BILL ANALYSIS Ó
AB 1143
Page 1
ASSEMBLY THIRD READING
AB 1143 (Dickinson)
As Amended May 27, 2011
Majority vote
BUSINESS & PROFESSIONS 9-0 APPROPRIATIONS 17-0
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|Ayes:|Hayashi, Bill Berryhill, |Ayes:|Fuentes, Blumenfield, |
| |Allen, Butler, | |Bradford, Charles |
| |Eng, Hagman, Hill, Ma, | |Calderon, Campos, Davis, |
| |Smyth | |Gatto, Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
| | | | |
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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, and the DGS plan for
replacing the BOE's current state-owned headquarters building
with other state tenants, 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.
AB 1143
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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 : According to the Assembly Appropriations
Committee:
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)To backfill the current BOE headquarters building, state
agencies would incur similar one-time moving costs plus
one-time costs of up to several million dollars depending on
the extent of required 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 totals $12.8 million
annually-consisting of $8.1 million on bond debt service and
$4.7 million in base rent.
COMMENTS : According to the author, "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
AB 1143
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across multiple annex locations, and accommodate future
short-term and long-term growth."
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.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
FN: 0000982