The Governing Board of the Benicia Unified School District heard a discussion on the progress of Benicia High School’s renovated stadium and questioned the approach the project was using.
The stadium, which was financed through Measure S, will feature a new all-weather track, a renovated entryway, upgraded lighting and bleachers that can seat up to 3,300 people. Patrick Wilson of School and College Legal Services of California in Santa Rosa explained that the district is planning to use a lease-leaseback process to construct the stadium.
In a lease-leaseback project, school districts are authorized to circumvent the process of advertising for bidders and instead leases the site to a contractor. After construction is done, the site is leased back to the district.
“One thing that lease-leaseback allows you to do is pick the contractor who has special qualifications that meet the need for your project,” Wilson said. “You reserve lease-leaseback for exceptional projects, and the general rule is you’re going to bid your painting and paving projects and the more generic projects. But for a project like this that is complicated and involves track and field and stadium development and school buildings that are associated with that on a short timeline, you’ll want to have a general contractor who has done this kind of project before and has good recommendations.”
However, lease-leaseback has seen controversy. Last year, Fresno Unified School District went to court over its alleged misuse of the lease-leaseback method. The district had used lease-leaseback for a variety of projects, including the construction of Rutherford B. Gaston Middle School. The 5th District Court of Appeal ruled that the contract was leaseback in name only and the district violated conflict of interest laws by awarding the project to Harris Construction who had previously done consultation on the process, according to The Fresno Bee.
However, Wilson said they will not repeat Fresno’s mistakes.
“Fresno Unified got into trouble, partly because they were using lease-leaseback for almost everything, and they were sole-sourcing it,” he said. “They weren’t casting the net wide and trying to allow qualified contractors to compete against one another. They tended to overly focus on one contractor who seemed to do all their work.”
“We’re trying to avoid those pitfalls and help you get your stadium project off the ground,” he added.
The board trustees were quick to ask questions about the process.
“If we state what we’re looking for, why wouldn’t qualified contractors apply to the job in the first place?” Trustee Andre Stewart asked.
“When you go out to bid, which is the general method of selecting contractors, you basically have to pick the low bidder regardless of whether you think they’re as qualified as you’d like them to be or not,” Wilson responded. “The way that we structure lease-leaseback is you reach out to four or five contractors, all of whom you think are highly experienced, and you get them to compete against one another. You whittle the pool down to one or two, and the board decides who you want to proceed with.”
Trustee Peter Morgan raised issues over the political impacts of lease-leaseback.
“The lease-leaseback approach, used improperly, can circumvent a lot of the controls that are intended to ensure that taxpayers’ dollars are used most effectively,” he said.
Morgan requested a written report detailing why lease-leaseback makes sense for the district and what the issues were in the Fresno case.
“Fresno Unified forgot that bidding is the general rule, and lease-leaseback’s an exception that should be used for exceptional cases,” Wilson responded. “They started using it in all instances, and they had no element of competition. In virtually every lease-leaseback I’ve worked on, we do have competition.”
In other business, the board approved a new facilities master plan, and Superintendent Charles Young highlighted the process of implementing a new bell schedule. A special meeting will be held in Room L-3 at Benicia High School at 7 p.m., Thursday, March 10 where high schools from Albany and Piedmont will talk to parents about how their schedule changes worked for them.
Roxanne Egan, Measure S bond director, briefly talks about the stadium renovation before handing the microphone to Patrick Wilson. (Photo by Nick Sestanovich)