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SDUHSD cancels building contracts

ENCINITAS — The San Dieguito Union High School District recently canceled four building contracts with three separate developers after being threatened with legal action by a taxpayer advocacy group.

The California Taxpayers Action Network demanded in a letter dated Jan. 12 that the school district rescind the contracts, which were lease-leaseback agreements with McCarthy Building Companies, C.W. Driver, LLC, and Erickson-Hall Construction Company, which the group said were approved without the plans for the projects being first approved by the Division of the State Architect.

The school district rescinded the agreements at the Jan. 19 board meeting and will rebid the project packages in the near future. The action will not delay the projects, district officials said.

School district officials said they felt the district was on solid ground, but did not want to expose the district to costly litigation.

“We don’t have the luxury of time, don’t certainly want to be involved in the unpleasantness of litigation and cost of it,” Superintendent Eric Dill said. “The timeline won’t change — we have some real critical projects coming up, and we needed to make sure to proceed on the same timeline.”

The contracts were for the construction of a Performing Arts Center, Culinary Art Classroom, modernization and parking lot improvements at Torrey Pines High School, a second classroom building at Pacific Trails Middle School an Arts Social Science Building at San Dieguito High School Academy and a Science Classroom Quad, Crest Hall and other improvements at Oak Crest Middle School.

Lease-leaseback arrangements are contracting mechanisms in which a district leases land to a developer selected outright for the purpose of developing a project on said land. The developer then has control over the subcontracting process.

The contract delivery method has been controversial in nature after several high-profile cases in which lawsuits argued that some districts were corrupt in their contract awarding practices and that developers were able to unduly influence the awarding of said contracts.

Gov. Jerry Brown recently adopted new laws that require the lease-leaseback agreements to be subject to competitive bidding for the prime and subcontracts, and that the district, not the contractor, handle the bids.

The Taxpayer Action Network, in its legal threat, argued that the district hastily approved the four contracts in December to circumvent the new laws, which went into effect on Jan. 1.

Dill said last week that this was not the case, and that the district had already mandated contractors to competitively bid the subcontracts.

“We have been using lease-leaseback for many years, this was the first time there was a real threat of litigation,” Dill said. “A few years ago when you had the (Fresno lawsuit that spurred the changes in law), we thoroughly reviewed our process and sought advice from other organizations, and we felt that we were compliant with many of the issues raised in that case.”

In one case, Dill said, the district previously rescinded and rebid a contract for the construction of the science building at San Dieguito Academy to avoid the appearance of non-compliance.

As for the contract being awarded before the Department of the State Architect approved the plans, Dill said that the district has historically awarded pre-construction services contracts with the understanding the contract would have to return for final approval after the State Architect approved the plans.