LEGAL ISSUES


like public school districts. In sum, charter schools that are


operated by nonprofit corporations are private entities, negating the first factor necessary for a public work, public ownership. However, a few operate as affiliates of the chartering district, and thus would be public.


Charter School Construction Usually Funded With Private Bonds


Public funding may subject


a construction project to public contracting laws, even if the owner is private. Te Wells court noted that although


charter schools receive public monies to operate schools, the mere fact the schools receive public funds, earmarked for “public” education, does not mean public construction laws apply. A key factor is whether the public funding is actually going towards construction. Put another way, public monies assisting charter schools for educational purposes is not suffi- cient to trigger public works laws. Te key is determining the source of


money funding the construction. Many charter schools finance construction solely with private, tax-exempt bonds or with private construction loans, rendering the construction a private work. A few charter schools do receive public money for construction, though,


Charter schools that are operated by nonprofit corporations are private entities, negating the first factor necessary for a public work, public ownership. However, a few operate as affiliates of the chartering district, and thus would be public.


www.AGC-CA.org


so it’s always a good idea to discuss construction funding sources prior to bid time. But what if the construction debt


is paid off with revenues derived from public funding? No case is directly on point. In similar situations, California courts have focused on whether: (1) a private developer or corporation is hiring the contractor; and (2) a private source of money is funding the construction. Arguably, if a general contractor is


hired by a non-profit corporation and paid solely from private money, the construction project is private. Tere- after, if the developer seeks to defray construction costs via rent payments from a school receiving public money, that is up to the developer. Te law on this point is worth tracking and seems ripe for legislation or caselaw closing this potential loophole.


Nature of Use Finally, sometimes a project is


deemed public based on the building’s use.


Current case law suggests that the


use of charter school facilities by public students, wherein the school receives public money for their education, does not transform construction work on the building into a public work. In McIntosh v. Aubry (1993) 14


Cal.App.4th 1576 the court held that “paying public funds for public services does not make incidental construction work done by a private provider of those services public works.” In sum, public funding of a charter school’s education services, by itself, does not transform construction work on the facilities into “public works.” For this work to be deemed public, the public funding needs to directly pay for the construction.


Conclusion In California, charter schools


operated by non-profit corporations are private entities, despite contradictory language in the CSA, the fact they serve a government purpose, and even if, by charter, they voluntarily agree to be bound by specific public rules, like


the Brown Act or the Public Records Act. If the construction is fully funded with private bonds or a private loan, the project remains private, even if the building is used for public education. California legislators have toyed


with bills to address this subject. In February, 2018, AB 3222 was intro- duced, expanding the definition of “public works” to include any construction done for a charter school, even if financed by private bonds and done between private companies. Although the bill failed, contractors should be cautious in this arena, for the determination of whether charter school construction is public or private is a moving target that could change in the years to come. 


Rosemary Nunn is Partner and


Nasim S. Tourkaman is Associate at Musick, Peeler & Garrett LLP, Costa Mesa, www.musickpeeler.com.


2019 Revisions Continued from page 15


Labor Commissioner is required to publish on its website a list of contractors who are ineligible due to violations.


 AB 3018 also carries forward for contracts executed after January 1, 2019 that sections 2601-2603 of the Public Contracts Code must be attached to the contract. While the skilled and trained


workforce requirements are mandated for certain public owners and projects, public agencies are free to implement the requirements on any project. We are watching the legislature for future bills in this area and will monitor agencies for adoption of such requirements. Stay tuned for further develop-


ments.  Donald “Dino” Velez of Smith,


Currie & Hancock, LLP is an attorney with over 29 years of experience in labor and employment matters, construction and design professional issues, and civil litigation.


Associated General Contractors of California 17


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