BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Tom Torlakson, Chairman
1527 (Yee)
Hearing Date: 6/30/08 Amended: 6/24/08
As
proposed to be amended
Consultant: Bob Franzoia Policy Vote: G O 10-0 Ag 4-1
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BILL SUMMARY: SB 1527, an urgency measure, would direct the
Department of General Services, prior to January 1, 2009, to
enter into negotiations to sell at fair market value, with
certain restrictions, a parcel of state property located in the
County of San Mateo and the City and County of San Francisco.
The net proceeds of the sale would be paid into the Fair and
Exposition Fund, a continuously appropriated fund, for the
benefit of the District 1-A Agricultural Association, thereby
making an appropriation. The bill would require reimbursement
from the net proceeds of the sale of any DGS costs incurred in
the disposition of the property.
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Fiscal Impact (in thousands)
Major Provisions 2008-09 2009-10 2010-11 Fund
Sale of state property Unknown, major revenue increase one
time;Special
(revenue) revenue increase likely less than fair
market
value due to restrictions on sale
* Fair and Exposition Fund (if the parcel was initially acquired
with moneys form this fund; otherwise the revenue from the sale
would be deposited in the Deficit Recovery Bond Retirement
Sinking Fund Subaccount pursuant to Prop 60A as noted below)
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STAFF COMMENTS: The property would be sold to the Daly City
Redevelopment Agency or to the City of Daly City. The net
proceeds shall be paid into the Fair and Exposition Fund for the
benefit of the District 1-A Agricultural Association. The sale
would be required to have an agreement requiring the purchaser
to retain title to the entire property sold to it for uses
consistent with the general plan of the City of Daly City, any
amendment to that general plan, any specific plan amendments to
any specific plan, and the Bayshore revitalization redevelopment
plan.
Current law generally requires a state agency to review annually
its real property holdings and determine what, if any, is in
excess of its foreseeable needs. These properties are commonly
referred to as "surplus state properties." Once real property
has been identified as surplus, the state attempts to sell the
property, or dispose of it in some other manner. When surplus
property is sold, the sales revenues are deposited into the
account that originally paid for the acquisition of the
property. In most instances, sales revenues are deposited in the
General Fund and are available for expenditure on any state
program. Pursuant to Proposition 60A (2004), the proceeds from
the sale would be used to pay the principal and interest on
Proposition 57 bonds. Once these bonds are fully repaid,
proceeds from surplus property sales would be deposited in the
General Fund. Proposition 60A only applies to those properties
that were purchased with General Fund revenue or bonds secured
by the General Fund. Staff notes that the bill, as amended on
May 20, 2008 contains a finding and declaration that appears to
Page 2
SB 1527 (Yee)
be at odds with the intent of the bill to dispose of the
property. Staff recommends an amendment to strike Section 3 of
the bill.
The proposed amendments would amend Government Code Section
11011.27 (a), as added by the bill, and as amended 6/24/2008, to
read (bold notes language that would be added to the bill):
(a) The Director of General Services in consultation with the
Department of Food and Agriculture, prior to January 1, 2009,
shall sell at fair market value to the Daly City Redevelopment
Agency or to the City of Daly City 2009, shall enter into
negotiations to sell at fair market value with an all cash sale
without any conditions relating to entitlements to any
interested third-party to any interested party, with the Daly
City Redevelopment Agency afforded the right of first refusal,
upon those terms and conditions and subject to those
reservations and exceptions that the director determines are in
the best interests of the state, the following real property:?.
Staff notes the following:
- The bill no longer requires that the Director of General
Services, prior to January 1, 2009, shall sell the property.
The bill now requires that the Director of General Services,
prior to January 1, 2009, shall enter into negotiations to sell
the property.
- A "first right of refusal" restriction places the seller at a
disadvantage and may depress the fair market value of the
property.
- An "as is" restriction (sale without any conditions relating
to entitlements) casts uncertainty on the development process
and may depress the fair market value of the property. (By
requiring the property be sold with this restriction, potential
buyers lack certainty about zoning changes which may occur post
sale that might restrict the development potential of the
property.)