BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 1119 (Wolk) - Surplus state property: Napa County Regional Park and Open Space District ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: March 28, 2016 |Policy Vote: G.O. 9 - 3 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: April 25, 2016 |Consultant: Mark McKenzie | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 1119 would authorize the Director of General Services (DGS) to sell or exchange all or part of a specified parcel of state property only to the Napa County Regional Park and Open Space District for park or wilderness preserve purposes by January 1, 2021, at fair market value and upon conditions DGS deems to be in the state's best interests. Fiscal Impact: One-time General Fund revenue gains, likely in the millions, related to the sale of Napa State Hospital property at fair market value. (Special Fund for Economic Uncertainties) SB 1119 (Wolk) Page 1 of ? DGS administrative costs, potentially over $100,000, related to the sale of the property. All DGS costs would be recovered from the proceeds of the property sale. Potential foregone revenues, to the extent the bill limits the sale to one entity for park or wilderness purposes, thereby potentially depressing the appraised fair market value. (see staff comments) Potential future costs to purchase additional property to accommodate the expansion needs of the Napa State Hospital, which will not be known until after the completion of the Department of State Hospitals facilities master planning process. (see staff comments) Background: Each year, state departments review their property inventory to identify for the DGS those holdings that can be declared surplus. Before the DGS can transfer these properties, however, the Legislature must provide specific authorization. Existing law requires that property declared surplus by the state first be offered for local governments or nonprofit housing sponsors intending to use the property for low and moderate income housing, second priority for local governments that will use the property for parks or open space, third priority for use as local government-owned facilities, followed in priority by private entities and individuals. When surplus land is to be for park and recreation purposes and operated for those purposes by local agencies at no expense to the state, the director may transfer the land to local governmental agencies at less than the fair market value of the land, if the transfer is in the public interest, and specified conditions are met. The property referenced in this bill, known as the Skyline Wilderness Park, is an 850-acre parcel of state land located on the grounds of the Napa State Hospital on the eastern boundary of the City of Napa. Most of the property is wilderness, and it includes 12 miles of hiking, equestrian, and bicycling trails, a native plant garden, a horse arena, and an archery range. In 1979, the property was declared surplus. The state has leased the property to the County of Napa since 1980 for $100 per year, and the lease expires in 2030. Proposed Law: SB 1119 (Wolk) Page 2 of ? SB 1119 would authorize DGS to sell or exchange, at fair market value, all or part of a specified parcel of state property to the Napa County Regional Park and Open Space District (District), upon the terms and conditions DGS determines are in the best interest of the state, by January 1, 2021. This bill would require any agreement for the sale or exchange of the property to include a provision that requires the District to retain title to the property for use as a park or wilderness preserve, or in the event of a future sale of that property, require the District to record an easement that limits future uses of the property to a park or wilderness preserve. This bill would require that any agreement for the sale or exchange of the property preserve Napa State Hospital's ownership and use of a specified area known as Camp Coombs. This bill would require DGS to be reimbursed for costs incurred in the disposition of the property from proceeds of the sale, and require the remaining net proceeds from the sale to be paid into the Special Fund for Economic Uncertainties, a continuously appropriated fund, thereby making an appropriation. SB 1119 would permit the District to enter into an agreement with a nonprofit land trust or nonprofit conservation entity for the purpose of sharing the cost associated with the sale or exchange authorized by this bill, as specified. Related Legislation: AB 2279 (Evans), Chap. 595/2010, authorized DGS to sell or exchange this parcel to Napa County under similar conditions until January 1, 2015. Staff Comments: Absent the bill, the state would continue to receive $100 in annual lease revenues until 2030, at which time the property could be declared surplus, upon legislative authorization. This bill seeks a direct sale option to the District, rather than potentially declaring the property surplus and disposing of the property in the future. As noted above, surplus property must first be offered to local agencies or nonprofits that would use the property for low/moderate income SB 1119 (Wolk) Page 3 of ? housing purposes, prior to making it available to other local agencies for park and recreation purposes (potentially at less than fair market value). This bill would require that the state realize the fair market value of the Napa State Hospital property, but eliminate the option to sell it to other entities. Limiting the sale to a specific entity for the singular purpose of parks and wilderness may have an impact on the fair market valuation, but it is not clear that there would be a strong interest in most of the property for other purposes. To the extent the restrictions in the bill impact fair market value, and to the extent the property could be offered to other interested parties for other purposes, this bill could result in foregone revenues, the magnitude of which is unknown. Staff notes that under the previous authorization to sell the property to Napa County, the county and DGS could not agree on the fair market value. The Department of State Hospitals is currently developing a system-wide facilities master plan, assessing the condition of all state hospital facilities and capital improvement needs. This process is not likely to be completed for several years, so any potential property needs to accommodate expansion or reconstruction of Napa State Hospital facilities may not be clear until well after the enactment of the bill. The bill does provide the director of DGS with the authority to specify terms and conditions of the sale and to subject the sale to "reservations and exceptions" that are in the best interests of the state. However, the Committee may wish to consider whether to authorize DGS to sell the property until the State Hospital's facilities master planning process is complete. To the extent the property is sold to the District prior to knowing the full needs of the Department of State Hospitals, and there is insufficient property to accommodate future expansion or reconstruction of the Napa State Hospital, this bill may ultimately result in future state expenditures for property acquisition. -- END --