BILL ANALYSIS Ó
AB 2726
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Date of Hearing: April 9, 2014
ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW
Jim Frazier, Chair
AB 2726 (Daly) - As Amended: March 28, 2014
SUBJECT : University of California: real property sales
SUMMARY : Revises existing law governing how the University of
California (UC) sells real property. Specifically, this bill :
1)Increases the estimated value of real property, from $500,000
to $1 million, that UC is required to sell through competitive
bidding.
2)Requires UC to publicly accept the bid which offers the best
combination of price, terms and bidder's qualifications or
reject all bids or proposals.
3)Specifies that the bidder's qualifications may include factors
other than price and terms, such as the bidder's ability to
complete the transaction or secure development entitlements.
4)Gives UC the discretion, in the event a successful bidder
fails to perform, to accept from the remaining bids or
proposals the one that is most advantageous to UC, rather than
start the bid process over.
5)Adds properties acquired through foreclosure, deed in lieu of
foreclosure, and transactions involving property accepted in
settlement of a defaulted mortgage or other legal settlement,
to the list of transactions currently exempt from competitive
bidding.
EXISTING LAW generally requires UC, in Public Contract Code
Section 10511, to sell real property valued at more than
$500,000 through competitive bidding and provides a list of
categorical exemptions. In addition, UC is required to provide
public notice of the sale, as specified, and to accept in public
the bid which offers the combination of price and terms deemed
to be in the best interest of UC or reject all bids.
FISCAL EFFECT : Unknown
COMMENTS : UC is sponsoring this bill to reduce administrative
AB 2726
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costs associated with the sale or other disposition of UC-owned
property. UC states that the flexibility provided in this bill
will allow UC to seek the highest and best use of properties,
many of which are single family homes that have been donated to
UC, within its real estate portfolio.
Current law requires UC to dispose of any real property worth
more than $500,000 through a competitive sealed bid process.
This bill raises that threshold to $1 million. According to UC,
this change would facilitate sales of smaller value properties
to a broader range of buyers represented by the traditional real
estate brokerage community. UC notes that brokers representing
these properties have estimated that as many as half of
potential buyers do not follow through with the transaction
because they have to obtain a binding financing commitment and
complete other due diligence at their own expense prior to
submitting their bid. This change would allow these properties
to be sold through more efficient and conventional means.
This bill also enables UC to consider a bidder's qualifications
in addition to price and monetary terms when selling real
property. Currently, UC is required to accept the highest price
that is offered. This bill allows UC to consider other relevant
factors, such as a potential buyer's financial capacity, ability
to secure local zoning changes and other development
entitlements, and ability to complete any needed rehabilitation
of the property being offered for sale.
Lastly, UC adds that exempting real property that has been
acquired through foreclosure or due to a mortgage default or as
settlement of litigation from the competitive bidding process
will expedite the disposal of such properties and allow the
proceeds from such sales to benefit UC programs in a timely
manner.
PRIOR LEGISLATION : AB 738 (Papan), Chapter 576, Statutes of
1997, establishes the $500,000 limit on the estimated value of
real properties owned by UC that must be competitively bid.
REGISTERED SUPPORT / OPPOSITION :
Support
University of California (sponsor)
AB 2726
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Opposition
None on file.
Analysis Prepared by : Cassie Royce / A. & A.R. / (916)
319-3600