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Dispute delays opening of two Paly buildings

Original post made on Aug 3, 2013

A dispute with a contractor has delayed this fall's opening of two major new buildings at Palo Alto High School -- a two-story classroom building for math and social studies and the school's new Media Arts Center, school officials said.

Read the full story here Web Link posted Saturday, August 3, 2013, 8:09 AM

Comments (43)

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Posted by Wayne Martin
a resident of Fairmeadow
on Aug 3, 2013 at 12:04 pm

If you google "Taisei Construction Corporation" and "litigation"--quite a few entries pop up in the search results.

Googling "Taisei Construction Corporation" and PAUSD and "litigation", and interesting Public Information Request (PIR) pops up:

Web Link

It's a real shame that the District doesn't put this sort of information on its web-site, so that the public at large can see what agreements the District has entered into in our name. Given the huge problem with "change orders" that we've seen at the Mitchell Park Library, and now at the PAUSD--keeping the schedules, change orders and status reports on-line would seem to be something that would benefit all of us.

Wonder what it will take to get the PAUSD and the City of Palo Alto to change their ways, relative to keeping the public informed?


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Posted by Checkitout
a resident of Another Palo Alto neighborhood
on Aug 3, 2013 at 1:04 pm

This construction company does NOT have a very good reputation. Didn't PAUSD do a background check on them? Or did they just go with whoever gave the lowest bid?

It seems Palo Alto, PAUSD. And the BOE have one thing in common: hiring people without proper investigation first, then regretting it later.


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Posted by village fool
a resident of another community
on Aug 3, 2013 at 3:01 pm

@Moderator - Would it make sense to list add this thread to the Schools & Kids category in town square? (currently it is under Palo Alto issues)


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Posted by JA3+
a resident of Crescent Park
on Aug 3, 2013 at 3:22 pm

Perhaps of interest too:
Web Link

Taisei's recent suit against San Joaquin Delta College is covered by a blog writer here:
Web Link

And by a local Stockton paper here:
Web Link


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Posted by former Paly parent
a resident of Palo Alto High School
on Aug 3, 2013 at 3:51 pm

PAUSD didn't know they were being served with a lawsuit? They didn't realize problems/delays were occurring? Who is responsible for oversight of the big project there - besides the middleman company listed? I would think it was important to stay on top of the work (and become aware of any problems/issues in a very timely manner)!


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Posted by Wayne Martin
a resident of Fairmeadow
on Aug 3, 2013 at 7:42 pm

> Palo Alto school officials said they were never served with the
> complaint and tracked down the lawsuit themselves when
> checking court records after hearing Taisei had filed
> similar litigation elsewhere.

According to the following web-site, that outlines aspects of filing civil suits, the defendent must be "served", and the "server" must file a "Proof of service" form:

Web Link

Filling Out and Filing the Proof of Service
The court must know that the other side was properly served. To do this, the process server must carefully fill out and sign the Proof of Service detailing how service was done, on whom, where, and when. The process server then gives you the Proof of Service.
---

So, this "Proof of Service" document is either in the file for this suit, or it isn't. If it is in the file, then the PAUSD contact that was "served" would be named, with a date when the "service" occurred.


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Posted by Berlioz
a resident of Palo Alto High School
on Aug 4, 2013 at 1:56 pm

Check Taisei online, and you will find they have a long history of suing clients all over this country. Why anyone would do business with them with that risk in mind is beyond me. unless, of course, they did not check out Taisei before signing the contract.


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Posted by JA3+
a resident of Crescent Park
on Aug 4, 2013 at 2:53 pm

Superior Court web page devoted to the litigation filed by Taisei:
Web Link

Offhand, I don't see a means to access the specific documents filed with the Court, each listed on the web page.


 +   Like this comment
Posted by JA3+
a resident of Crescent Park
on Aug 4, 2013 at 2:57 pm

Superior Court listing for litigation with PAUSD as plaintiff or defendant:
Web Link


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Posted by Wayne Martin
a resident of Fairmeadow
on Aug 4, 2013 at 4:06 pm

Thanks for the links, JA3+.

It would be really nice if court documents were available from this sight. I got the sense that they were to be provided to the court electronically, these days. Will check with the Court next week to see if they have any plans to public access any time soon.


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Posted by Robbie
a resident of Ventura
on Aug 4, 2013 at 7:47 pm

Yeah, it is too bad that the school district seems to have their priority set on teaching and education instead of providing accounting information to local busybodies.


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Posted by Random Paly Student
a resident of Midtown
on Aug 5, 2013 at 10:21 am

Well that's disappointing, but at least as a senior I can see the completion of the buildings (that's assuming the deadline doesn't keep on getting pushed back because of this stupid lawsuit).


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Posted by James
a resident of Duveneck/St. Francis
on Aug 5, 2013 at 11:34 am

Paly must have had a good reason in hiring Taisei. Paly is not dumb enough not to do a stupid thing like not run a background check. From what I know, there were a lot of construction projects going on in Palo Alto at the time (there still are!) and most construction companies were booked. School projects generally take very long (especially for 2 new multistory buildings) and Taisei's 2 year completion rate is a lot earlier than other companies would have offered for the same project. They were slowed down further by a fire that erupted from a nearby homeless encampment as well. However, the December completion date looks legit. The new buildings just need some more interior work. Plus, construction companies almost never push the completion date back a second time because that hurts their reputation.


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Posted by JA3+
a resident of Crescent Park
on Aug 5, 2013 at 11:34 am

I agree the District should prioritize teaching and education.

I think, though, the disclosure of documents related to litigation -- particularly when such docs are already a part of the public record (residing in the records of the Superior Court) -- is wise. In general, public entities benefit from prompt disclosure.

School districts tend to retain construction management firms to oversee large-scale construction; if the litigation has merit, it will be interesting to see the process here.


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Posted by JA3+
a resident of Crescent Park
on Aug 5, 2013 at 11:39 am

"... Taisei's 2 year completion rate is a lot earlier than other companies would have offered for the same project."

Do you have proof of such assertion?

I've worked in management for both Peter Kiewit Sons' Inc and Swinerton; in general, the completion schedule offered by highly competent firms does not materially differ from one firm to the next.


 +   Like this comment
Posted by Ethan Cohen
a resident of Palo Alto High School
on Aug 5, 2013 at 11:41 am

I'm not an expert on the process, but the way I understand it the district is required by law to take the lowest bid on the project, regardless of the contractor's history. That is the downside to Design Bid Build.

One the reasons the Peerys are pushing for a Lease-Leaseback approach on the new Paly gym is so that they can use a contractor they trust. Although that method could be vulnerable to corruption, it should help avoid the problem of bad contractors.

But if I'm wrong about any of that someone let me know.


 +   Like this comment
Posted by JS
a resident of Another Palo Alto neighborhood
on Aug 5, 2013 at 12:54 pm

An advantage of the "public" procurement process is that it yields the lowest price for the particular set of plans and specifications issued for bid.

A disadvantage of the "public" procurement process is that it results in an adversarial relationship between the Owner and the Contractor.

The low bid and schedule (in a "public" procurement process) ONLY holds up if the issued design is complete, well coordinated, correct and if the Owner manages the construction process well. More often than not, the project design is more complicated than the design team can express in their issued plans and specifications (meaning that the issued plans and specifications are missing information, are showing incorrect information or are showing conflicting information, etc.) which result in claims by the Contractor to the Owner (the Owner is contractually responsible for defective plans). The Contractor is not obligated to provide any more than the issued plans and specifications represent. If a Contractor were to include money in their original bid to cover missing, incomplete, late and/or uncoordinated design, the Contractor likely wouldn't win the bid award. It is the Owner's responsibility (or their consultants) to insure that the issued plans and specifications are truly ready to go out for bid to contractors.

This then sets up a contract battle to fight between the Owner and the Contractor over the associated costs of missing, incomplete, late and/or uncoordinated design. In the case of PALY, there is apparently a $1.65 million dollar fight over missing, incomplete, late and/or uncoordinated design. Time will tell whether the plans and specifications were as bad as represented by Taisei or whether Taisei is overreaching in their demands.

Much the same happened at Mitchell Park Library.


 +   Like this comment
Posted by Sylvia
a resident of Midtown
on Aug 5, 2013 at 2:07 pm

I was not surprised to read about all the litigation concerning Taisei.

I work for a sub-contractor, and we had to file a mechanic's lien against them in order to get paid on one of their projects.


 +   Like this comment
Posted by Angry
a resident of Old Palo Alto
on Aug 5, 2013 at 3:16 pm

Does anyone know if Paly students will be able to use the new buildings for second semester assuming everything is finished by then? My son is entering his senior year and is dying to use the new buildings...


 +   Like this comment
Posted by Sarah
a resident of Old Palo Alto
on Aug 5, 2013 at 4:01 pm

City should have check 'Angie's List' before committing to
this company. Pretty easy to see that there could be potential
problems.


 +   Like this comment
Posted by JA3+
a resident of Crescent Park
on Aug 5, 2013 at 4:27 pm

"The low bid and schedule (in a "public" procurement process) ONLY holds up if the issued design is complete, well coordinated, correct and if the Owner manages the construction process well."

+1; spot on.

The key to any construction: put significant effort into the plans and specs, prior to bidding the work. It will be interesting to see the heart of the matter here and whether the plaintiff's claims have merit.


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Posted by Wayne Martin
a resident of Fairmeadow
on Aug 5, 2013 at 5:01 pm

Relative to "lowest bidders"--the City of Poway (CA) seems to have passed a City ordinance that allows it to not accept the lowest bidder, if its "due diligence" comes to the conclusion that the lowest bidder might not be the best bidder—

Web Link

E. At its sole discretion, the City Council may reject any and all bids presented and readvertise for bids pursuant to the procedure prescribed above. In the event no bids are received or all bids are rejected, the City Council may, in accordance with Public Contracts Code Section 20167, and any amendments thereto, direct the Director of Administrative Services or designee to proceed pursuant to paragraphs relating to open market procedure or competitive negotiations.

Open market purchases shall, wherever possible, be based on at least three bids and shall be awarded to the lowest responsible bidder. The lowest responsible bidder will be the individual or firm who submits a responsible bid based on total cost, and which is determined to be the most advantageous to the City. (Ord. 675 7, 2008; Ord. 260 1, 1988; Ord. 55 8, 1982)
----

The key language in the ordinance seems to be: " The lowest responsible bidder will be the individual or firm who submits a responsible bid based on total cost, and which is determined to be the most advantageous to the City. (Ord. 675 7, 2008; Ord. 260 1, 1988; Ord. 55 8, 1982)".

If the City of Poway can recognize the problems with the "lowest bidder", why can't the City of Palo Alto?
-------------------------
Relative to the PAUSD, the CA Ed Code seems to be the guide:

PUBLIC CONTRACT CODE SECTION 20110-20118.4:
Web Link

Section 20111.5 (a) seems to offer us something to talk about:

20111.5. (a) The governing board of the district may require that
each prospective bidder for a contract, as described under Section
20111, complete and submit to the district a standardized
questionnaire and financial statement in a form specified by the
district, including a complete statement of the prospective bidder's
financial ability and experience in performing public works.
----

So, just for starters—did our BoT actually create a questionnaire, which each bidder was required to fill out? If not, why not? Why shouldn't these questionnaires be on-line, and available for the public to review at times like these?


 +   Like this comment
Posted by Graduated
a resident of Gunn High School
on Aug 6, 2013 at 12:35 am

The PAUSD employee in charge of all this is Robert Golton, Ph.D. The same guy who was ultimately responsible for B4E, Building for Excellence, the previous construction projects that showed mixed results. El Carmelo may wish to comment....


 +   Like this comment
Posted by Wayne Martin
a resident of Fairmeadow
on Aug 6, 2013 at 9:24 am

> The PAUSD employee in charge of all this is Robert Golton, Ph.D.

In charge of, perhaps, but not responsible, in any meaningful way, for these projects and the public monies funding them.


 +   Like this comment
Posted by JS
a resident of Another Palo Alto neighborhood
on Aug 6, 2013 at 10:49 am

Taisei submitted a "responsible low bid" and was awarded the project. No one knew at the time of bid award whether the plans and specifications were complete, well coordinated and correct. Obviously, everyone who was involved (design team, Owner, Construction Manager) took the position that the plans and specifications were ready to go out to bid. Would the Owner know if the plans and specifications were not complete, well coordinated and correct?? Probably not; they would rely on the recommendations of their design team and Construction Manager. Should they have known? Design team; absolutely - they created the plans and specifications. Construction Manager; they should have performed a detailed check of the plans and specifications. Such a detailed check would not find everything but might flush out indicators of whether the plans and specifications were of high quality or not.

The expression, "the devil is in the details" applies here. It is only when the Contractor and subcontractors begin the submittal and building process when the truth comes out regarding the quality of the plans and specifications (well after a contract has been signed). Taisei apparently thinks the plans and specifications were poorly prepared. The design team and PAUSD obviously think otherwise. Because a lawsuit has been filed, the two sides are miles apart in their assessment of the same set of plans and specifications.

Prescreening of contractors does not eliminate what has happened. Plans and specifications that are complete, well coordinated and correct eliminate what has happened.


 +   Like this comment
Posted by JA3+
a resident of Crescent Park
on Aug 6, 2013 at 12:09 pm

"Would the Owner know if the plans and specifications were not complete, well coordinated and correct?? Probably not ..."

If so, then perhaps the PAUSD should give strong consideration to amending its approach with future work: would it be wise to bring on a salaried employee -- for the duration of all future bidding work, if any -- skilled in the assessment of design drawings and related specifications?; or to go to the outside for such specific service (perhaps adding same to the construction management contract, if it is not already there)?

The devil is certainly in the details; but, reviewing the plan and spec details in great, time-consuming depth -- prior to going out to bid -- is the key here. In my opinion, it is wise for the PAUSD to spend the time upfront; it will pay ample dividends at the back end.


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Posted by JS
a resident of Another Palo Alto neighborhood
on Aug 6, 2013 at 1:45 pm

Isn't that what Gilbane (Co-Defendent and one of the largest building contractors in the USA) was hired to do...be the construction expert for PAUSD?

And maybe Gilbane did what they were supposed to do. Maybe Taisei is just over aggressive and pursuing cost recovery when not rightfully entitled to.

We don't know which party is in the right and to what degree nor do we know how a judge or jury will view things or whether the disputes will be resolved prior to a full court decision. If information is released after the final outcome is known we will be in a better place to offer our own judgements.


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Posted by Wayne Martin
a resident of Fairmeadow
on Aug 6, 2013 at 2:24 pm

> If information is released after the final outcome is known
> we will be in a better place to offer our own judgements.

Someone posted a link to the SCC Courts' web-site, where we can see the suits which have been filed against the PAUSD over many years:

Web Link

There are dozens of suits in this list (just under 70). Unfortunately, it does not seem that there is much useful information about these suits—such as 1) who prevailed, 2) access to submissions bolstering each of the litigant's positions, 3) how was the case settled?

Sometimes the local media carries stories about a given case, although it seems to me that that is rare. We have a lot of data about the PAUSD's practices in these suits. Unless someone (be it the media, an individual, or the PAUSD itself) digs these papers out of the Court archives, and publishes them—then it's unlikely that the general public will ever know what happened that caused these contractors to resort to litigation to resolve their differences with the PAUSD.



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Posted by JA3+
a resident of Crescent Park
on Aug 6, 2013 at 2:25 pm

Agree in full with JS post immediately above.

I think the case is of interest, given the scope and scale of construction underway within the PAUSD. If -- and it's a big if -- the Taisei litigation has merit, whether in part or in full, perhaps key improvements could be made now, hopefully averting or reducing troubles down the line.

I expect the District to fit the Taisei suit 'tooth & nail'; will be interesting to track.


 +   Like this comment
Posted by Tsk! Tsk!
a resident of Palo Alto High School
on Aug 6, 2013 at 2:30 pm

PAUSD should not be hiring a foreign contractor in the first place! But this one, Taisei, from Japan, has a reputation for suing their own clients everywhere from New York to Malaysia! Why do business with such a company? it was just asking for big trouble, as many other Taisei clients have found out too late!


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Posted by Wayne Martin
a resident of Fairmeadow
on Aug 6, 2013 at 2:41 pm

> PAUSD should not be hiring a foreign contractor in the first place!

So, should a Japanese school district ever hire an American construction firm to build on its campus? If we're going to compete in a globalized economy--then we are going to have to accept that firms from other nations win contracts in our country.

> But this one, Taisei, from Japan, has a
> reputation for suing their own clients everywhere
> from New York to Malaysia

This issue of systemic underbidding/price escalation thru change orders/litigation would seem to be a reason for disqualifying a low bidder. Notice that the State gives local governments the ability to reject all bids. It would seem that if one comes in 35%-50% below the bulk of the bids, that this low bid is really not realistic. Certainly using Court records from this company's previous contracts to establish a pattern would seem to be in the best interests of local governments when issuing RFQs/Bid Proposals. And if necessary, the Legislature needs to step up and modify the law to give local governments whatever tools they need to disqualify these suspiciously low bids.


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Posted by JS
a resident of Another Palo Alto neighborhood
on Aug 6, 2013 at 3:43 pm

The issue is not where the contractor is of foreign descent. Taisei has been operating in this area for at least 20 years.

Check out the following website:

Web Link

This is a PAUSD website where they post monthly reports on the progress of bond money spent on facilities. Note that the reports are prepared by a PAUSD architect (fs3Hodges) & the PAUSD construction Manager (Gilbane Building Company). If you read back many months on the Paly Classroom Building and Media Arts project, one never sees any hint that the PALY project has significant issues. Is this the report that gets submitted to the PAUSD Board each month? Note also that the project was one month behind after 6 months of construction. The projected January, 2014 completion date is not a new date (it showed up in the June, 2013 report with no real detail on why the delay occurred.

Should these PAUSD reports be more forthright in their assessments of project progress? Are these the reports that the School Board depends upon to oversee their projects? Are there other reports that provide a more accurate assessment?

What about the real and honest status on all of the other PAUSD projects? Are the monthly reports issued by PAUSD accurate with respect to them?


 +   Like this comment
Posted by Wayne Martin
a resident of Fairmeadow
on Aug 6, 2013 at 4:19 pm

> Should these PAUSD reports be more forthright in their assessments
> of project progress? Are these the reports that the School Board
> depends upon to oversee their projects? Are there other reports
> that provide a more accurate assessment?

> What about the real and honest status on all of the other
> PAUSD projects? Are the monthly reports issued by PAUSD
> accurate with respect to them?

All good points. In other words: "Projects don't go bad overnight, they go bad one day at a time."

Which gets us back to the issue of how many Change Orders are there in this disputed amount, who authorized the Change Orders, and who has refused to pay for them, for what reasons?

These reports seem to be "polished", so it's possible that if the contested Change Orders were accumulated over several months that the compiler of these reports might have chosen to overlook them.

Which gets us back to who is "responsible" for these projects. We pay the Superintendent of Education a lot of money--presumably because he is skilled in negotiation, and project management skills. If he isn't then 1) who is responsible for these projects (in toto), 2) why are we paying the Superintendent as much as we are. We also have to ask: "what is the School Board doing here?" Are they actively reading these reports, and asking probing questions like: "how many change orders have been generated this month? Why are these Change Orders being generated? How much are these Change Orders costing us?"

Having this information on-line, and available to the public, would give the Board some additional "eyes"--which it would seem they need.



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Posted by JS
a resident of Another Palo Alto neighborhood
on Aug 6, 2013 at 4:59 pm

Change orders approved to date are included in Monthly Progress Reports. What is not shown is the amount of change order requests denied or yet-to-be processed change order requests that have been submitted.

Note: The PAUSD Project budget anticipates a $2,515,000 Change Order Contingency on a $28.4 M construction contract. That's alotta changes!

So PAUSD pays approximately $7M for design services and construction management services and still expects to have to pay another $2.5M in "extra" costs during the project.



 +   Like this comment
Posted by Wayne Martin
a resident of Fairmeadow
on Aug 6, 2013 at 5:09 pm

> Note: The PAUSD Project budget anticipates a $2,515,000
> Change Order Contingency on a $28.4 M construction contract.
> That's alotta changes!

Here is a guideline from ASU:
Web Link

Total project contingency is about 10%.

They suggest that after the end of the Design Phase the "design contingency" should be 0%. This means tracking project progress, and costs, along lines that meet some sort of guideline.


 +   Like this comment
Posted by Wayne Martin
a resident of Charleston Meadows
on Aug 6, 2013 at 5:14 pm

> So PAUSD pays approximately $7M for design services and
> construction management services and still expects to
> have to pay another $2.5M in "extra" costs during the project.

This is where having access to the project histories of public school projects would come in handy. It may be that this is not uncommon for these kinds of projects. Given that the CA Office of the State Architect is involved with every public school construction project, then there are always some unknowns that could pop up that require either redesign, or rework.


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Posted by JS
a resident of Another Palo Alto neighborhood
on Aug 6, 2013 at 5:48 pm

PAUSD has a place on their website where public records may be requested:

Web Link


"As a public agency, PAUSD adheres to the California Public Records Act which requires that governmental records shall be disclosed to the public, upon request, unless there is a specific reason not to do so. Permissible exemptions from disclosure include documents that invade an individual's right to privacy (e.g., privacy in certain personnel, medical or student records) or hinder the government's need to perform its assigned functions in a reasonably efficient manner (e.g., maintaining confidentiality of investigative records, official information, records related to pending litigation, and preliminary notes or memoranda)."


 +   Like this comment
Posted by Wayne Martin
a resident of Fairmeadow
on Aug 6, 2013 at 5:57 pm

> PAUSD Web-site for public records

Thanks .. am fully aware of it.

I pointed out in an early posting that the lawyer for Taisei had made a public request for all the records that will be needed for Taisei to litigate their claims:

Web Link

Once the District has fulfilled this request, it shouldn't be too hard to ask for a duplicate copy.

However, the PAUSD does not have a published retention schedule for its records, so its very likely that construction records going back more than a couple of years might not be available--having been destroyed.


 +   Like this comment
Posted by Matt L
a resident of Old Palo Alto
on Aug 7, 2013 at 10:25 am

Thankfully it appears there is only 2 major parties involved in this mess (Taisei and Palo Alto). So I don't think the project will be delayed that long unless Taisei really, really, really screwed up, which I highly doubt because the English/History/Math building is about 80% done and the Journalism building is about 75% done. So while the delays are certainly discouraging, thankfully they don't appear to be a fourth as bad as the delays at Mitchell Park. Remain optimistic!


 +   Like this comment
Posted by JA3+
a resident of Crescent Park
on Aug 7, 2013 at 11:27 am

"Thankfully it appears there is only 2 major parties involved in this mess (Taisei and Palo Alto)."

At present, Gilbane is a listed defendant.
_____

Has anyone obtained a copy of the complaint filed with the Superior Court? If not, is there a means to request a copy?


 +   Like this comment
Posted by Chris Kenrick Palo Alto Weekly Staff Writer
a resident of Old Palo Alto
on Aug 7, 2013 at 4:57 pm

JA3+,

The complaint is 30 double-sided pages and too time-consuming to digitize on our labor-intensive scanner. I have a print copy and would be happy to let you see it if you come to the Weekly and I'm sure Bob Golton's office would do the same.


 +   Like this comment
Posted by James
a resident of Duveneck/St. Francis
on Aug 7, 2013 at 4:57 pm

On a side note does the media building start going up during the 2014-5 school year?


 +   Like this comment
Posted by Crescent Park Dad
a resident of Crescent Park
on Aug 8, 2013 at 7:52 am

The media building is the new building that you can see near Embarcadero. Once complete, the new Paly Theater will go in on the Embarcadero side of campus as well.

There is also a 2 story academic building going up on the back side of campus - can be seen from Alma.


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