BILL ANALYSIS Ó
AB 1143
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1143 (Dickinson) - As Introduced: February 18, 2011
Policy Committee: Business and
Professions Vote: 9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill:
1)Authorizes the Director of General Services (DGS), with the
consent of the State Board of Equalization (BOE), to enter
into a lease, a lease-purchase agreement, or a lease with an
option to purchase for a build-to-suit facility to consolidate
the offices of the BOE within the Sacramento region.
2)Requires DGS to notify the Legislature of the terms of the
agreement at least 30 days prior to executing an agreement,
and requires DGS to be reimbursed for its costs associated
with this transaction.
FISCAL EFFECT
1)The BOE estimates one-time moving costs of about $1.5 million.
Increased annual lease costs for the BOE-assuming 750,000
usable square feet of consolidated space-would depend on the
specific terms of the new lease agreement, but are estimated
to be about $6 million to $14 million annually at current
leasing rates. These additional costs would be partially
offset by operating efficiencies due to BOE consolidation into
a low- or mid-rise structure in lieu of occupying a high-rise
building and several satellite locations. These costs would
likely not begin before 2015.
2)Assuming a state agency or agencies are identified to backfill
the current BOE headquarters building, these agencies would
incur similar one-time moving costs plus one-time costs of up
to several million dollars depending on the extent of required
AB 1143
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tenant improvements. The net ongoing lease cost for these
agencies would depend on the occupancy cost of their current
space when compared to the BOE building annual costs, which
currently total $12.8 million annually-consisting of $8.1
million on bond debt service and $4.7 million in base rent.
COMMENTS
1)Background . The BOE headquarters building at 450 N Street in
Sacramento is owned by the state and managed by DGS.
Construction of this building began in 1991 and was completed
in January 1993. Since that time, the building has required
costly repairs for mold remediation and water intrusion
problems. The building is designed to house 2,200 employees,
while BOE requires space for approximately 2,900 employees.
Recent staffing increases at the board are due largely to
growth related to legislative mandates for revenue collection
and enforcement efforts. With this growth, BOE has located
approximately one-fourth of its headquarters operations to
four annex sites in the greater Sacramento area. However, BOE
states that all of its facilities are at maximum capacity,
leaving no room for future growth, which could result in
programmatic delays if unaddressed.
2)Prior Legislation . AB 151 (Jones) of 2009, which 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 authorized BOE to independently lease its facilities, was
vetoed by Governor Schwarzenegger, who argued that the state's
fiscal condition precluded such a relocation for the
foreseeable future. The governor also argued that the bill
would have removed Administration oversight from BOE's real
estate transactions.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081