BILL ANALYSIS �
AB 2442
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Date of Hearing: May 9, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2442 (Williams) - As Amended: April 25, 2012
Policy Committee: Business and
Professions Vote: 6-2
Higher Education 6-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill establishes the California Hope Public Trust to
provide additional funding-from net revenue in part generated by
management of state properties selected by the Trust-for the
state's public postsecondary education segments. Specifically,
this bill:
1)Establishes the Trust, to be administered by a nine-member
board, which is authorized to appoint and fix the compensation
of an executive director, chief investment officer, and other
investment officers and portfolio managers.
2)Deposits net proceeds of the Trust into the California Hope
Public Trust Fund, subject to appropriation by the
Legislature, and requires the appropriations to be in the
following proportion:
a) 50% to the California State University (CSU).
b) 25% to the University of California (UC).
c) 25% to the California Community Colleges (CCC).
3)Requires the Department of General Services (DGS) to submit to
the Trust, by March 31, 2013 and annually thereafter, an
inventory of all state-owned real property and an inventory of
all state lease agreements.
4)Requires the Trust, by January 1, 2014 and annually
thereafter, to request enactment of legislation authorizing
the Trust to assume control of state-owned and -leased
property as recommended by the Trust and to prepare a plan for
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assuming responsibility for providing real estate services to
the state departments located in those properties, including
planning future projects.
5)Exempts from consideration for transfer the following
properties:
a) Department of Transportation highways and airspace;
b) the state park system;
c) lands under jurisdiction of the State Lands Commission;
d) state prisons and youth detention facilities;
e) the State Capitol;
f) any building or property of historical significance;
g) lands under the jurisdiction of UC, CSU, and the CCC.
6)Requires the executive director of the Trust to annually
report to the Director of General Services regarding state
surplus properties that would assist the Trust in meeting its
mission.
7)Repeals all provisions regarding the Trust on January 1, 2019,
if legislation transferring state-owned property to the trust
is not effective by that date.
FISCAL EFFECT
1)To the extent properties are transferred to the Trust that
otherwise would have been declared surplus and sold by the
state, there will be revenue losses, potentially in the tens
of millions of dollars, to the GF and special funds.
2)To the extent the Trust is more successful in enhancing the
value and disposing of state properties than DGS, there could
be significant revenue increases, up to tens of millions of
dollars, for UC, CSU, and the CCC.
3)Initial costs for the Trust are assumed to be about $1 million
from the GF for up to 10 positions.
4)Annual operating costs thereafter will depend in part on the
extent of the state property portfolio and the opportunities
that portfolio provides for undertaking revenue generating
projects for the benefit of higher education. These costs are
supposed to be supported by Trust revenues, but initially some
GF support, in the form of appropriations or loans, would
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probably be necessary.
5)Depending on the extent of properties taken over by the Trust,
there could be some corresponding reductions in DGS staff
related to a reduced property management workload. This would
depend in part on the extent to which the trust contracts with
DGS for property management services on trust properties.
COMMENTS
1)Background and Purpose . Current law requires each state
agency, with specified exceptions, to report annually to DGS
any proprietary state lands under the agency's jurisdiction
that are in excess of the agency's foreseeable needs. DGS may
take specified actions with respect to surplus properties,
including asking permission from the Legislature for sale or
disposition. According to a 2009 California State Auditor
follow-up review of DGS'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. The auditor also noted that there continues to be little
incentive for state agencies to declare their property as
surplus, because individual agency budgets do not realize any
benefits from the sale of such properties.
According to the author, the California Hope Public Trust will
be able to evaluate and better utilize state property with the
proceeds benefitting the state's higher education segments.
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, CSU and
the community colleges.
2)Prior Legislation . AB 2578 (Frommer, 2006) and AB 593
(Frommer, 2005), which were substantially similar to this
bill, were both 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."
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Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081