Amended in Assembly April 10, 2014

Amended in Assembly March 28, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1581

Introduced by Assembly Member Buchanan

February 3, 2014

An act to amend, repeal, and add begin delete Section end delete begin insert Sections 17406 and end insert 17407 of the Education Code, and to amend Section 20111.6 of the Public Contract Code, relating to school facilities.

LEGISLATIVE COUNSEL’S DIGEST

AB 1581, as amended, Buchanan. School facilities: construction contracts.

Existing law requires, until January 1, 2019, the governing board of a school district that enters into a contract for a public project, as defined, for which the board uses moneys received pursuant to the Leroy F. Greene School Facilities Act of 1998 or moneys from future state school bonds for a public project that involves a projected expenditure of $1,000,000 or more, to require prospective bidders for a construction contract to complete and submit a standardized prequalification questionnaire and financial statement. Existing law requires the questionnaire and statement to be verified under oath by the bidder and for the district to adopt and apply a uniform system of rating bidders on the basis of the questionnaire and statement.

begin insert

Existing law authorizes the governing board 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 district.

end insert

Existing law also authorizes the governing board to enter into an agreement with the lowest responsible bidder to construct, or provide for the construction of, a building to be leased and used by the district upon a designated site. Existing law requires the instrument to provide that the title to the building and site to vest in the district at the end of the lease.

This bill would, until January 1, 2019, require begin delete a prospective bidder for a contract with a school district, for construction of end delete begin insert the lease instrument and the agreement with the lowest responsible bidder to include a requirement for the person, firm, or corporation that constructs end insert a building to be leased and used by the school district upon a designated site, begin insert including, but not limited to, the prime contractor and, if used, electrical, mechanical, and plumbing subcontractors, end insert to comply with the above-described prequalification questionnaire and financial statement requirements when the agreement is for a public project using moneys received pursuant to the Leroy F. Greene School Facilities Act of 1998 or moneys from future state school bonds that involves a projected expenditure of $1,000,000 or more. By requiring additional persons to complete a questionnaire and statement that is verified under oath and increasing the duties of local officials, the bill would impose a state-mandated local program.

begin insert

The bill would also, among other things, require the governing board to establish a process to prequalify a person, firm, or corporation, including, but not limited to, the prime contractor and, if used, an electrical, mechanical, and plumbing subcontractor, to construct the leased building on a quarterly or annual basis, which would be valid for one calendar year following the date of the initial prequalification.

end insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that with regard to certain mandates no reimbursement is required by this act for a specified reason.

With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

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

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 17406 of the end insert begin insert Education Code end insert begin insert is amended
to read: end insert

17406.  

(a)  begin insert (1) end insert begin insert   end insert Notwithstanding Section 17417, the governing
board of a school district, without advertising for bids, 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 district if the
instrument by which begin delete such end delete begin insert this end insert 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 begin delete thereof end delete begin insert of the lease end insert , 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 prior
to the expiration of that term, and shall contain begin delete such end delete other terms
and conditions as the governing board may deem to be in the best
interest of the school district.

begin insert

(2) If the instrument meets the criteria of subdivision (a) of
Section 20111.6 of the Public Contract Code, the instrument 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 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 insert

(b) Any rental of property that complies with subdivision (a)
begin insert as it reads on the day that the lease is entered into end insert 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

(c) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2019, deletes or extends that date.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 17406 is added to the end insert begin insert Education Code end insert begin insert , to read: end insert

begin insert

begin insert 17406. end insert   

(a) Notwithstanding Section 17417, the governing
board of a school district, without advertising for bids, 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 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 prior to the
expiration of that term, and shall contain other terms and
conditions as the governing board 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 January 1, 2019.

end insert

begin delete SECTION 1. end delete
begin insert SEC. 3. end insert   

Section 17407 of the Education Code is amended to
read:

17407.  

(a) The governing board of any school district may
enter into an agreement with any person, firm, or corporation under
which that person, firm, or corporation shall construct, or provide
for the construction of, a building to be used by the district upon
a designated site and lease the building and site to the district. The
instrument shall provide that the title to the building and site shall
vest in the district at the expiration of the lease, and may provide
the means or method by which the title to the building and site
shall vest in the district prior to the expiration of the lease, and
shall contain other terms and conditions as the governing board
of the district deems to be in the best interest of the district.

(b) The agreement entered into shall be with the lowest
responsible bidder who shall give the security that any board
requires. The board may reject all bids. For the purpose of securing
bids the board shall publish at least once a week for two weeks in
some newspaper of general circulation published in the district,
or if there is no paper, then in some paper of general circulation
circulated in the county, a notice calling for bids, stating the
proposed terms of the agreement and the time and place where
bids will be opened.

(c) If the agreement meets the criteria of subdivision (a) of
Section 20111.6 of the Public Contract Code, the begin insert agreement shall
also require that a end insert person, firm, or corporation begin delete entering into an
agreement with the governing board of a school district end delete begin insert that
constructs the building, including, but not limited to, the prime
contractor and, if used, electrical, mechanical, and plumbing
subcontractor, end insert under this section shall be subject to the same
begin insert prequalification end insert requirements for prospective bidders described
in Section 20111.6 of the Public Contract Code begin insert , 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 insert .

(d) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2019, deletes or extends that date.

begin delete SEC. 2. end delete
begin insert SEC. 4. end insert   

Section 17407 is added to the Education Code, to read:

17407.  

(a) The governing board of any school district may
enter into an agreement with any person, firm, or corporation under
which that person, firm, or corporation shall construct, or provide
for the construction of, a building to be used by the district upon
a designated site and lease the building and site to the district. The
instrument shall provide that the title to the building and site shall
vest in the district at the expiration of the lease, and may provide
the means or method by which the title to the building and site
shall vest in the district prior to the expiration of the lease, and
shall contain other terms and conditions as the governing board
of the district deems to be in the best interest of the district.

(b) The agreement entered into shall be with the lowest
responsible bidder who shall give the security that any board
requires. The board may reject all bids. For the purpose of securing
bids the board shall publish at least once a week for two weeks in
some newspaper of general circulation published in the district,
or if there is no paper, then in some paper of general circulation
circulated in the county, a notice calling for bids, stating the
proposed terms of the agreement and the time and place where
bids will be opened.

(c) This section shall become operative on January 1, 2019.

begin delete SEC. 3. end delete
begin insert SEC. 5. end insert   

Section 20111.6 of the Public Contract Code is
amended to read:

20111.6.  

(a) This section shall apply only to public projects,
as defined in subdivision (c) of Section 22002, for which the
governing board of the district uses funds received pursuant to the
Leroy F. Greene School Facilities Act of 1998 (Chapter 12.5
(commencing with Section 17070.10) of Part 10 of Division 1 of
Title 1 of the Education Code) or any funds from any future state
school bond for a public project that involves a projected
expenditure of one million dollars ($1,000,000) or more.

(b) If the governing board of the district enters into a contract
meeting the criteria of subdivision (a), then the governing board
of the district shall require that prospective bidders for a
construction contract begin delete , including a contract for the construction of
a building to be used and leased by the district pursuant to Sections
17406 and 17407 of the Education Code, end delete complete and submit to
the board of the district a standardized prequalification
questionnaire and financial statement. The questionnaire and
financial statement shall be verified under oath by the bidder in
the manner in which civil pleadings in civil actions are verified.
The questionnaires and financial statements shall not be public
records and shall not be open to public inspection.

(c) The board of the district shall adopt and apply a uniform
system of rating bidders on the basis of the completed
questionnaires and financial statements. begin insert This system shall also
apply to a person, firm, or corporation that constructs a building
described in Section 17406 or 17407 of the Education Code. end insert

(d) The questionnaire and financial statement described in
subdivision (b), and the uniform system of rating bidders described
in subdivision (c), shall cover, at a minimum, the issues covered
by the standardized questionnaire and model guidelines for rating
bidders developed by the Department of Industrial Relations
pursuant to subdivision (a) of Section 20101.

(e) Each prospective bidder shall be furnished by the school
district letting the contract with a standardized proposal form that,
when completed and executed, shall be submitted as his or her bid.
Bids not presented on the forms so furnished shall be disregarded.

(f) A proposal form required pursuant to subdivision (e) shall
not be accepted from any person or other entity that is required to
submit a completed questionnaire and financial statement for
prequalification pursuant to subdivision (b) or from any person or
other entity that uses a subcontractor that is required to submit a
completed questionnaire and financial statement for
prequalification pursuant to subdivision (b), but has not done so
at least 10 business days prior to the date fixed for the public
opening of sealed bids or has not been prequalified for at least five
business days prior to that date. begin insert The district may require the
completed questionnaire and financial statement for
prequalification to be submitted more than 10 business days prior
to the fixed date for the public opening of sealed bids. The district
may also require the prequalification more than five business days
prior to the fixed date. end insert

(g)  begin insert (1) end insert begin insert   end insert The board of the district may establish a process for
prequalifying prospective bidders pursuant to this section on a
quarterly or annual basis and a prequalification pursuant to this
process shall be valid for one calendar year following the date of
initial prequalification.

begin insert

(2) The board shall establish a process to prequalify a person,
firm, or corporation, including, but not limited to, the prime
contractor and, if used, an electrical, mechanical, and plumbing
subcontractor, to construct a building described in Section 17406
or 17407 of the Education Code on a quarterly or annual basis.
A prequalification pursuant to this process shall be valid for one
calendar year following the date of initial prequalification.

end insert

(h) This section shall not preclude the governing board of the
district from prequalifying or disqualifying a subcontractor begin insert of any
specialty classification described in Section 7058 of the Business
and Professions Code end insert .

(i) For purposes of this section, bidders shall include begin delete the general
contractor and, if utilized, all electrical, mechanical, and plumbing
subcontractors. end delete begin insert both of the following: end insert

begin insert (1) end insert begin insert   end insert begin insert A prime contractor, as defined in Section 4113, that is either
of the following: end insert

begin insert (A) end insert begin insert   end insert begin insert A general engineering contractor described in Section 7 end insert begin insert 056
of the Business and Professions Code. end insert

begin insert (B) end insert begin insert   end insert begin insert A general building contractor described in Section 7057 of
the Business and Professions Code. end insert

begin insert

(2) If utilized, each electrical, mechanical, and plumbing
contractor, whether as a prime contractor or as a subcontractor,
as defined in Section 4113.

end insert

(j) If a public project covered by this section includes electrical,
mechanical, or plumbing components that will be performed by
electrical, mechanical, or plumbing contractors, a list of
prequalified general contractors and electrical, mechanical, and
plumbing subcontractors shall be made available by the school
district to all bidders at least five business days prior to the dates
fixed for the public opening of sealed bids. begin insert The district may require
the list to be made available more than five business days prior to
the fixed dates for the public opening of sealed bids. end insert

(k) For purposes of this section, electrical, mechanical, and
plumbing subcontractors are contractors licensed pursuant to
Section 7058 of the Business and Professions Code, specifically
contractors holding C-4, C-7, C-10, C-16, C-20, C-34, C-36, C-38,
C-42, C-43, and C-46 licenses, pursuant to regulations of the
Contractors’ State License Board.

(l) This section shall not apply to a school district with an
average daily attendance of less than 2,500.

(m) (1) This section shall apply only to contracts awarded on
or after January 1, 2014.

(2) The amendments made to this section by the act adding this
paragraph shall apply only to contracts awarded on or after January
1, 2015.

(n) (1) On or before January 1, 2018, the Director of Industrial
Relations shall (A) submit a report to the Legislature evaluating
whether, during the years this section has applied to contracts,
violations of the Labor Code on school district projects have
decreased as compared to the same number of years immediately
preceding the enactment of this section, and (B) recommend
improvements to the system for prequalifying contractors and
subcontractors on school district projects.

(2) A report to be submitted pursuant to this subdivision shall
be submitted in compliance with Section 9795 of the Government
Code.

(o) This section shall become inoperative on January 1, 2019,
and, as of July 1, 2019, is repealed.

begin delete SEC. 4. end delete
begin insert SEC. 6. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution for certain
costs that may be incurred by a local agency or school district
because, in that regard, this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.

However, if the Commission on State Mandates determines that
this act contains other costs mandated by the state, reimbursement
to local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.