School board discusses processes to renovate Benicia High School stadium

(Originally published in the 3/20/16 edition)

   The Governing Board of the Benicia Unified School District continued the discussion from its March 3 meeting on the process of procuring a contractor to construct Benicia High School’s new stadium at Thursday’s meeting.

   Benicia High’s stadium renovation project was one of the largest projects that was part of the Measure S bond, which was approved by Benicia voters in June 2014. At the last meeting, Patrick Wilson of School and College Legal Services of California in Santa Rosa argued the merits of a lease-leaseback process, in which a district leases the site to a qualified contractor instead of advertising for bidders, and the site is leased back to the district after construction is completed. 

   At Thursday’s meeting, Loren Sokup, an associate general counsel with School and College Legal Services presented the pros and cons of both the general bidding process and the lease-leaseback process. She began by noting that both methods share common elements, including the Division of the State Architect having to approve construction plans and the contractor paying prevailing wages.

   She then discussed the pros and cons of a general bidding process. On the positive side, a bidding process would likely lead to more competition and better pricing due to advertising and would decrease the likelihood of favoritism. However, the district would have to award the project to the lowest bidder even if a superior contractor is available, Sokup said.

   “Price is the primary driver in this, and the district is subject and locked in to those restrictions,” she said. 

   Under a lease-leaseback process, the district would be able to have a highly qualified contractor who will construct the project in a timely manner. On the other hand, Sokup noted, the process of sole sourcing can be abused, the pricing may be higher and has not necessarily been vetted by a competitive bid process and the contractor may want to delay the start of work for at least 60 days afterward to rely on validation procedure.

   Additionally, Sokup noted that the lease-leaseback process has become more controversial in the wake of Davis v. Fresno Unified School District, in which Fresno Unified misused the process for a variety of projects. Among other things, it was determined that the district had violated conflict of interest laws by granting the project to a construction firm that had previously assisted with consultation on the project.

   Sokup also noted that a pre-qualification process is mandatory for lease-leaseback and required for most bidding projects. Among the subects addressed in the process include whether or not the contractor’s license has ever been revoked or suspended, prior experience with K-12 stadium projects and the provision of audited financial states. 

   Trustee Stacy Holguin asked if there was a time frame difference in carrying out the two processes.

   “With regard to the bidding, there is a required advertising period,” Sokup responded. “With lease-leaseback, it tends to be a shorter time period. That being said, contractors are wanting to wait and start work after 60 days after the contract is awarded.”

   Holguin then noted that lease-leaseback is frequently used at the community college level and asked why it was so controversial at the K-12 level. Sokup noted that it was actually more controversial at the community college level because community college districts haven’t been verified while there is a verification process at the K-12 level.

   Superintendent Charles Young said the board would be moving forward with the bidding process.

   “With the issues of the legal process around lease-leaseback, the 60-day timeframe just pushes us out even further,” he said. “We’ve talked about this quite a bit, and we would like to go ahead with the bidding process.” 

   Trustee Diane Ferrucci concurred with Young’s reasoning.

   “The more I’m reading about lease-leaseback in light of all the recent legislation, it concerns me that they keep saying the district is going to have a really difficult time meeting the level of requirements in order to participate in that lease-leaseback,” she said. “I really prefer going this way with some really clear expectations and requirements.”

   In other business, educational services coordinator Jan Rogenski discussed the rigorous Reading and Writing Project that had been implemented at the elementary schools. Brian Douglas of Mary Farmar Elementary, Kathy Crozier of Matthew Turner Elementary and Deborah Campbell of Joe Henderson Elementary discussed what their students were learning under this program, and some of their students even got to present some of the reports they had written.     Additionally, Young formally announced Brianna Kleinschmidt as Benicia High’s new principal. 

Loren Sokup discusses the differences between lease-leaseback and general bidding. (Photo by Nick Sestanovich)

School board questions process to renovate stadium

(Originally published in the 3/6/16 edition)

    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)