Devilish Details“Lease-leaseback enables a district to do sole-source contracting — that can sometimes be a ‘good old boys’ system, which was why competitive bidding was written into the law in the first place,” says Jay Hansen, legislative director of State Building and
Construction Trades Council of California. “There is the potential for nepotism, cronyism and those sorts of problems.”
Hoping to address those concerns, the council last year sponsored legislation to require competitive bidding in lease-leaseback agreements. Similar legislation was also written by former Assemblymember John Dutra (D-Fremont) in 2004. Both measures were promptly vetoed by the governor.
Judging by the vociferous reaction that the bills met in the Legislature, restructuring lease-leaseback won’t be easy. Any effort to require competitive bidding is likely to be viewed by Republicans as a union power grab and vetoed by a Republican governor. If a Democrat sits in the governor’s chair following the November election, reform would undoubtedly be easier but may not be a top priority. Regardless, industry insiders worry that future legislative reforms of any nature would leave lease-leaseback looking too much like the traditional school-construction process, thus removing the incentive for districts that are looking for alternatives.
If lease-leaseback hopes to stay above the fray of government bureau-
cracy and the red tape that has strangled traditional building methods, retaining flexibility is key. The adaptable nature of the private-delivery method lowers costs, reduces administrative hassles and promotes creativity in design. And what is most important, lease-leaseback bypasses obstacles to produce results where traditional-financing methods fall short.
Is the injection of the private sector into the public-school-construction process the answer to the Sacramento area’s school facility woes? With potential legislative reforms looming, the future of lease-leaseback is far from certain. Yet as long as lease-leaseback provides the efficiency, expediency and excitement the traditional process can’t match, the popularity of public-private school construction isn’t likely to fade.
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