Last year, a 5th District Court of Appeal ruling put millions of dollars in payments to contractors who worked on school construction projects under no-bid contracts in jeopardy.
This week, California Assembly’s committee on education advanced a bill that would protect those payments even if they’re deemed illegal because of a conflict of interest.
Unlike typical public-works projects, so-called lease-leaseback projects have allowed schools to forgo competitive bidding and merely choose the contractor they want. The district then leases property to the contractor for $1 a year, while the contractor builds improvements. The contractor then collects lease payments from the school district for up to 40 years until the project is paid off.
But school districts haven’t been treating the deals like true leases. Instead, they’ve paid contractors in full upon completion of a project like a normal construction job. That’s illegal, the 5th District decided in Davis v. Fresno Unified School District.
The Davis decision – and another this year in the 2nd District Court of Appeal – also bolstered state conflict-of-interest laws, ruling corporate consultants cannot help make contracts they profit from.
If lease-leaseback contracts are successfully challenged and invalidated in court, contractors could be forced to repay districts all the money received.
Under AB 2316, only contractor profits could be subject to repayment if the contract is invalidated, unless there is proof of fraud or that the contractor didn’t act in good faith. The bill will also require future lease-leaseback projects to go through a bid process.
San Diego Assemblywoman Shirley Weber cast one of the committee’s six supporting votes.
“Without any standards at all, it does run the risk of cronyism,” Weber said. She said requiring competition will bring “some sense of fairness,” even though the bill wouldn’t require districts to choose the lowest bidder.
But San Diego attorney Kevin Carlin, who represented the plaintiff in the game-changing Fresno case, urged the committee to reject the bill, likening it to a “fox in sheep’s clothing,” and saying legislators should not “allow these foxes to avoid their full legal liability.”
“They took the risk. They got caught. They’ve now traded their lawyers for lobbyists,” Carlin said.
The bill was opposed by the Howard Jarvis Taxpayers Association and the California League of Bond Oversight Committees. It was co-sponsored by the Associated General Contractors and garnered support from the California Association of School Business Officials and other groups.
The bill will head to the Assembly floor for a vote sometime later this month.
– Ashly McGlone
About Those Emergency Drought Measures …
Many California water agencies say it’s time to end Gov. Jerry Brown’s emergency water-use restrictions.
The regulations, which originally ordered urban Californians to reduce their water use by 25 percent, have already been relaxed significantly by the State Water Resources Control Board, but they still extend through October.
Even though the drought continues across California, water supplies have rebounded because of rain and snow this winter and because people used less water last year.
The Association of California Water Agencies argues that “conditions no longer warrant extraordinary emergency conservation mandates.” The association hopes the state board will end or relax the emergency regulations in the next several weeks.
San Diego water officials began making that argument last year and have since had so much water they have had trouble using it all efficiently.
There is also wrangling under way over long-term drought regulations, possibly in the form of new legislation.
One of the pushes may be to return jurisdiction over major water-use decisions to the state Department of Water Resources. The department was somewhat sidelined last year when the governor told the state water board to handle the emergency regulations.
“The water community in general would be much more comfortable with the Department of Water Resources running the program, rather than the state board,” said Gary Arant, general manager of the Valley Center Municipal Water District.
Water officials argue that continuing the emergency regulations in the absence of an actual emergency could confuse the public.
“You start to lose credibility,” Arant said. “People start going, ‘Wait, why should we do this, there’s water everywhere?’”
Environmental groups take another view: The state should do what it can to make sure Californians don’t return to their old habits.
“While we recognize that adjustments may be warranted in some areas, we urge the State Water Board to maintain some level of reduction targets for all parts of the state experiencing dry conditions,” a group of environmental groups wrote in a letter. “This will help convey the need to make conservation a way of life in California.”
If the emergency regulations were relaxed or ended, water agencies might be able to stop trying to meet targets for how much less water they should sell. Waiters in restaurants might be able to serve water automatically; right now, customers have to order water. But some restrictions will likely never go away, like those that prevent water from people from using so much water it runs into the street.
– Ry Rivard
Atkins Pushes for Medical Interpretation Funds
San Diego immigrants have been pushing for years for better access to medical interpreters who could allow them to communicate important medical information to their doctors.
KPBS’s Megan Burks has chronicled some especially harrowing stories from women in City Heights’ refugee community, like one who was unable to tell her doctor that she was circumcised – a cultural practice in some parts of East Africa – before giving birth.
Assemblywoman Toni Atkins is now working with Gov. Jerry Brown’s office to secure $15 million in funding for medical interpretation services, Burks reports. Buy-in from Brown’s office would be crucial, since the governor has already vetoed at least two bills that were intended to fund interpretation services.
(Density) Bonus Questions
The debate over the value of the state’s density bonus law, which lets developers bypass certain restrictions if they build a percentage of low-income housing, is still raging in our op-ed section.
The latest salvo: Stephen Russell, executive director of the San Diego Housing Federation, writes that though the law may not be a silver bullet, it is working.
Meanwhile, this Fox & Hounds piece suggests that the affordable housing crisis – which is especially bad along the coast – could be related to the fact that those communities “are rapidly becoming virtual retirement communities, with a diminishing number of children and young families.”
Golden State News
• Supreme Court Justice Stephen Breyer had some very harsh words for California’s death-penalty system this week. (Sacramento Bee)
• And the Long Beach Press Telegram had some harsh words for Florida Gov. Rick Scott, who keeps parachuting into the Golden State trying to poach businesses.
• Several social justice groups, including the Urban League of San Diego, wrote a letter to Gov. Jerry Brown this week urging him to double down on his commitment to closing the achievement gap after Brown suggested that disparities will continue even with help from the government. (CalMatters)
• Brown signed a package of bills cracking down on tobacco – one raises the smoking age to 21 and another limits the use of e-cigarettes in public. (NPR)
• “California’s recent growth has come largely through international immigration,” writes the Dallas Morning News. “In terms of domestic migration, it lost residents from 2013 to 2014.”