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