Important New Requirements for all Lease-Leaseback Projects Awarded on or after January 1, 2016 (K-12)
Effective January 1, 2016, AB 566 will take effect: this bill makes the following significant changes to the lease-leaseback process.
LEGAL UPDATE
December 15, 2015
To: Superintendents, Member School Districts (K-12)
From: Patrick C. Wilson, Senior Associate General Counsel
Subject: Important New Requirements for all Lease-Leaseback Projects Awarded on or After January 1, 2016
Memo No. 34-2015
Effective January 1, 2016, AB 566 will take effect: this bill makes the following significant changes to the lease-leaseback process.
1. The prequalification of lease-leaseback contractors and the mechanical, electrical, and plumbing subcontractors under Public Contract Code § 20111.6 will now be required for all lease-leaseback projects in excess of $1 million regardless of the funding source.
2. Education Code § 17407.5 requires that each contractor and subcontractor employ a “skilled and trained workforce” for each “apprenticeable occupation” on a lease-leaseback project.
An “apprenticeable occupation” is defined as an occupation for which the chief of the Division of Apprenticeship Standards of the Department of Industrial Relations has approved an apprenticeship program prior to January 1, 2014.
The “skilled and trained workforce” is defined as a workforce that meets all of the following conditions: (1) all workers are either skilled journeypersons or apprentices registered in an approved apprenticeship program and (2) beginning on January 1, 2016, 30% of the skilled journeypersons for each “apprenticeable occupation” must have graduated from an approved apprenticeship program.
The percentage of the “skilled journeypersons” required for each LLB project increases over time. On January 1, 2017, the percentage rises to 40%, then rises to 50% on January 1, 2018, and to 60% on January 1, 2019.
The new law also requires that the lease-leaseback contract include an “enforceable commitment” to using a “skilled and trained workforce” demonstrated through monthly reporting by the contractor and the subcontractors, or through a project labor agreement that binds all contractors and subcontractors and contains the requirements of AB 566. If the contractor fails to provide the school district with the required monthly reporting, the school district is directed to “immediately cease making payments” under the LLB contract.
This second new requirement may make compliance very difficult for certain contractors. Districts should review this new provision carefully to be sure the selected contractor is able to comply with its requirements.
Please contact our office with questions regarding this Legal Update or any other legal matter.
The information in this Legal Update is provided as a summary of law and is not intended as legal advice. Application of the law may vary depending on the particular facts and circumstances at issue. We, therefore, recommend that you consult legal counsel to advise you on how the law applies to your specific situation.
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