BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 2680
Nell Soto, Chair Hearing date: June 14, 2004
AB 2680 (Negrete McLeod) as amended April 22, 2004
FISCAL: NO
STRS: HEADQUARTERS BUILDING LOCATION
HISTORY :
Sponsor: California State Teachers Retirement System
(STRS)
Prior legislation: See below
ASSEMBLY VOTES :
PER & SS 8-0 5/05/04
Assembly Floor 77-1 5/20/04
SUMMARY :
Would authorize STRS Board (Teachers' Retirement Board) to
conduct real estate activities relating to the location of
their headquarters building.
ANALYSIS :
1) Existing STRS law :
a) authorizes the Teachers' Retirement Board to remodel,
equip, or construct a headquarter building in Sacramento
County for the State Teachers' Retirement System, and
b) authorizes the Board of Administration of the Public
Employees' Retirement System (PERS Board) to acquire
property for the use of STRS and other state retirement
systems.
2) This bill :
a) authorizes the Teachers' Retirement Board to remodel,
equip, or construct an office building in the greater
metropolitan Sacramento area including the City of
David Felderstein
Date: June 3, 2004 Page 1
Sacramento, the County of Sacramento, and the eastern part
of Yolo County, for the purposes of establishing a
headquarters for the system, and
b) removes STRS from the systems for which the PERS Board
has the authority to acquire property.
David Felderstein
Date: June 3, 2004 Page 2
FISCAL EFFECT :
None
COMMENTS :
1) Background
This bill expands the geographic area in which STRS may
locate its headquarters within metropolitan Sacramento to
include eastern Yolo County, and eliminates an unused
provision in existing law that authorizes the PERS Board to
lease, purchase, or construct offices for STRS' use.
Under the provisions of the Property Acquisition Law (Part 11
of Division 3, Title 2 of the Government Code), the Director
of the State Department of General Services (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 STRS
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
STRS staff for the last twenty years.
The STRS headquarters facility has been held in the real
estate investment portfolio of the Teachers' Retirement Fund
(STRS Fund) since its acquisition. At various times in the
past, STRS has leased space in its East Sacramento
headquarters to both governmental and private entities to
generate additional revenue for the STRS Fund. As with all
STRS investments in real property in California, the STRS
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.
David Felderstein
Date: June 3, 2004 Page 3
2) Arguments in Support
As a result of legislation enacted in recent years, STRS has
expanded its programs and operations to a point where it is
now occupying parts of three buildings in East Sacramento.
Consequently, the Teachers' Retirement Board directed STRS
staff to evaluate the System's long-term facility needs that
would allow the System to consolidate its operations to
provide a more efficient administration of the System. After
narrowing the number of possible locations for a new
headquarters facility, STRS staff is nearing a point in the
planning process where a recommendation will be made to the
Board.
David Felderstein
Date: June 3, 2004 Page 4
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 STRS
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.
This bill also eliminates an unused provision in existing law
that allows the PERS Board to lease, purchase, or build
offices for STRS' use. This provision, enacted in 1977,
anticipated PERS would include STRS in its new headquarters
building which became Lincoln Plaza in downtown Sacramento,
however, with the passage of Chapter 1429 and STRS' purchase
of a headquarters building in 1984, the need for this
authorization has long passed. PERS 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.
3) SUPPORT :
Yolo County Board of Supervisors
4) OPPOSITION :
None to date
David Felderstein
Date: June 3, 2004 Page 5
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David Felderstein
Date: June 3, 2004 Page 6