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

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 subjects 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.

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