BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2442 (Williams) - State property: California Hope Public
Trust.
Amended: June 27, 2012 Policy Vote: GO 7-4
Urgency: No Mandate: No
Hearing Date: August 6, 2012 Consultant:
Bob Franzoia
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 2442 would establish the California Hope Public
Trust (trust), an alternative for managing the state's real
estate. This bill would require all proceeds generated by the
trust to be deposited in the California Hope Public Trust Fund
which would be available, upon appropriation, to support the
California State University, California Community Colleges, and
the University of California systems. The provisions of this
bill would sunset on January 1, 2019.
Fiscal Impact: $500,000 to $1 million annually from the General
Fund to the trust to manage the state's real estate through
December 31, 2018.
Unknown, major asset and revenue shift through December 31,
2018. To the extent the Legislature transfers property to
the trust, and the trust manages state property for revenue
generating purposes than the Department of General Services
is otherwise permitted to do, this bill could reduce net
state costs to the General Fund. To the extent it generates
enterprise revenue, the trust could increase General Fund
revenue.
Potential state property management workload decrease to
the department.
Background: The department is responsible for providing a broad
range of business services to state entities, including
determining the present and future space needs of state
entities, administering the sales and leasing of state owned
surplus property, and leasing privately owned space for state
entities. This bill provides that the trust shall not sell or
dispose of excess or surplus state real property, as defined.
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Proposed Law: This bill would:
- Establish the California Hope Public Trust to be governed by a
nine member board and the California Hope Public Trust Fund with
moneys in the fund being allocated, upon appropriation, 50
percent to CSU, and 25 percent each to UC and the CCCs to
support instruction and direct student services.
- Require the department by March 31, 2013 to submit to the
trust an inventory of state owned property and lease agreements
between state agencies and private or nonpublic management
groups.
- Require the trust by January 1, 2015 to review that inventory,
determine which properties should be controlled by the trust,
and request that the Legislature authorize the trust to control
any of those properties.
- Require the trust to accomplish various objectives, including,
generating a return on real estate holdings in the possession of
the trust, and using private sector management and accounting
methods to provide for the effective utilization of state
assets.
- Authorize the trust to carry out various powers, including,
acquiring or disposing of property, constructing and maintaining
buildings, leasing property and approving loan agreements.
- Require all net proceeds generated by the trust to be paid to
the California Hope Public Trust Fund, which would be created by
this bill, and require the trust to use the money in that fund,
upon appropriation by the Legislature, to support instruction
and direct student services at the CSU, CCC, and UC systems.
- Require the trust to report on its activities and to include a
financial statement showing the assets, liabilities, revenues,
and expenditures and a summary of net proceeds.
- Authorize the trust to hire staff for these purposes.
- Repeal these provisions on January 1, 2019.
Related Legislation: AB 593 (Frommer) 2005 and AB 2578 (Frommer)
2006 proposed creating the California Hope Endowment and
California Hope Public Trust in a manner that is substantially
similar to the provisions of this bill. Both bills were vetoed.
Staff Comments: The trust shall not generally consider for
transfer any of the following real property owned by the state:
(1) Lands under the jurisdiction of the Department of
Transportation.
(2) Lands that are part of the State Park System.
(3) Lands under the jurisdiction of the State Lands Commission.
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(4) Lands in the possession of the Department of Corrections and
Rehabilitation that are used explicitly for the incarceration of
inmates.
(5) The State Capitol.
(6) Any land, building, or property of historical or cultural
significance.
(7) Any property used for public transit purposes.
(8) Lands under the jurisdiction of the University of
California.
(9) Lands under the jurisdiction of the California State
University.
Recommended Amendments: The trust shall generate a return on
real estate holdings in the possession of the trust including
leasing any property under the management and control of the
trust. The trust will also contract with the department for the
management and maintenance of property in the trust. Staff
recommends this bill be amended to prohibit the trust from
increasing lease payments on state entities or displacing state
entities without the approval of the department.
This bill states that the trust shall account for proceeds
received or generated that are derived from real estate procured
with special fund revenues. It is unclear how special fund
revenues may be allocated for General Fund purposes. Staff
recommends this bill be amended to prohibit the trust from
assuming responsibility of state-owned real estate and property
acquired or supported with special funds.
Other than notifying the chair of the fiscal committee of each
house prior to approving the acquisition or disposition of land
and buildings and a report on the activities undertaken by the
trust on or before July 1, 2016, there is no legislative
oversight of the trust. In order to maintain oversight, staff
recommends this bill be amended to require the trust's budget be
subject to appropriation in the annual budget act.
The California Community College system consists of 72 community
college districts with 112 campuses and 2,600,000 students
(1,200,000 full time). The California State University system
consists of 23 campuses 367,000 undergraduate and 60,000
graduate and post baccalaureate students. The University of
California system consists of 10 campuses and 234,000 students.
Staff recommends adopting a more equitable formula for the
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distribution of any trust generated revenue which is to be used
to support instruction and direct student services.