Pleasanton school board calls special meeting on lease-leaseback project options

Trustees will consider approving alternate bidding process for selecting contractors

The Pleasanton Unified School District Board of Trustees is wrapping up some unfinished business at a special meeting on Tuesday evening, following what was supposed to be their final gathering last week until next month for a summer hiatus.

An item requiring board action unexpectedly emerged last week at a district facilities staff meeting, prompting the hasty organization of Tuesday night’s meeting, which starts 5:30 p.m. inside the PUSD headquarters, 4665 Bernal Ave.

To get the best value for the district’s dollars, staff are asking the trustees to approve using a construction project bidding process that gives them more leverage when selecting a contractor.

Unlike traditional methods requiring public school districts to award contracts to the lowest qualified bidder, a lease-leaseback gives districts the same negotiating tools as private sector entities, including asking for references from other districts.

The district would lease their property to the builder and “would make payments to the contractor to pay for their fees instead of paying for the entire project all upfront,” according to Patrick Gannon, spokesman for the district. Once the facilities are completed, the builder leases the improved site back to the district and the lease is terminated upon the final lease payment.

Lease-leasebacks can help school districts attract more qualified bids, Gannon said, since requests for proposals on public projects typically require contractors to do more preparation competing for a contract that they’re not guaranteed to win.

“It allows us to go out for bidders, requires less work for contractors upfront and attracts more qualified contractors,” Gannon said. “We have, in the case of Lydiksen (Elementary School), struggled to get bids on projects, and the bids that we do get are very high.”

State-matched funds are also more accessible by entering lease-leaseback agreements because Gannon said that normally districts “have to put a ton of funds upfront because they’re using the traditional bid process and those state-matching dollars are not necessarily guaranteed and you don’t get those matching funds right away.”

“It’s years down the road, so by making payments, it allows us to go out for those state-matching funds without the burden of having to put all money upfront,” Gannon said, adding that “in terms of Measure I1 dollars, it doesn’t prolong the life of the bond -- these projects (like Lydiksen) happen to be tied to our first general obligation bond in 20 years.”

Gannon said that if approved Tuesday, “this will allow us to utilize this process without waiting until August to discuss.”

In other business, the board will also vote on the consent agenda's sole item, a proposed job description for the position of district career readiness specialist.

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2 people like this
Posted by ptowntb
a resident of Vintage Hills
on Jul 1, 2019 at 7:38 pm

ptowntb is a registered user.

Now we need someone to tell us the downside of this arrangement. This sounds a little too good to be true, or at least the whole story.

Usually it costs a lot more in the long run to pay for things over time, and I can't help but think there's something a bit shady about this (why isn't it standard operating procedure if it's such a great idea? and why the big hurry to get it approved?).

Pleasanton Weekly editors, please check this out ASAP and let us know the full story.

3 people like this
Posted by William
a resident of Canyon Meadows
on Jul 1, 2019 at 8:47 pm

Could this be because nothing has happened with the AVHS solar project? The parking lot has been fenced off for a month and no sign of progress.

3 people like this
Posted by Pleasanton Parent
a resident of Pleasanton Meadows
on Jul 1, 2019 at 11:21 pm

Has to be the overall cost, contractor is acting like a bank, they are going to charge for the cost of money they are fronting

2 people like this
Posted by Billy Baroo
a resident of Pleasanton Valley
on Jul 2, 2019 at 10:18 am

I'm a public works contractor that does a lot of school work. The lease-lease back method is a double-edged sword, but so is the low bid method. In a low bid scenario it is more likely that there will be more change orders throughout the project. In a negotiated deal, it is likely that the contract value may be larger up front but less change orders. The benefit of the leasing method is that there is more control over the quality of contractor.

3 people like this
Posted by Stan
a resident of Country Fair
on Jul 2, 2019 at 11:25 am

"Danger Will Robinson" comes to mind when reading this. My first thought is; if its such a good deal and positive direction, why did they wait until the 11th hour to announce that it will be on the Agenda tonight?

One reason contractors hesitate to bid, is poor bid documents to begin with. I have done a lot of public works projects. As was stated, the Lease/Lease Back method is an expensive way to manage projects. It simply stems from lazy and/or unqualified facility managers not the School District side. One thing that is not being mentioned is, if the "Landlord" is performing the work, the requirement for special inspections (to ensure the project meets the stringent and enhanced codes for school buildings) will no longer be required.

This is simply an expensive marriage of convenience put forth by lazy Administrators. Don't be fooled.

2 people like this
Posted by Patrick Gannon
a resident of Canyon Oaks
on Jul 2, 2019 at 12:04 pm

Patrick Gannon is a registered user.

There is a lot of great information as well as details on both benefits and challenges of the lease-lease back method in the PUSD Board of Trustees agenda for community members who would like to learn more. Just follow this link and click on Attachment A. Web Link

Sorry, but further commenting on this topic has been closed.

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