BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                              Senator Isadore Hall, III
                                        Chair
                                2015 - 2016  Regular 

          Bill No:           AB 354           Hearing Date:     6/9/15
           ----------------------------------------------------------------- 
          |Author:    |Committee on Accountability and Administrative       |
          |           |Review                                               |
          |-----------+-----------------------------------------------------|
          |Version:   |2/17/2015   Introduced                               |
           ----------------------------------------------------------------- 
           ------------------------------------------------------------------ 
          |Urgency:   |No                     |Fiscal:      |Yes             |
           ------------------------------------------------------------------ 
           ----------------------------------------------------------------- 
          |Consultant:|Felipe Lopez                                         |
          |           |                                                     |
           ----------------------------------------------------------------- 
          

          SUBJECT: Director of General Services: state leases:  
          notification.


            DIGEST:    This bill requires the Director of the Department of  
          General Services (DGS) to notify the chairperson of the Assembly  
          Committee on Accountability and Administrative Review and the  
          Senate Committee on Governmental Organization of a pending  
          building lease when that lease is for a period of five years or  
          longer and an annual rental in excess of $10,000. 

          ANALYSIS:
          
          Existing law prohibits DGS from entering into a building lease  
          if the state's obligation as lessee is for the occupancy of a  
          state agency with a lease period of five years or longer and an  
          annual rental in excess of $10,000 unless, at least 30 days  
          prior to entering into the lease, the director notifies, in  
          writing, the chairperson of the committee in each house of the  
          Legislature that considers appropriations and the Chairperson of  
          the Joint Legislative Budget Committee, as specified.

          This bill requires DGS to notify the chairperson of the Assembly  
          Committee on Accountability and Administrative Review and the  
          Senate Committee on Governmental Organization of a pending  
          building lease when that lease is for a period of five years or  
          longer and an annual rental in excess of $10,000.








          AB 354 (Committee on Accountability and Administrative Review)    
                        Page 2 of ?
          
          
          Background

          Purpose of the bill.  This bill seeks to increase legislative  
          oversight by requiring DGS to also include the Assembly  
          Accountability and Administrative Review Committee and the  
          Senate Governmental Organization Committee in notifications of  
          building leases for state agencies. 

          Leasing Process:  Though the State of California owns various  
          buildings throughout the State, oftentimes, state agencies and  
          departments are in need of additional office space or land.   
          When that occurs, the state agency or department contacts DGS  
          requesting new and/or additional office space.  After the  
          request has been submitted, DGS will first determine if the  
          state owned space is available that satisfies the need of the  
          department. 

          If none exist DGS determines the necessary need for that  
          particular department and begins a search for suitable office  
          space in the marketplace.  This search usually results in three  
          viable choices at which point DGS will begin negotiations with  
          those three entities to try and get the best deal for the state.  
           More often than not, the state will enter into a four year  
          lease with the first four years of that being a hard lease,  
          meaning neither side can terminate the contract.  Most of the  
          time those leases are simply renewed. 

          For those instances where DGS is looking to enter into a lease  
          that is longer than five years, current law requires DGS to  
          notify, in writing, the chairs of the Senate and Assembly  
          Appropriations Committees as well as the Chair of the Joint  
          Legislative Budget Committee at least 30 days prior to executing  
          the lease.  This notification often times is simply a one page  
          summary explaining the need for the lease.  

          Prior/Related Legislation
          
          SB 528 (Pan, 2015) increases the maximum term for the DGS to  
          enter into lease agreements for the acquisition of property from  
          five to 11 years without requiring legislative oversight.   
          (Pending in Senate Governmental Organization Committee) 

          AB 1656 (Dickinson, Chapter 451, Statutes of 2014) required DGS  
          to conduct a long-range planning study of state-controlled and  








          AB 354 (Committee on Accountability and Administrative Review)    
                        Page 3 of ?
          
          
          state-owned office buildings in the Sacramento region.

          ABX4-22 (Evans, Chapter 20, Statutes of 2009-10 Fourth  
          Extraordinary Session) authorized DGS to sell several state  
          buildings, and lease back that property for use by state  
          departments, including the Board of Equalization headquarters.

          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             Yes          Local:          No


            SUPPORT:  

          None received

          OPPOSITION:

          None received