Amended in Senate August 22, 2014

Amended in Senate August 5, 2014

Amended in Assembly May 23, 2014

Amended in Assembly March 28, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1656

Introduced by Assembly Member Dickinson

February 11, 2014

An act to add Section 14669.16 to the Government Code, relating to the Department of General Services.

LEGISLATIVE COUNSEL’S DIGEST

AB 1656, as amended, Dickinson. Department of General Services: begin delete State Board of Equalization headquarters end delete begin insert State buildings end insert .

Existing law creates the Department of General Services to provide centralized services, including, but not limited to, planning, acquisition, construction, and maintenance of state buildings and property, purchasing, printing, architectural services, administrative hearings, and accounting services. Existing law provides that the department is under the control of an executive officer known as the Director of General Services.

This bill would begin delete authorize the department, in consultation with the State Board of Equalization (BOE), to enter into one or more agreements for the planning, design, construction, and acquisition of facilities, including any improvements, betterments, and related facilities, and to enter into one or more agreements to acquire, construct, purchase, lease-purchase, or may enter into a lease with an option to purchase, for the relocation and consolidation of the BOE according to specific conditions. The bill would require the department to determine whether it is in the best interest of the state to sell, lease to other tenants, or exchange the current BOE headquarters property and to notify the chairs of the fiscal committees of the Legislature and the Joint Legislative Budget Committee, or their designees, of the most cost-effective option. The bill also would authorize the State Public Works Board to issue revenue bonds, negotiable notes, or negotiable bond anticipation notes to finance the acquisition of land and facilities for the headquarters, and would permit the State Public Works Board and the department to borrow funds for project costs from the Pooled Money Investment Account, as specified. The bill would require the department to be reimbursed for the cost of entering into these agreements or leases in an amount not to exceed $3,000,000 from a loan of funds in the Architecture Revolving Fund, as specified. The bill also would authorize the BOE to relocate and consolidate its offices without obligation to pay rent on the existing state-owned or state-leased facilities after they are vacated. end delete begin insert end insert begin insert require, by July 1, 2015, the Department of General Services to complete a long-range planning study of the state-controlled and owned office buildings in the County of Sacramento and the City of West Sacramento, including the headquarters of the State Board of Equalization (BOE), for the management of the state’s space needs in the Sacramento region, as specified. The bill would require the Director of General Services to issue one or more requests for proposals for the planning, design, construction, and acquisition of facilities recomended by the Legislature based on the planning study. end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature hereby finds and declares all of
the following:

begin delete

(a) Located in the City of Sacramento, the state owns
approximately 2.50 acres of real property on one city block
bounded by N Street on the north, 5th Street on the east, O Street
on the south, and 4th Street on the west, that is the State Board of
Equalization’s current state-owned headquarters. The state-owned
facility is a 24-story building that contains approximately 616,000
gross square feet, with 463,000 usable square feet of office space.
The ground floor contains a full-service cafeteria and a child care
center. The state-owned facility also includes a three-story parking
structure with 711 spaces.

(b) The State Board of Equalization collects taxes and fees that
provide approximately 35 percent of the annual revenue for state
government and essential funding for cities, counties, and special
districts. In the 2012-13 fiscal year, the State Board of
Equalization-administered tax and fee programs produced $56
billion for education, public safety, transportation, housing, health
services, social services, and natural resource management.

(c) The current State Board of Equalization headquarters
building lacks sufficient space to meet the State Board of
Equalization’s existing and future consolidated space needs.

(d) The state has expended approximately $65 million in
taxpayer dollars over the last decade to make repairs to the State
Board of Equalization building. The State plans to spend another
$30 million or more to address new issues with the building.

(e) Consolidating the various State Board of Equalization
headquarters and annexes into one location will greatly facilitate
and improve the efficiency of the administrative operations of the
agency.

(f) Allowing the State Board of Equalization to move out of the
real property described in subdivision (b) permanently and to
consolidate its operations into one location will accommodate
future growth as part of its revenue-administrative mission.

end delete begin insert

(a) The Department of General Services operates and manages
34 state-controlled and owned office buildings totaling over
8,000,000 net square feet in the County of Sacramento and the
City of West Sacramento. At least 4,000,000 gross square feet
located in 21 buildings are over 40 years old, many of which have
antiquated systems and will eventually experience failure and for
which replacement parts will not exist in the future. The state has
been repairing and replacing critical building systems when
necessary, but for some of the older buildings, this approach to
handling building deficiencies is no longer sufficient.

end insert begin insert

(b) Therefore, it is the intent of the Legislature that the
Department of General Services perform a study developing a
long-range plan for the Sacramento region. The 2014 Budget Act
appropriated funding in the amount of $2.5 million to the
Department of General Services for this purpose. This study will
determine the best course of action to address the state’s
infrastructure deficiencies and space needs within the region, while
focusing on long-term asset management. In addition to developing
a long-range plan for the Sacramento Region, the study will also
serve as the framework to develop the recommendations and
detailed cost and scope information necessary for future budget
proposals.

end insert

SEC. 2.  

Section 14669.16 is added to the Government Code,
to read:

begin delete

14669.16.  

(a) For purposes of this section, the “Sacramento
property” means the 2.50 acres of real property, owned by the state
and located in the City of Sacramento, on one city block bounded
by N Street on the north, 5th Street on the east, O Street on the
south, and 4th Street on the west, that is the State Board of
Equalization’s current state-owned headquarters.

(b) (1) Notwithstanding any other law, the Department of
General Services, in consultation with the State Board of
Equalization, may enter into one or more agreements for the
planning, design, construction, and acquisition of facilities,
including any improvements, betterments, and related facilities,
for the relocation of the State Board of Equalization in the
Sacramento region. The Department of General Services may enter
into one or more agreements to acquire, construct, purchase,
lease-purchase, or may enter into a lease with an option to purchase,
to provide usable office and related space in the Sacramento region
in order to consolidate various departments of the State Board of
Equalization into a single location.

end delete

begin insert

begin insert 14669.16. end insert   

end insert begin insert

(a) The Department of General Services shall, by
July 1, 2015, complete a long-range planning study of the
state-controlled and owned office buildings in the County of
Sacramento and the City of West Sacramento, including the Board
of Equalization’s headquarters, for the management of the state’s
space needs in the Sacramento region.

end insert begin insert

(b) The planning study shall contain, but is not limited to, the
following:

end insert begin insert

(1) Evaluation of the overall state facility needs in the
Sacramento region, including the capacity of currently owned and
leased space.

end insert begin insert

(2) Evaluation of each building including, but not limited to,
condition, age, building use, and the extent that it meets the
business needs and location of the state entity occupying the space.

end insert begin insert

(3) The impact the building’s age and design has on potential
reconfiguration and consolidation for state needs.

end insert begin insert

(4) The viability of antiquated building infrastructure systems,
including the present and probable future availability of
replacement parts for the systems in the buildings.

end insert begin insert

(5) Evaluation of office buildings in need of major repairs or
renovations to correct deficiencies, including estimated costs for
fire and life safety, accessibility, seismic safety, and other building
code compliance issues, and known existence of encapsulated
hazardous materials and lead-based paint.

end insert begin insert

(6) Other considerations deemed appropriate by the Department
of General Services, in consultation with the state entity occupying
the building, may be included.

end insert begin insert

(7) The development of a logical sequencing plan for renovation,
replacement, or both, of existing state office buildings and new
office development in the Sacramento region to guide the state
over the next 25 years.

end insert begin insert

(c) The findings in this long-range planning study shall be used
as the basis for recommendations and developing detailed cost
and scope information to be considered in future budget proposals.

end insert begin insert

(d) Beginning with the three buildings with the most significant
and immediate renovation or replacement needs, including highest
cost of total maintenance and repair to usable space, and other
related costs identified in the long-range planning study, the
Director of General Services shall issue one or more requests for
proposals for the planning, design, construction, and acquisition
of facilities that have been recommended by the Legislature based
on the planning study completed under this section. The Director
of General Services shall issue the requests for proposals within
12 months of the Legislature making the recommendation described
in this subdivision.

end insert begin delete

(2)  The Department of General Services shall solicit and accept
proposals for acquiring or constructing consolidated facilities for
the State Board of Equalization on the basis of the best value. For
purposes of this paragraph, “best value” means a value determined
by objective criteria, including, but not limited to, price, features,
functions, life-cycle costs, experience, and other criteria deemed
appropriate by the department.

(3) The Department of General Services shall develop the terms
and conditions of the agreements or leases authorized by paragraph
(1) no later than December 31, 2015.

(4) The acquisition of a new facility and sale of the existing
facility may be handled separately or combined into one proposal.
The Department of General Services may solicit and accept
proposals and may enter into one or more agreements for the sale,
exchange, lease, rehabilitation, or any combination thereof, of all
or a portion of the Sacramento property for the purpose of
providing office space to one or more entities.

(c) The Department of General Services shall provide notice of
the terms and conditions of the proposed agreements or leases to
the chairs of the fiscal committees of the Legislature and the Joint
Legislative Budget Committee, or their designees, at least 45 days
prior to executing the agreement for a lease-purchase or lease with
an option to purchase real property authorized by this section. The
department may proceed with the agreement or lease 45 days
following the date the department gave notice to the
above-mentioned chairs.

(d) The department shall determine whether it is in the best
interest of the state to sell, to lease to other tenants, or to exchange
the Sacramento property. The department shall notify the chairs
of the fiscal committees of the Legislature and the Joint Legislative
Budget Committee, or their designees, of the most cost-effective
option for the state.

(e) (1) Upon the Department of General Services making the
determination specified in subdivision (d) that the Sacramento
property should be either sold or leased to another tenant, the
department may sell, exchange, lease, or any combination thereof,
all or a portion of the Sacramento property. Upon sale, exchange,
or lease of the Sacramento property, and subject to the requirements
of Section 9 of Article III of the California Constitution, the
Department of General Services shall make an early payoff of the
total outstanding lease revenue bonds on the Sacramento property,
including accrued interest and any other obligations associated
with the Sacramento property, using the revenues resulting from
any sale, exchange, or lease.

(2) (A) If the Department of General Services sells the
Sacramento property and the sale constitutes a sale of surplus state
property for purposes of Section 9 of Article III of the California
Constitution, the “proceeds from the sale” for purposes of that
section shall be the revenues from the sale in excess of the amount
necessary to satisfy the total outstanding bonds on the Sacramento
property, as required by paragraph (1).

(B) In order to facilitate the sale of the Sacramento property,
the Department of General Services and the State Public Works
Board may borrow from the General Fund an amount necessary
to satisfy the total outstanding bonds. Any amounts loaned pursuant
to this subparagraph shall be repaid from the proceeds of the sale
of the Sacramento property.

(f) (1) The State Public Works Board may issue revenue bonds,
negotiable notes, or negotiable bond anticipation notes pursuant
to Chapter 5 (commencing with Section 15830) of Part 10b of
Division 3 of Title 2 to finance the acquisition of land and facilities
authorized in subdivision (b). The State Public Works Board and
the Department of General Services may borrow funds for project
costs from the Pooled Money Investment Account pursuant to
Sections 16312 and 16313. If the bonds authorized by the project
are not sold, the Department of General Services shall commit a
sufficient amount of its support appropriation to repay any loans
made for the project from the Pooled Money Investment Account.
It is the intent of the Legislature that this commitment be included
in future budget acts until outstanding loans from the Pooled
Money Investment Account are repaid either through the proceeds
from the sale of bonds or from an appropriation.

(2) The amount of revenue bonds, negotiable notes, or negotiable
bond anticipation notes to be sold may equal, but shall not exceed
the cost of acquisition, including land, construction, preliminary
plans and working drawings, construction management and
supervision, other costs relating to the design and construction of
the facilities, and any additional sums to pay interim and permanent
financing costs and costs to issue these bonds. The additional
amount may include interest and a reasonable required reserve
fund.

(3) Notwithstanding Section 13332.11, the State Public Works
Board may authorize the augmentation of the amount authorized
pursuant to this subdivision by up to, but not exceeding, 10 percent
of the amount specifically authorized.

(g) The Department of General Services shall be reimbursed
for the department’s costs pursuant to subdivision (b), in an amount
not to exceed three million dollars ($3,000,000), from a loan of
funds that are continuously appropriated pursuant to Section 14957
and deposited into the Architecture Revolving Fund for repairs to
the State Board of Equalization’s headquarters building located at
450 N Street in the City of Sacramento. Any amounts loaned
pursuant to this subdivision shall be repaid from the State Board
of Equalization’s operating funds within five years from the date
those funds were borrowed. Interest charges shall be waived
pursuant to subdivision (e) of Section 16314.

(h) Notwithstanding subdivision (c) of Section 14682, the State
Board of Equalization is authorized to relocate its offices from
existing state-owned or state-leased facilities for the purpose of
consolidating the State Board of Equalization headquarters and
annexes into a single location without any obligation to pay rent
on those facilities after vacating such premises.

end delete

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CORRECTIONS:

Digest--Pages 1 and 2.

Text--Pages 3 and 4.

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