BILL ANALYSIS �
AB 2442
Page 1
Date of Hearing: April 17, 2012
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Marty Block, Chair
AB 2442 (Williams) - As Amended: March 29, 2012
SUBJECT : State property: California Hope Endowment 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
request to the Legislature to enact legislation that would
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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,
which is related to smart growth.
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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
disposition of land and buildings, as specified.
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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)Defines the missions and functions of California's public and
independent colleges and universities, also known as the
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Donahoe Higher Education Act. (Education Code � 66010.4) UC
and CSU receive their funding through the annual Budget Act.
There is no funding policy in statute for these institutions;
thus, their funding is discretionary. However, UC and CSU
have entered into system-specific "compacts" and
"partnerships" with several Governors to ensure stable
multi-year funding in exchange for a commitment to deliver on
specific performance measures.
2)Establishes the DGS as the state government entity responsible
for providing a broad range of business services to
government, including 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.
FISCAL EFFECT : Unknown
COMMENTS : This bill was approved by the Assembly Business and
Professions Committee on April 10, 2012, by a vote of 6-2, where
issues pertaining to the Trust and surplus property were
considered.
Need for this bill . 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. According to the author, this bill creates the
California Hope Public Trust which will be able to evaluate and
better utilize state property with the proceeds benefitting the
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.
CCC . The California Community Colleges are not a beneficiary of
the Trust, yet they are an equal and critical partner in
California's higher education system and have sustained
significant budget reductions in recent years from both
Proposition 98 and the General Fund. Should CCC benefit from
the Trust?
Funding priorities and accountability . This bill does not speak
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to the allocation of funds, including the amounts to be
distributed to UC and CSU or for which purposes. Discretion is
left to the Trust governing board, which includes
representatives with expertise in real estate and finance but
not higher education or the state budget. For example, should
these funds support ongoing state priorities, such as
enrollment, faculty and staff, course offerings, or student
support services, or if the funds are unpredictable, should they
be used for one-time needs, such as maintenance, library
services, or information technolology? By allocating these
moneys apart from the budget process, there is no legislative
oversight of where the moneys are spent or how they coordinate
with the funds these institutions receive in the annual budget
act to support the state's priorities.
Supplement or supplant ? The author may wish to consider
language to expressly state that Trust funds will supplement and
not supplant General Fund support for UC and CSU. However, in
difficult fiscal times when state revenues are limited, will
state General Fund support for higher education be reduced in
anticipation that funding from the Trust will fill the gap?
Administrative costs . The Trust has the authority to hire
employees, yet there is no limit on the amount of funds that can
be spent on administration.
Prior legislation . AB 2578 (Frommer, 2006) and AB 593 (Frommer,
2005) were substantially similar to this bill. Both were vetoed
by Governor Schwarzenneger, who wrote the following in his veto
message for AB 2578:
"? 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 1326 (Furutani, 2011), which was held in the Assembly Revenue
and Taxation Committee, would have imposed a 12.5% oil and gas
severance tax and directed the proceeds of this tax to the
California Higher Education Fund to be allocated annually in
unspecified amounts to UC, CSU, and CCC.
REGISTERED SUPPORT / OPPOSITION :
AB 2442
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Support
Service Employees International Union, Californa
Opposition
None on file.
Analysis Prepared by : Sandra Fried / HIGHER ED. / (916)
319-3960