BILL ANALYSIS
AB 1240
Page 1
Date of Hearing: May 13, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 1240 (Davis) - As Amended: April 29, 2009
Policy Committee: Higher
EducationVote:9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill modifies the California Community Colleges (CCC)
property leasing and bidding processes. Specifically, this
bill:
1)Authorizes the Los Angeles Community College District (LACCD)
to enter into a lease with an option to purchase for five
years, instead of three, without making the facility comply
with the structural safety requirements of the Field Act.
2)Stipulates that (1) does not apply to leases with an effective
date or effective renewal date on or after January 1, 2015.
3)Eliminates the requirement that CCC districts call for oral
bids prior to accepting the highest written proposal to
purchase or lease district property, and the requirement that
districts split the commission between the brokers bringing
the highest written and oral bids, respectively.
FISCAL EFFECT
Potential savings to LACCD, to the extent allowing longer lease
terms provides more economical choices in selecting satellite
centers and less costly lease terms.
COMMENTS
1)Purpose . According to the author, this is an effort to
streamline CCC contracting and leasing processes.
2)Leasing Requirements . Current law requires a leased facility
AB 1240
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to be brought into compliance with the Field Act if the lease
includes an option to purchase on leases exceeding three
years. The sponsor, the Los Angeles Community College
District (LACCD), states that this creates an impediment to
developing satellite centers (1) because three years is an
insufficient time 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 remodeling costs incurred when leasing to new
tenants. In addition, the district asserts that it will
typically invest $200 per square foot to upgrade a facility to
Field Act standards. Since typical satellite facilities in
the district involve about 15,000 square feet, $3 million will
have to be invested on average prior to determining the site's
viability as a satellite center. This bill originally applied
to all districts, but was narrowed to only include LACCD as a
pilot.
3)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.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081