School Board Approves New Bond Manager

The Beverly Hills Unified School District (BHUSD) School Board awarded a new contract to manage the bond program to modernize and expand schools in the district on June 28. The new company, Fonder-Salari Inc., will take over for the embattled current manager, Team Concept Development Services (TCDS).

The district put out a request on Feb. 1 for qualified companies to submit proposals to take over the program. The district did not go through a similar process before awarding the contract to TCDS in 2017, a move that has attracted criticism.

School Board President Mary Wells said that going through the process will save the district millions.

“It is fair to say that as a result of going through the public bidding process, the district will be paying nearly half of the fees that we paid to TCDS for the same services and will save millions of dollars,” she said.

Beverly Hills voters passed Measure E in 2008, issuing $334 million in bonds for school improvements. 

in 2018, authorizing the district to issue another $385 million in bonds. Together, the bonds provide funding for modernization, seismic retrofits, new buildings, and improved security.

But since 2008 and 2018, many of the improvements promised by Measures E and BH have failed to materialize on time or on budget, with certain projects scrapped from the plans altogether. In an October study session, TCDS owner Don Blake reported to the board that the program was short by $129 million, though TCDS later put out a revised figure of $89 million.

The district brought on TCDS in 2017 to course correct for the prior bond manager, but confidence in TCDS has waned over the years, leading to a breakdown in trust between the board and the manager. While TCDS enjoyed hearty support from the board earlier in its tenure, the majority of the board has raised concerns with the transparency of operations under TCDS.

“At best, I have found our current process, systems and information we are receiving regarding the state of our construction program to be opaque,” Board member Gabriel Halimi wrote in a letter on March 22. “Just over the last few months, we’ve found ourselves surprised, confused and frustrated. And given the fact that we’re over budget and delayed in delivery, there are questions that need clear answers.”

The vote to approve Fonder-Salari as bond manager came directly on the heels of a report that was critical of TCDS. The report, delivered by the Citizens Bond Oversight Committee (CBOC), included insights from an audit of the bond program and observations by the CBOC.

The audit covered the fiscal year ending in June 2021 and faulted the district’s contractor, ProWest, for failing to document the billing from subcontractors. Say, for instance, that ProWest hired a carpenter; ProWest failed to provide documentation of the cost for the carpenter.

“So, we’re just taking ProWest at their word that every bill we pay is within contract,” said Nathan Kruger, Vice Chair of the CBOC. “As we move into a new bond manager, we just have to make sure these protocols are being followed.”

The audit also faulted the bond management program for failing to implement “a robust system of fraud prevention,” according to Kruger.

Complementing the observations of the audit, the CBOC also criticized TCDS for not developing a staffing plan – something previous audits have pointed out for over four years.

“They were able to just freely give raises to staff,” Krueger said of TCDS. “But there was no oversight [by] the board, no approval by the board to allow the growth of staff of costs by TCDS.”

The blame for the shortcomings of the bond program did not fall exclusively on the manager. The district itself had “insufficient senior staff in place to oversee the bond program,” CBOC member Marc Carrel shared with the board,

“No offense to the Board of Education, but you’re not experts in construction oversight,” Carrel said.

The board has previously acknowledged problems with having the bond manager report directly to them and is already taking steps to add a new senior staff position to review and make recommendations on the program, said Wells. The district will begin interviewing for the spot “within days.”

Carrel acknowledged that, in spite of the “holes” and “errors” highlighted by the CBOC, “the reality is there’s been a lot of success.”

“We should feel good that this ship is getting righted,” said Halimi.