BILL ANALYSIS �
SB 1266
Page 1
Date of Hearing: June 12, 2012
ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE
Jared Huffman, Chair
SB 1266 (Corbett) - As Amended: May 25, 2012
SENATE VOTE : 31-8
SUBJECT : Resource Conservation Lands: Appraisal Process
SUMMARY : Expands the scope of proposed state resource land
acquisitions for which an independent appraisal and review is
required, and specifies requirements for what must be included
in an appraisal report. Specifically, this bill :
1)Modifies the definition of a major acquisition thereby
lowering the threshold for when an independent appraisal is
required to include an acquisition for which the Wildlife
Conservation Board (WCB), Department of Parks & Recreation
(DPR), or a state conservancy proposes to spend more than $15
million of state funds. Current law requires an independent
appraisal for expenditures of more than $25 million in state
funds.
2)Requires for any proposed expenditure or grant by the WCB, DPR
or a state conservancy of more than $1 million for acquisition
of conservation lands, that the acquisition agency or project
partner contract for an appraisal. Defines a project partner
to include a public agency or nonprofit organization that is
seeking state funds for conservation lands. Requires the
appraisal to meet specified statutory requirements and to
conform to Uniform Standards of Professional Appraisal
Practice. Permits the landowner or project partner to
contribute to the costs of the appraisal and to be identified
as the intended user of the appraisal, and, until January 1,
2015, to be named as the co-client of the appraiser.
3)Allows the independent appraisal required for all major
acquisitions of conservation lands to be contracted for by
either the acquisition agency or a project partner as defined.
4)Requires appraisal reports for conservation land acquisitions
to include specified information, including photographs and
maps of the property, market data relied on, verifiable data
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on development potential for any valuations, a description of
any development requirements, evidence of market demand, land
title conditions, other rights that may affect value, and any
specialty valuations. Requires the appraisal report to be
prepared by an appropriately licensed or certified real estate
appraiser in good standing.
5)Deletes obsolete requirements in existing law for the
Department of General Services (DGS) to convene a working
group to make recommendations on standards for the acquisition
of conservation lands.
EXISTING LAW :
1)Requires an independent appraisal, contracted for by the
acquisition agency, of the fair market value of the land for
any major acquisition of conservation lands. Defines a major
acquisition as an acquisition involving expenditure of more
than $25 million in state funds.
2)Requires that the independent appraisal for major acquisitions
be reviewed by a qualified independent appraiser retained by
the acquisition agency. Requires the independent appraiser
performing the review to meet specified conditions and to
prepare an appraisal review report. Requires that the
independent appraisal review report be made publicly available
at least 30 days prior to holding a public hearing for
purposes of authorizing a major acquisition of conservation
lands. Requires that the appraisal and other relevant
documentation be made publicly available not more than 10
working days after the close of escrow.
3)Prohibits the purchase price for any real property acquired by
the WCB from exceeding the fair market value of the property,
as determined by an appraisal prepared by a licensed real
estate appraiser and approved by DGS.
4)Requires DGS to convene a working group to develop and adopt
standards for acquisition of conservation lands.
FISCAL EFFECT : According to the Senate Appropriations
Committee analysis:
1)Ongoing costs of $20,000 to $30,000, most likely from various
bond funds (or General Fund) for agencies to commission an
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independent appraisal and appraisal review required for major
acquisitions.
2)Ongoing costs approximately $30,000 most likely from various
bond funds (or General Fund) for agencies to commission an
appraisal to replace a landowner commissioned appraisal.
COMMENTS : The author and sponsors have introduced this bill to
enhance best practices for preparation and review of appraisals
for state purchases of conservation lands. Through the WCB,
DPR, and state conservancies, the state approves acquisitions of
land and conservation easements to protect natural resources,
and also approves grants for these purposes. From 2000 through
2009, the state spent $2.7 billion on acquisitions to purchase
1.5 million acres of conservation land and easements. These
purchases help to meet state goals for wildlife habitat
conservation, public recreation, and other ecosystem benefits.
Current state law requires an appraisal that is reviewed and
approved by DGS for each acquisition to determine fair market
value. Additional requirements for independent appraisals and
independent appraisal reviews apply to major acquisitions that
involve expenditure of over $25 million in state funds.
In order to provide greater transparency and assurances
regarding the fair market value of conservation lands purchased
by the state, the Legislature in 2004 passed legislation
establishing independent review and disclosure requirements for
acquisitions involving expenditure of more than $25 million in
state funds. In 2007 the Legislative Analyst's Office released
a report raising additional concerns regarding the appraisal
process for resource land acquisitions. SB 1285 (Corbett),
Chapter 711, Statutes of 2008, among other things, added DPR and
state conservancies to the acquisition agencies subject to the
major acquisition requirements, and required DGS to convene a
working group to develop recommendations on standards for the
appraisal process. The recommendations of the working group
were incorporated into regulations adopted by DGS in February
2012. This bill, among other things, codifies those regulatory
standards.
The major change this bill proposes to existing law is to expand
the number of land acquisitions subject to independent
appraisals and independent appraisal reviews to include any
acquisitions involving expenditures of over $15 million in state
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funds. This bill also requires that appraisals for all
acquisitions involving state expenditure of $1 million or more
be contracted for by the acquisition agency or the project
partner. The purpose of this requirement is to remove
landowners from commissioning appraisals. DGS reports that the
single factor most common to rejected appraisals is that the
appraisal was commissioned by the landowner. This bill would
continue to allow landowners to contribute toward the cost of
the appraisal but would require that the appraisal be
commissioned and contracted for by the agency or a project
partner other than the landowner. This bill would also allow
landowners to continue to be a co-client of the appraiser for a
two year period until 2015 so as not to disrupt existing
agreements that are already under consideration by state
acquisition agencies and for which the appraisal may already
have been completed.
This bill also deletes obsolete provisions of existing law
requiring DGS to convene a working group to develop
recommendations on standards for the acquisition process. As
explained above, these provisions were enacted by SB 1285. DFG
convened the working group and developed standards that were
adopted as regulations on February 22, 2012. This bill codifies
regulatory standards for what is to be included in an appraisal
report prepared for the acquisition of conservation lands by
WCB, DPR or state conservancies.
It should be noted that the WCB recently adopted a Board policy
that, while it is not in conflict with this bill goes beyond the
requirements of this bill, by requiring independent appraisals
and appraisal reviews, and public disclosure of the reviews for
30 days in advance of the public meeting where the project will
be considered, for all substantial acquisitions involving WCB
expenditures of $5 million or more, or that are 5,000 acres or
more in size. The WCB policy also includes criteria for what
must be included in an appraisal review report. The WCB plans to
monitor the effect of the policy and have staff report back on
the impacts of the policy after 12 months. The WCB adopted this
policy at its May 31, 2012 meeting. The Board indicates that
the purpose of the policy is to provide additional disclosure
and transparency with respect to acquisitions and demonstrate
that WCB conducts business in accordance with prescribed
statutory requirements, professional industry standards and with
fiscal responsibility and accountability.
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Issues and Potential Suggested Amendments : Existing law
requires the state acquisition agency to contract for an
independent appraisal for any major acquisition projects. This
bill expands the number of projects that would be subject to
this provision by lowering the threshold definition of a major
project from $25 million to $15 million. This bill also modifies
the requirement as to who is required to contract for the
independent appraisal to allow either the state acquisition
agency or the project proponent to contract for the independent
appraisal. To ensure the goal of independence, the committee
may wish to consider whether this provision ought not to stay as
it is in current law requiring that the agency itself contract
for the independent appraisal. The author and sponsors note
that the law also requires that the appraisal be subjected to an
independent appraisal review, a requirement which is not being
modified by this bill, and that by expanding the universe of
projects that are subject to the independent appraisal
requirement there could be some increased administrative costs
to the state.
Support Arguments : Supporters assert this bill strengthens best
practices for state expenditures for conservation lands, and
ensures appraisals contain all the necessary information for the
state to conduct a comprehensive review and determine a
competent and defensible value for the property. By raising the
standards and improving review of acquisitions, supporters
believe this bill will protect taxpayer money and make sure when
the state undertakes conservation land purchases the money is
being well spent.
REGISTERED SUPPORT / OPPOSITION :
Support
California Council of Land Trusts (sponsor)
Big Sur Land Trust
Bodega Land Trust
California Waterfowl Association
Land Trust of Santa Cruz County
Marin Agricultural Land Trust
McKinleyville Land Trust
Mendocino Land Trust
Ojai Valley Land Conservancy
Pacific Forest Trust
Peninsula Open Space Trust
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Planning and Conservation League
Redwood Coast Land Conservancy
Rocky Mountain Elk Foundation
Save Mount Diablo
Save the Redwoods League
Sierra Foothill Conservancy
Solano Land Trus
The Conservation Fund
The Nature Conservancy
Trust for Public Lands
Wildlife Heritage Foundation
Opposition
None on file.
Analysis Prepared by : Diane Colborn / W., P. & W. / (916)
319-2096