BILL ANALYSIS
SB 760
Page 1
Date of Hearing: June 16, 2009
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Mary Hayashi, Chair
SB 760 (Aanestad) - As Introduced: February, 27, 2009
SENATE VOTE : 36-0
SUBJECT : State property: City of Red Bluff.
SUMMARY : Authorizes 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 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 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.
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.
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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 :
1)Requires DGS to perform various functions with respect to
state property and provides for the sale, lease, or transfer
of surplus state property.
2)Requires the 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.
3)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.
4)Requires DGS is responsible to determine if surplus land is
needed by any other state agency, and to first offer surplus
state real property to local agencies, and then 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.
5)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,
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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.
6)Exempts 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.
7)Requires, pursuant to Proposition 60A of November 2004 (SCA
18, Johnson, Resolution Chapter 103/04) which was adopted by
the electorate (73% margin), 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.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "The
Red Bluff State Office Building, located at 2440 Main Street in
the City of Red Bluff, is a 43-year old building that is
deteriorating. There are two options available to the State:
renovate or replace.
"The cost to renovate the building is excessive as it would cost
nearly the same amount to attain a better facility, and would
only extend the building's life by 20 years. Replacing the
building is a better long-term solution for the State's needs by
replacing the current substandard facility with a modern
facility.
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"SB 760 would authorize the Director of the Department of
General Services to sell, lease or exchange approximately 3.14
acres of real property in Red Bluff, that is specifically not
declared surplus to the State's needs, and use the proceeds from
the disposition to acquire approximately not more than 40,000
net square feet in an updated, modern facility."
Background . 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).
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 be subject to
Section 9 of Article III of the Constitution.
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.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
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Opposition
None on file.
Analysis Prepared by : Ross Warren / B. & P. / (916) 319-3301