BILL ANALYSIS
Bill No: SB
760
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
SB 760 Author: Aanestad
As Introduced: February 27, 2009
Hearing Date: April 28, 2009
Consultant: Art Terzakis
SUBJECT
State Property: City of Red Bluff
DESCRIPTION
SB 760 authorizes the Director of the Department of General
Services (DGS) to sell, lease or exchange approximately
3.14 acres of state-owned real property in the City of Red
Bluff (Red Bluff Property), that is specifically not
declared surplus to the State's needs, and use the proceeds
to acquire office and related space not to exceed 40,000
net square feet in the City, to consolidate various
departments and state agencies. Specifically, this
measure:
1. Authorizes DGS to sell, lease (for no more than 66
years) or exchange all or any portion of approximately
3.14 acres of state-owned Red Bluff Property located at
2444 Main Street, in the City of Red Bluff for the
purpose of consolidating various state departments in the
City.
2. Requires any transaction to be for no less than fair
market value, as determined by an independent appraisal
or pursuant to a competitive selection process.
3. States that the disposition of the Red Bluff Property
is not subject to provisions of law requiring the
proceeds from the sale of state surplus property be used
to pay the principal and interest on the Economic
Recovery Bonds or provisions of law requiring state
surplus property be offered first to local government
agencies.
SB 760 (Aanestad) continued
Page 2
4. Requires the proceeds from the disposition of the Red
Bluff Property be held in trust for the office
consolidation project.
5. Requires DGS to develop the terms and conditions of any
agreement or lease and provide them to the Department of
Finance (DOF) prior to soliciting bids. Also, requires
DGS to obtain approval from DOF prior to execution of any
agreement.
6. Requires DGS to notify the Appropriations Committee of
each house and the Joint Legislative Budget Committee of
its intent to enter into a lease or agreement, and
provides that the committees shall be deemed to have
approved of the lease or an agreement if either fails to
take any action within 45 days.
7. Declares Legislative intent that the State obtain an
equity interest in the consolidated facility and also
makes various legislative findings and declarations
related to the Red Bluff Property.
EXISTING LAW
Existing law generally requires DGS to perform various
functions with respect to state property and provides for
the sale, lease, or transfer of surplus state property.
Existing law requires the Director of DGS to request
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.
Each state agency is required to annually review
proprietary state lands under its jurisdiction to determine
what lands are in excess of the agency's foreseeable needs
and to report to DGS.
This annual review of proprietary state lands does not
apply to tax-deeded land, land held for highway purposes,
lands under the jurisdiction of the State Lands Commission,
land that has escheated to the state or that has been
distributed to the state by a court decree in estates of
deceased persons, and lands under the jurisdiction of the
State Coastal Conservancy. Jurisdiction of all land
reported as excess is transferred to DGS, when requested by
SB 760 (Aanestad) continued
Page 3
the Director of DGS, for sale or disposition or as may
otherwise be authorized by law.
Existing law provides criteria for state agencies to use in
determining and reporting to DGS lands in excess of the
agency's foreseeable needs. A state agency is to include
land not currently being utilized, or currently being
underutilized, for any existing or ongoing program; land
for which the agency has not identified any specific
utilization relative to future needs; and land not
identified by the agency within its master plan for
facility development.
Where applicable within its jurisdiction, DGS is
responsible for determining if surplus land is needed by
any other state agency. Existing law, Government Code
Section 11011.1, requires the state to first offer surplus
state real property to local agencies, and next, to offer
the property to nonprofit affordable housing sponsors, as
defined, prior to offering the property to private
entities. Existing law also prescribes the procedure for
local agencies and nonprofit affordable housing sponsors to
use to obtain the surplus state real property.
Existing law specifies that the Legislature may authorize a
particular surplus property be sold at less than fair
market value and provides that 30 days prior to executing
such a transaction, DGS must report to the chairs of the
fiscal committees of the Legislature the following
information: (a) the financial terms of the transaction;
(b) a comparison of fair market value for the property and
financial terms; (c) the basis for agreeing to terms and
conditions other than fair market value.
Existing law [Government Code 11011 (k) (1) and (2)]
contains provisions exempting the sale of surplus property
from designated provisions of the California Environmental
Quality Act (CEQA). Specifically, the law provides that
any disposition of a parcel of surplus property made on an
"as-is" basis shall be exempt from statutory requirements
of CEQA; however, the law makes it explicit that the buyer
or transferee of a parcel shall be subject to any local
governmental entitlement or land use approval requirements
and CEQA.
Furthermore, existing law provides that if any transaction
SB 760 (Aanestad) continued
Page 4
is not on an "as-is" basis sale and close of escrow is
contingent on satisfying any local governmental approvals
for entitlement or land use requirements, including
compliance by the local government with CEQA, then the
execution of the purchase and sale agreement or exchange
agreement is exempt from CEQA.
Proposition 60A of November 2004 (SCA 18, Johnson,
Resolution Chapter 103/04) which was adopted by the
electorate (73% margin) 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 Economic Recovery Bond Act of 2004.
BACKGROUND
Purpose of SB 760: The author's office indicates that the
Red Bluff Property consists of a deteriorating 43 year old
office building, situated on 3.14 acres, located in the
City of Red Bluff. The sponsor of this measure, DGS,
points out that two options are available to the State:
renovate or replace . DGS contends that the cost of
renovating the existing office building is excessive and
would only extend the life of the building by 20 years.
DGS argues that replacing the existing substandard office
building with a modern facility is a better long-term
solution in light of the fact that the cost would be nearly
the same.
This measure would grant DGS the authority to sell, lease
(not to exceed 66 years) or exchange the existing Red Bluff
Property and use the proceeds from that disposition to
acquire land and facilities to consolidate various state
departments in closer proximity within the City of Red
Bluff.
Staff Comments: Under the provisions of Proposition 60A,
the proceeds of the sale of surplus property must be used
to pay the holders of the state's deficit reduction bonds.
These payments are intended to accelerate the redemption of
the state's debt, and reduce future General Fund payments
to the bondholders. This measure avoids the transfer of
the proceeds associated with the disposition of the
property by specifying that the disposition of
the Red Bluff Property does not constitute a sale or other
disposition of surplus state property that would otherwise
SB 760 (Aanestad) continued
Page 5
be subject to Section 9 of Article III of the
Constitution.
California Environmental Quality Act (CEQA) Exemption: The
ability to get excess properties declared surplus by the
Legislature has been impeded these past few years by a
disagreement between the Legislature and the Administration
regarding the removal of a statutory exemption for the
State's surplus properties from the requirements of CEQA.
This disagreement has at least for now been resolved with
enactment of AB 8xx (Nestande), Chapter 6 of 2009-10 Second
Extraordinary Session, that places within Section 11011 of
the Government Code an ongoing CEQA exemption for all
properties declared surplus by the Legislature.
This measure makes it explicit that its provisions do not
constitute a sale or other disposition of surplus property,
thus, DGS staff contends that no CEQA exemption is needed
for SB 760.
State Office Building Consolidation: In the early 1990s,
DGS undertook a program to save money and make government
more accessible to citizens by rearranging state offices in
major urban centers. The plan also envisioned
consolidation in numerous other California communities
where the state leased dispersed office space. Based on a
series of regional plans and facility studies, DGS' efforts
led to office consolidation projects (completed or in the
process of development) in major metropolitan areas (e.g.,
San Francisco, Oakland, Los Angeles, Riverside/San
Bernardino, Long Beach, San Diego and Sacramento).
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. The bill 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. AB 8xx
also provided expedited environmental permitting and CEQA
exemption for a list of 11 critical transportation
projects, as specified.
SB 760 (Aanestad) continued
Page 6
SB 586 (Yee) 2009-10 Session. An urgency measure that
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.
(Passed out of this committee on a vote of 11-1; currently
pending in Senate Environmental Quality 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 this
committee)
SB 178 (Aanestad) 2009-10 Session. Would authorize DGS to
sell, lease, or exchange approximately 3 acres of
state-owned real property in the City of Redding, currently
used by the Department of Forestry and Fire Protection,
which is specifically declared not to be surplus to the
needs of the state. (Pending in this committee)
SB 136 (Huff) 2009-10 Session. Annual DGS surplus property
bill that authorizes DGS to dispose of three specified
parcels. (Pending in this committee)
SB 30 (Denham) 2009-10 Session. Would require DGS to
identify not less than $1 billion worth of state property
that can be sold immediately to pay for the retirement of
outstanding general obligation bonds issued by the state,
thereby helping to close the state's budget deficit.
(Pending in this Committee)
SB 29 (Denham) 2009-10 Session. Would mandate the sale of
land that the Los Angeles Memorial Coliseum and the Los
Angeles Memorial Sports Arena occupy, including the state's
share of the Sports Arena structure, and abolishes the Los
Angeles Memorial Coliseum Commission upon completion of
that sale. (Pending in this Committee)
SB 28 (Denham) 2009-10 Session. Among other things, would
require that the San Quentin Prison site be sold, the
proceeds shall be exempt from the provisions of Proposition
SB 760 (Aanestad) continued
Page 7
60A of 2004, and the monies shall go to building a new
death row at another prison. (Pending in Senate Public
Safety Committee)
SB 140 (Kehoe) Chapter 513, Statutes of 2008. Authorized
DGS to sell, lease, exchange, or any combination thereof,
approximately 2.7 acres of real property in the City of San
Diego that is specifically declared not to be surplus to
the needs of the state, and, in return, to acquire up to
120,000 net square feet of usable office and related space
for consolidated administrative operations of the state.
Also provided that funds derived from the sale or exchange
of the real property would be appropriated to DGS to expend
for the purposes of the bill.
SB 1681 (Battin) Chapter 532, Statutes of 2008. Among
other things, revised the conditions and procedures by
which DGS may dispose of surplus land to local agencies and
private entities and individuals.
SB 567 (Aanestad) 2007-08 Session. The annual surplus
property bill sponsored by the Department of General
Services. (Placed on Senate Inactive File by Author)
SB 553 (Aanestad) 2007-08 Session. Similar to SB 178
(Aanestad) of 2009. Would have authorized DGS to lease,
sell, or exchange at fair market value a specified parcel
of state-owned property in the City of Redding currently
being used by the Department of Forestry and Fire
Protection (CalFire) as its Shasta-Trinity Unit
Headquarters. (Vetoed)
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
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.
SB 99 (Battin) 2005-06 Session. Would have established the
Commission on Asset Review and Divestiture to review
SB 760 (Aanestad) continued
Page 8
biennially the inventory of all real property held by the
State. (Held in Senate Appropriations Committee)
SUPPORT: Department of General Services
OPPOSE: None on file as of April 24, 2009.
FISCAL COMMITTEE: Senate Appropriations Committee
**********