BILL ANALYSIS
AB 1240
Page 1
Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Anthony Portantino, Chair
AB 1240 (Davis) - As Introduced: February 27, 2009
SUBJECT : Community colleges: leasing of buildings: sale of
district property.
SUMMARY : Changes the California Community Colleges (CCC)
property leasing and bidding processes. Specifically, this
bill :
1)Allows CCC districts to lease property for five instead of
three years before having to retrofit the facility for
compliance with the Field Act.
2)Authorizes CCC to enter into a lease with an option to
purchase for up to five years without Field Act compliance.
3)Eliminates the requirement that CCC districts call for oral
bids before accepting the high written bid for the purchase or
lease of district property
4)Eliminates the requirement that CCC districts split the
commission between the broker who brought in the highest
written bid and the broker who brought in the highest oral
bid.
EXISTING LAW : Requires that each school building constructed,
reconstructed, modified, or expanded on a CCC campus be built
according to the Field Act or the California Buildings Standards
Code (CBSC). Among other provisions, the Field Act requires the
Division of the State Architect (DSA) to review the construction
plans for school buildings and requires school and CCC districts
to hire onsite construction inspectors to ensure compliance with
the structural safety standards.
FISCAL EFFECT : Unknown
COMMENTS : Purpose of this bill : According to the author, this
is an effort to streamline CCC contracting and leasing processes
to allow them to use their staff and resources more effectively
and to serve students more efficiently. Currently, CCC
districts must follow bidding and leasing practices that add
AB 1240
Page 2
unnecessary bureaucracy and cost and are inconsistent with the
practices of other higher education institutions.
Property leasing requirements and satellite centers : Current
law requires CCC Field Act compliance on a lease of any length
if that lease includes an option to purchase and on all leases
that exceed three years. The sponsor, the Los Angeles Community
College District (LACCD), states that these provisions create an
impediment to developing satellite centers because 1) three
years is not long enough to determine the long-term viability of
a site, and 2) landlords are reluctant to lease for a period as
short as three years because it does not provide enough time to
amortize minor remodel costs incurred when leasing to new
tenants. In addition, according to LACCD, a CCC district will
typically invest $200 per square foot to upgrade a facility to
Field Act standards. Since typical satellite facilities for
LACCD are 15,000 square feet, a district will have to invest
$300,000 on average prior to determining the site's viability
for a satellite center.
Oral bid requirements : Currently, CCC districts must solicit
oral bids after the submission of written bids for the lease or
sale of CCC district property. In essence, the opening of
written bids immediately becomes an oral auction for those
bidders who are present. Since a bidder is not required to
participate in the submission of written documents as a
prerequisite to oral bidding, this requirement makes it
difficult to conduct an orderly bid and award process. In the
event of a sale on an oral bid to a purchaser hired by a
licensed real estate broker, CCCs are required to pay half of
the commission to the highest written bidder's broker and half
to the highest oral bidder's broker. Per LACCD, this "split
commission" requirement serves as a disincentive for contractors
to bid on CCC public works projects.
Other segments' processes : The University of California (UC)
and the California State University (CSU) do not use an oral bid
process-they must accept the lowest responsible bidder, except
in specified instances. UC and CSU are subject to the CBSC, not
the Field Act, nor is there any statutory requirement that they
retrofit leased facilities to CBSC standards. However, it is
staff's understanding that both segments have adopted systemwide
policies that require leased facilities to comply with CBSC
building requirements.
AB 1240
Page 3
Author's amendments : The author will propose amendments to
limit the provisions relating to property leasing requirements
to LACCD, to create a pilot program that will sunset as of
January 1, 2015.
Previous legislation : SB 588 (Runner), Chapter 704, Statutes of
2008, provides for alternative CCC building standards, mirroring
those that apply to CSU, while keeping plan check and oversight
responsibilities with the Department of General Services. AB
127 (Nunez), Chapter 35, Statutes of 2006, and approved by the
voters in November 2006, provided, among other things, that
buildings constructed, reconstructed, modified or expanded after
July 1, 2006, on a CCC campus must be built according to either
the Field Act or the CBSC.
REGISTERED SUPPORT / OPPOSITION :
Support
Los Angeles Community College District
Opposition
None on file.
Analysis Prepared by : Sandra Fried / HIGHER ED. / (916)
319-3960