BILL ANALYSIS Ó
AB 1143
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Date of Hearing: April 12, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 1143 (Dickinson) - As Introduced: February 18, 2011
SUBJECT : Director of General Services: authority to enter into
a lease, lease-purchase agreement, or a lease with an option to
purchase a build-to-suit facility.
SUMMARY : Authorizes the Department of General Services (DGS),
with the consent of the Board of Equalization (BOE), to enter
into a lease to consolidate the BOE headquarters (HQ).
Specifically, this bill :
1)Authorizes DGS, with BOE's consent, to enter into a lease,
lease-purchase agreement, or lease with an option to purchase
a build-to-suit facility in the Sacramento area for purposes
of consolidating the BOE HQ operations into one single
location.
2)Requires DGS to develop the agreements or leases pursuant to
this bill and provide them to the Department of Finance (DOF)
for review and approval prior to soliciting bids.
3)Requires DGS to obtain approval from DOF prior to execution of
an agreement or lease.
4)Requires DGS to notify the Legislature of the terms and
conditions of the agreement or lease at least 30 days prior to
executing the agreement for a lease, lease-purchase, or lease
with an option to purchase for build-to-suit, pursuant to this
bill.
5)Requires DGS to be reimbursed for any reasonable costs
incurred pursuant to this bill.
EXISTING LAW authorizes DGS (subject to legislative approval) to
sell, lease, exchange, or transfer various specified properties
for current market value, or upon terms and conditions as DGS
determines are in the best interests of the state.
FISCAL EFFECT : Unknown
AB 1143
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COMMENTS :
Purpose of this bill . According to the author's office, "BOE
has outgrown its current HQ space, which includes the 450 N
Street building and four annex locations, and anticipates future
growth. The staffing increases are due largely to growth to
address legislative mandates for revenue administration,
collection and enforcement efforts? The HQ building was designed
to house not more than 2,200 employees. However, BOE currently
requires space for approximately 2,900 employees for its
operations.
"This bill would support BOE's core mission of
revenue-generating processing, protect the health and safety of
employees, eliminate inefficiencies of managing operations
across multiple annex locations, and accommodate future
short-term and long-term growth."
Background . The BOE HQ building located at 450 N Street is
owned by the State of California and has property management
services provided by DGS. BOE is the primary tenant and pays
monthly rent as identified annually by DGS to occupy the
building, as well as any additional costs to maintain, upgrade,
operate, or fund other special repairs to the building.
Construction of the BOE HQ building began in 1991 and was
completed in January 1993. Since then, the BOE HQ has been
plagued with costly repairs for mold remediation and water
intrusion problems.
A 1997 study prepared by the architectural firm, Dreyfuss and
Blackford, and two DGS reviews have indicated that the HQ
building is designed to house 2,200 employees, while BOE
requires space for approximately 2,900 employees. Recent
staffing increases are due largely to growth to address
legislative mandates for revenue collection and enforcement
efforts. BOE has been forced to move approximately one-fourth
of the HQ operations to four different annex locations in the
greater Sacramento area. However, BOE states that these
facilities are at maximum capacity, leaves no room for future
growth, and will result in programmatic delays if unaddressed.
Support . According to the sponsor, BOE, this bill "will begin
the process of moving ÝBOE's] 2,900 employees out of the N
Street building and annex locations, which are at capacity, to a
location that better meets its business needs. BOE has been
AB 1143
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working with DGS to right size the HQ building by identifying
adequate office space for additional employees? Assuming modest
growth of 56 positions per year over the next five years, there
will be inadequate space for these employees Ýin the current
HQ]. Consequently, the implementation of any additional tax and
fee programs enacted by the Legislature would likely be delayed
because it generally takes about 12 months to locate facilities
to house the staff. BOE needs a new facility that can house all
HQ staff, with reasonable room for growth, in light of its
mission critical, revenue-generating work."
Previous Legislation . AB 151 (Jones) of 2009 would have
required DGS to study whether it is in the state's best
interests to sell or lease the Sacramento property used for BOE
offices, and would have authorized BOE to independently lease
its facilities. The Governor vetoed AB 151 with the following
message:
While I am sympathetic with this bill's objective of
ultimately locating most or all BOE HQ units in a
single location, the fiscal condition of the state
precludes relocating BOE's HQ or field offices for the
foreseeable future.
Permanently relocating the BOE HQ would result in
costs exceeding $100 million. Furthermore, this bill
would complicate the sale of bonds to retire the
existing Pooled Money Investment Board loan on the
property, resulting in additional costs to the state.
Lastly, this bill would unacceptably remove all
Administration oversight from BOE's real estate
transactions, and would require BOE to develop and
maintain a separate competency in that field. Those
activities would redirect resources and focus from
BOE's core mission as a revenue agency.
REGISTERED SUPPORT / OPPOSITION :
Support
Board of Equalization (sponsor)
Service Employees International Union, Local 1000
Opposition
AB 1143
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None on file.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301