Addressing Multiple Infrastructure Needs All at Once with Government Code 4217

Key highlights

• Aging infrastructure creates operational and financial burdens that drive up energy and maintenance costs, while limited capital funding forces agencies into piecemeal replacements.
• Government Code 4217 provides a way to bundle and accelerate multiple infrastructure improvements. Rather than addressing projects one at a time, public agencies can use its procurement framework to pursue coordinated projects spanning HVAC, roofing, lighting, and other needs, with flexible financing and best-value selection options. Under Government Code 4217 procurement, these bundled solutions can be competitively structured to align with best value and savings.
• The right Government Code (GC) 4217 strategy can shift agencies from reactive maintenance to proactive planning. By completing multiple high-priority improvements together and leveraging financing, savings, incentives, and grants, public agencies can address deferred needs now while establishing a more sustainable long-term replacement and budgeting strategy enabled by Government Code 4217 within the broader California Government Code.

Many California public agencies such as schools and city governments face similar challenges. Their buildings are aging, operating costs are rising, and funding is limited to address these issues. Post-COVID, construction costs have surged, and utility rates are expected to skyrocket.

The aging aspect is obvious, but the increase in operating costs may not be. As equipment like heating, ventilation, and air conditioning (HVAC) systems, lighting, and other critical equipment ages, they lose operating efficiency. For HVAC systems, this means working harder and longer to maintain desired temperatures, driving up energy costs. As energy usage rises, per-unit costs are anticipated to increase by nearly 25% within the next two years.

Over time, equipment replacement isn't considered until it completely fails and is irreparable and replacement is the only option. Sometimes, a piecemeal process of replacing equipment (or deferring critical projects altogether) is necessary because of a shortage of available funding — a fundamental challenge for many public agencies.

When HVAC equipment fails and needs to be replaced quickly, facility teams will often be forced to utilize whatever equipment is available, often at elevated prices. In addition, available equipment will often not deliver optimal performance.

Why is Government Code 4217 relevant?

Due to a lack of consistency in your system, a piecemeal process of replacing and upgrading equipment can also cause numerous operating issues, making it harder to maintain and operate your buildings the way you want to. Additionally, the total time spent on procurement, requesting funding, handling job walks, and the other numerous tasks involved in the buying process could often be better spent on other work. As many facility directors look for a solution to effectively take care of everything at once, California's Government Code (GC) 4217 offers better options that aligns with the procurement code framework.

This code is not a program or a grant fund but rather is a procurement code that allows public agencies to enter into purchase agreements that can address a wide range of infrastructure needs. For example, do you need to upgrade agency-wide HVAC equipment and replace the roofs that the equipment sits on at the same time? Government Code 4217 can help you do that. Want to replace windows, repair your central plant, and install solar photovoltaics and a battery storage system? Government Code 4217 can help you procure that as well. Government Code 4217 provisions also allow financing structures that align repayment with savings, consistent with the California Government Code.

Government Code 4217 was written to be intentionally broad, to provide maximum flexibility for agencies to use in a variety of ways. 

Some agencies use this California Government Code to purchase power, while others use it as a procurement vehicle to buy design-build retrofit projects with multiple disciplines like HVAC, lighting, roofing, windows, electrical, irrigation, plumbing, and anything else related to necessary operating or utility costs. Under Government Code 4217 procurement, agencies may select vendors based on best value rather than lowest bid, a key distinction from traditional procurement code approaches.

Additionally, agencies can enter into finance agreements to fund these projects, often with resultant cost savings as a revenue stream to repay the debt obligation. This California Government Code allows agencies to pick their vendor partner based on their own best value criteria, allowing you to work with your preferred partner without having to default to a low bid. These procurement methods permitted under Government Code 4217 include energy services agreements, lease-purchase, design-build, and power purchase arrangements, all consistent with the procurement code.

What does Government Code 4217 mean for you?

Government Code 4217 can be useful for your agency if you need a lot of facility upgrades or improvements — and can be an absolute game changer if you don't have the funding to do them. Not having the resources and funding required to develop a coordinated plan to complete work in a timely manner is a common problem for public agencies. Therefore, it can take years to work through the list and get everything fixed, resulting in the fact that you might have to start over again due to lost time.

This is often a function of the low bid process that is completed using capital expenditure dollars, which are often in short supply. Government Code 4217 can provide a procurement method to select a partner to design a comprehensive plan to do the work in short order so that you get a lot of work done at once. An often-overlooked benefit of getting the work done at once is that it gives you the time to then take a proactive approach, creating a planned replacement plan and budgeting for the future, thus breaking the cycle of constantly limping along with old, dying equipment. In the context of public works contracting, Government Code 4217 complements traditional low-bid delivery by allowing best-value energy and infrastructure projects when the governing body finds it in the public interest, aligning with the broader California Government Code and procurement code framework.

Most facility directors know that projects which aren't visibly public (e.g., think of a roof replacement versus a newly constructed, state-of-the-art gymnasium) are lower priority for funding simply because most people won't see the impact.

People complain (and rightly so) when a roof is leaking, but nobody comments when a roof isn't leaking because they expect there to be a functional, water-tight roof. Not many people will think about the cost and effort to maintain that functionality. But a new state-of-the art gymnasium will have people talking and gushing over how great it looks. Few people outside of the facility department want to prioritize spending money on keeping the roof from leaking when that money could be spent on a beautiful new building that showcases the community.

The financial advantage of this California Government Code is that the code enables public agencies to use financing to fund the work. There is a myriad of financial solutions that you can choose from to meet your needs now over a term period that works best for you, tying in different savings streams, incentives, and grant programs. This prevents you from being restricted from using budget leftovers after the crowd-pleasing projects have been funded. Ultimately, the purpose of Government Code 4217 provisions is to expedite energy-related and infrastructure improvements that reduce costs and improve reliability, while giving covered entities flexible tools under the procurement code to deliver best-value outcomes.

How to choose the right partner

When choosing the right company to partner with, start by thinking outside of the box to address more of your needs. This California Government Code explicitly gives you the latitude to address infrastructure needs beyond simple upgrades for energy conservation purposes, and Government Code 4217 supports best-value selection under the procurement code.

Ask:

• Are your needs more infrastructure-related (HVAC/roofs/electrical) or more energy-related (lights, solar photovoltaics)? Are you looking to maximize energy or financial savings or maximize the number of improvements you can make to your buildings? Which is a stronger driving factor for your agency?
• Do you have a need for EV charging?
• Do you have a need for replacing ductwork?
• Do you have a need for power resiliency because your buildings are used as emergency shelters during wildfires? 

Answers to these questions and solutions to address these problems can all be procured in the same project using Government Code 4217.

Government Code 4217 offers a flexible solution to address multiple infrastructure needs at once. To maximize its benefits, start by evaluating your budget, identifying available capital, and prioritizing key projects. Selecting the right partner is crucial to ensuring long-term operational efficiency. Under Government Code 4217, covered entities can lawfully apply best-value selections and financing methods consistent with this California Government Code. 

When choosing a partner, consider whether a phased approach — completed as budget permits — or a financed single-phase approach better aligns with your goals. Understanding the financial implications and long-term costs will help guide this decision and set your project up for lasting success, while maintaining compliance with Government Code 4217.