BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 760|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 760
Author: Aanestad (R)
Amended: As introduced
Vote: 27
SENATE GOVERNMENTAL ORG. COMMITTEE : 10-0,04/28/09
AYES: Wright, Harman, Benoit, Calderon, Denham, Florez,
Oropeza, Wiggins, Wyland, Yee
NO VOTE RECORDED: Negrete McLeod, Padilla, Vacancy
SENATE APPROPRIATIONS COMMITTEE : 11-0, 5/11/09
AYES: Kehoe, Cox, Corbett, Denham, DeSaulnier, Hancock,
Leno, Walters, Wolk, Wyland, Yee
NO VOTE RECORDED: Oropeza, Runner
SUBJECT : State property: City of Red Bluff
SOURCE : Department of General Services
DIGEST : This bill authorizes the Director of the
Department of General Services to sell, lease or exchange
approximately 3.14 acres of state-owned real property in
the City of Red Bluff, 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.
ANALYSIS :
CONTINUED
SB 760
Page
2
Existing law generally requires the Department of General
Services (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
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
SB 760
Page
3
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
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) which was adopted by the electorate
(73 percent 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.
This bill:
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
SB 760
Page
4
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 City of Red Bluff
(Red Bluff Property) is not subject to provisions of law
requiring the proceeds from the sale of state surplus
property is 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.
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 obtains an
equity interest in the consolidated facility and also
makes various legislative findings and declarations
related to the Red Bluff Property.
Background
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 bill, DGS, points out that two options
SB 760
Page
5
are available to the State: r enovate 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 bill grants 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.
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.
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 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 bill 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 this bill.
SB 760
Page
6
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).
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12
Fund
State property lease &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.
SUPPORT : (Verified 5/12/09)
Department of General Services (source)
TSM:do 5/12/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****