February 25, 2025 Minutes
Citizen’s Bond Oversight Committee (CBOC)
Minutes of the Meeting
Location: Members of the Committee attended the District Office in person.
Present: Janet Borgens, Jennifer Givens, Carl Landers, Karl Metz, and Jitpal Sahai
Absent: Jacqueline Rodriguez Luna
Mr. Sahai arrived at 6:15 pm.
Others present: Olivia Acosta, Supt. John Baker, Ed.D., CBO Rick Edson, Erika Szallos, and Erick Van Pelt (VPCS)
1.0 Call to Order
1.1 Roll Call
Meeting was called to order at 6:00 pm. Roll call was taken and quorum was established
1.2 Welcome – Carl Landers, Chair
Chair Landers welcomed everyone and outlined that at this meeting the financial reports and discussions will cover the period from October 1st through December 31st and other related matters. The Chair noted that quorum was met.
2.0 Agenda Review
2.1 Changes to the Agenda
No changes were made to the agenda.
2.2 Approval of Agenda
Motion to approve the February 25, 2025 Agenda
(Janet Borgens/Jennifer Givens; 4-0)
3.0 Public Comment on Items Not on the Agenda
3.1 At this time members of the public may address the CBOC on any items of interest to the public that are within the subject matter jurisdiction of the CBOC but not on the agenda for the meeting. Speakers are requested to limit their remarks to three minutes. No committee action can be taken.
There were no public comments.
4.0 Action Items
Members of the public may address the CBOC prior to its consideration of each item. Speakers are requested to limit their remarks to three minutes.
4.1 Approval of January 22, 2025 minutes
The minutes from the January 22, 2025, meeting were reviewed and approved.
(Jennifer Givens/Janet Borgens; 4-0)
5.0 Information/Discussion Items
Members of the public may address the CBOC prior to its consideration of each item. Speakers are requested to limit their remarks to three minutes.
5.1 Information on 2023-24 Financial and Performance Audits Building Fund (Measure T & S)
Mr. Landers noted that these audits were presented to the Board approximately two weeks ago. Mr. Landers invited Ahmad Gharaibeh to present.
Mr. Gharaibeh, the independent auditor at Eide Bailly, introduced himself and explained the scope of the audit, which focused on Measures S and T. He highlighted that the audit was a performance audit, consisting of two main components:
1. Ensuring that the financial statements for Measure S and Measure T are fairly stated.
2. Verifying that the expenses are in compliance with the ballot language (performance audit).
Mr. Gharaibeh described the audit process, which is divided into an interim phase and a final phase. During the interim phase, compliance is assessed by sampling invoices, reviewing internal controls, and ensuring adherence to district policies, including segregation of functions. After the district closes its books, the final phase involves confirming the amounts reported for bond proceeds, interest, cash, and other financial data. The audit also involves reviewing the expenses charged to the program, including payroll and vendor-related expenses.
Mr. Gharaibeh emphasized the importance of keeping funds and transactions for the two bond measures separate, using distinct General Ledger codes and treasury accounts.
He concluded by reporting that both Measure S and Measure T received clean opinions, both in terms of financial statements and compliance with the ballot language.
Mr. Landers thanked Mr. Gharaibeh for the presentation and asked if there were any questions from the committee members. There were no questions.
5.2 HVAC Upgrade Project Update (Scope, Status, and Funding)
· Mr. Landers noted that the first major projects funded under Measure S include the HVAC upgrades and the lighting retrofit discussed at the previous meeting.
· Mr. Van Pelt, continued by discussing the HVAC upgrades, noting the targeted schools: Selby, Hoover, Roosevelt, and Taft. He mentioned that architectural services for the HVAC upgrades were approved on November 6, 2024, and that work had begun immediately after. Temporary units were approved on February 5, and anticipated HVAC equipment will be presented to the board in March. A Division of State Architect (DSA) review and approval is expected in May. A Lease Leaseback RFP will be published this week to solicit contractors, with approval expected in May. The construction window is expected to be from June 9th to August, to complete installation and necessary adjustments.
· Mr. Van Pelt clarified that although Taft is a newer campus, it still lacks HVAC in some buildings, specifically older ones, while newer buildings will receive HVAC upgrades as part of the project. Mr. Van Pelt explained that costs for some schools were higher due to the need for additional work like ADA upgrades and electrical adjustments.
· A question was raised about temporary portable air conditioning units to cover schools not upgraded this summer. Mr. Van Pelt confirmed the rental cost for these temporary units is estimated at close to $1 million.
· Mr. Van Pelt emphasized that the total Measure S funds committed so far amount to approximately $77 million, with $60 million earmarked for HVAC upgrades and $17 million for lighting. The question was raised regarding potential risks or delays. Mr. Van Pelt assured the committee that there is contingency time and funding built into the project to manage any delays or changes, with the target completion for all HVAC projects expected within three summers.
· Mr. Van Pelt provided a brief update on the lighting retrofit project. The lighting upgrades will cover both interior and exterior lighting at district facilities. The lead time for the first order of lighting equipment is 6 to 10 weeks, with an anticipated installation start date of either March or April, depending on when the order arrives. The committee clarified that the lighting project does not include field lighting, which is managed by the city.
· There was a discussion on the Facilities Master Plan and the communication strategy for upcoming community outreach meetings, including virtual and in-person sessions.
5.3 Report from the ad-hoc subcommittee on the lighting retrofit project
· At the last meeting, it was decided that an ad hoc subcommittee for the project should be formed. Mr. Landers and Mr. Metz volunteered to be on the committee.
· Mr. Landers said that the first order of business was to compile a list of information requested from the district the previous week. Mr. Landers added that the subcommittee has not yet had time to fully review the information provided by the District, to prepare a report for the full committee. The update will be prioritized for the next CBOC meeting.
· Mr. Landers mentioned that he had no additional comments or updates to add.
5.4 Receive and discuss Measure S progress, including update on facilities master plan
The Measure S progress, including an update on the facilities master plan, was discussed in Item 5.2.
5.5 Receive progress report on Measure T remaining projects
· CBO Edson reported that the only remaining project under Measure T is the solar project. At the previous meeting, the solar project was at about 60% through the design phase. The team is still progressing with the project, and submissions to the Division of the State Architect (DSA) are anticipated for late March. There were no additional updates on the solar project, but a more detailed update is expected at the May meeting.
· CBO Edson also provided an anticipated construction schedule, stating that the solar installation is expected to begin towards the end of September 2025 and be completed by May 2026. To minimize disruption, the work will be scheduled to take place during the school year.
· Regarding the total cost of the solar project, CBO Edson confirmed that it is approximately $14 million. The funding for this project is coming from the remainder of Measure T funds, as well as state construction facility matching bonds. The state grant was awarded for projects completed during Measure T, and this reimbursement has already been deposited into the bond fund.
5.6 Review Bond Activity – October 1, 2024 – December 31, 2024
5.6.1 Review: Bond expenditures
The committee discussed various line items from the provided spreadsheets.
Measure S Expenditures:
A question was raised regarding the "Other Costs" category in the Measure S expenditures, specifically under the line item "Other Cost Construction." The inquiry sought clarification on what constitutes "other costs" and their relevance to the budget. "Other Cost Construction" refers to expenditures that may not fit into more specific categories, such as the cost of the mobile modular management offices. These offices are rented at $539.84 monthly and provide on-site district project support.
The "Mobile Modular Management Corp." charges reflect the cost of temporary office trailers on-site for district project support, a cost categorized under accountant salaries and benefits.
The cost of these modular offices, $500/month, was discussed, and it was considered a bargain for the trailer office space.
There was a question regarding the Key Analytics software. The $316,000 is for a five-year program to provide new accountability software for Measure S.
Clarification was sought on the Van Pelt Construction Service Program's $200,000 cost, which is part of the five-year contract for program management. CBO Edson confirmed that the $200,000 is for program management, with costs possibly increasing as construction ramps up.
Measure T Expenditures:
The Colby Technologies license cost was also discussed, with CBO Edson explaining that the monthly fee (approximately $6,000 to $10,000 per month) is spread over the entire year. Still, some costs fall into the next fiscal year, so they must be classified as prepaid expenses.
The legal services provided by DWK (Dannis, Wolver & Kelly) were questioned regarding whether there was a retainer or hourly basis. CBO Edson confirmed that DWK charges on an hourly basis and there is no retainer.
The program management cost for Measure T, specifically for RGM Kramer, is approximately $10,000 per month and will continue through the completion of the solar project.
5.6.2 Review: Contractor change orders approved by the District
The agenda item was reviewed, and no further discussion was needed.
5.6.3 Review: No-bid contracts executed by the District
The LED lighting retrofit project was discussed. No specific questions were raised regarding the no-bid contracts themselves. However, a follow-up question about the HVAC project bidding process was raised.
Mr. Van Pelt provided an update on the HVAC project bidding, confirming that contractor bidding will begin soon, specifically within the week. He clarified the Lease-Leaseback Process, explaining that while the process is not technically a "bidding" process, it is still competitive. The key point of the Lease-Leaseback model is that it allows for the selection of a contractor based on both cost and qualifications, rather than being bound solely to the lowest bid. The district will lease the property to the contractor during construction, and the contractor will perform tenant improvements on the facility. After construction, the property is leased back to the district for a term of one year. This process is designed to ensure that the district gets the best value, with the contractor selected based on a combination of pricing and qualifications. Unlike traditional bidding, the Lease-Leaseback process ensures that the district is not forced to accept the lowest bid but instead selects a contractor who can complete the work to a high standard while still providing competitive pricing.
Mr. Van Pelt emphasized that, under this process, contractors will submit competitive pricing, and their qualifications will also be evaluated.
The selected general contractor will then subcontract the work, and bids will be solicited from various subcontractors to maintain competitive pricing and quality.
The selection will be based on the "best value" to ensure the project is done properly, especially given the tight timelines.
Mr. Van Pelt clarified that the Lease-Leaseback model operates on a Guaranteed Maximum Price (GMP). At the end of the project, any unused funds are returned to the district. Conversely, if there are cost overruns, a change order would be issued.
There is no financial risk to the district since the district holds 5% of the total contract cost, which is paid back to the contractor over the leaseback year. This provides a safety net for the district.
The concern about contractor availability was raised due to the narrow 8-week construction window. Mr. Van Pelt acknowledged the challenge and mentioned that the district has already been in contact with contractors to ensure their availability. Additionally, their architectural partner, QKA, has been engaging their network of contractors to secure interest and involvement in the project.
It was clarified that in public sector projects, when using a traditional "hard bid" process, the district must accept the lowest bid, as required by public contract law.
However, the Lease-Leaseback process provides more flexibility in terms of selecting contractors based on value, not just price.
Mr. Landers raised a question about the financial risk to the district during the leaseback period. Mr. Van Pelt assured that DWK (the legal service provider) prepares thorough documents for this process, which adequately protect the district’s interests.
The 5% retention from the contractor’s payment is designed to further minimize financial risk and ensure proper performance during the leaseback period.
No further questions were raised about the no-bid contracts
5.6.4 Review: New projects/spending approved by the Board
The agenda item was reviewed, and no further discussion was needed.
5.6.5 Review: Current litigation and public disputes related to the bond programs
There are no current litigation and public disputes related to the bond programs at this time.
5.7 Review District's financial update on total revenues and expenditures for the bond program
· Ms. Szallos presented financial reports for December 31, 2024, including actual expenditures, interest revenue, and total funds. Total actuals were 213.6 million.
· Ms. Szallos clarified that the transfer for the solar project (from the state grant) has not yet been added to the budget. It might not appear under Fund 21, but it will be allocated for the solar project in a different fund.
· Ms. Szallos explained the adjustment related to the COVID-19 relief reimbursements in fiscal years 2019-2021. The district’s financial system recorded this as a credit to expenditures, while the accountability system recorded it as revenue.
· Ms. Szallos shared handout 5.7.b. This report shows the year-to-date actuals, with interest earned at $14,166 and expenditures at $210,270. Unlike Measure S, Measure T was not charged salaries and benefits. The report indicated the total funds combined are $213.6 million, with a projected budget increase due to a $13 million grant for the solar phase 2 project.
· Ms. Szallos shared handout 5.7.d, which showed that $13.7 million has been added to the Solar Phase 2 project, which includes construction costs ($12.5 million) and a contingency of $1.5 million. She said the remaining funds from the board reserve were moved into the solar phase 2 project.
· Ms. Szallos shared handout 5.7.e on Measure S actuals as of December 31, 2024, interest revenue was $890,000. Expenditures under capital outlay totaled $1.5 million, which includes various services such as Van Pelt Construction, architectural fees for QKA, and other smaller contracts like copier leases.
· Ms. Szallos shared the Keystone Solutions Financial Report, handout 5.7.f, which showed total expenditures for fiscal year 2024-2025 as $1.5 million. The cumulative total from all years was $3.2 million. The $1.2 million expenditures for 2023-2024 were mainly for Van Pelt services and Key Analytics fees.
· Mr. Landers mentioned that now that the audit reports for fiscal year 2023-2024 are available, it’s time to write the CBOC annual report for that year.
5.8 Receive an update from the District on CBOC membership:
5.8.1 Filling committee vacancies (taxpayer organization member, business association member, community member)
· Mr. Landers commented that the committee currently has six members, with five present at the meeting. Ms. Jacqueline has missed two consecutive meetings. Ms. Acosta was asked if she had reached out to Ms. Jacqueline. Ms. Acosta confirmed she had, and Ms. Jacqueline intends to continue participating.
· Mr. Landers responded that if Ms. Jacqueline misses a third meeting, the committee may need to take action. However, they will attempt to accommodate her in the meantime.
· CBO Edson provided an update on recruitment. There is still one potential new member being considered, but they are waiting for the final submission.
· Despite the potential new member, the committee will still be short of the required representation: seven members with one representing a taxpayer organization and one representing a business organization.
· Supt. Baker said he had already presented the idea to the Chamber of Commerce and that there would be more outreach next month.
5.9 QKA, along with Van Pelt and district staff, will lead discussions at upcoming community meetings about the project. It was suggested that members of the committee attending these meetings should pitch the opportunity to join the committee. Discuss future meeting dates and agenda topics for the next meeting
5.9.1 The next meeting dates are tentatively scheduled for
· Wednesday, May 7, 2025
· Wednesday, August 6, 2025
· Wednesday, November 5, 2025
6.0 Adjournment
The meeting was adjourned at 7:07 p.m.
(Karl Metz/Janet Borgens; 4-0)