BILL ANALYSIS Ó SENATE COMMITTEE ON EDUCATION Alan Lowenthal, Chair 2011-2012 Regular Session BILL NO: AB 1748 AUTHOR: Fong INTRODUCED: February 17, 2012 FISCAL COMM: No HEARING DATE: June 13, 2012 URGENCY: No CONSULTANT:Kathleen Chavira SUBJECT : Fair Market Value of leases. SUMMARY This bill eliminates the $25,000 cap on the fair market value of property which a local community college board is authorized to lease for up to five years, if it is not needed for school classroom buildings. BACKGROUND Current law authorizes a community college governing board to sell, or lease for a term up to 99 years, any real or personal property it owns which is not, or will not be needed for school classroom buildings at the time of the delivery of title or possession, and outlines various conditions including the use of the funds, priorities and procedures for a lease with option to purchase, public disclosure requirements, public bid requirements, and other conditions which must be met. (Education Code, Chapter 2, Article 4, § 81360 - § 81382). Current law authorizes a community college governing board to lease buildings, groups, or space therein, together with any personal property, if its value is less than twenty-five thousand dollars ($25,000) per year (as certified by the governing board) for a period of five days, but no more than five years, without complying with any other provision of Article 4. Prior to executing the lease, the governing board is required to include a description of the proposed lease and an explanation of the methodology used to establish the lease rate and for determining the fair market value of the lease in an agenda of a public meeting of the board. Any revenue derived from the lease must be retained by the leasing community college AB 1748 Page 2 district to supplement, but not supplant, any state funding. (Education Code § 81378.1) ANALYSIS This bill: 1) Eliminates any statutory cap on the fair market value of any buildings, grounds or space not needed for school classroom buildings which current law authorizes a community college governing board to lease for between five days and up to five years. 2) Makes a technical change. STAFF COMMENTS Need for the bill . According to the author, the statute that implemented the $25,000 cap was implemented in 1993, is outdated, and needs to be modified to reflect the 2012 fair market rates for property. Additionally, a statutory cap does not allow for the range of differences in property values throughout the state. This bill would expand a community college district's existing authority to negotiate short term leases of facilities without requiring compliance with the more extensive conditions required for longer term leases or the sale of property. At a time of extensive cuts to higher education, this bill could facilitate the use of an alternative revenue source to meet the local community's educational needs. SUPPORT California Community College league Kern Community College District Los Angeles Community College District Los Rios Community College District Mt. San Jacinto Community College District Peralta Community College District San Diego Community College District San Jose-Evergreen Community College District West Kern Community College District OPPOSITION None received. AB 1748 Page 3