The views and opinions expressed in this presentation are those of the authors and do not necessarily reflect those of CASBO.
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1 EVERYTHING YOU ALWAYS WANTED TO ASK YOUR ATTORNEY: PROPOSITION 39 P R E SENTED B Y: LISA R. A LLRED, P A R TNER; W. BRYCE C HASTAIN, P A R TNER; A N D THEODORE LIEU, A SSOCIATE The views and opinions expressed in this presentation are those of the authors and do not necessarily reflect those of CASBO.
2 What is the California Clean Energy Jobs Act (Prop. 39)? The California Clean Energy Jobs Act was created with the approval of Proposition 39 which changed the corporate income tax code and allocates projected revenue to California's General Fund and the Clean Energy Job Creation Fund for five fiscal years, beginning with fiscal year Under the initiative, roughly up to $550 million annually is available for appropriation by the Legislature for eligible projects to improve energy efficiency and expand clean energy generation in schools. $457,000,000 available for the fiscal year ($360,000,000 in ) $399,000,000 for K-12 $49,000,000 for Community College $9,000,000 for California Workforce Development Board and California Conservation Corps 1
3 What is the California Clean Energy Jobs Act (Prop. 39)? fiscal year will be final year of the program. Therefore, to ensure encumbrance of Proposition 39 K-12 Program allocations by the statutory deadline of June 30, 2018, the last date to submit energy expenditure plans to the Energy Commission is August 1, All projects must be completed by June 30, 2020 and Final Project Reporting must be completed by June 30,
4 Changes in The Program Savings to Investment Ratio: Existing law requires that an eligible energy project must achieve a minimum SIR of 1.05 to be approved for a Proposition 39 K-12 Program award. For , minimum SIR was reduced from 1.05 to 1.01, meaning that for every dollar invested on the project, the local agency must only accrue $1.01 in savings. 3
5 Changes in The Program Public Contract Code section 20133: Public Resources Code Section 26235(c) states, A community college district or LEA shall not use a sole source process to award funds pursuant to this chapter. A community college district or LEAs may use the best value criteria as defined in paragraph (1) of subdivision (c) of Section of the Public Contract Code to award funds pursuant to this chapter. PCC was repealed on September 30, 2014 pursuant to Senate Bill 785. The guidelines defer to the LEA s own procurement regulations and procedures, as long as they reflect applicable state and local laws and regulations and are not in conflict with the minimum legal standards specified above. 4
6 Changes in The Program An LEA may now submit up to three (3) energy expenditure plans per fiscal year. No longer have Power Purchase Agreement (PPA) size limitations. Prior Rule: clean generation project shall be sized to reduce up to 70% of the kwh energy consumption at the school site. (10% for weather variation, 20% for HVAC and lighting energy efficiency improvement). 5
7 Prop 39 Eligibility Eligible Projects: Energy efficiency measures and/or clean energy installations. Eligible Applicants: LEAs, County Offices of Education, School Districts, Charter Schools, State Special Schools and California Community College Districts. All facilities within the LEA: All facilities within the LEA, which include: classrooms, LEA office facilities, auditoriums, multipurpose rooms, gymnasiums, cafeterias, kitchens, pools, and special purpose areas. 6
8 Prop 39 - EIGHT STEP PROCESS 1. Electric and Gas Usage/Billing Data 2. Benchmarking or Energy Rating System 3. Eligible Energy Project Prioritization Considerations 4. Sequencing of Facility Improvements 5. Eligible Energy Measure Identification 6. Cost-Effectiveness Determination 7. Complete and Submit an Energy Expenditure Plan(s) 8. Energy Project Tracking and Reporting 7
9 You ve Gotten Your Award Now What? 8
10 Procurement Under Prop 39 Public Resources Code Section 26235(c): A community college district or LEA shall not use a sole source process to award funds pursuant to this chapter. A community college district or LEA may use the best value criteria as defined in paragraph (1) of subdivision (c) of Section of the Public Contract Code to award funds pursuant to this chapter Section 20133(c)(1) Best Value means a value determined by objective criteria related to price, features, functions, and procured from a single entity. Public Resources Code Section 26206(d): All projects shall require contracts that identify the project specifications, cost, and projected energy savings. 9
11 Use a formal Request for Qualifications/Request for Proposals Process What should be in an RFQ/RFP (no one size fits all!): Clearly identify any minimum criteria that must be met by the contractor, i.e. specific number of years of experience, specific contractors license, prequalification (if applicable) etc. Include specific qualifications that are important to your LEA, i.e. experience with similar projects, experience with LEA s of similar size and location, etc. Include CLEAR and CONCISE evaluation criteria and scoring system. There should be a rational connection between the evaluation criteria and the contract award. Sample form contract that contains insurance and indemnity requirements. Proposed fee, if applicable. Show your homework Have a written record Invite a good number of firms to submit a response 10
12 Why is Compliance Important? Public Resources Code Section 26206(e): All projects shall be subject to audit. Public Resources Code Section 26240(h)(1): The Superintendent of Public Instruction shall require local education agencies to pay back funds if they are not used in accordance with state statute or regulations. 11
13 Procurement of Expert Consultants 12
14 Energy Audit/Design Consultants The LEA may consider retention of a consultant who will help develop project specifications and assist in the Energy Expenditure Plan process. Government Code Sections 53060, et seq.: The legislative body of any public or municipal corporation or district may contract with and employ any persons for the furnishing to the corporation or district special services and advice in financial, economic, accounting, engineering, legal, or administrative matters if such persons are specially trained and experienced and competent to perform the special services required. 13
15 Energy Audit/Design Consultants Government Code Sections 4525, et seq.: selection by a local agency head for professional services of private architectural, landscape architectural, engineering, environmental, land surveying, or construction project management firms shall be on the basis of demonstrated competence and on the professional qualifications necessary for the satisfactory performance of the services required. In order to implement this method of selection local agency heads contracting for private architectural, landscape architectural, professional engineering, environmental, land surveying, and construction project management services may adopt by ordinance, procedures that assure that these services are engaged on the basis of demonstrated competence and qualifications for the types of services to be performed and at fair and reasonable prices to the public agencies 14
16 Energy Management Consultant Same methods of procurement as audit/design consultant qualifications based Allowed to use a certain amount of first year allocation per CEC guidelines LEA s with first-year award of $433,000 or less Up to $130,000 for planning activities LEA s with first-year award of $433,000 or more Up to 30% for planning activities May make sense to pool funds with other LEA s 15
17 Procurement of Design-Build or Construction Services 16
18 Find the Right Procurement Authority Formal design-build - Education Code Only for projects over $2,500,000 not a good fit Cumbersome selection requirements not a good fit Hard bid - Public Contract Code Section Lowest bidder not a good fit Lease-leaseback - Education Code Only for construction not a good fit Difficult to meet Skilled and Trained Workforce requirements, especially in smaller locales Not a good fit 17
19 Energy Conservation - Government Code Section Government Code Section : (a) Notwithstanding any other provision of law, a public agency may enter into an energy service contract and any necessarily related facility ground lease on terms that its governing body determines are in the best interests of the public agency if the determination is made at a regularly scheduled public hearing, public notice of which is given at least two weeks in advance, and if the governing body finds: (1) That the anticipated cost to the public agency for thermal or electrical energy or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the public agency of thermal, electrical, or other energy that would have been consumed by the public agency in the absence of those purchases. 18
20 Energy Conservation - Government Code Section An LEA must ensure that its Board makes the required findings based on reliable and accurate data. LEA should work closely with vendor and/or consultant(s) to ensure that proposed energy saving measure(s) will result in real and verifiable savings to the LEA. 19
21 Energy Conservation - Government Code Section Highly flexible Have to marry with Prop 39 sole source bar and contract/award requirements Don t confuse flexibility with informality 20
22 Keys to Taking on the Uncertainty Treat each separate procurement for an award of a contract Match the appropriate legal procurement method to each contract award Good documentation of your process 21
23 Piggyback Contracts 101 What is Piggybacking contracting? An exception to the bidding requirement that allows a public agency to procure materials, supplies, or equipment by piggybacking on another public entity s competitive procurement and contract. 22
24 Piggyback Contracts 101 Public Contract Code 20118: Notwithstanding Sections and 20112, the governing board of any school district, without advertising for bids, if the board has determined it to be in the best interests of the district, may authorize by contract, lease, requisition, or purchase order, any public corporation or agency, including any county, city, town, or district, to lease data-processing equipment, purchase materials, supplies, equipment, automotive vehicles, tractors, and other personal property for the district in the manner in which the public corporation or agency is authorized by law to make the leases or purchases from a vendor. Upon receipt of the personal property, if the property complies with the specifications set forth in the contract, lease, requisition, or purchase order, the school district may draw a warrant in favor of the public corporation or agency for the amount of the approved invoice, including the reasonable costs to the public corporation or agency for furnishing the services incidental to the lease or purchase of the personal property, or the school district may make payment directly to the vendor 23
25 Piggyback Contracts 101 Common Types of Piggyback Contracts: Procurement by another public agency, i.e. school district (Public Contract Code 20118) California Multiple Award Schedule ( CMAS ) (Public Contract Code 10298/10299) NASPO ValuePoint (Formerly WSCA-NASPO) (Public Contract Code and Government Code 6500) 24
26 Piggyback Contracts 101 Common Issues with Use of Piggyback Contracts: Governing Board approval of use of piggyback contract but not approval of actual materials, supplies or equipment being procured. Materials, supplies or equipment being procured are not on the same terms and conditions as the piggyback contract (i.e. items are different and/or contract terms are different). Purchase of impermissible labor or installation services. Underlying piggyback contract not properly awarded or expired. 25
27 Question Answer Session 26
28 Thank You For questions or comments, please contact: Lisa R. Allred (916) W. Bryce Chastain (925) Theodore Lieu (916)
29 Disclaimer This AALRR presentation is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR presentation/publication does not create an attorney-client relationship. The firm is not responsible for inadvertent errors that may occur in the publishing process Atkinson, Andelson, Loya, Ruud & Romo 28
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