BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  April 29, 2015


           ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW


                                  Rudy Salas, Chair


          AB 581  
          (Gomez) - As Amended April 21, 2015


          SUBJECT:  State Facilities Renewal Bond Act of 2016


          SUMMARY:  Authorizes the issuance of $2 billion in general  
          obligation bonds for deferred maintenance projects on  
          state-owned buildings, if approved by the voters at the June 7,  
          2016, statewide primary election.   Specifically, this bill:  


          1)Authorizes the issuance of $2 billion in general obligation  
            bonds for the purpose of addressing deferred maintenance  
            projects on state-owned property.

          2)Creates the State Facilities Renewal Bond Fund (Fund) and  
            requires the proceeds of bonds issued and sold pursuant to  
            this bill to be deposited in the fund.

          3)Requires bonds deposited in the Fund to be appropriated  
            annually by the Legislature and appropriated to state agencies  
            as part of their respective budgets.

          4)Clarifies that monies appropriated to a state agency must  
            supplement, not supplant, the agency's existing deferred  
            maintenance spending and expresses legislative intent that the  
            projects funded by these bonds have a useful life of at least  
            20 years.  








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          5)Directs the Governor to propose appropriations from the Fund  
            as part of his or her January budget proposal.

          6)Requires the Department of Finance to report specified  
            information about bond funding allocations and criteria to the  
            fiscal committees of the Legislature within 10 days after the  
            release of the Governor's budget proposal.

          7)Directs an agency for which the Governor proposes an  
            appropriation from the Fund to report specified information  
            about its deferred maintenance to the fiscal committees of the  
            Legislature within 30 days after the release of the Governor's  
            budget proposal.

          8)Contains the usual fiscal and procedural provisions governing  
            the application of the state's bond laws and the sale of the  
            bonds.

          9)Defines various terms for purposes of this measure, including  
            that "state agency" means any state agency, department,  
            office, division, bureau, board, commission, district  
            agricultural association, the California State University, the  
            University of California, and the Judicial Council.

          10)Requires this measure to be submitted to the voters at the  
            June 7, 2016, statewide primary election.

          EXISTING LAW establishes the Building and Property Management  
          Branch within the Department of General Services (DGS) to  
          provide building management and administration, operations,  
          maintenance, janitorial, grounds keeping, and repair services  
          necessary to support the state's real estate assets.


          FISCAL EFFECT:  Unknown


          COMMENTS:  This bill would place a $2 billion general obligation  








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          bond measure on the June 2016 ballot to fund deferred  
          maintenance in state-owned facilities.  According to the author,  
          if approved by voters, the bond funds would enable the state to  
          make a significant dent in its deferred maintenance backlog.   
          The author notes that the Governor's 2015 Five-Year  
          Infrastructure Plan estimates the state's current backlog at  
          about $6.1 billion, not including the state highway system.  The  
          author states that addressing the most critical infrastructure  
          needs in state buildings, such as roof and boiler repairs or  
          water and sewer line replacements, will lead to long-term  
          savings by avoiding more expensive emergency repairs and  
          disruption to program delivery.



          The Governor's proposed 2015-16 Budget includes $125 million  
          from the General Fund for one-time deferred maintenance  
          infrastructure needs, including a one-time increase of $5  
          million towards addressing DGS' backlog of maintenance projects.  
           According to a March 2015 report by the Legislative Analyst's  
          Office (LAO) of deferred maintenance in state office buildings,  
          DGS has struggled to consistently maintain the 58 state office  
          buildings it owns and its current maintenance backlog totals  
          $138 million.  

          The LAO report notes that the proposed $5 million allocation to  
          DGS is a step in the right direction, given that deferred  
          maintenance from improperly maintained buildings can result in  
          significant repair costs in the future and a shorter useful life  
          of the buildings.  The LAO recommends that DGS develop a  
          long-term strategy for maintaining state facilities by  
          addressing a number of other factors that have contributed to  
          the accumulation of delayed projects, such as understaffing,  
          reduced maintenance funding, inadequate preventive maintenance,  
          and limited ability for DGS to contract for maintenance staff to  
          fill ongoing vacancies.      

          This bill envisions the bond funding to be used for projects  
          with a useful life of at least 20 years and requires the bond  








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          funds to be repaid within that time.  The allocation of bond  
          funds would occur as part of the annual budget process.  Any  
          state agency with state property would have to report to the  
          Legislature on its deferred maintenance funding priorities and  
          the extent to which its current maintenance budget is  
          inadequate.  The funds appropriated from the Legislature would  
          have to be used to supplement, not supplant, the agency's  
          existing deferred maintenance expenditures.
          REGISTERED SUPPORT / OPPOSITION:


          Support
          Associated General Contractors


          Construction Employers' Association


          University of California


          Western Fairs Association




          Opposition


          None on file


          Analysis Prepared by:Cassie Royce / A. & A.R. / (916) 319-3600














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