Lease-Leaseback is a construction project delivery method in which a school district selects a Developer Contractor to develop and construct a new building. The district procures the property and then executes a lease of the property to the Developer Contract, who then develops the property and constructs the facility, which includes a Guaranteed Maximum Price. The district then leases back the property and facility from the developer. At the end of the lease, the district owns the project. The school district selects and approves the site and project plans. In addition, the Division of the State Architect (DSA) also must approve the plans for fire, life, safety, accessibility, and structural considerations. The plans and specifications are then approved by the school district’s board of trustees. The Lease-Leaseback construction delivery method is authorized by California Education Code 17406 and 81330.

The philosophy behind Lease-Leaseback is to engage the contractor and architect at an early stage to minimize costly change orders once construction begins, thus staying within the Guaranteed Maximum Price originally set by the Developer Contractor. It fosters architect-builder coordination early on and throughout the process. This coordination doesn’t always happen within the traditional Design-Bid-Build process, since the design documents are finished before the contractor becomes involved.

What are the advantages? 

  • Higher percentage of projects completed on-time
  • Higher percentage of projects completed on or under budget
  • Facilitates architect-contractor-owner partnership
  • Facilitates project financing/funding requirements
  • Provides more opportunity for “value engineering”
  • Saves time
  • Guaranteed Maximum Price is set early during design
  • Encourages participation of local subcontractors
  • Identifiable track record
  • Allows “best value” contracting based on qualifications the district considers important
  • No claims or litigation

Lease-Leaseback Projects