Amended in Assembly April 26, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2316

Introduced by Assembly Member O'Donnell

(Coauthor: Assembly Member Mullin)

February 18, 2016

An act to amend begin delete Section 17406 end delete begin insert Sections 17400 and 17406 end insert of the Education Code, relating to school facilities.

LEGISLATIVE COUNSEL’S DIGEST

AB 2316, as amended, O'Donnell. School facilities: leasing property.

Existing law requires the governing board of a school district to adopt a resolution that, among other things: (1) declares its intention to enter into a lease or agreement relating to school property, (2) includes specified information about the property, and (3) fixes a time for a public meeting of the governing board at which sealed proposals to enter a lease or agreement with the school district will be received from any person, firm, or corporation, and considered by the governing board, as specified.

Existing law, notwithstanding the provision described above, also authorizes the governing board of a school district, without advertising for bids, to lease real property for a minimum rental of $1 per year if the instrument by which this property is leased requires the lessee to construct, or provide for the construction of, a building to be used by the school district and provides that the title to the building shall vest in the school district at the end of the lease.

This bill begin delete would end delete begin insert would, among other things, end insert delete the language that provides that a school district governing board is not required to advertise for bids pursuant to this begin delete provision. end delete begin insert provision and would specify that only a person, firm, or corporation that is a licensed contractor, as specified, is eligible to be the lessee. The bill would require an instrument created pursuant to these provisions to be awarded based on a competitive solicitation process to the proposer providing the best value to the school district, taking into consideration the proposer’s demonstrated competence and professional qualifications necessary for the satisfactory performance of the services required. Before awarding such an instrument, the bill would require the governing board of the school district to adopt and publish required procedures and guidelines for evaluating the qualifications of proposers to ensure that the best value selections by the school district are conducted in a fair and impartial manner, as provided. Notwithstanding certain laws, the bill would authorize a school district to enter into such an instrument before written approval by the Department of General Services’ Division of the State Architect (DSA) if the instrument provides that no work for which a contractor is required to be licensed and for which DSA approval is required shall be performed before receipt of the required DSA approval. The bill would also provide that when a project for the construction, alteration, repair, or improvement of any structure, building, or other improvement of any kind that was leased through such an instrument before July 1, 2015, and that instrument is later determined to be invalid, the contractor who entered into the contract with the school district shall be entitled to be paid the reasonable cost of the labor, equipment, materials, and services furnished by the contractor before the date of the determination, subject to specified conditions. The bill would provide that the changes made by its provisions, except the deletion of the school district governing board’s authority to not advertise for bids, shall remain in effect only until July 1, 2022. end insert

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 17400 of the end insert begin insert Education Code end insert begin insert is amended
to read: end insert

17400.  

(a) Any school district may enter into leases and
agreements relating to real property and buildings to be used by
the begin insert school end insert district pursuant to this article.

(b) As used in this article, begin delete “building” end delete begin insert the following terms have
the following meanings: end insert

begin insert

(1) “Best value” means a competitive procurement process
whereby the selected proposer is selected on the basis of objective
criteria for evaluating the qualifications of proposers with the
resulting selection representing the best combination of price and
qualifications.

end insert begin insert

(2) “Best value score” means the total score awarded to a
proposer for all scored evaluation factors.

end insert

begin insert (3) end insert begin insert   end insert begin insert “Building” end insert includes each of the following:

begin delete

(1)

end delete

begin insert (A) end insert  One or more buildings located or to be located on one or
more sites.

begin delete

(2)

end delete

begin insert (B) end insert  The remodeling of any building located on a site to be leased
pursuant to this article.

begin delete

(3)

end delete

begin insert (C) end insert  Onsite and offsite facilities, begin delete utilities end delete begin insert utilities, end insert or
improvements begin delete which end delete begin insert that end insert the governing board determines are
necessary for the proper operation or function of the school
facilities to be leased.

begin delete

(4)

end delete

begin insert (D) end insert  The permanent improvement of school grounds.

begin insert

(4) “Preconstruction services” means advice during the design
phase including, but not limited to, scheduling, pricing, and
phasing to assist the school district to design a more constructible
project.

end insert begin delete

(c) As used in this article, “site”

end delete

begin insert (5) end insert begin insert   end insert begin insert “Site” end insert includes one or more sites, and also may include any
building or buildings located or to be located on a site.

begin delete SECTION 1. end delete

begin insert SEC. 2. end insert   

Section 17406 of the Education Code, as amended by
Section 1 of Chapter 214 of the Statutes of 2015, is amended to
read:

17406.  

(a) (1) Notwithstanding Section 17417, the governing
board of a school district may let, for a minimum rental of one
dollar ($1) a year, to a person, firm, or begin delete corporation end delete begin insert corporation,
licensed pursuant to Article 5 (commencing with Section 7065) of
Chapter 9 of Division 3 of the Business and Professions Code, end insert real
property that belongs to the school district if the instrument by
which this property is let requires the lessee therein to construct
on the demised premises, or provide for the construction thereon
of, a building or buildings for the use of the school district during
the term of the lease, and provides that title to that building shall
vest in the school district at the expiration of that term. The
instrument may provide for the means or methods by which that
title shall vest in the school district before the expiration of that
term, and shall contain other terms and conditions as the governing
board of the school district may deem to be in the best interest of
the school district.

begin delete

(2) For a public project, as defined in subdivision (c) of Section
22002 of the Public Contract Code, regardless of its funding source,
an instrument created pursuant to paragraph (1) shall also require
that a person, firm, or corporation that constructs the building,
including, but not limited to, the prime contractor and, if used,
electrical, mechanical, and plumbing subcontractor, shall be subject
to the same prequalification requirements for prospective bidders
described in subdivisions (b) to (m), inclusive, of Section 20111.6
of the Public Contract Code, including the requirement for the
completion and submission of a standardized prequalification
questionnaire and financial statement that is verified under oath
and is not a public record.

end delete begin insert

(2) An instrument created pursuant to paragraph (1) shall be
awarded based on a competitive solicitation process to the
proposer providing the best value to the school district, taking into
consideration the proposer’s demonstrated competence and
professional qualifications necessary for the satisfactory
performance of the services required. Before awarding an
instrument pursuant to this section, the governing board of the
school district shall adopt and publish required procedures and
guidelines for evaluating the qualifications of proposers that ensure
the best value selections by the school district are conducted in a
fair and impartial manner. These procedures and guidelines shall
be mandatory for the school district when awarding an instrument
pursuant to this section. The required procedures shall include,
at a minimum, the following:

end insert begin insert

(A) The school district shall prepare a request for sealed
proposals from qualified proposers. The school district shall
include in the request for sealed proposals an estimate of price of
the project, a clear, precise description of any preconstruction
services that may be required and the facilities to be constructed,
the key elements of the instrument to be awarded, a description of
the format that proposals shall follow and the elements they shall
contain, the standards the school district will use in evaluating
proposals, the date on which proposals are due, the timetable the
school district will follow in reviewing and evaluating proposals,
and the process to be used by the successful proposer for the award
of subcontracts.

end insert begin insert

(B) The school district shall give notice of the request for sealed
proposals in the manner of notice provided in Section 20112 of
the Public Contract Code, with the latest notice published at least
10 days before the date for receipt of the proposals.

end insert begin insert

(C) A proposer must be prequalified in accordance with
subdivisions (b) to (m), inclusive, of Section 20111.6 of the Public
Contract Code, in order to submit a proposal. If used, electrical,
mechanical, and plumbing subcontractors shall be subject to the
same prequalification requirements for prospective bidders
described in subdivisions (b) to (m), inclusive, of Section 20111.6
of the Public Contract Code, including the requirement for the
completion and submission of a standardized prequalification
questionnaire and financial statement that is verified under oath
and is not a public record. These prequalification requirements
shall be included in an instrument created pursuant to paragraph
(1).

end insert begin insert

(D) The request for sealed proposals shall identify all criteria
that the school district will consider in evaluating the proposals
and qualifications of the proposers, including relevant experience,
safety record, price proposal, and other factors specified by the
school district. The price proposal shall include, at the school
district’s discretion, either a lump-sum price for the instrument to
be awarded or the proposer’s proposed fee to perform the services
requested, including the proposer’s proposed fee to perform
preconstruction services or any other work related to the facilities
to be constructed, as requested by the school district. The request
for proposals shall specify whether each criterion will be evaluated
pass-fail or will be scored as part of the best value score, and
whether proposers must achieve any minimum qualification score
for award of the instrument under this section.

end insert begin insert

(E) For each scored criterion, the school district shall identify
the methodology and rating or weighting system that will be used
by the school district in evaluating the criterion, including the
weight assigned to the criterion and any minimum acceptable
score.

end insert begin insert

(F) Proposals shall be evaluated and the instrument awarded
under this section in the following manner:

end insert begin insert

(i) All proposals received shall be reviewed to determine those
that meet the format requirements and the standards specified in
the request for sealed proposals.

end insert begin insert

(ii) The school district shall evaluate the qualifications of the
proposers based solely upon the criteria and evaluation
methodology set forth in the request for sealed proposals, and
shall assign a best value score to each proposal. Once the
evaluation is complete, all responsive proposers shall be ranked
from the most advantageous to the least advantageous to the school
district.

end insert begin insert

(iii) The award of the instrument shall be made by the governing
board of the school district to the responsive proposer whose
proposal is determined, in writing by the governing board of the
school district, to be the best value to the school district.

end insert begin insert

(iv) If the selected proposer refuses or fails to execute the
tendered instrument, the governing board of the school district
may award the instrument to the proposer with the second highest
best value score if the governing board of the school district deems
it to be for the best interest of the school district. If the second
selected proposer refuses or fails to execute the tendered
instrument, the governing board of the school district may award
the instrument to the proposer with the third highest best value
score if the governing board of the school district deems it to be
for the best interest of the school district.

end insert begin insert

(v) Notwithstanding any other law, upon issuance of a contract
award, the school district shall publicly announce its award,
identifying the entity to which the award is made, along with a
statement regarding the basis of the award. The statement
regarding the school district’s contract award and the contract
file shall provide sufficient information to satisfy an external audit.

end insert begin insert

(G) The governing board of the school district, at its discretion,
may reject all proposals and request new proposals.

end insert begin insert

(3) Following the award of an instrument created pursuant to
paragraph (1), and if the price proposal is a not a lump sum for
the instrument awarded, the successful proposer shall provide the
school district with objectively verifiable information of its costs
to perform the services requested under the instrument and shall
select subcontractors using a competitive selection process that
is set forth in the request for sealed proposals. Once any
preconstruction services are completed and subcontractors are
selected, the successful proposer and the school district shall
finalize the price for the services to be provided under the
instrument that is consistent with the price estimate in the request
for proposal. The contract file shall include documentation
sufficient to support the final price determination.

end insert begin insert

(4) Nothing in paragraph (2) shall preclude a school district
from segregating the request for proposals into a request for
qualifications, followed by a request for proposals with price
information from the proposers deemed most qualified by the
school district, provided that the procedures specified in
paragraphs (2) and (3) are otherwise followed.

end insert begin insert

(b) Notwithstanding Sections 17297 and 17402, a school district
may enter into an instrument created pursuant to paragraph (1)
of subdivision (a) before written approval by the Department of
General Services’ Division of the State Architect if the instrument
provides that no work for which a contractor is required to be
licensed in accordance with Article 5 (commencing with Section
7065) of Chapter 9 of Division 3 of the Business and Professions
Code and for which Division of the State Architect approval is
required shall be performed before receipt of the required Division
of the State Architect approval.

end insert begin delete

(b)

end delete

begin insert (c) end insert  A rental of property that complies with subdivision (a) as it
reads on the day that the lease is entered into shall be deemed to
have thereby required the payment of adequate consideration for
purposes of Section 6 of Article XVI of the California Constitution.

begin insert

(d) (1) This subdivision shall apply retroactively to a project
for the construction, alteration, repair, or improvement of any
structure, building, or other improvement of any kind that was
leased through an instrument pursuant to this section before July
1, 2015. If at any time the instrument is determined to be invalid
by a court of competent jurisdiction, the contractor who entered
into the instrument with the school district shall be entitled to be
paid the reasonable cost of the labor, equipment, materials, and
services furnished by the contractor before the date of the
determination that the instrument is invalid if all of the following
conditions are met:

end insert begin insert

(A) The contractor proceeded with construction, alteration,
repair, or improvement based upon a good faith belief that the
instrument was valid.

end insert begin insert

(B) The school district has reasonably determined that the work
performed is satisfactory.

end insert begin insert

(C) Contractor fraud did not occur in the obtaining or
performance of the instrument.

end insert begin insert

(D) The instrument does not otherwise violate state law related
to the construction or leasing of public works of improvement.

end insert begin insert

(2) In no event shall payment to the contractor pursuant to this
section exceed either of the following:

end insert begin insert

(A) The contractor’s costs as included in the instrument plus
the cost of any approved change orders.

end insert begin insert

(B) The lease payments made, less profit, at the point in time
the instrument is determined to be invalid by a court of competent
jurisdiction.

end insert begin insert

(3) Notwithstanding paragraph (1), this subdivision shall not
affect any protest and legal proceedings, whether contractual,
administrative, or judicial, to challenge the award of the public
works contract, nor affect any rights under Section 337.1 or 337.15
of the Code of Civil Procedure.

end insert begin delete

(c)

end delete

begin insert (e) end insert  This section shall remain in effect only until begin delete January 1, 2019,
and as of that date end delete begin insert July 1, 2022, and as of January 1, 2023, end insert is
repealed, unless a later enacted statute, that is enacted before
January 1, begin delete 2019, end delete begin insert 20 end insert begin insert 23, end insert deletes or extends that date.

begin delete SEC. 2. end delete

begin insert SEC. 3. end insert   

Section 17406 of the Education Code, as added by
Section 2 of Chapter 408 of the Statutes of 2014, is amended to
read:

17406.  

(a) Notwithstanding Section 17417, the governing
board of a school district may let, for a minimum rental of one
dollar ($1) a year, to any person, firm, or corporation any real
property that belongs to the school district if the instrument by
which this property is let requires the lessee to construct on the
demised premises, or provide for the construction thereon of, a
building or buildings for the use of the school district during the
term of the lease, and provides that title to that building shall vest
in the school district at the expiration of that term. The instrument
may provide for the means or methods by which that title shall
vest in the school district before the expiration of that term, and
shall contain other terms and conditions as the governing board
of the school district may deem to be in the best interest of the
school district.

(b) Any rental of property that complies with subdivision (a)
shall be deemed to have thereby required the payment of adequate
consideration for purposes of Section 6 of Article XVI of the
California Constitution.

(c) This section shall become operative on begin delete January 1, 2019. end delete begin insert July
1, 2022. end insert