BILL NUMBER: AB 1895 CHAPTERED 09/14/06 CHAPTER 269 FILED WITH SECRETARY OF STATE SEPTEMBER 14, 2006 APPROVED BY GOVERNOR SEPTEMBER 14, 2006 PASSED THE SENATE AUGUST 21, 2006 PASSED THE ASSEMBLY MAY 30, 2006 AMENDED IN ASSEMBLY MARCH 15, 2006 INTRODUCED BY Assembly Member Coto JANUARY 24, 2006 An act to add and repeal Section 17463.8 of the Education Code, relating to surplus schools property. LEGISLATIVE COUNSEL'S DIGEST AB 1895, Coto Surplus school property: use of proceeds. Existing law, the Leroy F. Greene School Facilities Act of 1998 (the Greene Act of 1998), requires the State Allocation Board to allocate to applicant school districts, prescribed per-unhoused-pupil state funding for construction and modernization of school facilities, including hardship funding, and supplemental funding for site development and acquisition. Existing law requires a school district to use the funds derived from the sale of surplus property for capital outlay or for costs of maintenance of school district property that the governing board of the school district determines will not recur within a 5-year period. Existing law authorizes a school district having an average daily attendance of less than 10,001 in any fiscal year to deposit any and all interest earned on those funds into the general fund of the school district if the school district meets certain conditions. This bill would, notwithstanding any other provision of law, and until January 1, 2010, authorize the Oak Grove Elementary School District to sell certain surplus real and personal property and to use the proceeds from that transaction for any one-time general fund purpose. The bill would prohibit, if any of the purchases of the property were made using the proceeds of a local general obligation bond act or revenue derived from developer fees, the amount deposited into the general fund from exceeding the difference between the purchase price of the property and the proceeds of the transaction divided by the amount of the proceeds of the transaction, as defined. The bill would declare that, due to the special circumstances applicable to the Oak Grove Elementary School District, a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution, and the enactment of a special statute is therefore necessary. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 17463.8 is added to the Education Code, to read: 17463.8. (a) Notwithstanding any other provision of law, the Oak Grove Elementary School District may sell surplus real property, together with any personal property located thereon, purchased entirely with local funds, and may deposit the proceeds thereof into the general fund of the school district or county office of education, and may use the proceeds from the sale for any one-time general fund purpose. If the purchase of the property was made using the proceeds of a local general obligation bond act or revenue derived from developer fees, the amount of the proceeds of the transaction that may be deposited into the general fund of the school district or county office of education may not exceed the percentage computed by the difference between the purchase price of the property and the proceeds from the transaction, divided by the amount of the proceeds of the transaction. For the purposes of this section, "proceeds of the transaction" means either of the following, as appropriate: (1) The amount realized from the sale of property after reasonable expenses related to the sale. (2) For any transaction that does not result in a lump-sum payment of the proceeds of the transaction, the proceeds of the transaction shall be calculated as the net present value of the future cashflow generated by the transaction. (b) The State Allocation Board shall reduce the amount of hardship assistance awarded pursuant to Article 8 (commencing with Section 17075.10) to a school district that exercises the authority granted pursuant to this section by an amount equal to the amount of the proceeds of the sale of surplus real property used for a one-time expenditure of the school district pursuant to this section. (c) If a school district exercises the authority granted pursuant to this section, the school district is ineligible for hardship funding from the State School Deferred Maintenance Fund under Section 17587 for five years after the date of sale. (d) Before a school district exercises the authority granted pursuant to this section, the governing board of the school district shall first certify all of the following to the State Allocation Board: (1) The school district has no major deferred maintenance requirements not covered by existing capital outlay resources. (2) The sale of real property pursuant to this section does not violate any provisions of a local general obligation bond act. (3) The real property is not suitable to meet any projected school construction need for the next 10 years. (e) Before a school district exercises the authority granted pursuant to this section, the governing board of the school district shall at a regularly scheduled meeting present a plan for expending one-time resources pursuant to this section. The plan shall identify the source and use of the funds and describe the reasons why the expenditure will not result in ongoing fiscal obligations for the school district. (f) For purposes of this section, "one-time general fund purpose" means a nonrecurring cost payable from the general or special funds of a local educational agency, not including ongoing expenditures for the purposes of funding employee salaries and benefits or ongoing and sustained program operations and services. (g) This section shall become inoperative on January 1, 2010, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2010, deletes or extends the dates on which it becomes inoperative and is repealed. SEC. 2. The Legislature finds and declares that a special law is necessary and that a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique financial circumstances of the Oak Grove Elementary School District.