BILL NUMBER: AB 2316	CHAPTERED
	BILL TEXT

	CHAPTER  521
	FILED WITH SECRETARY OF STATE  SEPTEMBER 23, 2016
	APPROVED BY GOVERNOR  SEPTEMBER 23, 2016
	PASSED THE SENATE  AUGUST 23, 2016
	PASSED THE ASSEMBLY  AUGUST 29, 2016
	AMENDED IN SENATE  AUGUST 19, 2016
	AMENDED IN SENATE  AUGUST 2, 2016
	AMENDED IN SENATE  JUNE 14, 2016
	AMENDED IN ASSEMBLY  APRIL 26, 2016

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, 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 board of the
school district 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 governing board of the
school district, 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 bill would delete the language that provides that the
governing board of a school district is not required to advertise for
bids pursuant to this provision. 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
best value, as defined, to the school district. The bill would
require the governing board of the school district to adopt and
publish required procedures and guidelines for evaluating the
qualifications of proposers, as provided. The bill would authorize a
school district, for purposes of utilizing preconstruction services,
to enter into an instrument before written approval is obtained from
the Department of General Services' Division of the State Architect
(DSA) only if the instrument provides that no work for which a
contractor is required to be licensed and for which DSA approval is
required can be performed before receipt of the required DSA
approval.
    The bill would provide, for certain projects leased through an
instrument before July 1, 2015, if at any time the instrument is
determined to be invalid by a court of competent jurisdiction because
it fails to fall within the former competitive bidding exception,
that the contractor who entered into the contract with the school
district may be paid the reasonable cost, specifically excluding
profit, of the labor, equipment, materials, and services furnished by
the contractor before the date of the determination, if certain
conditions, as determined by the court, are met. 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. The bill would provide
that the changes made by its provisions, except the deletion of the
governing board of a school district's authority to not advertise for
bids, shall become inoperative on July 1, 2022.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 17400 of the Education Code is amended to read:

   17400.  (a) Any school district may enter into leases and
agreements relating to real property and buildings to be used by the
school district pursuant to this article.
   (b) As used in this article, the following terms have the
following meanings:
   (1) "Best value" means a competitive procurement process whereby
the selected proposer is selected on the basis of objective criteria
for evaluating the qualifications of proposers with the resulting
selection representing the best combination of price and
qualifications.
   (2) "Best value score" means the total score awarded to a proposer
for all scored evaluation factors.
   (3) "Building" includes each of the following:
   (A) One or more buildings located or to be located on one or more
sites.
   (B) The remodeling of any building located on a site to be leased
pursuant to this article.
   (C) Onsite and offsite facilities, utilities, or improvements that
the governing board of the school district determines are necessary
for the proper operation or function of the school facilities to be
leased.
   (D) The permanent improvement of school grounds.
   (4) "Preconstruction services" means advice during the design
phase including, but not limited to, scheduling, pricing, and phasing
to assist the school district to design a more constructible
project.
   (5) "Site" includes one or more sites, and also may include any
building or buildings located or to be located on a site.
  SEC. 2.  Section 17406 of the Education Code, as amended by Section
1 of Chapter 214 of the Statutes of 2015, is amended to read:
   17406.  (a) (1) Notwithstanding Section 17417, the governing board
of a school district may let, for a minimum rental of one dollar
($1) a year, to a person, firm, or corporation real property that
belongs to the school district if the instrument by which this
property is let requires the lessee therein to construct on the
demised premises, or provide for the construction thereon of, a
building or buildings for the use of the school district during the
term of the lease, and provides that title to that building shall
vest in the school district at the expiration of that term. The
instrument may provide for the means or methods by which that title
shall vest in the school district before the expiration of that term,
and shall contain other terms and conditions as the governing board
of the school district may deem to be in the best interest of the
school district.
   (2) An instrument created pursuant to paragraph (1) shall be
awarded based on a competitive solicitation process to the proposer
providing the best value to the school district, taking into
consideration the proposer's demonstrated competence and professional
qualifications necessary for the satisfactory performance of the
services required. Before awarding an instrument pursuant to this
section, the governing board of the school district shall adopt and
publish required procedures and guidelines for evaluating the
qualifications of proposers that ensure the best value selections by
the school district are conducted in a fair and impartial manner.
These procedures and guidelines shall be mandatory for the school
district when awarding an instrument pursuant to this section. The
required procedures shall include, at a minimum, the following:
   (A) The school district shall prepare a request for sealed
proposals from qualified proposers. The school district shall include
in the request for sealed proposals an estimate of price of the
project, a clear, precise description of any preconstruction services
that may be required and the facilities to be constructed, the key
elements of the instrument to be awarded, a description of the format
that proposals shall follow and the elements they shall contain, the
standards the school district will use in evaluating proposals, the
date on which proposals are due, and the timetable the school
district will follow in reviewing and evaluating proposals.
   (B) The school district shall give notice of the request for
sealed proposals in the manner of notice provided in Section 20112 of
the Public Contract Code and in a trade paper of general circulation
published in the county where the project is located, with the
latest notice published at least 10 days before the date for receipt
of the proposals.
   (C) A proposer shall be prequalified in accordance with
subdivisions (b) to (m), inclusive, of Section 20111.6 of the Public
Contract Code in order to submit a proposal. If used, electrical,
mechanical, and plumbing subcontractors shall be subject to the same
prequalification requirements for prospective bidders described in
subdivisions (b) to (m), inclusive, of Section 20111.6 of the Public
Contract Code, including the requirement for the completion and
submission of a standardized prequalification questionnaire and
financial statement that is verified under oath and is not a public
record. These prequalification requirements shall be included in an
instrument created pursuant to paragraph (1).
   (D) The request for sealed proposals shall identify all criteria
that the school district will consider in evaluating the proposals
and qualifications of the proposers, including relevant experience,
safety record, price proposal, and other factors specified by the
school district. The price proposal shall include, at the school
district's discretion, either a lump-sum price for the instrument to
be awarded or the proposer's proposed fee to perform the services
requested, including the proposer's proposed fee to perform
preconstruction services or any other work related to the facilities
to be constructed, as requested by the school district. The request
for proposals shall specify whether each criterion will be evaluated
pass-fail or will be scored as part of the best value score, and
whether proposers must achieve any minimum qualification score for
award of the instrument under this section.
   (E) For each scored criterion, the school district shall identify
the methodology and rating or weighting system that will be used by
the school district in evaluating the criterion, including the weight
assigned to the criterion and any minimum acceptable score.
   (F) Proposals shall be evaluated and the instrument awarded under
this section in the following manner:
   (i) All proposals received shall be reviewed to determine those
that meet the format requirements and the standards specified in the
request for sealed proposals.
   (ii) The school district shall evaluate the qualifications of the
proposers based solely upon the criteria and evaluation methodology
set forth in the request for sealed proposals, and shall assign a
best value score to each proposal. Once the evaluation is complete,
all responsive proposals shall be ranked from the highest best value
to the lowest best value to the school district.
   (iii) The award of the instrument shall be made by the governing
board of the school district to the responsive proposer whose
proposal is determined, in writing by the governing board of the
school district, to be the best value to the school district.
   (iv) If the selected proposer refuses or fails to execute the
tendered instrument, the governing board of the school district may
award the instrument to the proposer with the second highest best
value score if the governing board of the school district deems it to
be for the best interest of the school district. If the second
selected proposer refuses or fails to execute the tendered
instrument, the governing board of the school district may award the
instrument to the proposer with the third highest best value score if
the governing board of the school district deems it to be for the
best interest of the school district.
   (v) Notwithstanding any other law, upon issuance of a contract
award, the school district shall publicly announce its award,
identifying the entity to which the award is made, along with a
statement regarding the basis of the award. The statement regarding
the school district's contract award and the contract file shall
provide sufficient information to satisfy an external audit.
   (G) The governing board of the school district, at its discretion,
may reject all proposals and request new proposals.
   (3) Following the award of an instrument created pursuant to
paragraph (1), and if the price proposal is not a lump sum for the
instrument awarded, the successful proposer shall provide the school
district with objectively verifiable information of its costs to
perform the services requested under the instrument and shall select
subcontractors as set forth in paragraph (4). Once any
preconstruction services are completed and subcontractors are
selected, and upon approval of the plans and specifications for work
on the site by the Department of General Services' Division of the
State Architect, if required, the successful proposer and the school
district shall finalize the price for the services to be provided
under the instrument. The successful proposer shall provide the
school district with written rationale for the price, and the school
district shall approve or reject the final price at a public meeting
before the successful proposer may proceed with any further work
under the instrument. The contract file shall include documentation
sufficient to support the final price determination.
   (4) (A) The school district, in the request for sealed proposals,
may identify specific types of subcontractors that must be included
in the proposal. All subcontractors that are identified in the
proposal shall be afforded the protections of the Subletting and
Subcontracting Fair Practices Act (Chapter 4 (commencing with Section
4100) of Part 1 of Division 2 of the Public Contract Code).
   (B) Following the award of an instrument created pursuant to
paragraph (1) and for subcontractors not identified in the proposal,
the successful proposer shall proceed as follows in awarding
construction subcontracts with a value exceeding one-half of 1
percent of the price allocable to construction work:
   (i) Provide public notice of availability of work to be
subcontracted in accordance with the publication requirements
applicable to the competitive bidding process of the school district,
including a fixed date and time on which qualifications statements,
bids, or proposals will be due.
   (ii) Establish reasonable qualification criteria and standards.
   (iii) Award the subcontract either on a best value basis or to the
lowest responsible bidder. The process may include prequalification
or short-listing. The process shall not apply to subcontractors
listed in the original proposal. Subcontractors awarded construction
subcontracts under this subdivision shall be afforded all the
protections of the Subletting and Subcontracting Fair Practices Act
(Chapter 4 (commencing with Section 4100) of Part 1 of Division 2 of
the Public Contract Code).
   (5) Nothing in paragraph (2) shall preclude a school district from
segregating the request for proposals into a request for
qualifications, followed by a request for proposals with price
information from the proposers deemed most qualified by the school
district, provided that the procedures specified in paragraphs (2),
(3), and (4) are otherwise followed.
   (b) (1) Notwithstanding Sections 17297 and 17402, for purposes of
utilizing preconstruction services, a school district may enter into
an instrument created pursuant to paragraph (1) of subdivision (a)
before written approval by the Department of General Services'
Division of the State Architect only if the instrument provides that
no work for which a contractor is required to be licensed in
accordance with Article 5 (commencing with Section 7065) of Chapter 9
of Division 3 of the Business and Professions Code and for which
Division of the State Architect approval is required can be performed
before receipt of the required Division of the State Architect
approval.
    (2) Nothing in this subdivision waives the requirements of
Section 17072.30 or Section 17074.16, or any other applicable
requirements of Chapter 12.5 (commencing with Section 17070.10) of
Part 10.
   (c) A rental of property that complies with subdivision (a) as it
reads on the day that the lease is entered into shall be deemed to
have thereby required the payment of adequate consideration for
purposes of Section 6 of Article XVI of the California Constitution.
   (d) (1) This subdivision shall apply to a project for the
construction, alteration, repair, or improvement of any structure,
building, or other improvement of any kind that was leased through an
instrument pursuant to this section before July 1, 2015. If at any
time the instrument is determined to be invalid by a court of
competent jurisdiction because it fails to fall within the
competitive bidding exception pursuant to paragraph (1) of
subdivision (a), as it read on December 31, 2016, the contractor who
entered into the instrument with the school district may be paid the
reasonable cost, specifically excluding profit, of the labor,
equipment, materials, and services furnished by the contractor before
the date of the determination that the instrument is invalid if all
of the following conditions, as determined by the court, are met:
   (A) The contractor proceeded with construction, alteration,
repair, or improvement based upon a good faith belief that the
instrument was valid.
   (B) The school district has reasonably determined that the work
performed is satisfactory.
   (C) Contractor fraud did not occur in the obtaining or performance
of the instrument.
   (D) The instrument does not otherwise violate state law related to
the construction or leasing of public works of improvement.
   (2) In no event shall payment to the contractor pursuant to this
section exceed either of the following:
    (A) The contractor's costs as included in the instrument plus the
cost of any approved change orders.
   (B) The lease payments made, less profit, at the point in time the
instrument is determined to be invalid by a court of competent
jurisdiction.
   (3) Notwithstanding paragraph (1), this subdivision shall not
affect any protest and legal proceedings, whether contractual,
administrative, or judicial, to challenge the award of the public
works contract, nor affect any rights under Section 337.1 or 337.15
of the Code of Civil Procedure.
   (e) This section shall become inoperative on July 1, 2022, and, as
of January 1, 2023, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2023, deletes or
extends the dates on which it becomes inoperative and is repealed.
  SEC. 3.  Section 17406 of the Education Code, as added by Section 2
of Chapter 408 of the Statutes of 2014, is amended to read:
   17406.  (a) Notwithstanding Section 17417, the governing board of
a school district may let, for a minimum rental of one dollar ($1) a
year, to any person, firm, or corporation any real property that
belongs to the school district if the instrument by which this
property is let requires the lessee to construct on the demised
premises, or provide for the construction thereon of, a building or
buildings for the use of the school district during the term of the
lease, and provides that title to that building shall vest in the
school district at the expiration of that term. The instrument may
provide for the means or methods by which that title shall vest in
the school district before the expiration of that term, and shall
contain other terms and conditions as the governing board of the
school district may deem to be in the best interest of the school
district.
   (b) Any rental of property that complies with subdivision (a)
shall be deemed to have thereby required the payment of adequate
consideration for purposes of Section 6 of Article XVI of the
California Constitution.
   (c) This section shall become operative on July 1, 2022.