The superintendent of the Fresno Unified School District says their use of a procedure known as lease-leaseback to build new schools is legal.
The district has come under fire for selecting a local construction firm, Harris Construction, to build the $37 million Gaston Middle School without going through a competitive bidding process.
Harris was chosen through a process known as Lease-leaseback where the district can hand pick a company who agrees to front the construction cost and then be paid back over time.
Another construction company, Davis Moreno, sued this district saying it had the bond money to build the school and therefore misused the lease-leaseback method.
In press conference Wednesday, Superintendent Michael Hanson said their use of lease-leaseback is a normal way that districts across the state fund construction project.
“Our process for utilizing lease-leaseback is the same process used by hundreds of districts in the state for a decade before we even began to use it in Fresno Unified. And our process is consistent with the advice of a number of groups that matter a great deal in the world of public school construction,” Hanson said.
The 5th District Court of Appeal issued an opinion in June siding with Davis Moreno saying that Fresno Unified illegally used lease-leaseback. The district is taking the case to the California Supreme Court.
Hanson says regardless of the outcome of their appeal the ruling does not eliminate the district’s authority to use lease-leaseback.
“Lease-leaseback still is a viable delivery process and a method to use in California. And the Davis decision does not hold that section 17406, the lease-leaseback exception to the competitive bid process, is illegal. It doesn’t do that. It doesn’t say it is unconstitutional,” Hanson said.
Fresno Unified says it has used lease-leaseback at least 24 times since 2011 and in 9 of those projects Harris was the chosen company.
Hanson defended the repeated selection of Harris saying “It’s evidence of good work, it’s evidence of a great track record, it’s evidence of creativity, it’s evidence of being able to work with a customer like us very well, and it’s also evidence that they can do big complicated projects.”
Several Fresno Unified board members have called for an outside review of the contracts.
Board Member Brooke Ashjian says it’s clear that the proper procedure for a lease-leaseback was not followed in this case.
“The public should absolutely be concerned with all levels of government, especially when we are spending this kind of money. When you have contracts that are given to people before they are awarded by the board and you find out about it three years later...absolutely the public should be concerned about it,” Ashjian said.
Ashjian also told the Fresno Bee that he has been interviewed by the FBI about the deal, but neither the FBI nor the school district could confirm if there is an investigation underway.
