BILL ANALYSIS
AB 151
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 151 (Jones)
As Amended August 20, 2010
Majority vote
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|ASSEMBLY: |68-0 |(January 27, |SENATE: |24-9 |(August 25, |
| | |2010) | | |2010) |
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Original Committee Reference: PUB. S.
SUMMARY : Requires the Department of General Services (DGS) to
study whether it in the state's best interests to sell or lease
the Sacramento property (Sacramento property) used for Board of
Equalization (BOE) offices, and authorizes BOE to independently
lease its facilities.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Require DGS to study and determine whether it in the state's
best interests to sell or lease the Sacramento property and to
report its findings to the Legislature by April 1, 2011.
Requires DGS to consider the timeframe to sell or lease the
Sacramento property and the timely relocation of BOE
headquarters.
2)Authorize DGS to sell or lease the current BOE headquarters
following its determination, and requires DGS to use the
proceeds to pay off the total outstanding loan on the
Sacramento property. Requires DGS, in the event the sale
constitutes a sale of surplus property, to use the proceeds to
pay off the total outstanding loan on the Sacramento property
before paying down the economic recovery bond deficit.
3)Allow BOE to move out of the Sacramento property permanently,
without obligations to pay rent after vacating the premises.
4)Authorize BOE to hire or lease any property, real or personal,
if the Department of Finance determines that the transition is
cost beneficial to the General Fund. Grants BOE the following
powers to:
AB 151
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a) Maintain offices, storage, and parking facilities at any
place or places within and outside the state;
b) Negotiate, make and execute contracts pursuant to this
bill without the supervision or approval of another state
government entity or officer;
c) Acquires new facilities through lease of real or
personal property; and,
d) Consider utilizing properties owned, leased, or
controlled by the state first. Prohibits BOE, if
appropriate state facilities are unavailable, from
procuring new facilities without legislative approval and
cost efficiency as a primary criterion.
5)Make legislative findings and declarations, including that it
is legislative intent to permit the BOE to use a portion of
its 2010-11 operating budget to pay for BOE's actual and
reasonable costs for actions taken pursuant to this bill.
AS PASSED BY THE ASSEMBLY , this bill authorized the DGS to
investigate the potential to sell, exchange, or lease any
portion of the Sacramento property used for the BOE offices, and
investigate and negotiate new land and facilities for a BOE
headquarters using the net proceeds of the initial agreement.
EXISTING LAW :
1)Authorizes DGS to plan, acquire, construct, and maintain state
buildings and property.
2)Provides for DGS to dispose of state surplus property, subject
to specified conditions and upon legislative approval.
3)Requires, among other things, that the proceeds from the sale
of surplus state property, with specified exceptions, be used
to pay the principal and interest on the Recovery Bond Act of
2004.
FISCAL EFFECT : According to the Senate Appropriations Committee
analysis:
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Study Up to $250 one time General*
Special
Disposal of property Unknown, one time, revenue
potentiallyGeneral**
up to $91,000; amount available for
deposit in subaccount probably $0
Acquisition of propertyUnknown, multi millions of dollars
inGeneral*
costs over several years to
acquireSpecial
facilities and consolidate BOE operations
* Property Acquisition Law Account or a variety of other special
funds; 56 percent General Fund
** Deficit Recovery Bond Retirement Sinking Fund Subaccount
COMMENTS : This bill was substantially amended in the Senate to
address issues related to the same topic. This bill would set a
precedent in granting BOE authority to independently lease their
facilities, either state-owned or personal, and either in or out
of the state.
In 1993, BOE moved its headquarters into the 450 N Street
building as DGS's tenant and claims that it has since had
problems with water intrusion. The windows have continued to
pop open and require replacement. In addition, mold accumulated
inside the walls and spread into the BOE office space. Many BOE
workers have complained of health and safety issues. According
to BOE, the mold problem has resulted in approximately 75
workers' compensation claims, one omnibus lawsuit, and over 40
civil litigation cases against both DGS and BOE.
BOE has brought the mold problem to the attention of DGS, which
deems the 450 N Street building repairable and habitable. BOE
is contractually obligated to pay for any tenant building
improvements; consequently, BOE is fiscally liable for the
estimated $68 million in repairs in addition to their annual
rent of $10 million.
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Currently, DGS may look for another facility to house BOE staff,
but DGS needs legislative authority in order to find a new
tenant or dispose of the 450 N Street building. If BOE were to
exercise its option to move out of the 450 N Street building
today, BOE would still be obligated to pay DGS rent until DGS
finds a backfill tenant to occupy the building. Meanwhile, BOE
has outgrown the building with 2,900 employees and moved a
quarter of BOE staff to a second temporary office.
According to BOE, "As BOE is responsible for generating
one-third of the State's revenues, loss of productivity equals
lost revenue for the State. Based on the "swing space"
approach, BOE is estimating a loss of productivity of 111
personnel years at a cost of $8,325,000 in personnel costs
during the planned 18-month remediation period. As many of
these positions are revenue generating, BOE also estimates a
revenue loss to the State of California of $22 million due to
the workload disruptions.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
FN:
0006767