BILL ANALYSIS Ó SENATE COMMITTEE ON EDUCATION Carol Liu, Chair 2013-2014 Regular Session BILL NO: AB 1664 AUTHOR: Hagman AMENDED: April 22, 2014 FISCAL COMM: Yes HEARING DATE: June 18, 2014 URGENCY: No CONSULTANT:Kathleen Chavira SUBJECT : School facilities sale or lease of real property. SUMMARY This bill modifies the Naylor Act to authorize a school district to offer open-space property to a school district, county office of education or an agency that will use the property for child care and development services, prior to offering the property to a city, park or recreation district, regional park authority or a county, if the school district had purchased, constructed, modernized, or made improvements on the property using state bond funds, and makes other related and conforming changes. BACKGROUND Current law establishes the School Facility Program (SFP) under which the state provides general obligation bond funding for various school construction projects. Current law authorizes, until January 1, 2016, a school district to deposit the proceeds from the sale of surplus real property, together with any personal property located on the property, purchased entirely with local funds into the general fund of the school district and authorizes the school district to use the proceeds for any one-time general fund purpose. (EC § 17463.7) Current law authorizes the State Allocation Board (SAB) to establish a program that requires a school district, county office of education, or charter school that sells real property to return any state funds that were provided to purchase the property or on which improvements were constructed if the real property was purchased, or the improvements were constructed or modernized on the real AB 1664 Page 2 property within 10 years before the real property is sold, and if the proceeds from the sale of the real property are not sold to a charter school, school district, county office of education or an agency that will use the property exclusively for the delivery of child care and development services. (EC § 17462.3) Current law, commonly known as the "Naylor Act," requires a school district to offer any or all portion of property used for a school playground, playing field or other outdoor recreational purposes and open space, to the following entities in order of priority: 1) Until, July 1, 2016, a charter school. 2) Any city within which the land is located. 3) Any park or recreation district within which the land is located. 4) Any regional park authority having jurisdiction within the area in which the land is located. 5) Any county within which the land may be situated. Current law requires that the cost not exceed the cost of acquisition, adjusted by a cost of living factor, plus the cost of any improvements made to open-space portion of the property. Under these provisions, the entity that purchases or leases the property is required to maintain the property for playground, playing field, or other outdoor recreational and open-space uses. (EC § 17485 - § 17500) ANALYSIS This bill: 1) Modifies the Naylor Act to authorize a school district to offer open-space property to a school district, county office of education or an agency that will use the property for child care and development services, prior to offering the property to a city, park or recreation district, regional park authority or a county, if the school district had purchased, constructed, modernized, or made improvements on the property using state bond funds. AB 1664 Page 3 2) Continues to require, under the Naylor Act, that until July 1, 2016, a school district first offer a school site for sale or lease to a charter school that has submitted a written request to the district to be notified of surplus property offered for sale or lease, and that at the time of the offer has projections of at least 80 units of in-district average daily attendance for the following fiscal year. 3) Makes a clarifying and conforming cross reference to provisions regarding the return of state bond funds if a county office of education, school district, or charter school sells real property that was purchased, constructed upon or modernized using state bond funds within the prior 10 years. STAFF COMMENTS 1) Need for the bill . According to the author, this bill is intended to prevent school districts complying with the Naylor Act from having to return state bond funds pursuant to recently enacted legislation, AB 308 (Hagman, Chapter 496, Statutes of 2013). According to the author, a school district complying with the Naylor Act by selling open-space property to a city, county, or park authority would be required, under provisions established by AB 308, to return the amount received from state bond funds, if the property is sold within 10 years after receipt of state bond funds. This bill would make conforming changes to Naylor Act provisions within the Education Code to authorize a school district to sell the property to another local educational agency or a child care and development agency, prior to offering the property to the entities specified under the Naylor Act. With these changes, the property could remain with an educational institution and the school district would not be required to return state bond funds. 2) The Naylor Act . Current law, within the Government and Education Codes, establishes the Naylor Act for the purpose of preserving school playground, playing AB 1664 Page 4 field, or other outdoor recreational purposes and open space land by giving other public agencies the opportunity to purchase or lease such property. Within the Education Code, if a charter school has not accepted an offer to purchase or lease the schoolsite, the Naylor Act requires a school district, prior to selling or leasing such property, to offer to sell or lease the portion of the schoolsite used for school playground, playing field, or other outdoor recreational purposes to the following entities: 1) any city; 2) any park or recreation district; 3) any regional park authority; and 4) any county within which the land may be situated. (EC Section 17489). This bill would provide an exception to these requirements if the property in question would be subject to the return of state bonds funds under the provisions of AB 308 (Hagman, Statutes of 2013). 3) Is the bill necessary ? It has been argued and is plausible that current law offers a number of alternative lease or sale arrangements that can be entered into, allowing school districts to be in compliance with the provisions established by AB 308 (Hagman) without violating the provisions of the Naylor Act. However, the provisions of the bill would provide an additional incentive to ensure that the open space properties purchased with education bond funds would be maintained by educational entities, and further ensure that state education bond funds are used to meet school facility needs, rather than city or county facility needs which may be unrelated to an education purpose. 4) Other conforming and clarifying changes . Until July 1, 2016, current law requires that school districts first offer surplus property for sale or lease to a charter school with at least 80 units of average daily attendance. (EC § 17457.5). AB 308 (Hagman, Statutes of 2013) established provisions that required the return of state bond funds unless the real property in question was sold to a charter school, school district, county office of education, or an agency that would use the property for delivery of child care and development AB 1664 Page 5 services. The provisions of AB 308, as enacted, did not provide that current law, until July 2016, extends priority for any surplus property to a charter school. This bill clarifies that the provisions of AB 308, consistent with current law, require that a school district first offer surplus property for sale or lease to a qualifying charter school. SUPPORT Riverside County Superintendent of Schools Riverside County School District Superintendents California Charter Schools Association Advocates OPPOSITION Coalition for Adequate School Housing