Fresno Unified School District’s attempt to back away from its use of controversial lease-leaseback agreements has inadvertently put its latest building project in the hands of the construction firm that is challenging the district in court.
In a special meeting Wednesday, the Fresno Unified Board of Trustees will revisit a project to provide 18 portable classrooms across the district. The project originally was intended to be a lease-leaseback agreement with BVI Construction, with a guaranteed maximum cost of about $1.9 million, according to the agenda from last month’s board meeting. Now, a motion on Wednesday’s agenda instead asks to approve the project for $1.4 million to Davis Moreno Construction.
Stephen Davis, a principal at Davis Moreno Construction, is in a pending legal case with Fresno Unified over its use of lease-leaseback agreements — an alternative to the traditional competitive bidding process that was designed to allow cash-strapped districts to build schools. Under a lease-leaseback agreement, school districts can handpick developers who will pay construction costs upfront and then have the district pay back the costs over time.
The 5th District Court of Appeal recently deemed Fresno Unified’s use of a lease-leaseback deal with Harris Construction illegal, saying the district had the money to pay for the near $42 million Rutherford B. Gaston Middle School, and therefore misused the process.
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The court’s opinion has critics of lease-leaseback — including some Fresno Unified trustees — questioning why the process was used in the Harris case, calling for an outside investigation of the contracts.
Lease-leaseback agreements are an alternative to traditional competitive bidding. Under lease-leaseback, a school district can handpick a developer who will pay construction costs upfront. The district then “leases back” the building until the construction cost is paid off.
Because of the pending litigation, the board delayed action on any other lease-leaseback deals, voting to instead put the new portable classroom project through the traditional hard-bid process.
Davis Moreno ended up being the lowest bidder, at about $500,000 less than the original projected cost of the project. BVI Construction, the firm that would have overseen the project under the original lease-leaseback deal, also placed a bid this time around, but the amount was $105,500 more than Davis Moreno’s.
Fresno Unified trustees who have publicly defended the use of lease-leaseback agreements have pointed to cost savings as a major plus.
In a letter to the editor in the Bee last week, trustees Christopher De La Cerda and Janet Ryan said they prefer lease-leaseback to the traditional bidding process because it “produces a better product for the same or a lower price.”
But Fresno Unified spokeswoman Amy Idsvoog said Monday that the cost changed because the project’s scope has changed. The initial bid had the contractor building infrastructure and moving the portable buildings; the new contract is just for building the infrastructure, she said. Idsvoog said another company will handle moving the buildings, although she did not immediately know which company would handle that work or how much it would cost.
Wednesday’s special meeting, scheduled for 4:30 p.m., is open to the public. The meeting will be held in the board room at the Board of Education office on Tulare Street.