The William S. Hart Union High School District in Santa Clarita, California has seen a convoluted journey to the opening of the new Castaic High School. Construction for the new Castaic High School broke ground by way of a controversial construction contract awarded by the Hart District Governing Board (Hart) without any formal or informal bidding process.
Circumventing the Competitive Bidding Process
Competitive bidding is a fundamental facet of contracting for the construction of public property, yet elected board members appear to have loopholed the bidding process in favor of those who financially supported their campaigns based on premeditated plans made years in advance.
Different companies, no-bid contracts, which so happens to be Messina’s main campaign contributor.
Castaic High School Construction, Inc.
Filed in 2014, as a California company under the umbrella corporation, Spirit Holding, Inc., it’s “a new company for the construction of the school and Larry Rasmussen is in charge of the company,” according to Hart District Public Relations Officer, Dave Caldwell.
Planned in Advance of Contract
Larry Rasmussen apparently planned to get this contract far in advance of 2014, however, which is difficult to guarantee when facing the prospect of another company outbidding your own for the contract.
Financially Supporting Joe Messina
As early as 2005, Larry Rasmussen was already financially supporting Joe Messina for a Hart District Board seat, contributing to the Joe 4 Hart campaign. Messina ran several times before finally getting the Board seat in 2009.
In 2013, Messina ran uncontested, meaning no one ran against him. Messina was also the President of the local Republican Committee.
State and Federal Law Mandate Bidding Process
Several state and federal codes of law mandate a bidding process for any such contract between the state and a licensed, private entity. Randy Wrage, works for both companies, the Castaic High Construction development manager, and also a development manager for Spirit Holding, Inc..
Wrage explicitly said in October 2016 that Spirit Holding “formed Castaic High Construction about three years ago with the hope that there would be some type of agreement to build the school, and we knew that we would need a contractor’s license.”
Grading the Target Property in Advance
In the meantime, Romero Canyon LLC—another subsidiary of Spirit Holding, Inc. started grading the target property from 2014 to 2016 to determine its viability for construction.
Case Law – Bidding Process
Paul G. Thompson, an attorney with Fagen Friedman & Fulfrost LLP, was amicus curiae for the McGee v. Balfour case, and he describes Justice Madeleine Flier’s as a “decision that [Balfour Beatty Construction, LLC., et al.] complied with the requirements of section 17406, the court followed the Fourth Appellate District’s decision Los Alamitos Unified School Dist. V. Howard Contracting, Inc. (2014) and rejected the more recent decision by the Fifth Appellate District in Davis v. Fresno Unified School Dist. (2015).”
That more recent decision—yet another case for which Thompson served as amicus curiae to the court—affirmed that lease-leasebacks (LLBs) were required by Education Code section 17406 and Government Code section 1090 to be subject to competitive bidding procedure.
A Court Might Rule the Conflict of Interest Illegal
In other words, a different court, which Hart District would get, might very well rule it illegal. The presiding precedent during Romero Canyon’s grading of the site—a span that includes the creation of Castaic High Construction — was that of the Davis decision, which definitively viewed this as a clear conflict of interest.
The McGee decision overturned this on April 12, 2016; almost exactly two months later on June 15, only the fourth meeting that the board had held since the verdict, the board cited the Balfour decision as justification for using an LLB as the “delivery method” for Castaic High School. The idea had been brought to the board in the previous meeting (May 18) by Vicki Engbrecht, Hart District superintendent.
Hart Board President Robert Hall told KHTS AM-1220 the day after the board acted on that suggestion, June 16, 2016, “The lease-leaseback method was a method we wanted to use over a year ago, and then when the Fresno decision came out, we then had to look at other methods. That has delayed us being able to take that next step as we investigated this.”
The official Hart District Board statement on the issue came out that same day on June 16, explaining very explicitly that LLBs allow “school district governing boards, without advertising for bids, to lease property currently owned by a school district to any person, firm, or corporation for a minimum of $1 per year, as long as such lease requires the other party to construct (or provide for the construction of) a building or buildings upon the subject property.”
Planned Far in Advance
Messina campaigned on the prospect of CHSC before the company existed and had Rasmussen’s support since 2005. In Rasmussen’s defense, Messina said, “That money is for everyone involved in the project.”
Significant opposition among the “group of people” to whom Messina referred came from his fellow HDGB member, Gloria Mercado-Fortine who originally said that “because the district is saying we have to go from rough grade to fine grade, there is additional cost, but certainly not at the $12 million mark.”
Hart District taxpayer, Gino Sanchez, saw the massive change order as a sign that Rasmussen and co. were running over the taxpayers, and he, like many others, castigated Benjamin Rodriguez who had just recently been made interim Chief Operating Officer (COO) and subsequently was no longer interim.
“I can’t believe [Rodriguez] is our chief negotiator against a Rasmussen and his subcontracting buddies. He’s the steward of the $300M bond measure that I’m paying for.” Rodriguez, in fact, said in Fall 2014 that this massive change order was likely to incur $13 million in additional costs for Romero Canyon.
Messina defended this fact publicly, saying that the fact that Rodriguez mentioned this likelihood in April and in August and that no one said anything meant there should be no problem. “If we’re out of control on the project, why wasn’t this brought to our attention in August?” Messina asked in February 2015 when fingers were beginning to point at Rasmussen.
Measure SA is a $300 million bond for Castaic High School
The Measure SA Citizens’ Oversight Committee is a group that is supposed to provide independent supervision of the $300 million bond. “The ad hoc committee, comprised of board members Linda Storli and Joe Messina, Superintendent Engbrecht, and a member of the public, KHTS Co-Owner Carl Goldman, all participated in the selection of the two new committee members.” — KHTS
In 2017, the ad hoc committee then recommended Matthew Denny and Mark Elfont. Matt Denny is also the Registered Agent for Service of Process for local the Conservation Action Group, Inc. — more on that in upcoming articles.