Amended in Senate August 19, 2016

Amended in Senate August 2, 2016

Amended in Senate June 14, 2016

Amended in Assembly April 26, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2316


Introduced by Assembly Member O'Donnell

(Coauthor: Assembly Member Mullin)

February 18, 2016


An act to amend Sections 17400 and 17406 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 of the school district 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 of the school district, 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 would delete the language that provides that the governing board of a school district is not required to advertise for bids pursuant to this provision. 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, as defined, to the school district. 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, as provided. The bill would authorize a schoolbegin delete districtend deletebegin insert district, for purposes of utilizing preconstruction services,end insert to enter into an instrument before written approval is obtained from the Department of General Services’ Division of the State Architect (DSA)begin insert onlyend insert if the instrument provides that no work for which a contractor is required to be licensed and for which DSA approval is requiredbegin delete shallend deletebegin insert canend insert be performed before receipt of the required DSA approval.begin delete Theend delete

begin insert Theend insert bill would provide, for certain projects leased through an instrument before July 1, 2015, if at any time the instrument is determined to be invalid by a court of competent jurisdiction because it fails to fall within the former competitive bidding exception, that the contractor who entered into the contract with the school district may be paid the reasonablebegin delete costend deletebegin insert cost, specifically excluding profit,end insert of the labor, equipment, materials, and services furnished by the contractor before the date of the determination, if certain conditions, as determined by the court, are met. The bill would authorize a school district to identify specific types of subcontractors required to be included in a proposal, and would impose specified other procedural requirements on awarding construction subcontracts of a certain value. The bill would provide that the changes made by its provisions, except the deletion of the governing board of a school district’s authority to not advertise for bids, shall become inoperative on July 1, 2022.

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

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

P2    1

SECTION 1.  

Section 17400 of the Education Code is amended
2to read:

P3    1

17400.  

(a) Any school district may enter into leases and
2agreements relating to real property and buildings to be used by
3the school district pursuant to this article.

4(b) As used in this article, the following terms have the following
5meanings:

6(1) “Best value” means a competitive procurement process
7whereby the selected proposer is selected on the basis of objective
8criteria for evaluating the qualifications of proposers with the
9resulting selection representing the best combination of price and
10qualifications.

11(2) “Best value score” means the total score awarded to a
12proposer for all scored evaluation factors.

13(3) “Building” includes each of the following:

14(A) One or more buildings located or to be located on one or
15more sites.

16(B) The remodeling of any building located on a site to be leased
17pursuant to this article.

18(C) Onsite and offsite facilities, utilities, or improvements that
19the governing board of the school district determines are necessary
20for the proper operation or function of the school facilities to be
21leased.

22(D) The permanent improvement of school grounds.

23(4) “Preconstruction services” means advice during the design
24phase including, but not limited to, scheduling, pricing, and phasing
25to assist the school district to design a more constructible project.

26(5) “Site” includes one or more sites, and also may include any
27building or buildings located or to be located on a site.

28

SEC. 2.  

Section 17406 of the Education Code, as amended by
29Section 1 of Chapter 214 of the Statutes of 2015, is amended to
30read:

31

17406.  

(a) (1) Notwithstanding Section 17417, the governing
32board of a school district may let, for a minimum rental of one
33dollar ($1) a year, to a person, firm, or corporation real property
34that belongs to the school district if the instrument by which this
35property is let requires the lessee therein to construct on the
36demised premises, or provide for the construction thereon of, a
37building or buildings for the use of the school district during the
38term of the lease, and provides that title to that building shall vest
39in the school district at the expiration of that term. The instrument
40may provide for the means or methods by which that title shall
P4    1vest in the school district before the expiration of that term, and
2shall contain other terms and conditions as the governing board
3of the school district may deem to be in the best interest of the
4school district.

5(2) An instrument created pursuant to paragraph (1) shall be
6awarded based on a competitive solicitation process to the proposer
7providing the best value to the school district, taking into
8consideration the proposer’s demonstrated competence and
9professional qualifications necessary for the satisfactory
10performance of the services required. Before awarding an
11instrument pursuant to this section, the governing board of the
12school district shall adopt and publish required procedures and
13guidelines for evaluating the qualifications of proposers that ensure
14the best value selections by the school district are conducted in a
15fair and impartial manner. These procedures and guidelines shall
16be mandatory for the school district when awarding an instrument
17pursuant to this section. The required procedures shall include, at
18a minimum, the following:

19(A) The school district shall prepare a request for sealed
20proposals from qualified proposers. The school district shall include
21in the request for sealed proposals an estimate of price of the
22project, a clear, precise description of any preconstruction services
23that may be required and the facilities to be constructed, the key
24elements of the instrument to be awarded, a description of the
25format that proposals shall follow and the elements they shall
26contain, the standards the school district will use in evaluating
27proposals, the date on which proposals are due, and the timetable
28the school district will follow in reviewing and evaluating
29proposals.

30(B) The school district shall give notice of the request for sealed
31proposals in the manner of notice provided in Section 20112 of
32the Public Contract Code and in a trade paper of general circulation
33published in the county where the project is located, with the latest
34notice published at least 10 days before the date for receipt of the
35proposals.

36(C) A proposer shall be prequalified in accordance with
37subdivisions (b) to (m), inclusive, of Section 20111.6 of the Public
38Contract Code in order to submit a proposal. If used, electrical,
39mechanical, and plumbing subcontractors shall be subject to the
40same prequalification requirements for prospective bidders
P5    1described in subdivisions (b) to (m), inclusive, of Section 20111.6
2of the Public Contract Code, including the requirement for the
3completion and submission of a standardized prequalification
4questionnaire and financial statement that is verified under oath
5and is not a public record. These prequalification requirements
6shall be included in an instrument created pursuant to paragraph
7(1).

8(D) The request for sealed proposals shall identify all criteria
9that the school district will consider in evaluating the proposals
10and qualifications of the proposers, including relevant experience,
11safety record, price proposal, and other factors specified by the
12school district. The price proposal shall include, at the school
13district’s discretion, either a lump-sum price for the instrument to
14be awarded or the proposer’s proposed fee to perform the services
15requested, including the proposer’s proposed fee to perform
16preconstruction services or any other work related to the facilities
17to be constructed, as requested by the school district. The request
18for proposals shall specify whether each criterion will be evaluated
19pass-fail or will be scored as part of the best value score, and
20whether proposers must achieve any minimum qualification score
21for award of the instrument under this section.

22(E) For each scored criterion, the school district shall identify
23the methodology and rating or weighting system that will be used
24by the school district in evaluating the criterion, including the
25weight assigned to the criterion and any minimum acceptable score.

26(F) Proposals shall be evaluated and the instrument awarded
27under this section in the following manner:

28(i) All proposals received shall be reviewed to determine those
29that meet the format requirements and the standards specified in
30the request for sealed proposals.

31(ii) The school district shall evaluate the qualifications of the
32proposers based solely upon the criteria and evaluation
33methodology set forth in the request for sealed proposals, and shall
34assign a best value score to each proposal. Once the evaluation is
35complete, all responsive proposals shall be ranked from the highest
36best value to the lowest best value to the school district.

37(iii) The award of the instrument shall be made by the governing
38board of the school district to the responsive proposer whose
39proposal is determined, in writing by the governing board of the
40school district, to be the best value to the school district.

P6    1(iv) If the selected proposer refuses or fails to execute the
2tendered instrument, the governing board of the school district
3may award the instrument to the proposer with the second highest
4best value score if the governing board of the school district deems
5it to be for the best interest of the school district. If the second
6selected proposer refuses or fails to execute the tendered
7instrument, the governing board of the school district may award
8the instrument to the proposer with the third highest best value
9score if the governing board of the school district deems it to be
10for the best interest of the school district.

11(v) Notwithstanding any other law, upon issuance of a contract
12award, the school district shall publicly announce its award,
13identifying the entity to which the award is made, along with a
14statement regarding the basis of the award. The statement regarding
15the school district’s contract award and the contract file shall
16provide sufficient information to satisfy an external audit.

17(G) The governing board of the school district, at its discretion,
18may reject all proposals and request new proposals.

19(3) Following the award of an instrument created pursuant to
20paragraph (1), and if the price proposal is not a lump sum for the
21instrument awarded, the successful proposer shall provide the
22school district with objectively verifiable information of its costs
23to perform the services requested under the instrument and shall
24select subcontractors as set forth in paragraph (4). Once any
25preconstruction services are completed and subcontractors are
26selected,begin insert and upon approval of the plans and specifications for
27work on the site by the Department of General Services’ Division
28of the State Architect, if required,end insert
the successful proposer and the
29school district shall finalize the price for the services to be provided
30under thebegin delete instrument that does not exceed the price estimate in the
31request for proposal.end delete
begin insert instrument. The successful proposer shall
32provide the school district with written rationale for the price, and
33the school district shall approve or reject the final price at a public
34meeting before the successful proposer may proceed with any
35further work under the instrument.end insert
The contract file shall include
36documentation sufficient to support the final price determination.

37(4) (A) The school district, in the request for sealed proposals,
38may identify specific types of subcontractors that must be included
39in the proposal. All subcontractors that are identified in the
40proposal shall be afforded the protections of the Subletting and
P7    1Subcontracting Fair Practices Act (Chapter 4 (commencing with
2Section 4100) of Part 1 of Division 2 of the Public Contract Code).

3(B) Following the award of an instrument created pursuant to
4paragraph (1) and for subcontractors not identified in the proposal,
5the successful proposer shall proceed as follows in awarding
6construction subcontracts with a value exceeding one-half of 1
7percent of the price allocable to construction work:

8(i) Provide public notice of availability of work to be
9subcontracted in accordance with the publication requirements
10applicable to the competitive bidding process of the school district,
11including a fixed date and time on which qualifications statements,
12bids, or proposals will be due.

13(ii) Establish reasonable qualification criteria and standards.

14(iii) Award the subcontract either on a best value basis or to the
15lowest responsible bidder. The process may include prequalification
16or short-listing. The process shall not apply to subcontractors listed
17in the original proposal. Subcontractors awarded construction
18subcontracts under this subdivision shall be afforded all the
19protections of the Subletting and Subcontracting Fair Practices
20Act (Chapter 4 (commencing with Section 4100) of Part 1 of
21Division 2 of the Public Contract Code).

22(5) Nothing in paragraph (2) shall preclude a school district
23from segregating the request for proposals into a request for
24qualifications, followed by a request for proposals with price
25information from the proposers deemed most qualified by the
26school district, provided that the procedures specified in paragraphs
27(2), (3), and (4) are otherwise followed.

28(b) begin insert(1)end insertbegin insertend insertNotwithstanding Sections 17297 and 17402,begin insert for purposes
29of utilizing preconstruction services,end insert
a school district may enter
30into an instrument created pursuant to paragraph (1) of subdivision
31(a) before written approval by the Department of General Services’
32Division of the State Architectbegin insert onlyend insert if the instrument provides that
33no work for which a contractor is required to be licensed in
34accordance with Article 5 (commencing with Section 7065) of
35Chapter 9 of Division 3 of the Business and Professions Code and
36for which Division of the State Architect approval is requiredbegin delete shallend delete
37begin insert canend insert be performed before receipt of the required Division of the
38State Architect approval.

begin insert

39
(2) Nothing in this subdivision waives the requirements of
40Section 17072.30 or Section 17074.16, or any other applicable
P8    1requirements of Chapter 12.5 (commencing with Section 17070.10)
2of Part 10.

end insert

3(c) A rental of property that complies with subdivision (a) as it
4reads on the day that the lease is entered into shall be deemed to
5have thereby required the payment of adequate consideration for
6purposes of Section 6 of Article XVI of the California Constitution.

7(d) (1) This subdivision shall apply to a project for the
8construction, alteration, repair, or improvement of any structure,
9building, or other improvement of any kind that was leased through
10an instrument pursuant to this section before July 1, 2015. If at
11any time the instrument is determined to be invalid by a court of
12competent jurisdiction because it fails to fall within the competitive
13bidding exception pursuant to paragraph (1) of subdivision (a), as
14it read on December 31, 2016, the contractor who entered into the
15instrument with the school district may be paid the reasonablebegin delete costend delete
16begin insert cost, specifically excluding profit,end insert of the labor, equipment,
17materials, and services furnished by the contractor before the date
18of the determination that the instrument is invalid if all of the
19following conditions, as determined by the court, are met:

20(A) The contractor proceeded with construction, alteration,
21repair, or improvement based upon a good faith belief that the
22instrument was valid.

23(B) The school district has reasonably determined that the work
24performed is satisfactory.

25(C) Contractor fraud did not occur in the obtaining or
26performance of the instrument.

27(D) The instrument does not otherwise violate state law related
28to the construction or leasing of public works of improvement.

29(2) In no event shall payment to the contractor pursuant to this
30section exceed either of the following:

31 (A) The contractor’s costs as included in the instrument plus
32the cost of any approved change orders.

33(B) The lease payments made, less profit, at the point in time
34the instrument is determined to be invalid by a court of competent
35jurisdiction.

36(3) Notwithstanding paragraph (1), this subdivision shall not
37affect any protest and legal proceedings, whether contractual,
38administrative, or judicial, to challenge the award of the public
39works contract, nor affect any rights under Section 337.1 or 337.15
40of the Code of Civil Procedure.

P9    1(e) This section shall become inoperative on July 1, 2022, and,
2as of January 1, 2023, is repealed, unless a later enacted statute,
3that becomes operative on or before January 1, 2023, deletes or
4extends the dates on which it becomes inoperative and is repealed.

5

SEC. 3.  

Section 17406 of the Education Code, as added by
6Section 2 of Chapter 408 of the Statutes of 2014, is amended to
7read:

8

17406.  

(a) Notwithstanding Section 17417, the governing
9board of a school district may let, for a minimum rental of one
10dollar ($1) a year, to any person, firm, or corporation any real
11property that belongs to the school district if the instrument by
12which this property is let requires the lessee to construct on the
13demised premises, or provide for the construction thereon of, a
14building or buildings for the use of the school district during the
15term of the lease, and provides that title to that building shall vest
16in the school district at the expiration of that term. The instrument
17may provide for the means or methods by which that title shall
18vest in the school district before the expiration of that term, and
19shall contain other terms and conditions as the governing board
20of the school district may deem to be in the best interest of the
21school district.

22(b) Any rental of property that complies with subdivision (a)
23shall be deemed to have thereby required the payment of adequate
24consideration for purposes of Section 6 of Article XVI of the
25California Constitution.

26(c) This section shall become operative on July 1, 2022.



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