PUSD board supports lease-leaseback process at special meeting

District hopes alternative contract option will attract better bids for Lydiksen rebuild, other projects

The Pleasanton Unified School District Board of Trustees wrapped up some unfinished business at a last-minute special meeting last Tuesday evening, after what was supposed to be the board's final time gathering until summer recess is over.

To get the best value for the district’s dollars, the trustees unanimously approved using a construction project bidding process called a lease-leaseback, which 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, according to PUSD officials.

The lease-leaseback item, which required board action to pursue, unexpectedly emerged about a week and a half ago at a district facilities staff meeting, prompting the last-minute organization of last Tuesday night’s special meeting. The board had not been expected to meet again until August after its June 25 meeting.

In an interview before the meeting, district spokesman Patrick Gannon said the board’s vote for the lease-leaseback option “will allow us to utilize this process without waiting until August to discuss.”

The district would lease its property to the builder and “we would make payments to the contractor to pay for their fees instead of paying for the entire project all upfront,” according Gannon. 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.

During the meeting, facilities and construction director Nick Olson told the board that lease-leasebacks can help the district draw more qualified bids because “there’s so much work out there” for contractors to pick from.

“What we’re hearing from contractors is that design-bid-build is not attractive to them right now because there’s so much work out there,” Olson said. “There’s more interest in the lease-leaseback where they could come in based on their qualifications and work with us on pre-construction services and negotiate a contract. So, for the larger contractors, that’s much more attractive these days.”

Some contractors avoid public requests for proposals because they’re required to prepare more to compete for a contract that they’re not guaranteed to win. “From a contractor perspective, it’s more a guarantee that they’re going to have the work,” Olson said about the lease-leaseback option.

In the case of the Lydiksen Elementary School rebuild and modernization, staff said that could be helpful since only one bid has been received so far, which Gannon said was “very high.”

State-matched funds are also more accessible by entering lease-leaseback agreements; 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.”

In other business, all five board members voted in favor of 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 community member
a resident of Country Fair
on Jul 8, 2019 at 9:42 am

So happy to see Pleasanton being practical and updating their methods to co-inside with industry protocol! Keep up the good work in saving $ while giving children what they deserve! On a side note, hope this also allows to not always take the LOWEST bid, as economically that is not necessarily the best move.

4 people like this
Posted by Map
a resident of Del Prado
on Jul 8, 2019 at 11:26 am

So the contractor/developers own that developed site till the PUSD pays back that final lease payment- hmmm!! Is there a final date to make that payment without penalties, will PUSD need to float another bond to make that final payment because of their cost overruns, or spending the money elsewhere?? Sounds like we would be giving the PUSD another license to steal!

1 person likes this
Posted by Pleasanton Parent
a resident of Pleasanton Meadows
on Jul 8, 2019 at 8:40 pm

Reads like car salesman/women 101. "How much do you want to pay per month?"

What's the total?

"We can work something that fits your monthly budget"

What's the total?

If the problem is poorly qualified low bid contractors, increase the qualification requirements and contingency clauses - ie how about an escrow account for any warranty work ?

2 people like this
Posted by Just wondering
a resident of Highland Oaks
on Jul 12, 2019 at 10:20 pm

Does anyone know what’s going on at Lydiksen? I thought this school was a driving force to get the bond passed. Have they done any work? My understanding is that nothing has happened. Can someone please enlighten me? Thanks

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