BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1748| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1748 Author: Fong (D) Amended: As introduced Vote: 21 SENATE EDUCATION COMMITTEE : 8-0, 6/13/12 AYES: Lowenthal, Alquist, Hancock, Huff, Liu, Price, Simitian, Vargas NO VOTE RECORDED: Runner, Blakeslee, Vacancy ASSEMBLY FLOOR : 75-0, 4/12/12 - See last page for vote SUBJECT : California Community Colleges: fair market value of leases SOURCE : San Jose/Evergreen Community College DIGEST : This bill 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. ANALYSIS : 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 CONTINUED AB 1748 Page 2 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. 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. Comments 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, 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 this bill will provide districts greater ability to increase revenues through leasing unused buildings and space. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 6/12/12) San Jose/Evergreen Community College (source) California Community College League CONTINUED AB 1748 Page 3 Glendale Community College 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 West Kern Community College District ARGUMENTS IN SUPPORT : According to the author's office, 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. ASSEMBLY FLOOR : 75-0, 4/12/12 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Chesbro, Conway, Davis, Dickinson, Donnelly, Eng, Feuer, Fong, Fuentes, Furutani, Beth Gaines, Galgiani, Gatto, Gordon, Gorell, Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones, Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez, Portantino, Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao, Wagner, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Cedillo, Cook, Fletcher, Garrick, Wieckowski CONTINUED AB 1748 Page 4 PQ:nl 6/14/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED