Bidding on the Capitol ‘swing space’ + CA’s financial future + Sprint, T-Mobile merger roadblock

Top of the Tuesday morning to you, readers. If you haven’t had time to stroll past the Capitol Christmas tree this year, I’d recommend it. Really puts you in the holiday spirit.

A SWIFT AND STYLISH PROJECT

In a rush to rebuild lawmakers’ offices, state officials last year waived a standard government construction process to put up a $423.6 million building in downtown Sacramento without soliciting bids from multiple contractors.

The result has California state government constructing a new tower, deemed the Capitol “swing space,” in near-record time, accommodating special requests from lawmakers to design a structure that can temporarily house their offices, the governor’s suite and committee hearing rooms.

The effort ensures that every lawmaker’s office will have a window, and avoids moving the Legislature during an election year, when members are occupied by campaigns. It also uses an expedited environmental review not available to most other California construction.

The new structure at 1021 O Street won’t immediately have the features city leaders have been seeking in downtown buildings, such as retail space and restaurants, raising worries that the tower is a missed opportunity to rebuild Sacramento’s skyline with the city’s interest in mind.

“O Street is a disaster,” said Councilman Steve Hansen, who represents Sacramento’s downtown grid. “It will be a dead zone if that building doesn’t have any ground floor activation. It’s sort of prioritizing state operations over the community’s best interest.”

Assemblyman Ken Cooley, D-Rancho Cordova, the brains and heart behind the project, worked for years to make a case to replace the annex.

His efforts culminated last year, when former Gov. Jerry Brown approved a $1.2 billion plan to tear down the annex, temporarily house the Legislature in a new state building and construct an upgraded structure attached to the Capitol for legislative work.

“You have 120 people who have taken this oath of office to build the future. They embody this office. Therefore, their work is an extension of what they are personally able to accomplish,” Cooley said.

Cooley mapped a plan to build the temporary office space on O Street by 2021 and the full Capitol Annex by 2025.

But the tight schedule pressured the Department of General Services to work faster than ever to build a new state office building.

To save time, the Legislature gave the department the authority to skip the normal bidding process, a provision tucked into a budget bill in 2018.

Instead, the department offered the opportunity to Hensel Phelps, the second place-bidder on another downtown project.

That so-called “progressive design model” let the state break ground on the building after just months of planning. Normally, that takes two years.

It was something the department had never done before.

Contracting directly with Hensel Phelps shaved about 14 months off what a project of the swing space’s scope and size usually demands, said Jeffrey Wellenstein, project manager of the construction group which includes HOK and Dreyfuss + Blackford.

“It lets you go faster,” Wellenstein said, because “you’re selected based on qualifications” rather than using required criteria to draft a proposal to then wrangle for the contract against other bidders.

At its peak, around 400 personnel will work on-site to finish construction. Two cranes are working on it now.

Once completed, the upgraded offices will come with perks.

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CALIFORNIA’S WALLET

Even Assembly Democrats are urging caution about new budget spending.

Assembly budget chair Phil Ting said Assembly Democrats are concerned the Trump administration might not approve a policy known as the managed care organization tax, which was reauthorized by California lawmakers this year to offset some health costs in the budget.

If the Trump administration doesn’t approve the policy, California lawmakers will have less money to work with.

Amid the uncertainty, Ting said Monday that Assembly Democrats are advocating for adding $1 billion in ongoing new spending in next year’s budget.

“Unfortunately we’re finding that the federal government is no longer reliable,” Ting of San Francisco said on a call with reporters, pointing to various areas the federal government has tried to withhold funding from California, including transportation and emergency management. “Every time there’s an opportunity to fight with California, the Trump administration has really taken up that mantle.”

Legislative Analyst Gabriel Petek is also recommending the Legislature commit just $1 billion in ongoing spending, despite a projected $7 billion budget surplus.

On Monday, Petek pointed specifically to a potential recession, the possibility of expensive natural disasters and uncertainty over the MCO tax as reasons lawmakers should be careful.

Despite the caution, Ting said Assembly Democrats want to spend more money on new preschool facilities and will consider expanding Medi-Cal to more undocumented people. This year, the budget expanded Medi-Cal eligibility to undocumented adults until age 26.

State prisons are the only part of the budget where Ting said he wants to see reductions in spending, but he said it will likely take several years before the state can make substantial cuts to that area. That’s because the only way to make a significant dent in prison spending is to actually close a prison, an idea Gov. Gavin Newsom has embraced.

In the meantime, Ting said spending more on rehabilitation for inmates could result in savings down the road if programs successfully keep people from returning to prison.

MERGE AHEAD?

Despite federal approval for the proposed T-Mobile and Sprint merger, California and a coalition of more than a dozen attorneys general are suing to stop the deal.

The trial to determine the future of the telecommunications companies began yesterday in the U.S. District Court in New York, and could last for weeks, according to a report from The Associated Press.

T-Mobile’s merger with Sprint would cost the company about $26 billion, but leave it with more leverage to compete against Verizon Wireless and AT&T.

California Attorney General Xavier Becerra is leading the pack alongside New York’s attorney general to stop the deal. The two say the merger will reduce competition by limiting the number of wireless providers from four to three, is “bad for innovation” and the “unchecked corporate dominance” will hurt consumers.

“Today we stand on the side of meaningful competition and affordable options for consumers,” Becerra said in a press release. “Our airwaves belong to the public, who are entitled to more, not less. This merger would hurt the most vulnerable people among us - leaving consumers with fewer choices and higher prices.”

The Federal Communications Commission, however, determined the deal will “help close the divide and advance United States leadership in 5G, the next generation of wireless connectivity.” The commission argued against claims of reduced competition and said it would instead enhance options in “rural America.”

A CHALLENGE

Assemblyman Tyler Diep, R-Westminster, is facing a challenge from within his own party, and from a familiar face. Janet Nguyen, a former Senate Republican who lost her reelection in November 2018, qualified for the ballot on Dec. 7 to oust Diep.

“We need common-sense solutions that address serious problems including homelessness, high taxes, costly health care and the rising cost of living,” Nguyen said in her statement. “Some misguided Legislators ignore serious problems and instead vote for laws that harm small business, drive jobs away and make our state less affordable. I stand with you and serve as an advocate for middle-income families, seniors, veterans and small businesses.”

Diep votes as a more-moderate Republican, according to data collected by CalMatters. He’s also been critical of President Donald Trump’s immigration policies.

For your radar — The California Chamber of Commerce announced its new leadership board on Monday. The chamber will be led by Mark Jansen of Blue Diamond Growers as the board of directors’ 2020 chair. Donna Lucas, CEO of Lucas Public Affairs, will serve as first vice chair, with second and third vice chairs filled by Kailesh Karavadra and Gregory S. Bielli, respectively.

QUOTE OF THE DAY

“In a continued commitment to transparency, we are announcing today that our campaign will open fundraisers to reporters, and will release the names of people raising money for our campaign. Fundraising events with Pete will be open to press beginning tomorrow, and a list of people raising money for the campaign will be released within the week.”

- Mike Schmuhl, campaign manager for South Bend Indiana Mayor Pete Buttigieg, who’s been criticized for his closed-door fundraisers with wealthy donors in his pursuit for the White House.

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