BILL ANALYSIS                                                                                                                                                                                                    






                                                       Bill No:  SB  
          1481
          
                 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                       Senator Roderick D. Wright, Chair
                           2009-2010 Regular Session
                                 Staff Analysis



          SB 1481  Author:  Committee on Governmental Organization
          As Introduced:  March 8, 2010
          Hearing Date:  April 13, 2010
          Consultant:  Art Terzakis


                                     SUBJECT  


                                   DESCRIPTION
           
          SB 1481 would make it explicit that proceeds from the sale  
          of armories must be deposited in the Armory Fund,  
          notwithstanding specified Government Code provisions that  
          require proceeds from the sale or lease of surplus state  
          property be applied to retire accumulated deficits.

                                   EXISTING LAW

           Existing law generally requires the Director of General  
          Services (DGS) to perform various functions with respect to  
          state property and provides for the sale, lease, or  
          transfer of surplus state property.

          Existing law (Government Code Section 11011) 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,  
          lands under the jurisdiction of the State Lands Commission,  




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          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.

          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  
          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. This section  
          of law also prescribes the procedure for local agencies and  
          nonprofit affordable housing sponsors to use to obtain the  
          surplus state
          real property. 
           
           Existing law authorizes DGS, with the approval of the  
          Adjutant General, to lease for fair market value (up to 99  
          years) and sell any real property held for armory purposes,  
          subject to legislative approval.  Additionally, existing  
          law establishes the Armory Fund and requires that proceeds  
          from the sale or lease of armories be used for the  
          maintenance of existing armories and for the acquisition or  
          construction of new armories.
           
          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.





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                                    BACKGROUND
           
          Within the State Treasury is a special fund, referred to as  
          the "Armory Fund," where proceeds from the sale or lease of  
          National Guard armories are deposited in order to finance  
          the construction of new armories and the renovation of  
          existing armories. 

          In November 2004, voters passed Proposition 60A, which  
          amended the state Constitution to require that any proceeds  
          from the sale of state surplus property must be used to pay  
          down the $15 billion in deficit bonds included in the  
          2003-04 Budget package.

           Purpose of SB 1481:   Since the California Military  
          Department (CMD) has separate authority to sell and lease  
          its property, and the Armory Fund is a special fund, which  
          was established in state law to assist with funding the  
          construction of new National Guard armories, Military and  
          Veterans Code Section 435 needs to be revised to ensure that  
          the Armory Fund remains a viable funding source for the  
          acquisition, construction, and maintenance of armories.

          Currently, Military and Veterans Code Section 435  
          authorizes the Department of General Services (DGS) to  
          lease or sell any real property used for armory purposes  
          when it is determined to be in the best interest of the  
          state.  Military and Veterans Code Section 435 makes no  
          reference to "surplus property."  Further, Military and  
          Veterans Code Section 435 provides that, within the State  
          Treasury, is the Armory Fund.  All net proceeds from the  
          sale, lease, or exchange of National Guard armories are to  
          be deposited into this Armory Fund.  The money in the fund  
          accumulates and is available, upon appropriation by the  
          Legislature, for the acquisition and construction of  
          replacement armories and for maintenance of existing  
          armories.  
          This proposal, sponsored by the Military Department, would  
          make it explicit that proceeds from the sale or lease of  
          armories must be deposited in the Armory Fund, regardless  
          of existing Government Code provisions that require  
          proceeds from the sale of surplus state property be applied  
          to retire state deficit recovery bonds. 

          The sponsor emphasizes that the National Guard's  
          infrastructure is vital to the State of California - thus,  




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          any and all proceeds from the sale or lease of obsolete  
          armories must continue to be deposited into the Armory  
          Fund.  Without working armories, the Guard's ability to  
          support state emergencies will be significantly impaired.

                            PRIOR/RELATED LEGISLATION
           
           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 this Committee)
           
          SB 1001 (Strickland) 2009-10 Session.   Would terminate the  
          public recreation use restriction and right of reentry that  
          is held by the state with respect to a specified portion of  
          San Buenaventura State Park in order to provide for  
          improved public access while allowing for compatible  
          private commercial and recreational use.  (Pending in this  
          Committee)  

          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.
           




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          SB 136 (Huff) Chapter 166, Statutes of 2009.   Authorized  
          DGS to dispose of three specified parcels of real property  
          pursuant to certain provisions.
           
          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.  
           
          AB 608 (Evans) 2009-10 Session.   Would have authorized DGS  
          to execute an agreement in the best interests of the state  
          to modify boundary lines dividing private and state  
          property along the area known as the River to Ridge Trail,  
          from Kennedy Park to Skyline Park, in Napa County.  (Vetoed  
          by Governor on the basis that the State should not incur  
          costs when there are other available remedies.)
           
          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.  

          AB 1123 (Berg) Chapter 625, Statutes of 2007.   Authorized  
          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.

           SUPPORT:   As of April 9, 2010:





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          California Military Department (sponsor)
          National Guard Association of California

           OPPOSE:   None on file as of April 9, 2010

           FISCAL COMMITTEE:  Senate Appropriations Committee

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