BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1900| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1900 Author: Jones-Sawyer (D) and O'Donnell (D) Amended: 8/19/16 in Senate Vote: 27 - Urgency SENATE JUDICIARY COMMITTEE: 7-0, 6/21/16 AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning, Wieckowski SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/11/16 AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen ASSEMBLY FLOOR: 79-0, 4/21/16 (Consent) - See last page for vote SUBJECT: San Pedro superior courthouse SOURCE: Judicial Council of California DIGEST: This bill authorizes the Judicial Council to sell the San Pedro superior courthouse, which has not been in use for three years, as specified. This bill also requires that the County of Los Angles receive the opportunity to purchase the property at fair market value before the property is offered to others for purchase. This bill requires the net proceeds from the sale to be deposited into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund (ICNA). Senate Floor Amendments of 8/19/16 ensure that the proceeds from the sale are transferred to the Judicial Council's ICNA fund and remove the appropriation from the same account. These amendments also clarify that the disposition of the property AB 1900 Page 2 authorized in this bill does not constitute a sale or other disposition of surplus state property within the meaning of the California Constitution and shall not be subject to specified law. ANALYSIS: Existing law: 1)Establishes the ICNA fund and limits how ICNA funds may be spent. 2)Permits ICNA funds to only be used for the following purposes: planning, design, construction, rehabilitation, renovation, replacement, or acquisition of court facilities; repayment for moneys appropriated for lease of court facilities pursuant to the issuance of lease-revenue bonds; payment for lease or rental of court facilities or payment of service contracts, including those made for facilities in which one or more private sector participants undertake some of the risks associated with the financing, design, construction, or operation of the facility; or trial court operations. 1)Provides that notwithstanding any law, the Controller may use ICNA funds for cash flow loans to the General Fund as specified. 2)Establishes the Special Fund for Economic Uncertainties (SFEU). 3)Requires that proceeds from the sale of surplus state property be deposited into the SFEU after paying the principal and interest on the 2004 Economic Recovery Bond Act. AB 1900 Page 3 4)Provides that upon legislative authorization, the Department of General Services (DGS) may sell or dispose of excess property, as specified. 5)Directs each state agency to annually review lands under their jurisdiction to determine what lands are in excess of their foreseeable needs and to report on their findings to the DGS. 6)Provides that the Judicial Council has authority with regard to court facilities, including, to: exercise full responsibility, jurisdiction, control and authority as an owner would have over trial court facilities, the title of which is held by the state, including, but not limited to, the acquisition and development of facilities; exercise the full range of policymaking authority over trial court facilities, including, but not limited to, the acquisition and development of facilities, planning, construction, and operation of court facilities, to the extent not expressly otherwise limited by law; and dispose of surplus court facilities following the transfer of responsibility for court facility from the county to the Judicial Council, as specified, including consulting with the county concerning the disposition of the facility and offering the surplus facility to the county at fair market value prior to offering it to other state agencies or local government agencies, when the transferring county requests it. This bill: 1)Provides that notwithstanding any other law, the Judicial Council may sell the San Pedro Courthouse located at 505 South Centre Street with Assessor Parcel Number 7455-0130901. 2)Provides that the sale of the San Pedro Courthouse must be at fair market value and upon the terms and conditions and subject to the reservations the Judicial Council deems in the best interests of the state if the following requirements are met: AB 1900 Page 4 the sale complies with Section 70391 of the Government Code, as applicable; the Judicial Council consults with the County of Los Angeles concerning the sale of the courthouse; and the Judicial Council offers the County of Los Angeles the right to purchase the courthouse at fair market value before otherwise offering the property for sale. 1)Provides that notwithstanding any other law, the net proceeds from the sale of the courthouse shall be deposited into the ICNA. 2)Provides that the disposition of the property does not constitute a sale or other disposition of surplus state property within the meaning of Section 9 of Article III of the California Constitution and shall not be subject to subdivision (g) of Section 11011 of the Government Code. 3)Makes related legislative findings and contains an urgency clause. Background There have been 53 courthouse closures and 215 courtroom closures throughout California since 2008. Los Angeles County alone has suffered 78 courtroom and 8 courthouse closures since 2008. The San Pedro Courthouse was closed by the Superior Court of Los Angeles in June 2013 due to budget cuts and remains closed to this day. Nonetheless, the Judicial Council continues to fund the maintenance of the San Pedro Courthouse, including payment for utilities, landscaping, and vandalism prevention. The Judicial Council recently declared the San Pedro Courthouse as surplus property pursuant to their requirement under Government Code Section 11011 to identify real properties that are no longer needed. The Judicial Council, sponsor of this bill, seeks legislative authorization to sell the San Pedro Courthouse and legislative direction to use the proceeds to pay for planning, design, construction, rehabilitation, renovation, replacement, or acquisition of court facilities. Under current AB 1900 Page 5 law, proceeds from the sale of the San Pedro Courthouse, or any courthouse, would be directed into the SFEU. Additionally, under current law, the Judicial Council is required to consult with the County in which the surplus property is located and if the County expresses an interest in purchasing the property, the Judicial Council is also obligated to offer the surplus property to the County at fair market value prior to offering the property to another state agency or local government agency. (Gov. Code Sec. 70391(c)(2).) In a letter dated March 30, 2015, the County of Los Angeles confirmed it wants to purchase the San Pedro Courthouse after it is declared surplus. This bill authorizes the Judicial Council to sell the San Pedro Courthouse and provides that the net proceeds be deposited into the ICNA fund. This bill requires the Judicial Council to give the County of Los Angeles the right to purchase the San Pedro Courthouse for fair market value before otherwise offering the property for sale. Comments The author writes: The bill would declare the existing San Pedro Courthouse surplus property and allow for its disposal by the Judicial Council. The state of California, acting by and through the Judicial Council, holds title to the San Pedro Courthouse. The Courthouse is a shared-use facility, with the Judicial Council holding a 95.15 percent equity interest and the County of Los Angeles holding the remaining 4.85 percent. The Superior Court of California, County of Los Angeles closed the Courthouse on June 30, 2013, and has since advised Judicial Council staff that the court does not have a current or any future need for the Courthouse. According to a report by the Judicial Council, the County of Los Angeles has expressed its desire to purchase the Courthouse at its fair market value as soon as possible and the court supports the sale to the County. AB 1900 Page 6 After the Judicial Council declared and proposed legislation required to dispose of the Courthouse as surplus property, the Legislature requested an alternative proposal framed in a manner authorizing the sale not as surplus property so as to allow the Judicial Council to retain the proceeds from its sale. Under the California Constitution, the proceeds from the sale of the San Pedro Courthouse (surplus property) must be directed into the SFEU. Without legislation, the proceeds would remain in the SFEU and not be redirected to the Judicial Council for court facilities. The Legislature may appropriate funds in the SFEU for any purpose by majority vote. This bill requires the net proceeds from the sale of the San Pedro Courthouse to be directed into the ICNA fund. The author notes that the Legislature has approved several bills that disposed of surplus property in the same manner (AB 826, Jones-Sawyer, Chapter 505, Statutes of 2013 and SB 798, Committee on Governmental Organization, Chapter 798, Statutes of 2012). Existing law delineates what ICNA funds may be spent on. ICNA funds may be spent on planning, design, construction, rehabilitation, renovation, replacement, or acquisition of court facilities. However, ICNA funds can be spent in other ways including on trial court operations. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriation Committee: Sale proceeds: Redirection of one-time revenue potentially in excess of several million dollars from the SFEU to the ICNA fund. Under existing law, the proceeds from the sale of surplus state property are to be deposited into the SFEU (now that the principal and interest on the 2004 Economic Recovery Bonds have been fully paid). The 2016 Budget Act reflects a 2016-17 ending balance of $1.75 billion in the SFEU. Absent the declaration of the courthouse as "surplus property," the net proceeds of the sale would potentially be subject to reversion to the General Fund and the State Court Facilities AB 1900 Page 7 Construction Fund pursuant to Government Code § 70391(c)(1). Appropriation to Judicial Council: One-time appropriation potentially in excess of several million dollars to the Judicial Council from the ICNA. Annual revenues to the ICNA have been declining, and the 2016 Budget Act reflects a 2016-17 ending balance of $87.8 million in the ICNA. Operations/maintenance: Future cost savings (General Fund-Trial Court Trust Fund) to the Judicial Council in avoided maintenance and operations costs. Despite the closure of the courthouse at the end of June 2013, the Judicial Council continues to share responsibility with the county for maintenance and operations costs pursuant to Government Code § 70343(a)(2). SUPPORT: (Verified8/21/16) Judicial Council of California (source) County of Los Angeles OPPOSITION: (Verified8/21/16) None received ASSEMBLY FLOOR: 79-0, 4/21/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, AB 1900 Page 8 Waldron, Weber, Wilk, Williams, Wood, Rendon NO VOTE RECORDED: Ridley-Thomas Prepared by:Margie Estrada / JUD. / (916) 651-4113 8/22/16 20:37:42 **** END ****