BILL ANALYSIS SB 1481 Page 1 SENATE THIRD READING SB 1481 (Governmental Organization Committee) As Amended August 2, 2010 Majority vote SENATE VOTE :33-0 BUSINESS & PROFESSIONS 11-0 APPROPRIATIONS 17-0 ----------------------------------------------------------------- |Ayes:|Hayashi, Conway, Eng, |Ayes:|Fuentes, Conway, | | |Hernandez, | |Bradford, | | |Hill, Ma, Nava, Niello, | |Charles Calderon, Coto, | | |Ruskin, | |Davis, | | |Smyth, Logue | |De Leon, Gatto, Hall, | | | | |Harkey, Miller, Nielsen, | | | | |Norby, Skinner, Solorio, | | | | |Torlakson, Torrico | | | | | | ----------------------------------------------------------------- SUMMARY : Specifies that the proceeds from the sale of armories must be deposited in the Armory Fund (Fund) and are not required to be used to retire bond debt resulting from the 2004 Economic Recovery Bond Act. EXISTING LAW : 1)Authorizes the Department of General Services, with the approval of the Adjutant General, to lease up to 99 years or sell at fair market value, as specified, any real property held for armory purposes, with statutory approval. 2)Establishes the Fund for the deposit of proceeds from the sale or lease of armories and authorizes the use of available funds upon appropriation by the Legislature for the maintenance of existing armories and construction of new or replacement armories. 3)Requires the proceeds from the sale of state surplus real property be used to pay the principal and interest on the Economic Recovery Bond (ERB) Act of 2004 and subsequently be deposited into the Special Fund for Economic Uncertainties. FISCAL EFFECT : According to the Assembly Appropriations SB 1481 Page 2 Committee analysis, no net state costs. The bill clarifies that the proceeds of the sales of armory properties will not be treated as General Fund (GF) monies to help pay off the ERBs or be deposited into the state's GF reserve. Instead, such proceeds are to be deposited into the Fund, where, upon appropriation by the Legislature, these monies are available for the state's share of costs for acquisition or construction of replacement or new armories - costs that would otherwise be a GF obligation. Moreover, the state's armories, which average over 50 years in age, are generally not surplus to the Military Department's needs, but are simply obsolete and in need of complete replacement, thus it is not appropriate to consider their disposition within the statutory framework for surplus property sales. Finally, though some records are not readily available, it is likely that funding for many of the older armory properties came in part from federal funds and in some cases from local funds, with at most only a portion coming from the state GF. COMMENTS : According to the author's office, "Within the State Treasury is a special fund, the 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. An amendment to the California Military and Veterans Code Section 435 is required to ensure that monies from the sale of armory properties, no longer utilized by the California National Guard, continue to be deposited in the Fund. In November 2004, voters passed Proposition 60A, which requires the proceeds of the sale of surplus property to be used to pay down the $15 billion in deficit bonds included in the 2003-04 Budget. These payments are intended to accelerate the retirement of the state's debt, and reduce future GF payments to the bondholders. Existing law also provides the California Military Department with separate authority to sell and lease its property, with the revenues earned to be deposited into the Fund. Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916) 319-3301 SB 1481 Page 3 FN: 0005633