BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 1481
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          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  

          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  


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          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  
          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  

           Analysis Prepared by  :    Joanna Gin / B.,P. & C.P. / (916)  


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