Davis v. Fresno Unified School District
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The Supreme Court affirmed the judgment of the court of appeal in this action alleging that Defendants entered into a lease-leaseback construction agreement in violation of various statutes and common law rules, holding that the specific lease-leaseback arrangement at issue in this case was not a "contract" within the meaning of Cal. Gov. Code 53511.
Plaintiff brought this action alleging that the Fresno Unified School District and Harris Construction Co. entered into an unlawful lease-leaseback construction agreement. At issue before the Supreme Court was whether a lease-leaseback arrangement in which construction is financed through bond proceeds, rather than through the builder, is a "contract" within the meaning of section 53511. The Supreme Court held that the lease-leaseback arrangement in this case was not a "contract" under the statute because (1) the underlying project was fully funded by a prior sale of general obligation bonds and payment of the debt service on the bonds was from ad valorem property taxes; and (2) therefore, payment did not dependent on the lease-leaseback arrangement or on completion of the project.
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