BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1581|
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THIRD READING
Bill No: AB 1581
Author: Buchanan (D)
Amended: 4/10/14 in Assembly
Vote: 21
SENATE EDUCATION COMMITTEE : 5-1, 6/18/14
AYES: Liu, Block, Correa, Hancock, Monning
NOES: Huff
NO VOTE RECORDED: Wyland
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/14/14
AYES: De León, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters, Gaines
ASSEMBLY FLOOR : 60-16, 5/28/14 - See last page for vote
SUBJECT : School facilities: construction contracts
SOURCE : State Building and Construction Trades Council,
AFL-CIO
DIGEST : This bill, until January 1, 2019, requires that
school districts entering into lease/ leaseback or lease-to-own
contracts comply with specified pre-qualification requirements,
if the project is funded with state bond funds, the expenditure
of the project is $1 million or more, and the average daily
attendance (ADA) of the school district is more than 2,500.
ANALYSIS :
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Leasing provisions
Existing law authorizes the governing board of a school district
to enter into a lease/leaseback contract, without advertising
for bids. Existing law prescribes that real property may be let
by the district for a minimum rental of $1 per year if the
lessee is required to construct, or provide for the construction
of a building/buildings for the use of the school district
during the term of the lease, and requires that title of the
building vests in the school district at the expiration of that
term.
Existing law authorizes the governing board of a school district
to enter into a lease to own agreement in which a person, firm,
or corporation is required to construct or provide for the
construction of a building to be used, and leased by the school
district. Existing law requires that title of the building
vests in the school district at the expiration of that term is
and authorizes the vesting of title to the property prior to the
expiration of the lease. Existing law requires that the
agreement be entered into with the lowest responsible bidder as
specified.
Competitive bidding
Existing law requires the governing board of a school district,
to competitively bid, and award to the lowest responsible
bidder, any contract for a public project (as defined) involving
an expenditure of $15,000 or more.
Prequalification
Existing law authorizes the governing board of a school district
to require prequalification of prospective bidders for a
contract for a public project. A prospective bidder may be
required to complete and submit to the school district a
standardized questionnaire and financial statement in a form
specified by the district, including a complete statement of the
prospective bidder's financial ability and experience in
performing public works. A school district that establishes a
prequalification process is required to adopt and apply a
uniform system of rating bidders on the basis of the completed
questionnaires and financial statements. School districts are
authorized to establish a process for prequalifying prospective
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bidders on a quarterly basis and to consider a prequalification
to be valid for up to one calendar year following the date of
initial prequalification.
Existing law requires, until January 1, 2019, school districts
using state school facilities bond funds to establish a
prequalification process whereby a prospective bidder, and any
electrical, mechanical and plumbing subcontractors, of a public
works contract with a projected expenditure of $1 million or
more, is required to complete a standardized questionnaire
provided by the district and submit a financial statement.
This bill:
1. Extends the pre-qualification requirements established under
AB 1565 (Fuentes, Chapter 808, Statutes of 2012) to a
lease-leaseback project or a lease-to-own project. More
specifically requires that lease/leaseback projects and
lease-to-own projects are subject to these pre-qualification
requirements if:
A. The project is funded by state school facilities bond
funds.
B. The project is for $1 million or more.
C. The ADA of the school district is 2,500 or more.
1. Extends the prequalification requirements for
lease-leaseback and lease-to-own projects to include the
entity that constructs the building, including but not
limited to the prime contractor and, if used, electrical,
mechanical and plumbing subcontractors, and specifically
requires that they comply with the requirement to complete
and submit a standardized prequalification questionnaire and
financial statement that is verified under oath and is not a
public record.
2. Sunsets the prequalification requirements imposed on
lease/leaseback and lease-to-own projects on January 1, 2019.
3. Modifies existing prequalification requirements under the
Public Contract Code. More specifically it:
A. Extends the requirement that a governing board of a
school district adopt and apply a uniform system of rating
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bidders on the basis of the completed questionnaires and
financial statements to include a person, firm, or
corporation that constructs a building pursuant to
provisions that establish the lease-leaseback and
lease-to-own authority.
B. Authorizes a school district to:
(1) Require the completed questionnaire and
financial statement for prequalification to be
submitted more than the 10 business days prior to the
fixed date for the public opening of sealed bids
required under existing law.
(2) Require a bidder to be prequalified more than
the five business days prior to the fixed date required
under existing law.
A. Requires the local governing board of a school
district to establish a process to prequalify specified
entities constructing a building under the lease/leaseback
and lease-to-own provisions of law.
B. Clarifies that "bidders" include a prime contractor
that is either a general engineering contractor or a
general building contractor as specified; and if utilized,
each electrical, mechanical and plumbing contractor,
whether as a prime contractor or as a subcontractor.
C. Authorizes a school district to require the list of
prequalified general contractors and electrical,
mechanical, and plumbing subcontractors to be made
available more than five business days prior to the fixed
dates for the public opening of sealed bids.
D. Applies the new requirements and authorities
established by this bill to be applicable only to
contracts awarded on or after January 1, 2015.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
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Bonds: Significant ongoing cost pressure on remaining
Proposition 1D funding and all future K-12 construction bonds,
to the extent that school districts would have otherwise
interpreted certain contracts to result in exemption from
statutory pre-qualification (and competitive bidding)
requirements, and opted not to pre-qualify contractors.
SUPPORT : (Verified 8/13/14)
State Building and Construction Trades Council, AFL-CIO (source)
California Association of School Business Officials
California Labor Federation
California Legislative Conference of the Plumbing, Heating, and
Piping Industry
California State Association of Electrical Workers
California State Pipe Trades Council
National Electrical Contractors Association - California Chapter
Western States Council of Sheet Metal Workers
OPPOSITION : (Verified 8/13/14)
Air Conditioning Trade Association
Associated Builders and Contractors of California
Associated Builders and Contractors of San Diego
Association of California Construction Managers
Coalition for Adequate School Housing
Plumbing-Heating-Cooling Contractors Association of California
Western Electrical Contractors Association
ARGUMENTS IN SUPPORT : Supporters believe this bill will help
increase the quality of public school construction by requiring
that school facility projects performed under the
lease-leaseback procurement method use prequalified contractors.
The Legislature and the Governor recognized the critical role
of facilities in student achievement and have provided as much
as $35 billion for capital assistance to local education
agencies through the School Facility Program (contained in the
Leroy F. Greene School Facility Act of 1998 -- Education Code
Section 17070.10 et seq.) which provides matching funds for the
construction of new schools and the modernization of existing
schools. The Legislature has also made several key improvements
to the program including adopting legislation to increase the
quality of construction through mandatory prequalification.
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ARGUMENTS IN OPPOSITION : Opponents state this bill extends
the pre-qualification requirements established by AB 1565
(Fuentes, 2012) to school construction projects utilizing the
lease-leaseback construction delivery method. AB 1565 requires
all state-funded projects over $1 million dollars to use a
pre-qualification process for almost all contracts awarded after
January 1, 2015. While existing law does not require
pre-qualification for lease-leaseback contracts, some school
districts have chosen to use this method for those contracts.
The request appears to have lessened pools and increased costs
when pre-qualification is used.
Existing law establishes AB 1565 as a pilot program; making
changes during the pilot program will distort the pilot's
evaluation, because different types of projects will be added
mid-evaluation. The opponents believe that school districts
should be given the opportunity to implement the bill as
initially chaptered, becoming accustomed to prequalification
requirements, before additional changes are made.
ASSEMBLY FLOOR : 60-16, 5/28/14
AYES: Alejo, Ammiano, Bloom, Bocanegra, Bonilla, Bonta,
Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez,
Chesbro, Cooley, Dababneh, Dahle, Daly, Dickinson, Eggman,
Fong, Fox, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray, Hall,
Roger Hernández, Holden, Jones-Sawyer, Levine, Linder,
Lowenthal, Maienschein, Medina, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Perea, John A. Pérez, V. Manuel Pérez,
Quirk, Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas,
Skinner, Stone, Ting, Weber, Wieckowski, Williams, Yamada,
Atkins
NOES: Achadjian, Bigelow, Conway, Donnelly, Beth Gaines,
Gorell, Grove, Hagman, Harkey, Jones, Logue, Mansoor,
Melendez, Wagner, Waldron, Wilk
NO VOTE RECORDED: Allen, Frazier, Patterson, Vacancy
PQ:k 8/15/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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