BILL ANALYSIS                                                                                                                                                                                                    





          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
          
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          |Version: March 28, 2016         |Policy Vote: G.O. 9 - 3         |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: April 25, 2016    |Consultant: Mark McKenzie       |
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          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)








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           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:  







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            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  







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          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.


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