BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2438
                                                                  Page  1

          Date of Hearing:   May 19, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   AB 2438 (Hagman) - As Amended:  April 26, 2010 

          Policy Committee:                              Business and  
          Professions  Vote:                            9-2

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill:

          1)Authorizes the Department of General Services (DGS) to lease  
            state-owned property adjacent to the California Institute for  
            Men at Chino under terms deemed in the best interest of the  
            state.

          2)Directs 50% of the lease revenues to the Department of  
            Corrections and Rehabilitation (CDCR).

           FISCAL EFFECT  

          Annual General Fund revenue from the pending lease is unknown,  
          but the bill earmarks one-half of those revenues to CDCR.   
          Without this provision, allocation of all lease revenue would be  
          subject to legislative discretion through the annual budget  
          process.

           COMMENTS  

           1)Background  . ABX4 22 (Evans)/Chapter 20 of 2009, authorizes DGS  
            to lease excess real property under the jurisdiction of a  
            state agency, department, or district agricultural  
            association, unless otherwise specified, and requires DGS to  
            deposit net proceeds from the lease into the General Fund.  
            (DGS thus already has the authority to undertake the lease  
            provided for in AB 2438.) DGS is currently in the processing  
            of obtaining bids for a long-term ground lease at the Chino  
            prison site. The department hopes to select a developer for  
            exclusive negotiation by October 1 and enter into exclusive  








                                                                  AB 2438
                                                                  Page  2

            negotiations at that time for an industrial/warehouse  
            distribution development consistent with land use in the  
            surrounding area. DGS is seeking to lease 150 acres for a  
            period not exceeding 60 years.

           2)Purpose  . According to the author, "This legislation gives CDCR  
            a way to upgrade its current facilities and not lose the  
            potential benefit of the surplus property to the GF.  If CDCR  
            were to sell this land, [all] the revenue generated from the  
            sale would go directly into the GF.  [The] land lease  
            agreement [in this bill] could be used to keep some of the  
            money within [CDCR]."

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081