BILL ANALYSIS �
AB 2442
Page 1
Date of Hearing: April 10, 2012
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 2442 (Williams) - As Amended: March 29, 2012
SUBJECT : State property: California Hope Public Trust.
SUMMARY : Establishes the California Hope Public Trust (Trust)
to support the California State University (CSU) and University
of California (UC) systems. Specifically, this bill :
1)Creates the Trust, requires it to be funded by transfers of
state-owned property, and requires the Trust to manage
properties transferred to it with the goal of increasing the
value of its holdings and earning revenue for the CSU and UC
systems, as specified.
2)Requires the Trust to be governed by a nine-member board of
directors with staggered four-year terms, including: four
members appointed by the Governor, subject to Senate
confirmation, who have demonstrated expertise in real estate,
finance, and urban planning; one member appointed by the
Speaker of the Assembly; and, one member appointed by the
Senate Committee on Rules. The Secretary for State and
Consumer Services, the Treasurer, and the Controller shall
serve as ex officio members of the board, as specified.
3)Requires, on or before March 31, 2013, the Department of
General Services (DGS) to submit to the Trust a complete and
thorough inventory of all state-owned real estate and
property. DGS must also submit an inventory of all lease
agreements between any state agency and private or nonpublic
management groups.
4)Requires, on or before January 1, 2014, the Trust to review
the inventory specified above and determine which properties
should be controlled by the Trust, as specified. The Trust
must prepare a plan for assuming responsibility for providing
real estate services to the agencies and departments located
in those properties and enter into customer service agreements
to provide for their space needs, as specified.
5)Requires, on or before January 1, 2014, the Trust to submit a
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request to the Legislature to enact legislation that would
authorize the Trust to control any state-owned real property
that the Trust determines should be controlled by the Trust.
6)Prohibits the Trust from considering for transfer any of the
following real property owned by the state: lands in the
possession of the Department of Transportation that are used
for existing highways or airspace, and properties acquired for
highway projects; lands that are part of the State Park
System; lands under the jurisdiction of the State Lands
Commission; lands in the possession of the Department of
Corrections and the California Youth Authority that are used
explicitly for the incarceration of inmates; the State
Capitol; any land, building, or property determined to be of
historical or cultural significance; any property subject to
constitutional provisions governing the Highway Users Tax
Account; and, lands under UC or CSU jurisdiction.
7)Requires the Trust's executive director to report annually to
DGS regarding land or property classified as excess, as
specified, and identify that land or property that would
assist the Trust to effectuate its purposes.
8)Requires the Trust to:
a) Generate a return on real estate holdings in the
possession of the Trust;
b) Provide land and buildings it manages and controls for
the accommodation of all state agencies, by lease or
license or any other arrangement, for their use and
occupation;
c) Fulfill an obligation to the state to provide innovative
stewardship of real property and infrastructure;
d) Provide for the efficient and effective utilization of
state assets;
e) Ensure that all projects undertaken by the Trust satisfy
state, regional, and local land-use and environmental
requirements that apply to private sector projects; and,
f) Ensure that projects undertaken by the Trust meet the
smart growth principles of Executive Order D-46-01 of 2001,
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which is related to smart growth.
9)Authorizes the Trust to:
a) Acquire and dispose of any property, subject to
specified legislative notification;
b) Construct and maintain buildings, subject to specified
legislative notification;
c) Conduct studies or surveys with regard to future office
space and building needs of the state;
d) Lease any property under the management and control of
the Trust to any person or any public or private entity;
e) Enter into joint ventures with other public or private
entities for the construction or development of buildings
and land for joint-use purposes;
f) Acquire by purchase, rental or otherwise, equipment,
fixtures, and other property, real or personal, required
for any property managed or controlled by the Trust;
g) Accept donations of property from private donors;
h) Approve loans or other financing for projects undertaken
by the Trust;
i) Contract with DGS for the management and maintenance of
property in the possession of the Trust.
j) Issue revenue bonds, as specified, to obtain funds to
pay the cost of projects, secure the payment of revenue
bonds and interest thereon by pledging all or part of its
revenues, rentals, and receipts, and provide for the
security of the revenue bonds and the rights of the holders
thereof; and,
aa) Sell property owned by the Trust and lease the property
back so as to generate proceeds of sale to be used for
purposes of the Trust.
10)Requires the Trust to notify the chair of the fiscal
committee of each house prior to approving the acquisition or
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disposition of land and buildings, as specified.
11)Requires, on or before July 1, 2015, and each year
thereafter, the Trust to report to the Legislature on the
activities undertaken by the Trust, as specified.
12)Creates the California Hope Public Trust Fund (Trust Fund),
requires all net proceeds received or generated as a result of
Trust activities to be paid to the Trust Fund, and requires
the Trust, upon appropriation by the Legislature, to use the
moneys in the fund to support the CSU and UC systems.
13)Specifies the Trust's authority to issue revenue bonds to
accomplish its powers or duties, requires Bond sales to be
coordinated by the Treasurer, and outlines provisions
governing the bond sales, as specified.
14)Repeals the provisions of this bill creating the Trust, its
authority to issue bonds, and the Trust Fund on January 1,
2019, unless legislation is enacted that becomes effective on
or before that date to transfer to the Trust management and
control of any or all of the state-owned real estate that the
Trust recommends for transfer. At the time of the transfer,
the Trust shall assume from DGS responsibility for providing
real estate services to the state agencies and departments
located in those properties, including planning of future
projects.
15)Exempts additional agencies from current law requiring all
state agencies to report annually to DGS any property held by
that agency that is in excess of its needs, to include the
Department of Parks and Recreation, the Department of Fish and
Game, the Wildlife Conservation Board and other state
conservancies.
16)Authorize DGS to give priority to proposals related to the
disposition of surplus lands to further the purposes of the
provisions governing the Trust.
17)Makes findings and declarations and provides terms and
definitions.
EXISTING LAW
1)Establishes DGS as the state government entity responsible for
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providing a broad range of business services to government
agencies. With respect to real estate, DGS is responsible for
determining the present and future space needs of state
agencies, administering the sales and leasing of state-owned
surplus property, and leasing privately-owned space for state
agencies.
2)Requires DGS to maintain a complete and accurate statewide
inventory of all real property held by the state.
3)Requires each state agency to report annually to DGS any
proprietary state lands under the jurisdiction of that agency
that are in excess of the foreseeable needs of that agency,
with specified exemptions.
4)Authorizes the Director of DGS to require a state agency to
transfer to DGS jurisdiction over any land declared excess by
a state agency. DGS may take specified actions with respect
to that property, including, among others, asking permission
from the Legislature to sell or dispose of the property.
5)Authorizes DGS to give priority to any property that involves
the exchange of surplus lands listed in specified reports.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author, "Public higher
education in California has sustained considerable reductions in
state funding in recent years. Although all state budget areas
have undergone significant cuts over the past several budget
cycles, higher education does not enjoy the same funding
mandates and legal protections as other state services such as
K-12 education. Improving the opportunity for college
attendance and graduation in California are not only needed to
meet the demands of tomorrow, but ensure the economic prosperity
of the State.
"According to a 2009 California State Auditor follow-up review
of the State's management of surplus property, the State still
lacks assurance that underused or unused properties are sold to
generate revenue or are put to better use. AB 2442 creates the
California Hope Public Trust which will be able to evaluate and
better utilize state property with the proceeds benefitting the
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UC and CSU systems. The Trust is funded by transfers of
state-owned properties that are determined by the Trust to be
suitable for development and have been approved by the
Legislature. Those properties would be managed with the goal of
increasing the value of its holdings and earning revenue for the
UC and CSU systems.
"The California Hope Public Trust is aimed at renewing our
commitment to our higher education systems and our students by
supplementing, not replacing, our General Fund investment to the
UC and CSU systems."
Background .
The state owns and leases real property assets used for diverse
public purposes, including: university campuses, highways,
parks, correctional facilities, flood control levies, water
storage and conveyance facilities, mental health hospitals,
developmental centers, veterans' homes, telecommunication sites,
armories, state fairgrounds, fire stations, forensic
laboratories, and office buildings.
DGS is generally responsible for determining the space needs of
state agencies, administering the sales and leasing of
state-owned surplus property, and leasing privately-owned space
for state agencies.
According to the state Auditor, "With the State owning at least
6.7 million acres of real property, identifying and selling
surplus property is critical for the State to realize benefits
from such sales - for example, using the proceeds to pay the
principal and interest on certain bonds, eliminating the
maintenance costs and legal liabilities associated with the
property, or increasing the tax base if the properties are sold
for commercial or residential use. Although DGS is primarily
responsible for disposing of the State's surplus properties,
individual state agencies are responsible for identifying and
reporting excess property.
"In January 2001 the Bureau of State Audits (bureau) issued a
report that focused on state agencies' handling of excess real
estate in which the bureau raised numerous concerns, including
the State's lack of assurance that its properties are being
carefully evaluated, to determine if properties should be sold,
because no entity has broad oversight of state property.
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Further, in a legislative hearing in May 2008, legislative
members expressed similar concerns. Thus, the bureau conducted
a follow-up review of the State's progress in implementing our
recommendations for managing surplus property.
"During our follow-up review of the State's management of
surplus property, we noted the following:
The State still lacks assurance that underused or unused
properties are sold to generate revenue or are put to better
use. The State continues to operate without having empowered
an existing agency or a new commission or authority to oversee
and scrutinize the property-retention decisions of individual
agencies although we recommended it do so eight years ago.
Although DGS has implemented some of our 2001 recommendations,
it did not fully implement others: it continues to submit
annual reports late and has not performed studies of regional
office space as planned.
There continues to be little incentive for state agencies to
sell their surplus property because the proceeds from the sale
are not typically returned to the entity but rather go towards
paying off certain state bonds.
The Department of Transportation sold numerous parcels of
excess land since our 2001 report by establishing goals,
performance agreements, and reporting mechanisms. However,
its surplus property database continues to have certain
inaccuracies that limit its reliability."
This bill establishes a new entity - the Trust - in addition to
DGS to manage state properties, and authorizes it to determine
which state properties to manage for the benefit of the CSU and
UC systems.
Support .
The Service Employees International Union writes, "The
California Hope Public Trust will carefully assess the state's
properties and determine whether certain properties could be
utilized in a manner that would create revenue for the state.
The appointees of the Board of Directors will have expertise in
real estate, finance and urban planning which will enable them
to properly assess the potential for state property.
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"It is important to point out that the Trust will not compete
with DGS for property management services. Instead, the Trust
will fill a gap that has been identified by the California State
Auditor, (who) expressed concern that no state entity has broad
oversight to review property-retention decisions by individual
agencies."
Previous legislation .
AB 2578 (Frommer) of 2006 creates the California Hope Public
Trust (Trust) and requires DGS to transfer specified state lands
to the Trust for the purpose of managing state properties for
the benefit of public colleges and universities. This bill was
vetoed with the following message:
"In 2004, the voters approved Proposition 60A which provided
that the revenue generated by the sale of surplus property is to
be used to pay off the debt from the Economic Recovery Bonds.
This bill attempts to redirect those funds to other purposes.
As admirable as those purposes are, it remains that the intent
of the electorate was to reduce the States debt, and the
Administration intends to abide by their will.
"In addition, this bill would delegate important decisions
regarding the allocation of State resources to a new entity,
unaccountable to the people, and outside the annual budget
process. In doing so, it would hamper the ability of the
Legislature and the Governor to make such resource decisions
that take into account all of the State's needs.
AB 593 (Frommer) of 2005 of was substantially similar to AB 2578
and was vetoed with a nearly identical veto message.
Double-referred . This bill is double-referred to the Assembly
Higher Education Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Service Employees International Union (sponsor)
Opposition
AB 2442
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None on file
Analysis Prepared by : Angela Mapp / B.,P. & C.P. / (916)
319-3301