BILL ANALYSIS Ó
Bill No: AB
1656
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Lou Correa, Chair
2013-2014 Regular Session
Staff Analysis
AB 1656 Author: Dickinson
As Amended: May 23, 2014
Hearing Date: June 24, 2014
Consultant: Paul Donahue
SUBJECT
State Board of Equalization - headquarters building
DESCRIPTION
Authorizes the Department of General Services (DGS), with
the consultation of the Board of Equalization (BOE), to
enter into agreements for the planning, design,
construction, and acquisition of facilities to relocate BOE
headquarters in the Sacramento region. Specifically, this
bill :
1)Authorizes BOE to relocate its offices from existing
state-owned or state-leased facilities to consolidate its
headquarters and annexes to a single location without any
obligation to pay rent on those facilities after leaving.
2)Requires DGS to solicit and accept proposals for
acquiring or constructing consolidated facilities for BOE
on the "best value" basis, as specified.<1>
3)Requires DGS to develop terms and conditions of the
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<1> A consolidated facility for the BOE would require about
one million gross square feet and cost in the range of $500
million, with occupancy in five to six years following
authorization. As this facility would likely be acquired
under a lease with a purchase option or a lease-purchase
agreement, payments would be made for 25-30 years through
augmentations to the BOE's operating budget.
AB 1656 (Dickinson) continued
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agreements or leases authorized by this bill by December
31, 2015.
4)Requires DGS to provide notice of 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 agreements.
5)Authorizes expenditures of up to $3 million from the BOE
building repair funds to develop acquisition-related
agreements.
EXISTING LAW
1)Authorizes DGS to acquire, construct, lease, or transfer
state property, as specified, and when specifically
authorized by the Legislature.
2)Authorizes DGS to hire, lease, lease-purchase, or lease
with an option to purchase any real or personal property
for the use of any state agency if DGS deems the hiring
or leasing is in the State's best interest, and DGS is
specifically authorized to do so by the Legislature.
3)Provides a mechanism by which DGS can dispose of surplus
property upon approval by the Legislature, under any
terms and conditions and subject to any reservations and
exceptions that DGS deems to be in the best interests of
the state, with right of first refusal going to local
agencies or nonprofit affordable housing sponsors prior
to it being offered for sale to private entities or
individuals.
4)Requires each state agency to annually review proprietary
state lands under its jurisdiction to determine what
lands are in excess of the agency's foreseeable needs and
to report their findings to DGS.
BACKGROUND
Purpose of the bill : According to the author and the BOE,
which is sponsoring this measure, the costs of staying in
the building justify relocation. Since moving to the 450 N
Street building in 1992, the State has spent approximately
AB 1656 (Dickinson) continued
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$59 million to make repairs to the building. Several years
of water intrusion caused mold growth which required
remediation repairs, including extensive repairs to the
exterior wall window system. In addition, several building
systems (e.g., elevator modernization) have required
extensive renovation and/or replacement because of the age
of the building.
The state could spend approximately $64 million more over
the next few years to address the most recent problems.
These include replacing 2070 spandrel glass panels on the
exterior of the building, replacing waste water pipes and
cleaning mold from the HVAC ducts, and performing various
other infrastructure repairs.
Background : In 1993, the Department of General Services
(DGS) entered into a lease-purchase agreement with CalPERS
for the BOE headquarters building located at 450 N Street
in Sacramento and immediately began experiencing water
intrusion problems caused by heavy rains.
Another major problem was the curtain wall window system
failure in 1998, in which windows leaked and fell to the
street below and onto the surface of the attached parking
garage (seven windows fell between 1999 and 2005).
Moreover, due to the water intrusion, in 2007 mold was
discovered on the top three floors, which were subsequently
vacated, thus requiring the relocation of over 200
employees to another building.
In 2006, the state exercised its option to purchase the
building. A loan of approximately $81 million was approved
from the Pooled Money Investment Account (PMIA) effective
in 2007.
On June 12, 2014, the Sacramento Bee reported that a faulty
fire system pump at the BOE's "beleaguered headquarters in
downtown Sacramento prompted the state fire marshal to put
the 24-story tower under fire watch." This means that until
the system is fixed, someone must continuously walk the
high-rise while on lookout for fire hazards.
PRIOR/RELATED LEGISLATION
AB 151 (Jones), 2009-2010 Session. Would have required DGS
to conduct a study as to whether it is in the best interest
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of the state to sell, lease, or exchange the BOE
headquarters. It authorized the sale, lease, or exchange
thereof, based upon the director's findings. It required
DGS to investigate new land and facilities for a BOE
headquarters using the net proceeds of the initial
agreement. Furthermore, the bill granted the BOE
independent real estate authority without DGS involvement.
(Vetoed)
ABX4 22 (Evans), Chapter 20, Statutes of 2009. Authorized
DGS to sell several state buildings, and lease back that
property for use by state departments, including the BOE
headquarters.
SUPPORT:
City of Sacramento
State Board of Equalization
OPPOSE:
None on file
FISCAL COMMITTEE: Senate Appropriations Committee
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