BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1266
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          Date of Hearing:   June 19, 2012

              ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER 
                                     PROTECTION
                                 Mary Hayashi, Chair
                    SB 1266 (Corbett) - As Amended:  May 25, 2012

           SENATE VOTE  :   31-8
           
          SUBJECT  :   Resource conservation lands: appraisal process.

           SUMMARY  :   Lowers the expenditure threshold amount from $25 
          million to $15 million before an independent appraisal is 
          required for state conservation land acquisitions, and specifies 
          appraisal reporting requirements.  Specifically,  this bill  :   

          1)Revises the definition of a major acquisition by lowering the 
            expenditure threshold amount from $25 million to $15 million 
            before an independent appraisal is required to determine fair 
            market value (FMV) for conservation lands to be acquired by 
            the Wildlife Conservation Board (WCB), Department of Parks & 
            Recreation (DPR), or a state conservancy.  

          2)Requires the acquisition agency or project partner to contract 
            for the independent appraisal. 

          3)Requires, for any proposed conservation land acquisition 
            exceeding $1 million by the WCB, DPR or a state conservancy, 
            that the acquisition agency or project partner contract for an 
            appraisal.  Permits the landowner or project partner to 
            contribute to the costs of the appraisal and be identified as 
            the intended user of the appraisal, and, until January 1, 
            2015, to be named as the co-client of the appraiser.

          4)Requires all appraisals to meet specified statutory 
            requirements and to conform to the Uniform Standards of 
            Professional Appraisal Practice.  

          5)Requires appraisal reports for conservation land acquisitions 
            to include specified information, including: 

             a)   Property photographs and maps, and market data; 

             b)   Data on development potential for any valuations; 









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             c)   A description of any development requirements; 

             d)   Evidence of market demand for development; and, 

             e)   Land title conditions and related appraisal reports. 

          6)Deletes obsolete provisions in existing law requiring the 
            Department of General Services (DGS) to convene a working 
            group to make recommendations on standards for the acquisition 
            of conservation lands.

          7)Defines "project partner" to mean a public agency or 
            non-profit organization that is seeking state funding for 
            itself or for another public agency or non-profit 
            organization, from an acquisition agency for the acquisition 
            of conservation lands.

           EXISTING LAW  : 

          1)Requires an independent appraisal, contracted for by the 
            acquisition agency, to determine the FMV in major acquisitions 
            of conservation lands.  Defines a major acquisition as an 
            acquisition that costs $25 million or more in state funds.

          2)Requires the acquisition agency, for major acquisitions, to 
            hire a qualified independent appraiser to both review the 
            independent appraisal and prepare an independent appraisal 
            review report that shall be made publicly available at least 
            30 days prior to a public hearing to authorize a major 
            acquisition of conservation lands.  Requires that the 
            appraisal and other relevant documentation be made publicly 
            available not more than 10 working days after the close of 
            escrow.

          3)Prohibits the purchase price for any real property acquired by 
            the WCB from exceeding the FMV of the property, as determined 
            by an appraisal prepared by a licensed real estate appraiser 
            and approved by the DGS.

          4)Requires the DGS to convene a working group to develop and 
            adopt standards for the acquisition of conservation lands.  

           FISCAL EFFECT  :   Unknown

           COMMENTS  :    








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          Purpose of this bill  .  According to the author's office, "This 
          bill establishes best practices for the state purchase of lands 
          for conservation purposes.  In doing so, this bill ensures that 
          potential purchases are thoroughly and uniformly reviewed and 
          the state gets the best value for its dollar."

           Background  .  From 2000 through 2009, the state spent $2.7 
          billion on acquisitions to purchase 1.5 million acres of 
          conservation land and easements.  These purchases help to meet 
          state goals for wildlife habitat conservation, public 
          recreation, and other ecosystem benefits.  Current state law 
          requires an appraisal that is reviewed and approved by DGS for 
          each acquisition to determine FMV.  Additional requirements for 
          independent appraisals and independent appraisal reviews apply 
          to major acquisitions that involve expenditure of over $25 
          million in state funds.  This bill would revise the definition 
          of major acquisitions by lowering the expenditure threshold 
          amount to instead apply to land expenditures of $15 million or 
          more.  This bill also provides best practices for the 
          preparation and review of appraisals for state purchases of 
          conservation lands.    

          This bill also requires that appraisals for all acquisitions 
          involving state expenditure of $1 million or more be contracted 
          for by the acquisition agency or the project partner.  According 
          to the Assembly Water, Parks and Wildlife Committee, the purpose 
          of this requirement is to remove landowners from commissioning 
          appraisals.   The DGS reports that the single factor most common 
          to rejected appraisals is that the appraisal was commissioned by 
          the landowner.  This bill would continue to allow landowners to 
          contribute toward the cost of the appraisal, but would require 
          that the appraisal be commissioned and contracted for by the 
          agency or a project partner other than the landowner.  This bill 
          would also allow landowners to continue to be a co-client of the 
          appraiser for a two-year period until 2015, so as to not disrupt 
          existing agreements that are already under consideration by 
          state acquisition agencies and for which the appraisal may 
          already have been completed.

          This bill also deletes obsolete provisions of existing law 
          requiring DGS to convene a working group to develop 
          recommendations on standards for the acquisition process 
          pursuant to SB 1285 (Corbett), Chapter 711, Statutes of 2008.  
          The DGS adopted those recommendations on appraisal report 








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          requirements for conservation lands acquired by WCB, DPR, or 
          state conservations through the regulatory process in February 
          2012, and this bill codifies those regulations.

          On May 31, 2012, WCB recently adopted a policy that exceeds this 
          bill's requirements by requiring independent appraisals, 
          appraisal reviews, and a 30-day public notice of those reviews 
          prior to the public meeting where the project will be 
          considered, for WCB acquisitions that either cost $5 million or 
          more, or are 5,000 acres or larger.  The WCB policy also 
          includes criteria for what must be included in an appraisal 
          review report and the WCB will report on this policy after one 
          year.  The WCB indicates that the purpose of the policy is to 
          provide additional disclosures and transparency with respect to 
          acquisitions, and to demonstrate that the WCB conducts business 
          in accordance with prescribed statutory requirements, 
          professional industry standards, and with fiscal responsibility 
          and accountability.

           Previous Legislation  .  SB 1285 (Corbett), Chapter 711, Statutes 
          of 2008, added DPR and state conservancies to the acquisition 
          agencies subject to the major acquisition requirements, and 
          required DGS to convene a working group to develop 
          recommendations on standards for the appraisal process.

           Support  .  According to the sponsor, the California Council of 
          Land Trusts, "SB 1266 ensures appraisals contain all the 
          necessary information for the state to conduct a comprehensive 
          review of the potential purchase and determine a strong, 
          competent and defensible value for the property.  In addition, 
          it makes other changes where there are opportunities to improve 
          the appraisal process.  By raising the standards and putting 
          them in law, SB 1266 protects taxpayers' money and makes sure 
          when the state undertakes conservation land purchases, the money 
          is well spent."

          According to the Nature Conservancy, "This legislation will 
          ensure that appraisals for acquisitions by the WCB, DPR, and the 
          state conservancies contain the necessary information to permit 
          these agencies to determine FMV and ensure the prudent 
          expenditure of public dollars.  SB 1266 seeks to raise the 
          standards for the appraisal of conservation lands, thereby 
          allowing for a comprehensive review of conservation real estate 
          acquisitions.  All parties benefit from strong, competent, and 
          defensible valuations of real property.  SB 1266 appropriately 








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          seeks to build public confidence in transactions designed to 
          advance conservation goals and provide a framework for fiscal 
          accountability.  In addition, the state will realize cost 
          savings in the acquisition of conservation lands by continuing 
          to allow 'project partners' to contract for appraisals."

           REGISTERED SUPPORT / OPPOSITION  :



           Support 
           
          California Council of Land Trusts (sponsor)
          Big Sur Land Trust 
          Bodega Land Trust 
          California Waterfowl Association 
          Land Trust of Santa Cruz County 
          Marin Agricultural Land Trust 
          McKingleyville Land Trust 
          Mendocino Land Trust 
          Ojai Valley Land Conservancy 
          Pacific Forest Trust 
          Peninsula Open Space Trust 
          Redwood Coast Land Conservancy 
          Rocky Mountain Elk Foundation 
          Save Mount Diablo 
          Save the Redwoods League 
          Sierra Foothill Conservancy 
          Solano Land Trust 
          The Conservation Fund 
          The Nature Conservancy
          Wildlife Heritage Foundation 
           
            Opposition 
           
          None on file.  

           Analysis Prepared by  :    Joanna Gin / B.,P. & C.P. / (916) 
          319-3301