BILL ANALYSIS Ó SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Isadore Hall, III Chair 2015 - 2016 Regular Bill No: SB 273 Hearing Date: 5/12/2015 ----------------------------------------------------------------- |Author: |Hueso | |-----------+-----------------------------------------------------| |Version: |4/27/2015 | ----------------------------------------------------------------- ------------------------------------------------------------------ |Urgency: |Yes |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Arthur Terzakis | | | | ----------------------------------------------------------------- SUBJECT: State real property: surplus. DIGEST: This bill authorizes the Department of General Services (DGS) to dispose of two parcels deemed surplus - a Department of Conservation field office in Coalinga (Fresno County) and a Department of Forestry conservation camp in Whiskeytown (Shasta County). ANALYSIS: Existing law: 1)Authorizes DGS, subject to legislative approval, to sell, lease, exchange, or transfer various specified properties for current market value, or upon such other terms and conditions that DGS determines are in the best interests of the state. 2)Establishes criteria for state agencies to use in determining and reporting excess lands. A state agency must report land as surplus that is: a) Not currently utilized, or is underutilized, for any existing or ongoing programs; b) Land for which the agency cannot identify any specific utilization relative to future needs; and, c) Land not identified by the state agency within its SB 273 (Hueso) Page 2 of ? master plan for facility development. 3)Requires DGS to dispose of surplus state real property in a specified manner, and prescribes the priority of disposition of the property before DGS may offer it for sale to private entities or individuals. 4)Exempts the sale of surplus property sold "as is" from designated provisions of the California Environmental Quality Act (CEQA). However, the buyer or transferee of a parcel is subject to CEQA as well as any local governmental entitlement or land use approval requirements. 5)Authorizes DGS to sell surplus real property to a local agency or to a nonprofit affordable housing sponsor for affordable housing projects at a sales price less than fair market value if DGS determines that such a discount will enable the provision of housing for persons and families of low or moderate income. 6)Requires, unless otherwise specified by law, that the proceeds from the sale of surplus state property be used to pay the principal and interest on the Economic Recovery Bond Act of 2004. This bill: 1)Authorizes DGS to sell, exchange, sell combined with an exchange, or lease for fair market value, upon terms and conditions deemed to be in the best interests of the state the following real property: a) Parcel 1, consisting of 0.17 acres and improvements, known as the Department of Conservation field office located at 466 North Fifth Street, in Coalinga, Fresno County. b) Parcel 2, consisting of approximately 29.93 acres and improvements, known as the Department of Forestry Crystal Creek Conservation Camp located at 2242 Highway 299 West, in Whiskeytown, Shasta County. 2)Requires that, to the extent that bonds issued by the State Public Works Board involve the property to be sold pursuant to this bill, all issuer and trustee related costs associated SB 273 (Hueso) Page 3 of ? with the review of any proposed sale, together with the costs related to the defeasance or retirement of any bonds, which may include the cost of nationally recognized bond counsel, shall be paid from the proceeds of any sale or lease authorized by this bill's provisions. 3)Contains an urgency clause to take effect immediately. Background This is the annual DGS sponsored legislation for the disposal of surplus State real property. State law requires state agencies to identify real properties that are excess to their needs. Legislative authorization is needed to declare real properties as surplus and to authorize their disposal by DGS. All proceeds generated from the sale of surplus properties are deposited into the Deficit Recovery Bond Retirement Sinking Fund Subaccount to pay the principal and interest on bonds issued pursuant to the 2004 Economic Recovery Bond Act. Once the principal and interest on those bonds are fully paid, the proceeds from the sale of surplus state property are deposited into the Special Fund for Economic Uncertainties, or any successor fund. DGS' Real Estate Services Division (RESD) is responsible for the disposition of state surplus real property assets. RESD is also responsible for determining the present and future space needs of state agencies, administering the sales and leasing of state-owned surplus property, and leasing privately-owned space for state agencies. RESD also assists state landholding agencies in making real estate decisions regarding their properties. DGS reports that the Department of Conservation property in Coalinga was originally purchased in 1918 as a single story 1,670 square foot home on an approximately 0.17 acre lot. Today it is used as office space yet despite upgrades over the years it no longer meets program needs. DGS notes that the Department of Forestry conservation camp in Whiskeytown consists of approximately 29.93 acres which were SB 273 (Hueso) Page 4 of ? acquired in the 1950's. Numerous fire support structures were added to the property shortly after acquisition but the land and structures are currently undersized and no longer meet program needs. The Department of Forestry discontinued use of the site several years ago which eventually resulted in structural damage to the facilities due to a lack of security at the site. DGS claims that until disposed of, this particular property will continue to pose a liability to the state. Staff Comments. As this bill moves through the legislative process the author may wish to consider the following technical amendments: 1)Amendment #1: on page 2, line 13, strike "Highway 2999" and insert "Highway 299" 2)Amendment #2: on page 2, line 14, strike "Whiskytown" and insert "Whiskeytown" Prior/Related Legislation SB 536 (Roth, 2015) authorizes DGS, with the approval of the Adjutant General, to sell seven specified state armory properties that are no longer considered needed by the California Military Department. (Pending in Senate Appropriations Committee) AB 2174 (Committee on Accountability and Administrative Review, Chapter 337, Statutes of 2014) authorized DGS to dispose of certain state surplus property, subject to specified conditions. AB 826 (Jones-Sawyer, Chapter 505, Statutes of 2013) authorized DGS to dispose of 8 specified parcels of state property. SB 1580 (Committee on Governmental Organization, Chapter 798, Statutes of 2012) authorized DGS, with the approval of the Adjutant General, to sell four specified armories. The bill also required the proceeds from the sale of the armories to be deposited in the Armory Fund. Additionally, the bill required that DGS be reimbursed for any reasonable costs or expenses incurred in conducting a transaction involving those armories. Furthermore, the bill authorized DGS to sell 3 additional parcels of state property, as specified. AB 1272 (Butler, Chapter 178, Statutes of 2011) authorized DGS SB 273 (Hueso) Page 5 of ? to dispose of certain state office buildings located in Hollywood, Los Angeles, and Oroville. Other properties included the Hidden Lakes Estates Parcel near Millerton Lake Recreation Area, the Digger Butte Lookout near Red Bluff, and the Campbellville Lookout, located near Chico. SB 1167 (Cogdill, Chapter 327, Statutes of 2010) authorized DGS to dispose of all or any portion of two parcels of real property - the Veterinary Laboratory for the Department of Food and Agriculture located in Fresno and the Department of Motor Vehicles field office located in Roseville, Placer County. AB 2279 (Evans, Chapter 595, Statutes of 2010) authorized DGS to sell or exchange, at fair market value based upon an appraisal approved by DGS, all or part of a specified parcel of state property only to the County of Napa upon terms, conditions, reservations, and exceptions that DGS determines are in the best interest of the state, by January 1, 2015. SB 136 (Huff, Chapter 166, Statutes of 2009) authorized DGS to dispose of three specified parcels of real property pursuant to certain provisions. ABX2-8 (Nestande, Chapter 6, Statutes of 2009-10, Second Extraordinary Session) exempted the sale of surplus state real property made on an "as is" basis from designated provisions of CEQA. The bill also exempted from those provisions of CEQA the execution of the purchase and sale agreement or the exchange agreement for surplus state real property if the disposition is not made on an "as is" basis and the close of escrow is contingent on a specified requirement or compliance with CEQA. SCA 18 (Johnson, Chapter 103, Statutes of 2004) required, among other things, that the proceeds from the sale of surplus state real property be used to pay the principal and interest on the Economic Recovery Bond Act of 2004. The provisions relating to state property were adopted by the electorate in Proposition 60A of 2004. FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: No SUPPORT: SB 273 (Hueso) Page 6 of ? Department of General Services OPPOSITION: None received ARGUMENTS IN SUPPORT: According to DGS, the properties contained in this bill have been identified by state agencies as no longer serving a programmatic need. DGS points out that "while these properties remain under state ownership, they may have additional issues, such as non-compliance with the Americans with Disabilities Act, pose security concerns, or cost the state money to maintain and secure while vacant. In addition there could be significant costs associated with making these properties compliant with current building standards."