BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1681|
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THIRD READING
Bill No: SB 1681
Author: Battin (R)
Amended: 5/27/08
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 9-1, 4/15/08
AYES: Florez, Battin, Denham, Maldonado, Padilla, Vincent,
Wiggins, Wyland, Yee
NOES: Negrete McLeod
SENATE APPROPRIATIONS COMMITTEE : 9-3, 5/22/08
AYES: Torlakson, Cox, Aanestad, Ashburn, Dutton, Florez,
Oropeza, Wyland, Yee
NOES: Corbett, Kuehl, Simitian
NO VOTE RECORDED: Cedillo, Ridley-Thomas, Runner
SUBJECT : State surplus property
SOURCE : Department of General Services
DIGEST : This bill repeals an extensive body of law
governing the disposition of surplus land by the Department
of General Services to local agencies and private entities,
including provisions relating to offers, valuations,
conditions, selection of offers and retention of land for
affordable housing purposes and establishes a streamlined
process by which the Department of General Services may
dispose of surplus land.
ANALYSIS : Existing law (Government Code Section 11011)
CONTINUED
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requires the Director of the Department of General Services
(DGS) to request authorization by the Legislature prior to
the disposition by sale or otherwise of state land reported
to it by a state agency as being in excess of its
foreseeable needs. Each state agency is required annually
to review proprietary state lands under its jurisdiction to
determine what lands are in excess of the agency's
foreseeable needs and to report to DGS.
This annual review of proprietary state lands does not
apply to tax-deeded lands, land held for highway purposes,
lands under the jurisdiction of the State Lands Commission,
land that has escheated to the state or that has been
distributed to the state by a court decree in estates of
deceased persons, and lands under the jurisdiction of the
State Coastal Conservancy. Jurisdiction of all land
reported as excess is transferred to DGS, when requested by
the Director of DGS, for sale or disposition under Section
11011 or as may otherwise be authorized by law.
Section 11011 of the Government Code provides criteria for
state agencies to use in determining and reporting to DGS
lands in excess of the agency's foreseeable needs. A state
agency is to include land not currently being utilized, or
currently being underutilized, for any existing or ongoing
program; land for which the agency has not identified any
specific utilization relative to future needs; and land not
identified by the agency within its master plan for
facility development.
Existing law requires state agencies, when purchasing real
property, to review the Surplus Property Inventory of state
properties and purchase, lease, or trade property on that
list, if possible, prior to purchasing property not on the
inventory.
Where applicable within its jurisdiction under Section
11011, DGS is responsible for determining if surplus land
is needed by any other state agency. Section 11011.1
provides that if the land is not needed by another state
agency, the property is offered to local governments for
any of the following purposes; "parks and recreation,"
"open-space," "low or moderate income housing," and "local
schools," subject to specified conditions. Existing law
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does not prohibit the sale of surplus property at less than
fair market value if the transfer of property is in the
public interest, as specified.
Existing law, the Roberti Act, requires that a state agency
disposing of surplus residential property must offer that
property for sale in a specified order. Provides generally
that single-family residences shall be offered first to
former owners and second to present occupants (i.e.,
tenants), if those occupants have occupied the property for
five years or more and are persons or families of low to
moderate income, as defined. Existing law provides further
that low to moderate income occupants shall be offered the
property at an affordable price, as defined. Also, the
Roberti Act provides that all other surplus residential
properties (i.e., multi-family units) that are not
purchased by former owners or occupants, shall be offered
to housing-related private or public entities at a
reasonable price for the purpose of promoting affordable
housing and neighborhood preservation. (government Code
Section 54235 through 54238.7)
Proposition 60A of November 2004 (SCA 18 [Johnson],
Resolution Chapter 103, Statutes of 2004] which was adopted
by the electorate (73 percent margin) requires, among other
things, that the proceeds from the sale of surplus state
property, with specified exceptions, be used to pay the
principal and interest on the Economic Recovery Bond Act of
2004.
This bill:
1.Provides that the disposal of surplus state real
property by the Department of General Services shall be
subject to the requirements of this bill.
2.Defines "surplus state real property" as real property
declared surplus by the Legislature and directed to be
disposed of by DGS, including any real property
previously declared surplus by the Legislature but not
yet disposed of by DGS prior to the enactment of this
bill.
3.Provides that DGS may dispose of surplus state real
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property by sale, lease, exchange, a sale combined with
an exchange, or the manner of disposition of property,
as authorized by the Legislature, upon any terms and
conditions subject to any reservations and exceptions
that DGS deems to be in the best interests of the state.
4.Stipulates that surplus state real property shall be
offered to local agencies and then to nonprofit
affordable housing sponsors prior to being offered for
sale to private entities or individuals.
5.Defines "nonprofit affordable housing sponsor" to mean
any of the following:
A. A nonprofit corporation incorporated pursuant to
the Corporations Code.
B. A cooperative housing corporation which is a stock
cooperative, as defined.
C. A limited-dividend housing corporation.
6.Provides that a local agency that expresses interest in
acquiring a parcel of surplus property shall
demonstrate, to the satisfaction of DGS that the real
property is to be used by the local agency for open
space, public parks, affordable housing projects, or
development of local government-owned facilities.
7.Requires a local agency or nonprofit affordable housing
sponsor to notify DGS of its interest in the surplus
property within 60 days of posting the notice of the
availability of the property on DGS' Internet web site
and requires the sales agreement to be executed by the
local agency or nonprofit affordable housing sponsor
within 60 days after DGS determines that local agency or
affordable housing sponsor is to receive the property.
8.Stipulates that the sale of the property to the local
agency shall be completed, and title transferred, within
60 days of the date that DGS executes the sales
agreement, or, if required by law, no later than 60 days
after the State Public Works Board has authorized the
sale.
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9.Provides that, if the sale of surplus property to a
local agency or nonprofit affordable housing sponsor is
not completed within the above referenced timeframe, DGS
shall proceed with the process for disposal to private
entities or individuals.
10.Makes it explicit that disposal of surplus property to
any local agency or nonprofit affordable housing sponsor
shall be at "fair market value" as established by an
appraisal and economic evaluation conducted or approved
by DGS. If more than one local agency or nonprofit
affordable housing sponsor desires the property, the
fair market value shall be the highest price offered
above that value.
11.Stipulates that no local agency or nonprofit affordable
housing sponsor is interested, or an agreement, as
provided above, is not reached, then the disposal of the
property to private entities or individuals shall be
pursuant to a public bidding process designed to obtain
the highest most certain return for the state from a
responsible bidder, and any transaction based on such a
bidding process shall be deemed to be the fair market
value.
12.Provides that notwithstanding any other provision of
law, DGS may sell surplus property, or portion of
surplus property, to a local agency, or to a nonprofit
affordable housing sponsor if no local agency is
interested in the property, for affordable housing
projects at a sales price less than fair market value if
DGS determines that such a discount will enable the
provision of housing for persons and families of low or
moderate income.
13.Provides that nothing shall preclude a local agency that
purchases the property for affordable housing from
reconveying the property to a nonprofit affordable
housing sponsor for development of affordable housing.
Transfer of title to the land or lease of the land for
affordable housing shall be conditioned upon continued
use of the property as housing for persons and families
of low and moderate income for at least 40 years and
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requires DGS to record a regulatory agreement that
imposes affordability, convenants, conditions, and
restrictions on the property.
14.Authorizes the Director of DGS to transfer surplus
property to a local agency for less than fair market
value if the local agency uses the property for parks or
open-space purposes, as specified.
15.Specifies that the Legislature may authorize a
particular surplus property be sold at less than fair
market value and provides that 30 days prior to
executing such a transaction, DGS must report to the
chairs of the fiscal committees of the Legislature the
following information: (a) the financial terms of the
transaction; (b) a comparison of fair market value for
the property and financial terms; and, (c) the basis for
agreeing to terms and conditions other than fair market
value.
16.Repeals additional provisions of law governing the
disposition of surplus property relating to: maintenance
costs incurred by a state agency until declared surplus;
sales price agreement and procedures; transfer at no
cost; payment of interim management and administrative
costs incurred by the state for receipt of property at
less than fair market value; and, legislative findings,
declarations and intent language pertaining to
disposition of surplus property for park, recreation,
school, open-space, housing, and community development
purposes.
17.Makes other conforming and code maintenance changes to
provisions of the Government Code relating to the
disposition of surplus property by state and local
entities.
NOTE: Please refer to Senate Governmental Organization
Committee
analysis for prior/related legislation.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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Fiscal Impact (in thousands)
Major Provisions 2008-09 2009-10
2010-11 Fund
Revision of surplus Unknown, likely additional
revenues; General*/
property process potential administrative
saving Special
Internet posting of Minor, likely absorbable, cost
annually General
Properties
*Deficit Recovery Bond Retirement Sinking Fund Subaccount
SUPPORT : (Verified 5/28/08)
Department of General Services (source)
OPPOSITION : (Verified 5/28/08)
California State Association of Counties (unless amended)
Housing California
Western Center on Law and Poverty
ARGUMENTS IN SUPPORT : According to the author's office,
this bill is a DGS sponsored bill that is intended to
simplify and streamline the process for disposing of
state-owned surplus real property as well as require that
all sales be made at fair market value. The author's
office states that under the provisions of this bill, the
Legislature will control when "less than fair market value"
sales can be made and discounts would still be available
for affordable housing projects. The author's office also
notes that this bill eliminates references to state surplus
sales in statutes governing surplus sales by local
governments however local governments would continue to
have a priority to purchase surplus property for open
space, parks, affordable housing projects and local
government-owned facilities.
Furthermore, the author's office points out that state and
other governmental entities are currently losing money as a
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result of delays in the sale of surplus properties to the
general public. Thus, this bill addresses that matter by
making it clear that local governments have specific time
periods within which to decide and consummate the purchase
of state surplus property. The author's office emphasizes
that more timely sales will increase property tax revenues
to governmental entities and sales revenue to the state.
ARGUMENTS IN OPPOSITION : Opponents contend that housing
sponsors - not local governments - are the entities most
likely to develop affordable units on surplus land thus,
the ability of these housing sponsors to obtain surplus
property under current law should be preserved and not
eliminated entirely as proposed in this bill.
Additionally, opponents believe that this bill potentially
conflicts with the Roberti Act (Government Code Section
54235, et seq.), which also governs the disposition of
surplus residential property and that clarifying language
is needed to make certain that the two laws are harmonized
and ensure that both remain in effect.
Furthermore, opponents claim that the standard in this bill
governing when surplus land can be sold at below market
value is unclear. Specifically, opponents state that it is
not clear what it means to "accomplish the financing" of
the project, nor how the standard could be used to
determine whether the land should be discounted. Opponents
believe that a more appropriate standard would allow a
discounted sale where such a discount would aid in making
the housing affordable to lower income households.
TSM:cm 5/29/08 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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