BILL ANALYSIS
Bill No: AB
1444
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
AB 1444 Author: Garrick
As Amended: April 20, 2009
Hearing Date: July 8, 2009
Consultant: Art Terzakis
SUBJECT
Disposition of State Property: services contracts
DESCRIPTION
AB 1444 authorizes the Department of General Services (DGS)
to advertise and award service contracts related to the
disposition of state-owned real property, and to establish
a list of prequalified firms that may enter into such
contracts. Specifically, this measure:
1. Defines "qualified firm" as an individual, firm, or
combination of firms and individuals having appropriate
expertise and knowledge related to due diligence
investigations, land use planning, real estate
development, entitlement, appraisals, real estate
economics and valuation, marketing, public relations,
auctioning, and other related matters involved in the
disposal, reuse, leasing, and sale of real property.
2. Defines "prequalified list" (PL) as a list of firms
that possess the qualifications established by DGS to
perform specific types of services needed.
3. Establishes a process to advertise and award contracts,
which includes soliciting statements of qualifications
(SQs) of interested firms and making announcements
through the State Contracts Registrar and applicable
publications.
4. Requires DGS to use the PL of a particular category (or
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profession) to find at least three firms with sufficient
staffing available for a project. If the first category
does not yield three results, DGS may utilize other
categories that can provide the desired services.
5. Requires DGS to solicit cost proposals from the three
identified firms available and originating from the PL,
and to negotiate a contract with the best qualified firm
at compensation deemed fair and reasonable to the State.
6. Requires DGS to negotiate a contract with the next
qualified firm if DGS is unable to negotiate a successful
contract with the identified qualified firm. Also,
permits DGS to remove a qualified firm from the PL if
contract negotiations are unsuccessful on three separate
occasions.
7. Requires DGS to update PLs at least every two years
from the date the lists are established to include
additional firms. Also, allows DGS to add qualified
firms more frequently than every two years.
8. Makes it explicit that contracts for services that DGS
elects to advertise and award in accordance with the
provisions of this measure are not subject to existing
provisions of law applicable to Personal & Consulting
Services Contracts (Article 4, commencing with Section
10335 of the Public Contract Code) and shall not include
services defined in Chapter 10, commencing with Section
4525 of the Government Code (e.g., contracts with private
architects, engineering, land surveying and construction
project management firms).
EXISTING LAW
Current law authorizes DGS to take various actions with
respect to the sale, lease, and disposition of state
properties, including entering into lease purchase
agreements with state agencies for specified state
properties.
Under current law, the state is authorized to utilize
multiple awards, including Federal General Service
Administration (GSA) Multiple Awards Schedules (MAS) and
master agreements or contracts for goods, information
technology, services, or consulting services.
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Existing law authorizes state agencies, in exercising their
contracting authority delegated by DGS, to contract with
suppliers who have MAS with the Federal GSA on the same
terms, conditions, and prices if the supplier is agreeable.
The state MAS process is referred to as the California
Multiple Awards Schedules (CMAS).
Current law authorizes DGS to require vendors to be
pre-qualified prior to placing bids in a reverse auction.
Current law, The Small Business Procurement and Contract
Act, permits a state agency to award a contract for goods,
services, or information technology with a value of between
$5,000 and $100,000 to a small business without complying
with competitive bidding requirements.
The California Constitution requires proceeds from the sale
of all surplus properties be used to pay the principal and
interest on the bonds authorized under the Economic
Recovery Bond Act. After those specific bonds are retired,
money from the sale of surplus properties must be placed in
the Special Fund for Economic Uncertainties.
Existing law requires authorization by the Legislature
prior to the disposition by sale or otherwise of State land
reported to it by a State agency as being in excess of its
foreseeable needs.
BACKGROUND
Purpose of AB 1444: According to the author's office, this
measure is intended to allow DGS (the sponsor) to establish
lists of prequalified external consultants who can perform
the various services DGS typically utilizes as part of its
real property disposition program. According to DGS,
following legislative authorization to sell state-owned
property, the state can sell the property either "as is" or
"subject to" entitlements. DGS utilizes a variety of
contracted professional consultants such as real estate
economists, marketing consultants, and entitlement
specialists, in its real property sales and property
enhancement programs.
For larger, more valuable properties, DGS utilizes an
entitlement enhancement process to increase the value.
These types of properties have significant revenue
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potential when they are rezoned through the local
government entitlement process (e.g., zoning, general plan
amendments and specific plan processes). DGS uses
specialized consultants to perform the preliminary
entitlement work, prior to placing the real property on the
real estate market.
This process eliminates much of the risk for the buyer
since the buyer and DGS already understand the level of
entitlements before close of escrow on the sale of the
property. A buyer is inclined to pay a higher price for the
property to the State for the reduced risk resulting from
this process.
DGS states that this measure would probably affect
approximately 10-12 contracts each year. In addition,
there are only a select number of specialized consultants
who would meet the criteria for the type of services DGS is
looking for and who would become eligible on the
prequalified list. The Request for Proposal (RFP) process
used to hire an external consultant can take three to six
months, and costs approximately $25,000 to $50,000 in staff
resources. DGS claims that using a prequalified list will
reduce this administrative cost to approximately $5,000.
PRIOR/RELATED LEGISLATION
AB 8xx (Nestande) Chapter 6, Statutes of 2009-10 Second
Extraordinary Session. Among other things, exempted the
sale of surplus state real property made on an "as is"
basis from designated provisions of CEQA. Also exempted
from those provisions of CEQA the execution of the purchase
and sale agreement or the exchange agreement for surplus
state real property if the disposition is not made on an
"as is" basis and the close of escrow is contingent on a
specified requirement or compliance with CEQA. In
addition, provided expedited environmental permitting and
CEQA exemption for a list of 11 critical transportation
projects, as specified.
SB 760 (Aanestad) 2009-10 Session. Would authorize DGS to
sell, lease, exchange, or any combination thereof,
approximately 3.14 acres of real property in the City of
Red Bluff that is specifically declared not to be surplus
to the needs of the state, and, in return, to acquire up to
40,000 net square feet of usable office and related space
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for consolidated state administrative operations. (Pending
in Assembly Appropriations Committee)
SB 586 (Yee) 2009-10 Session. Would direct DGS, in
consultation with the Department of Food and Agriculture,
to enter into negotiations to sell, to any interested
party, at fair market value, with certain restrictions, a
13-acre parking lot portion of the state-owned Cow Palace
property, located in the County of San Mateo and the City
and County of San Francisco. (Pending in Assembly policy
committee)
SB 256 (Aanestad) 2009-10 Session. Would authorize DGS to
sell, lease, exchange, or any combination thereof
approximately 1.69 acres of real property in the City of
Chico, currently used by the California Highway Patrol as
its Chico area office, which is specifically declared not
to be surplus to the needs of the state. (Pending in
Assembly policy committee)
SB 178 (Aanestad) 2009-10 Session. Would authorize DGS to
sell, lease, exchange, or any combination thereof,
approximately 3 acres of real property in the City of
Redding, currently used by the Department of Forestry and
Fire Protection as its Shasta-Trinity Unit Headquarters,
that is specifically declared not to be surplus to the
needs of the state. (Pending in Assembly policy committee)
SB 136 (Huff) 2009-10 Session. Annual DGS surplus property
bill that authorizes DGS to dispose of specified parcels.
(Pending in Assembly policy committee)
AB 600 (Hall) 2009-10 Session. Would grant the DGS the
authority to lease the Compton Armory to the City of
Compton at fair market value. (Pending in this committee)
AB 240 (Monning) 2009-10 Session. Would revise the terms
of a previously authorized exchange of DeLaveaga Park
parcels, currently owned by the State of California and the
City of Santa Cruz (City) respectively, in accordance with
the current needs of the State and City. (Pending in this
committee)
AB 2026 (Villines) Chapter 761, Statutes of 2008.
Authorized DGS to sell, exchange, or lease for fair market
value nine specified parcels deemed to be surplus to the
state's needs. Additionally, rescinded the surplus
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authorization granted previously to DGS with respect to
seven specified parcels. Furthermore, exempted the State's
execution of a purchase and sales agreement from CEQA
however, the provisions made it explicit that in an "as is"
sale, the buyer or transferee will be subject to any local
governmental entitlement or land use approval requirements
including requisite CEQA provisions.
SUPPORT: Department of General Services (sponsor)
OPPOSE: None on file as of July 3, 2009.
FISCAL COMMITTEE: Senate Appropriations Committee
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