager signatory authority for award of contracts for public project and maintenance service contracts. Council also introduced and waived the full reading of ordinance Chapter 3.14 and amended Chapter 3.12.140 of the Hermosa Beach Municipal Code. |
Discussion:
California’s Public Contract Code (PCC) § 20160-20174 identifies the rules governing bidding and contracting of public projects by local municipalities, and it outlines very specific criteria that must be followed when advertising and awarding public projects valued over $5,000. These rules apply to construction and improvements to buildings, facilities within the public rights of way (ROW), repairs, replacement of parts and equipment; and the purchase of any materials and supplies needed for these projects. Because the code’s definition of “public project” is sufficiently broad, the bidding and award criteria are applicable to the overwhelming majority of public improvement, restoration, and repair projects carried out by Public Works. The $5,000 public bidding threshold was established decades ago by the California Legislature and has never been adjusted for inflation.
Additionally, the bidding and award requirements contained in PCC § 20160-20174 provide virtually no flexibility in obtaining quotes for and expeditiously implementing smaller public projects and repairs (e.g., those valued at less than $60,000), making it difficult for Hermosa Beach staff to secure low value contracts at reasonable prices. Many contractors are simply unwilling to expend the time, money, and effort necessary to complete all the paperwork and bonding requirements for such small projects, or if they are willing, the markup is oftentimes much larger than true market conditions/pricing. Consequently, work that otherwise seems simple becomes more costly, complex, and time-consuming for Hermosa Beach to secure.
To address the challenges associated with contracting for low value public projects, the State Legislature established the Uniform Public Construction Cost Accounting Act (UPCCAA; Public Contract Code § 22000-22045) in 1983; often referred to as alternative bidding procedures. The Act provides government agencies with much greater flexibility for bidding and awarding projects valued at $200,000 or less. This is further described in UPCCAA’s Frequently Asked Questions (FAQ) (Attachment 3). More than 1,560 agencies, including 291 cities and another 1,272 public agencies and districts statewide, have already adopted UPCCAA procedures due to their enhanced ability to more quickly implement smaller public projects (Attachment 4). The dollar thresholds in the Act are reviewed and increased periodically by the State Legislature based on inflation.
What Do UPCCAA’s Alternative Bidding Procedures Allow?
Currently, under the UPCCAA, any work that meets the definition of a public project and is valued at less than $60,000 may be:
• Awarded by negotiated contract-This means City staff can obtain spot quotes rather than first developing detailed plans and designs for small repairs and renovations. This can result in rapid implementation as well as additional financial savings to the City.
• Completed by purchase order-Staff can simply select a vendor/contractor using an on-call service approach and issue a purchase order for routine repair work under $60,000 that falls within the definition of a public project.
• Performed by the employees of a public agency by force account-This gives Hermosa Beach the flexibility to utilize its own staff for repair projects in lieu of bidding, subject to identification and tracking of personnel costs policies in accordance with procedures developed by the California Uniform Construction Cost Accounting Commission.
Examples of such projects that can often cost more than $5,000 but less than $60,000 include:
• Replacement of boilers and HVAC units;
• Repairs to and/or replacement of miscellaneous mechanical and building equipment; elevator mechanical and electrical systems; carpet, windows, and deteriorated plumbing; sidewalk and concrete; roof structures; minor sewer main work; water valves; and pump station mechanical equipment;
• Park fencing replacement and recreational equipment upgrades and repairs;
• Exterior building painting; and
• Repair of street depressions, pothole repairs, striping, and minor paving projects.
Another benefit of adopting alternative bidding procedures is that it allows cities to advertise smaller projects for a shorter period. Public projects valued between $60,000 and $200,000 may be awarded using informal bid procedures set forth in the Act (PCC § 22032(b)), which allow advertising in trade journals or to a short list of qualified vendors for 10 days, rather than broader advertising for 15 days. This could help ensure that Hermosa Beach is working with known, quality, and local vendors for smaller projects.
Public projects valued at greater than $200,000 (PCC §22032(c)) must utilize the formal bidding procedures. The City currently uses formal bidding procedures for all projects valued greater than $5,000.
UPCCAA procedures prohibit splitting projects into smaller projects to evade provisions of the code; establish notice and advertising requirements for informal and formal bidding of public projects; and establish criteria for the rejection of bids.
What Must Hermosa Beach Do to Utilize the UPCCAA’s Flexibilities?
For Hermosa Beach to legally utilize UPCCAA bidding procedures and the streamlined bid/award process it affords, the City must subscribe to the policies and procedures developed by the California Uniform Construction Cost Accounting Commission. Specifically, the City must adopt a resolution electing to become subject to the UPCCAA and notify the State Controller of that election, and the City must adopt an ordinance enacting the informal bidding procedures set forth in the UPCCAA.
By adopting the resolution (Attachment 2) and proposed ordinance (Attachment 1) required by UPCCAA, and in amending Chapter 3.12 of the Hermosa Beach Municipal Code to raise the City Manager’s contract signature authority, a significant number of Hermosa Beach’s public projects valued under $200,000 would be more quickly and easily implemented, saving significant staff time and resources.
As proposed, the current thresholds for bidding and awarding contracts for public projects and their corresponding benefits would be:
|
Public Project Cost |
Bidding Options |
Benefits |
|
PCC §22032(a) (i.e., Level 1 projects) $0-$60,000 |
Negotiated contracts, purchase order, and force account. |
Allows projects to be spot quoted; saves time in preparing bids/specs, advertising, and awarding contracts. |
|
PCC §22032(b) (i.e., Level 2 projects) $60,000-$200,000 |
Informal bidding procedures allowed. |
Saves time in awarding contracts. City may publish in certain trade journals. |
|
PCC §22032(c) (i.e., Level 3 projects) Over $200,000 |
Formal bidding required. |
No additional benefits. |
The California Uniform Cost Accounting Commission (“Commission”) is charged with reviewing construction costs every five years and periodically recommends increases to the three bidding thresholds listed above to account for inflation. The most recent increase was approved four years ago in 2019, which raised the Level 1 cap from $45,000 to $60,000 and the Level 2 cap from $175,000 to $200,000.
The ordinance proposed by staff includes a recommendation that the City Manager be given signatory authority for Level 1 and Level 2 projects consistent with the thresholds adopted by the Commission, inclusive of any future increases approved by the Commission. This would allow Hermosa Beach to continue to use the streamlined process and flexibilities of the UPCCAA for the public projects and expenditures already approved by City Council through its annual adoption of the Capital Improvement Program and budget. Staff further recommends that this signatory authority and bidding thresholds be extended to include contracts for maintenance and minor repair projects as defined in PCC §22002(d) so that the same flexibilities can be utilized to quickly address the maintenance needs of City facilities.
Companion Action to the UPCCAA: Design Immunity for Level 1 Public Projects
Design Immunity is codified in Government Code §830.6, which sets forth the design immunity defense for public works projects awarded by the City. That section states:
“Neither a public entity nor a public employee is liable under this chapter for an injury caused by the plan or design of a construction of, or an improvement to, public property where such plan or design has been approved in advance of the construction or improvement by the legislative body of the public entity or by some other body or employee exercising discretionary authority to give such approval or where such plan or design is prepared in conformity with standards previously so approved, if the trial or appellate court determines that there is any substantial evidence upon the basis of which (a) a reasonable public employee could have adopted the plan or design or the standards therefore or (b) a reasonable legislative body or other body or employee could have approved the plan or design or the standards therefore.” (Emphasis added).
In order to trigger the design immunity defense, the City designated staff person must approve the plans and designs prior to construction. Currently, City Council fills this role by approving a resolution at the same time it awards a project availing the City of the immunities set forth in Government Code §830.6. However, such approval could also be delegated to the Public Works Director and/or City Engineer for those projects falling into the Level 1 and Level 2 categories described above, because public projects of $200,000 or less would no longer require formal City Council action to award such contracts.
To ensure that the design immunity afforded by section 830.6 attaches to those lower cost projects, staff recommends that the ordinance authorize the Public Works Director and/or City Engineer to approve plans and designs and grant design immunity for those public projects valued at less than $200,000. In the absence of such a delegation, staff would be required to bring every minor public project to the Council for design immunity, resulting in unnecessary delays and negating the core efficiencies that the UPCCAA provides. As the official(s) charged with overseeing all public works in the City and as a licensed Professional Engineer, the Public Works Director and/or City Engineer are qualified to exercise discretionary authority over the approval of plans and designs for public projects.
General Plan Consistency:
This report and associated recommendation have been evaluated for their consistency with the City’s General Plan. Relevant Policies are listed below:
Governance Element
Goal 1. A high degree of transparency and integrity in the decision-making process:
Policies:
• 1.1 Open meetings. Maintain the community’s trust by holding meetings in which decisions are being made, that are open and available for all community members to attend, participate, or view remotely.
• 1.2 Strategic planning. Regularly discuss and set priorities at the City Council and management level to prioritize work programs and staffing needs.
• 1.4 Consensus oriented. Strive to utilize a consensus-oriented decision-making process.
• 1.6 Long-term considerations. Prioritize decisions that provide long-term community benefit and discourage decisions that provide short-term community benefit but reduce long term opportunities.
Goal 2. The community is active and engaged in decision-making processes.
Policies:
• 2.3 Public participation guidelines. Establish parameters and guidelines to ensure public participation is promoted through diverse methods.
• 2.4 Public Forums. Host periodic public forums on issues important to the community, facilitating these forums with the purpose of guiding City policy.
Infrastructure Element
Goal 2. Roadway infrastructure maintenance supports convenient, attractive, and complete streets and associated amenities.
Policy:
• 2.8 Timely repairs and maintenance. Ensure that repairs and maintenance are completed in a timely manner when reported.
Fiscal Impact:
There is no fiscal impact associated with the recommended action. If adopted, Public Works expects anticipated savings to be as much as 25 percent of the project cost for Level 1 projects (valued between $0 and $60,000) by eliminating the need to prepare plans and specifications for formal bidding, as well as many staff hours associated with the preparation of the bidding documents and contract award. Level 2 projects (valued between $60,000 and $200,000) would also benefit the City by reducing staff time associated with formal contract award procedures.
Attachments:
1. Proposed Ordinance No. 23-1467
2. Resolution No. 23-7386
3. UPCCAA Frequently Asked Questions
4. List of Participating Agencies
5. Link to September 12, 2023 City Council Staff Report
Respectfully Submitted by: Joe SanClemente, Public Works Director
Noted for Fiscal Impact: Viki Copeland, Finance Director
Legal Review: Patrick Donegan, City Attorney
Approved: Suja Lowenthal, City Manager