BILL ANALYSIS �
Bill No: AB
2442
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
AB 2442 Author: Williams
As Amended: May 25, 2012
Hearing Date: June 26, 2012
Consultant: Paul Donahue
SUBJECT
State property: California Hope Public Trust
DESCRIPTION
Establishes the California Hope Public Trust (Trust) for
the benefit of the California State University (CSU),
California Community Colleges (CCC), and University of
California (UC) systems. Specifically, this bill :
1)Creates the trust and a board to govern and administer
it, requires it to be funded by transfers of state-owned
property, and requires the board to manage trust
properties with the goal of increasing property values
and earning revenue for the CSU, CCC, and UC systems, as
specified.
2)Specifies the composition of the nine-member board of
directors of the trust:
a) Four members are appointed by the Governor, subject
to Senate confirmation, with demonstrated expertise in
real estate, finance and urban planning;
b) One member appointed by the Speaker of the
Assembly;
c) One member appointed by the Senate Rules Committee;
AB 2442 (Williams) continued
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d) The Secretary of State and Consumer Services
Agency, the Treasurer and the Controller would serve
as ex officio members of the board.
3)Requires the Department of General Services (DGS) to
submit an inventory to the trust of all state-owned real
property and lease agreements for all state-owned real
estate and property by March 31, 2013, and annually
thereafter.
4)Requires the trust to biennially review this inventory
beginning January 1, 2015, and determine which properties
to control. The trust must prepare a plan for assuming
responsibility of state-owned real estate and property.
The trust must submit a request to the Legislature by
January 1, 2015, to enact legislation authorizing the
Trust to control these identified properties.
5)Prohibits the trust from considering for transfer any of
the following:
a) Department of Transportation property used for
existing highways or airspace, or acquired for highway
projects;
b) State Parks properties;
c) Lands under the jurisdiction of the State Lands
Commission;
d) Department of Corrections and Rehabilitation or its
Division of Juvenile Facilities properties that are
used explicitly for incarcerating inmates;
e) The State Capitol;
f) Any land, building, or property determined to be of
historical or cultural significance;
g) Any property subject to constitutional provisions
governing the Highway Users Tax Account; and
h) Lands under UC or CSU jurisdiction.
6)Duties of the Trust : (a) to report annually to DGS
regarding surplus property, as specified, and identify
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land or property that would assist the Trust to
effectuate its purposes; (b) generate a return on its
real estate holdings; (c) provide innovative stewardship
of real property and infrastructure; (d) provide for
efficient and effective utilization of state assets; (e)
ensure that all projects satisfy state, regional, and
local land-use and environmental requirements applicable
to private sector projects; and (f) ensure that it meets
smart growth principles, as specified.
7)Powers of the Trust : (a) to acquire and dispose of any
property-subject to specific limitations; (b) to
construct and maintain buildings; (c) to lease property
under the management and control of the trust; (d) to
enter into joint ventures with other public or private
entities for various purposes; (e) to acquire real or
personal property, equipment and fixtures required for
any property managed or controlled by the trust; and (f)
to accept donations of property from private donors.
8)Requires the trust to notify the chair of the fiscal
committee of each house before approving the acquisition
or disposition of real property;
9)Prohibits the trust from selling or disposing of any
state excess land or surplus property;
10)Requires the trust to annually report to the Legislature
beginning July 1, 2016, on its activities.
11)Creates the California Hope Public Trust Fund (Trust
Fund), requires all net proceeds of trust activities to
be paid to the Trust Fund, and requires the trust, upon
appropriation by the Legislature in the annual Budget
Act, to use the moneys in the fund to support instruction
and direct student services at the CSU, the CCC, and UC
systems. The Legislature must appropriate funds
according to the following schedule: 50% to the CSU, 25%
to the UC and 25% to the CCCs.
12)States legislative intent that moneys in the Trust Fund
not be used to enter into or renew a contract that
provides for an increase in compensation for a UC or CSU
administrator, as defined, and to establish an
administrative cap on the Trust once it is fully
operational.
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13)Authorizes the trust to issue revenue bonds, requires
the Treasurer to coordinate bond sales, and specifies
provisions governing the sale of bonds by the trust.
14)Sunsets this bill on January 1, 2019, unless legislation
is enacted beforehand to transfer properties to the trust
as outlined above, and requires the trust to assume
responsibility for providing real estate services for
transferred properties, including planning of future
projects.
15)Exempts the Department of Parks and Recreation, the
Department of Fish and Game, the Wildlife Conservation
Board and other state conservancies from existing law
requiring all state agencies to report surplus property
to DGS annually, and authorizes DGS to give priority to
proposals for disposing of surplus lands to further the
purposes of the trust.
16)Requires any revenue received or generated from the
application of this bill's provisions attributable to the
Trust to supplement, rather than supplant, state funds
made available or expended for the same or similar
purpose.
EXISTING LAW
1)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.
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
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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.
BACKGROUND
1)Purpose : The author notes that, 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, the California Hope Public Trust created by
this bill will be able to evaluate and better utilize
state property, and the proceeds of the trust will
benefit the UC, CSU and CCC 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. The trust
would manage the properties with a goal of increasing the
value of its holdings and earning revenue for the CCC, UC
and CSU systems.
2)Support : Among other things, the supporters point out
that the trust will fill a gap that was identified by the
State Auditor, who expressed concern that no state entity
has broad oversight to review property-retention
decisions by individual agencies. This bill would enable
the trust to evaluate state property in order to
determine whether there are properties that are currently
underutilized.
3)State Auditor's review of state surplus property : The
author and supporters of this bill note that the State
Auditor has identified shortcomings in the management of
state property that creation of the California Hope
Public Trust would rectify. However, it seems that the
State Auditor's chief complaint is that the State has
failed to properly manage the disposal of state property.
The Auditor complains that no state entity has authority
to oversee the property-retention decisions of individual
agencies, and has suggested that the state centralize the
administration of its real property assets and provide
financial incentives to state agencies for disposing of
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surplus property.<1>
This bill departs from the Auditor's recommendations in
this regard. Rather than consolidate or centralize
administration of real property assets, this bill instead
creates a separate entity made up of political appointees
who are seeking to appropriate state properties to
fulfill a narrow mission of restoring funding to colleges
and universities that the Legislature took away,
seemingly without regard to the overall needs of the
State.
Moreover, the Auditor sought to expedite and incentivize
the disposal of state properties, whereas this bill would
seem to encourage stockpiling of state real properties in
order to pursue not well-defined property development
goals.
4)Opposition : The Judicial Council and Administrative
Office of the Courts opposes this bill for several
reasons, among them the belief that this bill presents
the risk that revenue currently generated from court
facilities would be diverted to CSU, US, and the CCC.
The Judicial Council receives roughly $4 million per year
in revenue from property through parking lot fees and
leases to counties, etc., and notes that under this bill
the trust could manage these income generating facilities
and the income would be distributed to CSU, US and the
CCC rather than to the branch's facilities and
maintenance fund.
5)Veto of prior legislation : AB 2578 (Frommer) in 2006,
and AB 593 (Frommer) from 2005 were substantially similar
to this bill. Both were vetoed by Governor
Schwarzenegger, 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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<1> See, e.g., California State Auditor Report 2008-502,
p.3
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PRIOR/RELATED LEGISLATION
AB 1326 (Furutani) 2011-2012 Session 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. (Held in Assembly Revenue and Taxation Committee)
AB 2578 (Frommer) and AB 593 (Frommer) 2005-2006 Session
would have created the California Hope Trust in form that
is substantially similar to the provisions of this bill.
(VETOED)
SUPPORT:
California Faculty Association
Service Employees International Union - California
OPPOSE:
Judicial Council
DUAL REFERRAL: Senate Governance and Finance Committee
FISCAL COMMITTEE: Senate Appropriations Committee
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