San Diego Source

The Daily Transcript
Monday, March 16, 2015

There are nuances and strategies to building and passing a construction bond program.

Entities, such as school districts, have to figure out an execution plan for the construction bond program — the financial structure, management and oversight — and then persuade voters to pass the measure.

Companies and executives with experience managing and implementing construction bond programs gave advice Friday at a San Diego Taxpayers Association seminar.

Executives with San Diego-headquartered Cumming Corp., which has worked with 225 California school districts, discussed their experience managing school district bond programs.

“It is vital to bring on all the partners as soon as possible: the school board, staff, architects, contractors,” said Lisa Sachs, managing principal for Cumming Corp. That way everyone is aiming for identical goals with realistic expectations.

A project and construction management firm acts as the team leader on the bond program and keeps everyone — from district officials, architects and contractors, to the community — current with the projects.

Sachs gave the example of how Cumming successfully started a construction bond program in 2011 for the Glendale Unified School District.

She said the school district hired Cumming as a construction management consultant two months before the district’s bond passed.

Cumming created nine steps for the bond program: a master facility assessment plan, architecture and engineering site investigations, cost assessments, roofing assessments, a plan to meet the Americans with Disabilities Act, sustainability and energy assessment, technology assessment, education specifications and district design standards.

Christine Marez, director of energy services for Cumming Corp., said you “always want to be fair, firm and reasonable” when it comes to executing a successful bond program.

“You want to be known as an agency that is accountable and transparent,” she said.

When it comes to construction-related contracts, Marez said it is important that each side takes on risk. That way, no one side is left with the bill when unforeseen issues arise.

“You also want to have someone, like a lawyer, look over the contracts to make sure there are no loopholes,” Marez added.

Another important task is having a program accountant to ensure the contractors and workers are paid on time.

“The life blood of a program and the projects is paying your subs on time,” Marez said. “If you don’t, the word will get around and you will have less and less subs bidding on your projects as the bond program moves forward. This will increase costs because you will have less competition for your projects.”

Scheduling and deadlines are essential to success, Marez said, not only for change orders and paying subcontractors, but also placing a five-year schedule and goals for the entire program.

Marez also said that school districts and construction management firms should know about the California Clean Jobs Act, also known as Proposition 39. From 2013 to 2018, California will distribute $381 million to K-12 school districts and $47 million to community college districts for campus projects that improve energy efficiency.

“You have to prove to the state that the school district can save money via energy improvements such as Title 24,” Marez said. Title 24 states all new construction projects have to show a net zero impact, compared to buying from a local energy company.

Dale Scott who provides financial advisory consulting services, said you want to make school-bond financing good for 30 years.

“Once voters pass bonds, they are called authorized but not issued,” Scott said. “As bonds come online and get issued, taxpayers start to be taxed. Once you sell those bonds, they are locked.”

You also want to draft a project list to show the community what you are planning to do with the bond money you hope the voters pass.

“You want to be able to show voters where their taxes are going,” Scott said.

Courtney Jones, partner at the law firm Jones Hall, said you should always have a taxpayers association review financing plan.

“Especially here in San Diego,” she said. “Having the local taxpayers association to approve and endorse your bond … will tell voters it is a responsible bond measure to pass.”

Scott said the best time for school districts to place a measure on a ballot is during a presidential election when more people vote and more bond measures are passed, rather than a primary or gubernatorial election.

Bob Kiesling, retired director of facilities for the Grossmont Union High School and San Diego Unified districts, said the district should hire or have a program manager on staff to oversee, direct and manage the bond program and work with the construction management firm.

“You should have someone that knows about the division of state architects,” he said. “Having a school rep go up and talk to them looks good and the DSA likes that better than having the project architect talk to them. It shows the district is invested and not passing the buck, so to speak.”

Kiesling added that you want to let the media and public know what is going on because there are projects they can’t see, like underground infrastructure.

“You also want to hire two of everything,” he stated. “Two construction managers, two general contractors, two architectural firms, etc., just in case one tries to strong-arm you, you have someone to compete with on pricing. You can still give most of the work to one over the other, but just make sure everyone is being awarded contracts.”

Kiesling also said to pick the construction-delivery method that best fits each project. Larger projects might call for a design-build, while smaller ones might need lease-lease-back.