Bill Text: CA AB975 | 2015-2016 | Regular Session | Amended


Bill Title: School facilities: lease-leaseback contracts: contractor relief.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2016-11-30 - From Senate committee without further action. [AB975 Detail]

Download: California-2015-AB975-Amended.html
BILL NUMBER: AB 975	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 18, 2015
	AMENDED IN ASSEMBLY  MAY 4, 2015
	AMENDED IN ASSEMBLY  MARCH 26, 2015

INTRODUCED BY   Assembly Member  Frazier  
Mullin 

                        FEBRUARY 26, 2015

    An act to amend Sections 20101, 20111.5, and 20111.6 of
the Public Contract Code, relating to public contracts. 
 An act to add Section 5111 to the Public Contract Code, relating
to school facilities, and declaring the urgency thereof, to take
effect immediately. 



	LEGISLATIVE COUNSEL'S DIGEST


   AB 975, as amended,  Frazier   Mullin  .
 Local Agency Public Construction Act: bid criteria.
  School facilities: lease-leaseback contracts:
contractor relief.  
   Existing law, until January 1, 2019, authorizes the governing
board of a school district, without advertising for bids, to lease
real property owned by the school district 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 during the term of the
lease and provides that the title to the building shall vest in the
school district at the end of the lease.  
   This bill would provide that when 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 the provisions described above before July 1, 2015, and
that instrument is later determined to be invalid, the contractor who
entered into the contract with the school district is entitled to be
paid the reasonable cost of the labor, equipment, materials, and
services furnished by the contractor before the date of the
determination, subject to specified conditions.  
   This bill would declare that it is to take effect immediately as
an urgency statute.  
   The Local Agency Public Construction Act sets forth the
requirements for competitive bidding on various types of contracts
awarded by state and local agencies, including a school district. The
act authorizes a public entity or school district to require
prospective bidders for a construction contract to complete and
submit to the governing board a prequalification questionnaire and
financial statement, and requires the board to adopt and apply a
uniform system of rating bidders on the basis of completed
questionnaires and financial statements.  
   This bill would also prohibit a public agency or school district
under the act, from disqualifying a prospective bidder based solely
on whether the prospective bidder filed a claim against a project
owner.  
   Because this bill would impose new requirements on the governing
body of a local school board, it would impose a state-mandated local
program.  
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.  
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions. 
   Vote:  majority   2/3  . Appropriation:
no. Fiscal committee:  yes   no  .
State-mandated local program:  yes   no  .


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

   SECTION 1.    Section 5111 is added   to the
  Public Contract Code   , to read:  
   5111.  (a) This section shall apply retroactively 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 Section 17406 of the Education
Code before July 1, 2015. If at any time the instrument is determined
to be invalid by a court of competent jurisdiction, the contractor
who entered into the instrument with the school district shall be
entitled to be paid the reasonable cost 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 are met:
   (1) The contractor proceeded with construction, alteration,
repair, or improvement based upon a good faith belief that the
instrument was valid.
   (2) The school district has reasonably determined that the work
performed is satisfactory.
   (3) Contractor fraud did not occur in the obtaining or performance
of the instrument.
   (b) In no event shall payment to the contractor pursuant to this
section exceed the contractor's costs as included in the instrument
plus the cost of any approved change orders.
   (c) Notwithstanding subdivision (a), this section 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. 
   SEC. 2.    This act is an urgency statute necessary
for the immediate preservation of the public peace, health, or safety
within the meaning of Article IV of the Constitution and shall go
into immediate effect. The facts constituting the necessity are:
 
   As a result of a California appellate court decision that was
published on June 1, 2015, that called into question the legality of
lease-leaseback school construction agreements, school districts have
indicated that additional legal challenges are now forthcoming.
These challenges may seek disgorgement of all funds from the general
contractor for projects that have been completed or are under
construction, which may bankrupt even the most stable contractor. In
order to ensure that contractors are not subject to disgorgement in
these legal challenges if the contractor relied upon a good faith
belief that the instrument was valid, it is necessary that this act
take effect immediately.  All matter omitted in this version of
the bill appears in the bill as amended in the Assembly, May 4, 2015.
(JR11)
  
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