BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
760 (Aanestad)
Hearing Date: 5/11/2009 Amended: As Introduced
Consultant: Bob Franzoia Policy Vote: GO 10-0
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BILL SUMMARY: SB 760 would authorize the Department of General
Services (DGS) to sell, lease, or exchange, or any combination
thereof, for no less than fair market value, 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 for consolidated
administrative operations of the state. This bill would provide
that the funds derived from the disposition of the real property
shall be appropriated to DGS to expend for the purposes of the
bill.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
State property lease and Unknown, if any, capital
costs, likely fully General
facilities constructionoffset by an unknown amount of lease
revenues resulting in major cost
avoidance
in future years
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STAFF COMMENTS: Current law generally requires a state agency to
review annually its real property holdings and determine what,
if any, is in excess of its foreseeable needs. These properties
are commonly referred to as surplus state properties. They
include both unused properties and those which are underutilized
by an agency. Once real property has been identified as
surplus, the state attempts to sell the property, or dispose of
it in some other manner.
When surplus property is sold, the sales revenues are deposited
into the account that originally paid for the acquisition of the
property. In most instances, sale revenues are deposited in the
General Fund and are available for expenditure on any state
program. Pursuant to Proposition 60A (2004), the proceeds from
the sale are deposited in the Deficit Recovery Bond Retirement
Sinking Fund Subaccount and are be used to pay the principal and
interest on Proposition 57 bonds. Once these bonds are fully
repaid, proceeds from surplus property sales would be deposited
in the General Fund. Proposition 60A only applies to those
properties that were purchased with General Fund revenue or
bonds secured by the General Fund.
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 bill 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 be subject to
Section 9 of Article III of the Constitution.
Page 2
SB 760 (Aanestad)
This bill authorizes the department to sell, lease or exchange
or any combination thereof, all or a portion of the property at
fair market value. Compensation for the property may include
land, or a combination of land, improvements, and money. The
department may lease all or part of the property for a period
not to exceed 66 years.
The department would be required to develop the terms and
conditions of any agreements or lease, and provide them to the
Department of Finance for review prior to soliciting bids and
shall obtain approval from the Department of Finance prior to
the execution of any agreement or lease.
Staff notes this bill is nearly identical to Chapter 513/2008
(SB 140, Kehoe) which 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.