A Well-Informed Start to 2024: BBK’s Guidance for New Laws in California

In Part One of the New Law Guidance series from Best Best & Krieger LLP (BBK), we cover important new legislation for 2024 related to public contracts, local agencies and public employees. Below we provide takeaways and analyses of AB 334, SB 617, AB 516, AB 557, SB 706, SB 229, AB 1484 and AB 96.

PUBLIC CONTRACTS

AB 334

AB 334 (Bill) establishes a new statute, Government Code Section 1097.6, which clarifies Government Code Section 1090 (Section 1090) conflict of interest prohibition and its application to independent contractors engaged by public agencies effective January 1, 2024. The Bill provides:

An independent contractor who enters into a contract with a public agency to perform one phase of a project and seeks to enter into a subsequent contract for a later phase of the same project is not an “officer” under Section 1090 if the contractor’s duties and services related to the initial contract did not include assisting the public agency with any portion of a request for proposals, request for qualifications, or any other subsequent or additional contract with the public agency.
If an independent contractor did assist the public agency with contracting matters, the contractor may enter into a subsequent contract with the public agency for a later phase of the same project so long as: (1) the contractor’s prior participation during an initial stage of a project was limited to conceptual, preliminary, or initial plans or specifications; and (2) all bidders or proposers for the subsequent contract have access to the same information, including all conceptual, preliminary, or initial plans or specifications.
The Bill also exempts independent contractors from criminal, civil or administrative enforcement under Section 1090 if the initial contract includes specified language and the independent contractor is not in breach of those terms.
The Bill further provides that independent contractors who fail to include the specified language in the initial contract, but act in good faith reliance on the above-stated rules, are exempt from criminal, civil or administrative enforcement under Section 1090.

SB 617

SB 617 (Bill) expands the existing authority for local water agencies to use the progressive design-build method of project delivery for specified water projects to include transit and transportation agencies and any type of project. Specifically, this Bill:

Authorizes a “local agency” (defined as a transit district, municipal operator, consolidated agency, joint powers authority, county transportation commission, regional transportation agency or local or regional agency) to procure progressive design-build contracts and use the progressive design-build contracting process for up to 10 public works projects each in excess of $5,000,000 until January 1, 2029.
Requires a local agency entering into a progressive design-build contract to develop guidelines for a standard organizational conflict-of-interest policy regarding the ability of a person or entity that performs services for the local agency relating to the solicitation of a design-build to submit a proposal as a design-build entity or to join a design-build team.
Specifies guidelines and procedures for a local agency’s use of a progressive design-build project delivery method.
Requires a local agency that uses the progressive design-build process to submit a report on its use of the process to the Legislature by January 1, 2028.

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LOCAL AGENCIES

AB 516 and The Mitigation Fee Act

The Mitigation Fee Act (Act) allows local agencies to impose mitigation fees for development projects to pay for public improvements such as constructing sidewalks, parks and other public facilities. The Act requires the local agency to deposit the fees in a separate account or fund, and to make certain information about the account or fund public annually (such as an identification of an approximate date by which the construction will commence and the amount of refunds made to the owners of the lots or units of the development project). The Act also authorizes a person to request an audit to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of a product, public facility or service provided by the local agency.

AB 516 (Bill) attempts to increase greater transparency in this fee process by expanding the type of information that must be included in the annual reports. However, this increase in transparency will impose additional burdens and costs on local agencies to sufficiently annually report as required under the Act.

The following additional information is provided:

The Bill will now require the annual report to include an identification of each public improvement identified in a previous report, whether construction began on the approximate date noted in the previous report, the reason for the delay and a revised approximate date that the local agency will commence construction.
The Bill requires the annual report to include the number of persons or entities identified to receive refunds.
The Bill will require a local agency to inform a person paying a fee imposed as a condition of approval of a development project of their right to request the audit and their right to request notice of the local agency’s meeting to review the fee account or fund information.
The Bill will require a local agency to provide the person with a link to the page on the local agency’s website where the fee account or fund information made public as described above is available for review.

AB 557

AB 557 (Bill) updates and amends the flexible COVID-era teleconference procedures previously allowed under AB 361. Public agencies must post agendas at all teleconference locations, identify each teleconference location on the agenda and ensure a quorum of the body participates from within the agency’s jurisdiction (Government Code section 54953(b)) under the “traditional” Brown Act teleconference rules. The Bill’s relaxed teleconference rules allows public agencies to conduct virtual meetings as long as there is a state-proclaimed state of emergency and the governing bodies make and renew findings every 30 days.

The following additional information is provided:

The Bill, which sunsets on January 1, 2026, makes the following two updates to the existing relaxed teleconference meeting rules established by AB 361:
- State or local social distancing restrictions can no longer serve as a basis for holding relaxed teleconference meetings, as was the case under AB 361. Public agencies may still hold remote meetings in situations where the governor has proclaimed a state of emergency and the legislative body is meeting via teleconference during that emergency, either to make an initial determination on whether meeting in person presents imminent risks to health or safety or where the body has already determined by a majority vote that such risks are present.
- The agency’s governing body may now renew its findings in support of continued teleconference meetings under the relaxed requirements every 45 days instead of every 30 days as required under AB 361.
- While agencies may no longer rely on findings for relaxed teleconference meetings based on social distancing measures, agencies can still apply the relaxed teleconferencing rules during a Governor-declared state of emergency. Alternatively, agencies may continue to rely on the traditional teleconferencing requirements or allow remote attendance on a case-by-case basis using the emergency and just cause provisions found in section 54953(f) (otherwise known as the AB 2449 rules).

SB 706

SB 706 (Bill) allows all cities, counties and special districts to use the progressive design-build process to procure public works contracts in excess of $5,000,000. “Progressive design-build” refers to a process where an agency hires a single entity at the earliest feasible stage of the project to perform the design, preconstruction and construction. Unlike standard design-build, the progressive design-build process enables procuring a design-build entity prior to establishing a construction price, which enables the parties to finalize the construction cost as the design is being considered.

The following additional information is provided:

The Bill process requires the agency to release a request for qualifications that contains a description of the project and the procedure for final selection, which naturally will be based on qualifications and value rather than price.
To be eligible for selection, the design-build entity must agree to a project labor agreement or enter another enforceable commitment to provide a skilled and trained workforce. The design-build entity must perform sufficient design and preconstruction work to determine a mutually agreeable guaranteed maximum price. In many cases, the design-build entity will have to bid out subcontract work following standard bidding procedures and award subcontracts on a best value basis, which can consider cost and other factors.
There are of course advantages and disadvantages to this delivery method, and different risk factors that should be considered. However, progressive design-build is a significant new tool that public agencies can take advantage of, particularly for unique or specialized projects that require collaboration in the early stages of design.
The Bill may also unlock new potential for public-private partnerships, given that a single source can carry out all project phases. The Bill is effectively a pilot; public agencies cannot use progressive design-build on more than 10 projects and the statute will sunset in 2030.
Given the potential public benefits of having the option for a more collaborative procurement process, the Legislature may ultimately remove these restrictions.

SB 229

SB 229 (Bill) adds Government Code section 54230.7 to the Surplus Land Act (SLA), effective January 1, 2024.

The following information is provided:

The SLA provides that a local agency must send written notice of availability and specific information regarding the property to the Department of Housing and Community Development (HCD) before disposing of (or negotiating for the disposal of) property.
HCD may issue a Notice of Violation if property is improperly disposed of under the SLA, potentially subjecting a local agency to liability for: a first-time violation penalty of 30% of the final sale price of the land sold; or 50% for subsequent violations. A local agency has 60 days to cure or correct an alleged violation before an HCD enforcement action may be brought.
Under the Bill, local agencies that have received an HCD Notification of Violation must hold an open and public meeting to review and consider the substance of the Notice of Violation. The public meeting item to consider the Notice of Violation must be publicly noticed consistent with the Brown Act and disclosed in a conspicuous place at the local agency’s offices, and on its website.
This Bill makes clear that a legislative body may still meet in closed session, under real property negotiations, to consider the planned disposition. A local agency is exempt from the requirement of holding public meetings if, after receiving Notice of Violation, it ceases to dispose of the surplus land.

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PUBLIC EMPLOYMENT

AB 1484

AB 1484 (Bill) adds sections of the Government Code (Gov. Code) relating to temporary employees hired to do the same or similar work as permanent employees be represented by a recognized employee union, subject to limitations.

The following additional information is provided:

The Bill requires that temporary employees hired by a public employer to perform the same or similar work as a permanent employee be represented by the recognized employee union, except:
- Where the temporary employee is presently within the union prior to this date (and does not require the same terms and conditions of permanent employment).
- Provided that there is a recognized employee organization.
- If the current collective bargaining agreement excludes temporary employees (Gov. Code, § 3507.7).
The Bill requires the public employer to promptly participate in collective bargaining to establish certain employment conditions for the newly added temporary employees if the parties’ current memorandum of understanding does not address them (Gov. Code, § 3507.7 (b)(1)(B)).
The Bill requires public employers, upon hiring, to provide each temporary employee with their job description, wage rates, and eligibility for benefits, anticipated length of employment and procedures to apply for open, permanent positions (Gov. Code, § 3507.7 (b)(2)).
Fiscal impact: The Bill does not appropriate funds for these new requirements; however, this Bill specifies this as a state mandate. Therefore, if the Commission on State Mandates determines the Bill contains costs mandated by the state, it shall reimburse those costs under the California Constitution. If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made.

AB 96

AB 96 (Bill) adds multiple sections of the Government code (Gov. Code) relating to public transit employers acquiring autonomous transit vehicles and protections of jobs of transit workers, requiring collective bargaining commencement to create plans to train and prepare affected workers.

The following additional information is provided:

The Bill requires a public transit employer to wait at least 10 months before beginning a procurement process to acquire or deploy any autonomous transit vehicle technology for public transit services that would eliminate job functions or jobs of a workforce, and the employer must provide written notice to the exclusive employee representative (union representative) of the workforce affected by the autonomous transit vehicle technology of its determination to begin that procurement process (Gov. Code, § 3126 (a)).
The Bill requires a public transit employer to create plans to train and prepare the affected workforce to fill new positions created by the autonomous transit vehicle technology when requested in writing by the union representative, among other subjects (Gov. Code, § 3127).
The Bill would vest the California Public Employment Relations Board (PERB) with jurisdiction to process unfair practice charges alleging violations of these provisions (but only as to transit district employers) and authorizes PERB to make additional emergency regulations necessary for the immediate preservation of the public peace, health, safety or general welfare.
Fiscal impact: The Bill does not appropriate funds for this initiative and no expected/contemplated costs are associated with the change.

Disclaimer: BBK Legal Alerts are not intended as legal advice. Additional facts, facts specific to your situation or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.