Six months after passage of a $280 million bond measure in 2010, Fresno Unified School District changed the way many of its construction contracts were awarded.
The traditional practice of choosing the lowest bid was placed on the back burner. Moved to the front was a method called lease/leaseback that let the district simply pick the contractor it wanted.
Not unexpectedly, the dramatic switch has fans and critics.
Fresno Unified Superintendent Michael Hanson says that lease/leaseback has helped the district make good on its Measure Q promise of upgrading schools, stimulating the hard-struck Valley construction industry, hiring local workers and helping revive the city's urban core.
But Ken Gray, co-owner of Selma-based BVI Construction Inc., sees things differently. He says the manner in which the school district devised the new system opened the door to influence-peddling.
"The district seems to have re-established the good old boys club," said Gray, who is the mayor of Selma. "Contractors are making political contributions and they're expecting payback in the form of being awarded contracts. I don't think that's a healthy thing for the public."
Of this there is no doubt: Harris Construction Co. Inc., owned by Richard Spencer of Fresno, has received the lion's share of Fresno Unified's business since the method was changed in May 2011. Since then, Harris has received seven contracts totaling about $78 million. These contracts include building the new Rutherford B. Gaston Sr. Middle School and making major renovations at Fresno High School.
During the same time frame, five other projects totaling $51 million were awarded to five separate contractors using the new award system.
Flavoring the debate about lease/leaseback -- particularly among Valley contractors -- is the fact that Spencer, a longtime contributor to political campaigns at the local, state and federal levels, gave $25,000 to the Measure Q campaign. Harris Construction pitched in $5,000 more. These contributions made Spencer and his company the biggest donor to a campaign that raised about $259,000.
Now, with the upcoming school board election seen by some people as a referendum on Hanson's performance, Spencer, his family members and employees of his companies contributed nearly $10,000 to the campaigns of three candidates supportive of the superintendent, according to elections records through Sept. 30.
The lease/leaseback method isn't new. Originally it was intended as a way for cash-poor districts to build and update schools. A district would lease land to a developer for a nominal amount, typically $1 a year. A school would be built, and the district would pay the developer back over an extended period of time.
But school districts throughout California -- frustrated by poor construction work and projects that increased in price because of change orders -- began using lease/leaseback even when they had ample construction bond money on hand.
Instead of hiring an architect to design what they wanted and selecting the contractor and subcontractors based on the lowest responsible bids, districts choose a general contractor to work with a selected architect and negotiate a guaranteed maximum price. When the job is done, the builders are paid in full.
Kings Canyon Joint Unified School District in Reedley, for example, switched to lease/leaseback in 2002. Clovis Unified and Sanger Unified have used lease/leaseback as well.
The method is touted as superior to hard bids in a 12-minute video on the Harris Construction website. The video also includes testimony from prominent local architects about how well lease/leaseback works. In addition, Harris has hosted sessions with campaign and polling experts instructing districts on how to pass bond measures and implement lease/leaseback. The sessions took place at company headquarters in Fresno.
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