Measure BB & Bond Oversight Committee Bond Oversight Committee April 30, 2012.

Measure BBMeasure BB& Bond & Bond

Oversight Oversight CommitteeCommittee

Bond Oversight CommitteeApril 30, 2012

1. Measure BB Background & Initial Budget2. How Bond Financing Works3. Governance of Bond Oversight Committee (BOC)4. Creation of BOC5. Responsibilities of BOC6. Highlight of Accomplishments To Date7. Lease / Leaseback Transactions8. Initial Role of Bernards9. Current Role of Bernards10.Bernards Change: Impact on BOC

Meeting AgendaMeeting Agenda

April 30, 2012Measure BB Bond Oversight Committee

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• MBUSD Resolution No. 2008-12• Election authorizing issuance of general obligation

bonds held November 2, 2008• Passed by the voting residents of Manhattan Beach• “shall MBUSD rehabilitate 58-year old Mira Costa

High School…by issuing $67,480,000 in bonds at legal rates” (originally built in 1950)

• “..including replacing deteriorated classrooms with new classrooms and science labs, upgrading technology, replacing deteriorated plumbing / restrooms, and improving safety/energy-efficiency.”

Measure BB Measure BB BackgroundBackground


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• “Independent oversight”• “Mandatory audits”• “No money for administrator salaries”• “All funds staying local to improve Manhattan

Beach schools.:

Measure BB Measure BB BackgroundBackground


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1. New math/science instructional building (Bldg. A)2. New academic instructional building (Bldg B)3. Technology Upgrades4. Career/technical skills center5. Arts instructional building6. Safety7. Student services8. High school maintenance building9. Pay or prepay certain existing long-term debt (See more details on handout)

Measure BB & Initial Measure BB & Initial Project ListProject List


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Phase I – Math & Science $24,360,000

Phase II – Finger & Admin Buildings

13,983,000

Phase III – Multi-purpose, Etc. 9,420,000

Architect, CM, Attorney 7,012,000

Sub-total Construction 54,775,000

Debt Payments 12,705,000

Total Measure BB $67,480,000

Measure BB & Initial Measure BB & Initial BudgetBudget


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1. Organization determines amount of financing need

2. Election held for community agreement3. Underwriters relay to the county the amount

needed to pay principal and interest (typically once per year)

4. County, based on assessed values, determines incremental property tax

5. Example, incremental tax of $35 per $100,000 of assessed value

How Bond Financing How Bond Financing WorksWorks


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California Legislation•California Proposition 39 includes various accountability requirements, including audits•California Assembly Bill 1908 (“AB 1908”) includes additional requirements related to school district general obligation bond elections•AB 1908 established appointment of members to a Citizens Oversight Committee

Governance of BOCGovernance of BOC


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MBUSD School District•MBUSD also established Bylaws for the Measure BB Bond Oversight Committee•Purpose: Funds used in accordance with the intention of voters•Goals: (1) Validate spending (2) Progress reports•Mission: Independently review and authenticate planning and execution of Measure BB, and inform the public and Board regarding spending to ensure compliance with invention of voters and state law

Governance of BOCGovernance of BOC


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• Committee shall consist of at least 7 members (but may be larger)

• Serve for a term of two years (MBUSD exception made for a one year term)

• Serve for no more than two consecutive terms

BOC RequirementsBOC Requirements


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At least one member from each of the following:1.Active in business organization representing business community within the school district2.Active in senior citizen’s organization3.Active in a bona fide taxpayer association4.Parent or guardian of child enrolled in school district5.Both a parent (or guardian) of a child in the district and active in a parent-teacher organization

BOC RequirementsBOC Requirements


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1. Actively review and report on the proper expenditure of the taxpayers’ money for school construction

2. Advise the public as to whether the school district is in compliance with the requirements of Article XIIIA, Section 1(b)(3) of the California Constitution

3. Advisory role4. Proposition 39 requires BOC to issue a report

annually5. MBUSD By-Laws, however, require BOC to issue a

report quarterly

Responsibilities of Responsibilities of BOCBOC


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2008•Measure BB passed in November•One BOC meeting held

2009•Focus on planning by architects Harley Ellis Devereaux•Several meetings held with teachers, students and community for schematic design•Discussed various green initiatives•Four BOC meetings held

Highlight of Key Highlight of Key Measure BB EventsMeasure BB Events


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2010•Bernards retained as construction services management (April)•Schematic design approved by BOD (May)•Decision to remodel, not demolish, existing “M&O” building (Summer)•Bonds issued totaling $9.738,877 (July)•BOC review of architect and other contracts•Construction documents to DSA (November)•First audit report issued (December)•Seven BOC meetings held



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2011•Lease / Leaseback alternative explored (Spring)•Budget revisions made by Bernards based on design changes (March)•BOC review of Lease / Leaseback contract•Math / Science building construction began (November)•Five BOC meetings held



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2012•Construction continues on Math & Science Building•Both audit reports (financial and performance) finalized and issued on 1/30/12•Third meeting to be held today.



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Lease Leaseback:Lease Leaseback:In SummaryIn Summary

• The Builder is selected by qualifications, not low bid.

• Builder provides a Guaranteed Maximum Price.• Traditionally, included a significant financing

component.• Possible legal challenges (but none in recent

years, and none ever upheld.)

History of LLBHistory of LLB• LLB is authorized under Ed.Code 17406.

o A long-term, revenue-based financing vehicle for projects.

• Growing problems with claims and cost overruns on design-bid-build projects led districts to look for alternatives to the low bid model.

• LLB widely used in recent years due to qualifications-based selection rather than low bid.

• Legal and legislative challenges to LLB have failed.

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Structure Basically Structure Basically

Is The SameIs The Same

=Owner Team

OwnerConstructionManager (Opt.)

ArchitectLLB Builder or

D-B-B Contractor

Subcontractors

• Retained by the Board as Construction Manager in April 2010

• Oversee the construction of the entire project, working closely with the Architect and all contractors

• Prepare the detailed project budget by phase• Monitor and report on project spending• Recommend changes to the budget as necessary• Responsible for Quality Assurance• Limited Financial Responsibility

Initial Role of Initial Role of BernardsBernards


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• Lease / Leaseback agreement signed with Bernards on Nov. 22, 2011

• Accountable for all costs of the project, not to exceed $48,800,193 (Guaranteed Maximum Price)

• Fulfill role of the General Contractor• Agree to all construction plans• No longer Quality Assurance

responsibility(transitioned to Steve Romaine)

Current Role of Current Role of BernardsBernards


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• Continue to actively review and report on proper expenditures

• Continue to advise the public regarding the compliance of expenditures

• Relationship with Bernards is a “fixed fee”; day to day expenses less of a concern

• Scope of project likely to transition over time, as it has already (“scope creep”)

Bernards Change: Bernards Change: Impact on BOCImpact on BOC


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Questions?April 30, 2012

Measure BB Bond Oversight Committee

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Measure BB & Bond Oversight Committee Bond Oversight Committee April 30, 2012.

Documents

Transcript of Measure BB & Bond Oversight Committee Bond Oversight Committee April 30, 2012.