BILL ANALYSIS                                                                                                                                                                                                    
                                                       Bill No:  AB  
          815
          
                 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                       Senator Roderick D. Wright, Chair
                           2009-2010 Regular Session
                                 Staff Analysis
          AB 815  Author:  Caballero
          As Amended:  June 14, 2010
          Hearing Date:  June 29, 2010
          Consultant:  Art Terzakis
                                     SUBJECT  
                                 State Property
                                   DESCRIPTION
           
          AB 815 amends an existing provision of the surplus property  
          bill of 2003 which granted the Director of the Department  
          of General Services (DGS) the authority to convey the  
          Salinas Armory, in the City of Salinas (Monterey County)  
          for no less than 50% of fair market value to the City for  
          development of a police station and instead authorizes  
          conveyance to the City for use as a "local government-owned  
          facility." 
                                   EXISTING LAW
           Existing law authorizes DGS to perform various functions  
          with regard to state property and provides for the sale,  
          lease, or transfer of surplus state property, if authorized  
          or contemplated by law.  
          Existing law requires the Director of 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 to annually 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 land, land held for highway purposes,  
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          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 or as may  
          otherwise be authorized by law.
          Existing law 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.
          Where applicable within its jurisdiction, DGS is  
          responsible for determining if surplus land is needed by  
          any other state agency.  Existing law  (Government Code  
          Section 11011.1) requires the state to first offer surplus  
          state real property to local agencies, and next, to offer  
          the property to nonprofit affordable housing sponsors, as  
          defined, prior to offering the property to private  
          entities.  Existing law also prescribes the procedure for  
          local agencies and nonprofit affordable housing sponsors to  
          use to obtain the surplus state real property. 
          Existing law specifies that the Legislature may authorize a  
          particular surplus property be sold at less than fair  
          market value (if the local agency uses the surplus state  
          real property for parks or open-space purposes) 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; (c) the basis for agreeing to terms and  
          conditions other than fair market value. 
          Existing law [Government Code 11011 (k) (1) and (2)]  
          contains provisions exempting the sale of surplus property  
          from designated provisions of the California Environmental  
          Quality Act (CEQA).  Specifically, the law provides that  
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          any disposition of a parcel of surplus property made on an  
          "as-is" basis shall be exempt from statutory requirements  
          of CEQA; however, the law makes it explicit that the buyer  
          or transferee of a parcel shall be subject to any local  
          governmental entitlement or land use approval requirements  
          and CEQA.
           
           Furthermore, existing law provides that if any transaction  
          is  not  on an "as-is" basis sale and close of escrow is  
          contingent on satisfying any local governmental approvals  
          for entitlement or land use requirements, including  
          compliance by the local government with CEQA, then the  
          execution of the purchase and sale agreement or exchange  
          agreement is exempt from CEQA.
          Proposition 60A  of November 2004 (SCA 18, Johnson,  
          Resolution Chapter 103/04) which was adopted by the  
          electorate (73% 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.
                                    BACKGROUND
           
           Salinas Armory:   SB 856 (Governmental Organization),  
          Chapter 258 of 2003 was the annual surplus property bill,  
          sponsored by DGS, which among other things, authorized DGS,  
          with consent of the Military Department to surplus this  
          property located at 100 Howard Street, in the City of  
          Salinas (Monterey County) and sell it to the City for no  
          less than 50% of fair market value so that the City may use  
          the property for a police station.  
          The property was appraised at $860,000 at the time of  
          purchase in July 2005 but the City received it for  
          $430,000.  This conveyance was made on the condition that  
          the City utilizes the property for a public benefit by  
          constructing a police station.  Conditions of the sale  
          provided that construction begin within 10 years of the  
          recording of the deed to the City.  The State retained the  
          right to terminate the City's right, title, and interest in  
          the property if construction of the police station had not  
          commenced within 10 years of the deed recording.  Several  
          use limitations were also placed on the property until  
          construction of the police station, including use as a  
          gymnastics academy and public parking for government  
          purposes.  If the City breaches any of these conditions the  
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          State retains the right to terminate the City's right,  
          title and interest in the property.  
           
          Purpose of AB 815:   According to the author's office, the  
          City of Salinas purchased the Salinas Armory property from  
          the State with the intent of developing it into a police  
          station however, the City has encountered numerous  
          obstacles in development of the property, including but not  
          limited to, the presence of asbestos, mold, and other  
          potential environmental hazards.  An alternative and  
          superior location for a police facility has been identified  
          in east Salinas in the Alisal Marketplace area, an area in  
          great need of increased public safety services and  
          facilities. 
          The author's office states that the Salinas Police  
          Activities League (PAL) would like to utilize the armory  
          facility for the home of their programs.  PAL proposes to  
          renovate the facility for use as a center for SPD sponsored  
          youth activities, including after school and extended hours  
          programs.  PAL indicates that they have secured a $100,000  
          private grant to upgrade the Armory.
          This measure would amend Section 4 of Chapter 258 of the  
          Statutes of 2003, thereby authorizing the development of  
          the Salinas Armory as a local, government-owned facility  
          for the public benefit.    
                           PRIOR/RELATED LEGISLATION
          AB 2279 (Evans) 2009-10 Session.   Would grant DGS the  
          authority to sell or exchange at current fair market value,  
          by January 1, 2015, to the County of Napa, certain property  
          located in the County upon terms and conditions the  
          Director deems are in the best interests of the state.   
          (Pending in Senate Appropriations Committee)  
          SB 1167 (Cogdill) 2009-10 Session.   Would authorize DGS to  
          dispose of all or any portion of two parcels of real  
          property (the Veterinary Laboratory for the Department of  
          Food and Agriculture located in Fresno and the Department  
          of Motor Vehicles field office located in Roseville, Placer  
          County).  (Pending in Assembly Policy Committee)
           
          AB 22xxxx (Evans) Chapter 20, Statutes of 2009-10 Fourth  
          Extraordinary Session.   Authorized DGS to: (1) sell the  
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          Orange County Fairgrounds; (2) sell specified state-owned  
          office buildings and to enter into long-term leases for  
          those buildings with the option to buy back any of the  
          buildings; (3) enter into and approve "long-term" leases of  
          the state's real properties and determine terms and  
          conditions of such leases.  Also, imposed additional  
          reporting requirements upon state agencies relative to  
          information that must be submitted to DGS pertaining to the  
          state's real property holdings and authorized a loan of not  
          more than $10 million from the General Fund to support the  
          management of the state's real property assets and any  
          extra workload.
           
          SB 760 (Aanestad) Chapter 64, Statutes of 2009.   Authorized  
          DGS to sell, lease or exchange specified state-owned real  
          property in the City of Red Bluff, that is specifically not  
          declared surplus to the State's needs, and use the proceeds  
          to acquire office and related space not to exceed 40,000  
          net square feet in the City, to consolidate various  
          departments and state agencies.
           
          SB 256 (Aanestad) Chapter 572, Statutes of 2009.    
          Authorized DGS to sell, lease, exchange, or any combination  
          thereof, all or a portion of specified state-owned real  
          property in the City of Chico, that is specifically not  
          declared surplus to the State's needs, and is used by the  
          California Highway Patrol as its area office, in order to  
          relocate and expand the office.
           
          SB 178 (Aanestad) Chapter 564, Statutes of 2009.    
          Authorized DGS to sell, lease or exchange approximately  
          three acres of state-owned real property located in the  
          City of Redding that is specifically not declared surplus  
          to the State's needs and is currently used by the  
          Department of Forestry and Fire Protection for the purpose  
          of consolidating operations on or near the Redding Airport.
           
          AB 8xx (Nestande) Chapter 6, Statutes of 2009-10 Second  
          Extraordinary Session.   Among other things, exempted the  
          sale of surplus state real property made on an "as is"  
          basis from designated provisions of CEQA.  Also, exempted  
          from those provisions of CEQA the execution of the purchase  
          and sale agreement or the exchange agreement for surplus  
          state real property if the disposition is not made on an  
          "as is" basis and the close of escrow is contingent on a  
          specified requirement or compliance with CEQA.  
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           AB 600 (Hall) 2009-10 Session.   Would have authorized DGS,  
          with the approval of the Adjutant General, to complete a  
          lease to the City of Compton at fair market value, of  
          specified state-owned property known as the Compton Armory.  
           (Vetoed by Governor on the basis that current law already  
          authorizes DGS to enter into long-term leases on  
          state-owned land that may have some potential future use to  
          the program needs.)  
          AB 240 (Monning) Chapter 422, Statutes of 2009.   Revised  
          the terms of a previously authorized exchange of DeLaveaga  
          Park parcels, owned by the State of California and the City  
          of Santa Cruz (City) respectively, in accordance with the  
          current needs of the State and City.  
          SB 1681 (Battin) Chapter 532, Statutes of 2008.    Among  
          other things, revised the conditions and procedures by  
          which DGS may dispose of surplus land to local agencies and  
          private entities and individuals.  
          SB 567 (Aanestad) 2007-08 Session.    The annual surplus  
          property bill sponsored by DGS.  (Placed on Senate Inactive  
          File by Author)   
          SB 553 (Aanestad) 2007-08 Session.   Similar to SB 178  
          (Aanestad) of 2009.  Would have authorized DGS to lease,  
          sell, or exchange at fair market value a specified parcel  
          of state-owned property in the City of Redding currently  
          being used by the Department of Forestry and Fire  
          Protection (CalFire) as its Shasta-Trinity Unit  
          Headquarters.  (Vetoed)
           
          AB 2026 (Villines) Chapter 761, Statutes of 2008.    
          Authorized DGS to sell, exchange, or lease for fair market  
          value  nine  specified parcels deemed to be surplus to the  
          state's needs.  Additionally, rescinded the surplus  
          authorization granted previously to DGS with respect to  
           seven  specified parcels.  Furthermore, exempted the State's  
          execution of a purchase and sales agreement from CEQA  
          however, the provisions made it explicit that in an "as is"  
          sale, the buyer or transferee will be subject to any local  
          governmental entitlement or land use approval requirements  
          including requisite CEQA provisions.  
           AB 1123 (Berg) Chapter 625, Statutes of 2007.   Authorized  
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          DGS, with the approval of the Adjutant General, to lease to  
          the City of Healdsburg at fair market value and for a  
          period of up to 30 years specified state property known as  
          the Healdsburg Armory.  Also, required that proceeds from  
          the lease be deposited into the Armory Fund.
           
          SB 99 (Battin) 2005-06 Session.   Would have established the  
          Commission on Asset Review and Divestiture to review  
          biennially the inventory of all real property held by the  
          State.  (Held in Senate Appropriations Committee)
          
           AB 53 (Negrete McLeod) 2005-06 Session.   The annual DGS  
          surplus property bill containing approximately 30 parcels  
          for disposal.  (Died on Senate Inactive File)
           
          AB 54 (Negrete McLeod) 2005-06 Session.   The annual DGS  
          surplus property bill.  (Vetoed by Governor because of  
          concerns over requiring DGS to initiate a CEQA process on  
          the properties - the Governor stated that "such a provision  
          could potentially cost California taxpayers millions of  
          dollars.")
           
          SB 669 (Battin) 2003-04 Session.   Would have required DGS  
          to identify $1 billion worth of state property that can be  
          sold immediately to help close the budget deficit.  The  
          bill also would have required state agencies affected by  
          the sale to determine the costs and benefits of leasing  
          back their existing space or finding new, more  
          cost-effective space.  (Passed out of this Committee on a  
          vote of 11-0; Died in Senate Appropriations Committee -  
          Suspense file)
          
           SB 856 (Committee on Governmental Organization) Chapter  
          258, Statutes of 2003.   The annual DGS surplus property  
          bill.
           
          SB 1607 (Committee on Governmental Organization) Chapter  
          974, Statutes of 2002.   The annual DGS surplus property  
          bill.
          
           SB 951 (Committee on Governmental Organization) Chapter  
          610, Statutes of 2001 .  The annual DGS surplus property  
          bill.
           SUPPORT:   As of June 25, 2010
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          City of Salinas 
          Chief Louis Fetherolf, City of Salinas Police Department
          Salinas Police Activities League
           
          OPPOSE:   None on file as of June 25, 2010.
           FISCAL COMMITTEE:   Senate Appropriations Committee