BILL ANALYSIS Ó
AB 1748
Page 1
Date of Hearing: March 27, 2012
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Marty Block, Chair
AB 1748 (Fong) - As Introduced: February 17, 2012
SUBJECT : California Community Colleges: fair market value of
leases.
SUMMARY : Removes the limitation that the fair market value of
specified short-term leases not exceed $25,000 annually, for
California Community College (CCC) district buildings or space
not being used for educational purposes.
EXISTING LAW exempts certain lease arrangements from the general
provisions regarding the lease and sale of CCC district
property, including CCC district property that is not needed for
educational activities, if it is leased for a period of more
than five days but less than five years and the fair market
value of the lease does not exceed $25,000 annually. CCC
district governing boards seeking to enter into the
aforementioned negotiated lease are required to include the
proposed lease and methodology used to determine the value of
the lease as an agenda item in a public meeting, and provide one
week public notice before taking action on the lease agreement.
FISCAL EFFECT : Unknown. This bill has been keyed non-fiscal by
Legislative Counsel.
COMMENTS : Purpose of this bill. This bill authorizes CCC
districts to enter into negotiated short-term lease agreements
for property not needed for educational purposes and generate
fair market value for that property, not subject to the $25,000
annual limitation. Existing law authorizes CCC districts to
enter into leases for longer-terms or greater than $25,000
annually but requires a public bid process that accepts the
highest responsible bid. The author argues that the current cap
of $25,000 on short-term leases was put into place almost 20
years ago and does not take into account differences in property
value throughout the state or increase in value over time.
Further, according to the author, multiple years of budget cuts
and increasing demand for higher education have left CCC
districts needing to maximize alternative revenue sources. By
relieving CCC districts of the $25,000 cap on short-term leases,
AB 1748
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the author believes this bill will provide districts greater
ability to increase revenues through leasing unused buildings
and space.
California State University (CSU) leasing policy. Existing law
authorizes the CSU Trustees to lease any property of a CSU for
any purpose that they consider not inconsistent with the
functions of the CSU and requires the funds received to be
deposited into the State Treasury and credited to the support
appropriation of the CSU during the period of occupancy.
Through executive order, the CSU Chancellor has delegated
leasing authority to CSU presidents with certain exceptions
including leases of potentially more than twenty years or with
annual lease payments equal to or greater than $1,000,000.
University of California (UC) leasing policy . UC leasing
policy, through standing orders from the UC Regents, authorizes
individual UC Chancellors to approve leases of up to 10 years
and authorizes the UC President to approve leases of up to 20
years. There appears to be no specific restrictions on lease
amounts or payments.
REGISTERED SUPPORT / OPPOSITION :
Support
Chief Executive Officers of the California Community Colleges
Glendale Community College District
Kern Community College District
Los Angeles Community College District
Peralta Community College District
San Diego Community College District
San Jose-Evergreen Community College District
Opposition
None on File
Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960