BILL ANALYSIS
AB 2680
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Date of Hearing: May 5, 2004
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Gloria Negrete McLeod, Chair
AB 2680 (Negrete McLeod) - As Amended: April 22, 2004
SUBJECT : State Teachers' Retirement System: headquarters
building.
SUMMARY : Authorizes the Teachers' Retirement Board to conduct
specified real estate activities. Specifically, this bill :
1)Authorizes the Teachers' Retirement Board to remodel, equip,
or construct an office building in the greater metropolitan
Sacramento area including the City of Sacramento, the County
of Sacramento, and the eastern part of Yolo County, for the
purposes of establishing a permanent headquarters facility for
the system.
2)Removes the State Teachers' Retirement System from the systems
for which the Public Employees' Retirement Board has the
authority to acquire property.
EXISTING LAW
1)Authorizes the Teachers' Retirement Board to remodel, equip,
or construct an office building in Sacramento County for a
permanent headquarters facility for the State Teachers'
Retirement System.
2)Authorizes the Board of Administration of the Public
Employees' Retirement System to acquire property for the use
of the State Teachers' Retirement System and other state
retirement systems.
FISCAL EFFECT : According to CalSTRS, the authorization provided
by this bill does not assume any costs for actual construction
because the Board has made no final decision regarding a site.
The bill is designed to provide an option to pursue geographical
areas other than Sacramento County.
COMMENTS :
Assembly Bill 2680 expands the geographic area in which the
California State Teachers' Retirement System (CalSTRS) may
AB 2680
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locate its headquarters facility within metropolitan Sacramento
to include eastern Yolo County, and eliminates an unused
provision in existing law that authorizes the Board of
Administration of the California Public Employees' Retirement
System (CalPERS) to lease, purchase, or construct offices for
CalSTRS' use.
Under the provisions of the Property Acquisition Law (Part 11 of
Division 3, Title 2 of the Government Code), the Director of the
DGS is generally authorized to hire, lease, lease-purchase, or
lease with the option to purchase any real or personal property
for the use of any state agency if the director deems the hiring
or leasing is in the state's best interest. Section 22375 of the
Education Code specifically exempts CalSTRS from these
provisions and allows the Teachers' Retirement Board to lease,
purchase or build an office building within Sacramento County to
serve as a headquarters facility for the System. In 1984, the
Board purchased the System's existing headquarters building in
East Sacramento, which has housed CalSTRS staff for the last
twenty years.
The CalSTRS headquarters facility has been held in the real
estate investment portfolio of the Teachers' Retirement Fund
(Fund) since its acquisition. At various times in the past,
CalSTRS has leased space in its East Sacramento headquarters to
both governmental and private entities to generate additional
revenue for the Fund. As with all CalSTRS investments in real
property in California, the Fund pays no property taxes that
would otherwise be imposed on private holdings, and instead, all
non-governmental tenants in these investment properties are
required to pay in-lieu taxes.
Arguments in Support
As a result of legislation enacted in recent years, CalSTRS has
expanded its programs and operations to a point where it is now
occupying parts of three buildings in East Sacramento.
Consequently, the Board directed CalSTRS staff to evaluate the
System's long-term facility needs that would allow the System to
consolidate its operations to provide for more efficient
administration of the System. After narrowing the number of
possible locations for a new headquarters facility, CalSTRS
staff is nearing a point in the planning process where a
recommendation will be made to the Board.
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While existing law allows the Board to lease, purchase or build
office space within Sacramento County to serve as a headquarters
facility for the System, there may be properties outside of
Sacramento County, but within metropolitan Sacramento, that best
meet the administrative needs of CalSTRS and the service needs
of its members, and also present attractive commercial
investment and/or development opportunities. Without legislative
authorization to consider locations in eastern Yolo County, the
Board may be unable to choose an alternative that would provide
the best combination of improvements to member service and
returns to the Fund.
The Legislature has previously recognized eastern Yolo County as
an appropriate location for state agency headquarters. For
example, the headquarters of the Department of General Services
is located in leased office space in an existing building along
the West Sacramento waterfront and the Highway Patrol houses its
training facility and administrative operations near the
northern edge of the city. In addition, Chapter 782, Statutes
of 1998 allows DGS to construct a state-owned office building in
West Sacramento for the Department of Corrections and other
specified state agencies.
AB 2680 also eliminates an unused provision in existing law that
allows the CalPERS Board of Administration to lease, purchase,
or build offices for CalSTRS' use. This provision, enacted in
1977, anticipated CalPERS would include CalSTRS in its new
headquarters building which became Lincoln Plaza in downtown
Sacramento, however, with the passage of Chapter 1429 and
CalSTRS' purchase of a headquarters building in 1984, the need
for this authorization has long passed. CalPERS staff has
indicated that they have no concerns with the proposal and that
the change is consistent with their efforts to eliminate
unnecessary provisions of the Government Code that apply to
their agency.
REGISTERED SUPPORT / OPPOSITION :
Support
State Teachers Retirement System (Sponsor)
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Opposition
None on file
Analysis Prepared by : Clem Meredith / P.E., R. & S.S. / (916)
319-3957