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 boardbegin insert of the school districtend insert 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 governingbegin delete board,end deletebegin insert board of the school district,end insert 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 billbegin delete would, among other things,end deletebegin insert wouldend insert delete the language that provides thatbegin delete a school districtend deletebegin insert theend insert governing boardbegin insert of a school districtend insert is not required to advertise for bids pursuant to thisbegin delete provision and would specify that only a person, firm, or corporation that is a licensed contractor, as specified, is eligible to be the lessee.end deletebegin insert provision.end insert 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 bestbegin delete valueend deletebegin insert value, as defined,end insert to the schoolbegin delete 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, theend deletebegin insert district. Theend insert bill would require the governing board of the school district to adopt and publish required procedures and guidelines for evaluating the qualifications ofbegin delete proposers to ensure that the best value selections by the school district are conducted in a fair and impartial manner,end deletebegin insert proposers,end insert as provided.begin delete Notwithstanding certain laws, theend deletebegin insert Theend insert bill would authorize a school district to enter intobegin delete suchend delete an instrument before written approvalbegin delete byend deletebegin insert is obtained fromend insert 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 alsobegin delete provide that when a project for the construction, alteration, repair, or improvement of any structure, building, or other improvement of any kind that wasend deletebegin insert make the bill’s provisions retroactively applicable to certain projectsend insert leased throughbegin delete such anend deletebegin insert anend insert instrument before July 1, 2015, andbegin insert would specifyend insert thatbegin insert if theend insert 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.begin insert 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.end insert The bill would provide that the changes made by its provisions, except the deletion of thebegin delete school districtend delete governingbegin delete board’send deletebegin insert board of a school district’send insert authority to not advertise for bids, shallbegin delete remain in effect only untilend deletebegin insert become inoperative onend insert 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:

P3    1

SECTION 1.  

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

3

17400.  

(a) Any school district may enter into leases and
4agreements relating to real property and buildings to be used by
5the school district pursuant to this article.

6(b) As used in this article, the following terms have the following
7meanings:

8(1) “Best value” means a competitive procurement process
9whereby the selected proposer is selected on the basis of objective
10criteria for evaluating the qualifications of proposers with the
11resulting selection representing the best combination of price and
12qualifications.

13(2) “Best value score” means the total score awarded to a
14proposer for all scored evaluation factors.

15(3) “Building” includes each of the following:

16(A) One or more buildings located or to be located on one or
17more sites.

18(B) The remodeling of any building located on a site to be leased
19pursuant to this article.

20(C) Onsite and offsite facilities, utilities, or improvements that
21the governing boardbegin insert of the school districtend insert determines are necessary
22for the proper operation or function of the school facilities to be
23leased.

24(D) The permanent improvement of school grounds.

25(4) “Preconstruction services” means advice during the design
26phase including, but not limited to, scheduling, pricing, and phasing
27to assist the school district to design a more constructible project.

28(5) “Site” includes one or more sites, and also may include any
29building or buildings located or to be located on a site.

30

SEC. 2.  

Section 17406 of the Education Code, as amended by
31Section 1 of Chapter 214 of the Statutes of 2015, is amended to
32read:

33

17406.  

(a) (1) Notwithstanding Section 17417, the governing
34board of a school district may let, for a minimum rental of one
35dollar ($1) a year, to a person, firm, orbegin delete corporation, licensed
36pursuant to Article 5 (commencing with Section 7065) of Chapter
379 of Division 3 of the Business and Professions Code,end delete
begin insert corporationend insert
38 real property that belongs to the school district if the instrument
P4    1by which this property is let requires the lessee therein to construct
2on the demised premises, or provide for the construction thereon
3of, a building or buildings for the use of the school district during
4the term of the lease, and provides that title to that building shall
5vest in the school district at the expiration of that term. The
6instrument may provide for the means or methods by which that
7title shall vest in the school district before the expiration of that
8term, and shall contain other terms and conditions as the governing
9board of the school district may deem to be in the best interest of
10the school district.

11(2) An instrument created pursuant to paragraph (1) shall be
12awarded based on a competitive solicitation process to the proposer
13providing the best value to the school district, taking into
14consideration the proposer’s demonstrated competence and
15professional qualifications necessary for the satisfactory
16performance of the services required. Before awarding an
17instrument pursuant to this section, the governing board of the
18school district shall adopt and publish required procedures and
19guidelines for evaluating the qualifications of proposers that ensure
20the best value selections by the school district are conducted in a
21fair and impartial manner. These procedures and guidelines shall
22be mandatory for the school district when awarding an instrument
23pursuant to this section. The required procedures shall include, at
24a minimum, the following:

25(A) The school district shall prepare a request for sealed
26proposals from qualified proposers. The school district shall include
27in the request for sealed proposals an estimate of price of the
28project, a clear, precise description of any preconstruction services
29that may be required and the facilities to be constructed, the key
30elements of the instrument to be awarded, a description of the
31format that proposals shall follow and the elements they shall
32contain, the standards the school district will use in evaluating
33proposals, the date on which proposals are due,begin insert andend insert the timetable
34the school district will follow in reviewing and evaluating
35
begin delete proposals, and the process to be used by the successful proposer
36for the award of subcontracts.end delete
begin insert proposals.end insert

37(B) The school district shall give notice of the request for sealed
38proposals in the manner of notice provided in Section 20112 of
39the Public Contractbegin delete Code,end deletebegin insert Code and in a trade paper of general
40circulation published in the county where the project is located,end insert

P5    1 with the latest notice published at least 10 days before the date for
2receipt of the proposals.

3(C) A proposerbegin delete mustend deletebegin insert shallend insert be prequalified in accordance with
4subdivisions (b) to (m), inclusive, of Section 20111.6 of the Public
5Contractbegin delete Code,end deletebegin insert Codeend insert in order to submit a proposal. If used,
6electrical, mechanical, and plumbing subcontractors shall be subject
7to the same prequalification requirements for prospective bidders
8described in subdivisions (b) to (m), inclusive, of Section 20111.6
9of the Public Contract Code, including the requirement for the
10completion and submission of a standardized prequalification
11questionnaire and financial statement that is verified under oath
12and is not a public record. These prequalification requirements
13shall be included in an instrument created pursuant to paragraph
14(1).

15(D) The request for sealed proposals shall identify all criteria
16that the school district will consider in evaluating the proposals
17and qualifications of the proposers, including relevant experience,
18safety record, price proposal, and other factors specified by the
19school district. The price proposal shall include, at the school
20district’s discretion, either a lump-sum price for the instrument to
21be awarded or the proposer’s proposed fee to perform the services
22requested, including the proposer’s proposed fee to perform
23preconstruction services or any other work related to the facilities
24to be constructed, as requested by the school district. The request
25for proposals shall specify whether each criterion will be evaluated
26pass-fail or will be scored as part of the best value score, and
27whether proposers must achieve any minimum qualification score
28for award of the instrument under this section.

29(E) For each scored criterion, the school district shall identify
30the methodology and rating or weighting system that will be used
31by the school district in evaluating the criterion, including the
32weight assigned to the criterion and any minimum acceptable score.

33(F) Proposals shall be evaluated and the instrument awarded
34under this section in the following manner:

35(i) All proposals received shall be reviewed to determine those
36that meet the format requirements and the standards specified in
37the request for sealed proposals.

38(ii) The school district shall evaluate the qualifications of the
39proposers based solely upon the criteria and evaluation
40methodology set forth in the request for sealed proposals, and shall
P6    1assign a best value score to each proposal. Once the evaluation is
2complete, all responsivebegin delete proposersend deletebegin insert proposalsend insert shall be ranked from
3thebegin delete most advantageousend deletebegin insert highest best valueend insert to thebegin delete least advantageousend delete
4begin insert lowest best valueend insert to the school district.

5(iii) The award of the instrument shall be made by the governing
6board of the school district to the responsive proposer whose
7proposal is determined, in writing by the governing board of the
8school district, to be the best value to the school district.

9(iv) If the selected proposer refuses or fails to execute the
10tendered instrument, the governing board of the school district
11may award the instrument to the proposer with the second highest
12best value score if the governing board of the school district deems
13it to be for the best interest of the school district. If the second
14selected proposer refuses or fails to execute the tendered
15instrument, the governing board of the school district may award
16the instrument to the proposer with the third highest best value
17score if the governing board of the school district deems it to be
18for the best interest of the school district.

19(v) Notwithstanding any other law, upon issuance of a contract
20award, the school district shall publicly announce its award,
21identifying the entity to which the award is made, along with a
22statement regarding the basis of the award. The statement regarding
23the school district’s contract award and the contract file shall
24provide sufficient information to satisfy an external audit.

25(G) The governing board of the school district, at its discretion,
26may reject all proposals and request new proposals.

27(3) Following the award of an instrument created pursuant to
28paragraph (1), and if the price proposal isbegin delete aend delete not a lump sum for the
29instrument awarded, the successful proposer shall provide the
30school district with objectively verifiable information of its costs
31to perform the services requested under the instrument and shall
32select subcontractorsbegin delete using a competitive selection process that is
33set forth in the request for sealed proposals.end delete
begin insert as set forth in
34paragraph (4).end insert
Once any preconstruction services are completed
35and subcontractors are selected, the successful proposer and the
36school district shall finalize the price for the services to be provided
37under the instrument thatbegin delete is consistent withend deletebegin insert does not exceedend insert the
38price estimate in the request for proposal. The contract file shall
39include documentation sufficient to support the final price
40determination.

begin insert

P7    1
(4) (A) The school district, in the request for sealed proposals,
2may identify specific types of subcontractors that must be included
3in the proposal. All subcontractors that are identified in the
4proposal shall be afforded the protections of the Subletting and
5Subcontracting Fair Practices Act (Chapter 4 (commencing with
6Section 4100) of Part 1 of Division 2 of the Public Contract Code).

end insert
begin insert

7
(B) Following the award of an instrument created pursuant to
8paragraph (1) and for subcontractors not identified in the proposal,
9the successful proposer shall proceed as follows in awarding
10construction subcontracts with a value exceeding one-half of 1
11percent of the price allocable to construction work:

end insert
begin insert

12
(i) Provide public notice of availability of work to be
13subcontracted in accordance with the publication requirements
14applicable to the competitive bidding process of the school district,
15including a fixed date and time on which qualifications statements,
16bids, or proposals will be due.

end insert
begin insert

17
(ii) Establish reasonable qualification criteria and standards.

end insert
begin insert

18
(iii) Award the subcontract either on a best value basis or to
19the lowest responsible bidder. The process may include
20prequalification or short-listing. The process does not apply to
21subcontractors listed in the original proposal. Subcontractors
22awarded construction subcontracts under this subdivision shall
23be afforded all the protections of the Subletting and Subcontracting
24Fair Practices Act (Chapter 4 (commencing with Section 4100)
25of Part 1 of Division 2 of the Public Contract Code).

end insert
begin delete

11 26(4)

end delete

27begin insert(5)end insert Nothing in paragraph (2) shall preclude a school district
28from segregating the request for proposals into a request for
29qualifications, followed by a request for proposals with price
30information from the proposers deemed most qualified by the
31school district, provided that the procedures specified in paragraphs
32begin delete (2) and (3)end deletebegin insert (2), (3), and (4)end insert are otherwise followed.

33(b) Notwithstanding Sections 17297 and 17402, a school district
34may enter into an instrument created pursuant to paragraph (1) of
35subdivision (a) before written approval by the Department of
36General Services’ Division of the State Architect if the instrument
37provides that no work for which a contractor is required to be
38licensed in accordance with Article 5 (commencing with Section
397065) of Chapter 9 of Division 3 of the Business and Professions
40Code and for which Division of the State Architect approval is
P8    1required shall be performed before receipt of the required Division
2of the State Architect approval.

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 retroactively to a project
8for the construction, alteration, repair, or improvement of any
9structure, building, or other improvement of any kind that was
10leased through an instrument pursuant to this section before July
111, 2015. If at any time the instrument is determined to be invalid
12by a court of competent jurisdiction, the contractor who entered
13into the instrument with the school district shall be entitled to be
14paid the reasonable cost of the labor, equipment, materials, and
15services furnished by the contractor before the date of the
16determination that the instrument is invalid if all of the following
17conditions are met:

18(A) The contractor proceeded with construction, alteration,
19repair, or improvement based upon a good faith belief that the
20instrument was valid.

21(B) The school district has reasonably determined that the work
22performed is satisfactory.

23(C) Contractor fraud did not occur in the obtaining or
24performance of the instrument.

25(D) The instrument does not otherwise violate state law related
26to the construction or leasing of public works of improvement.

27(2) In no event shall payment to the contractor pursuant to this
28section exceed either of the following:

29 (A) The contractor’s costs as included in the instrument plus
30the cost of any approved change orders.

31(B) The lease payments made, less profit, at the point in time
32the instrument is determined to be invalid by a court of competent
33jurisdiction.

34(3) Notwithstanding paragraph (1), this subdivision shall not
35affect any protest and legal proceedings, whether contractual,
36administrative, or judicial, to challenge the award of the public
37works contract, nor affect any rights under Section 337.1 or 337.15
38of the Code of Civil Procedure.

begin delete

P9    1(e) This section shall remain in effect only until July 1, 2022,
2and as of January 1, 2023, is repealed, unless a later enacted statute,
3that is enacted before January 1, 2023, deletes or extends that date.

end delete
begin insert

4
(e) This section shall become inoperative on July 1, 2022, and,
5as of January 1, 2023, is repealed, unless a later enacted statute,
6that becomes operative on or before January 1, 2023, deletes or
7extends the dates on which it becomes inoperative and is repealed.

end insert
8

SEC. 3.  

Section 17406 of the Education Code, as added by
9Section 2 of Chapter 408 of the Statutes of 2014, is amended to
10read:

11

17406.  

(a) Notwithstanding Section 17417, the governing
12board of a school district may let, for a minimum rental of one
13dollar ($1) a year, to any person, firm, or corporation any real
14property that belongs to the school district if the instrument by
15which this property is let requires the lessee to construct on the
16demised premises, or provide for the construction thereon of, a
17building or buildings for the use of the school district during the
18term of the lease, and provides that title to that building shall vest
19in the school district at the expiration of that term. The instrument
20may provide for the means or methods by which that title shall
21vest in the school district before the expiration of that term, and
22shall contain other terms and conditions as the governing board
23of the school district may deem to be in the best interest of the
24school district.

25(b) Any rental of property that complies with subdivision (a)
26shall be deemed to have thereby required the payment of adequate
27consideration for purposes of Section 6 of Article XVI of the
28California Constitution.

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



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