BILL ANALYSIS �
SB 1266
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Date of Hearing: June 19, 2012
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
SB 1266 (Corbett) - As Amended: May 25, 2012
SENATE VOTE : 31-8
SUBJECT : Resource conservation lands: appraisal process.
SUMMARY : Lowers the expenditure threshold amount from $25
million to $15 million before an independent appraisal is
required for state conservation land acquisitions, and specifies
appraisal reporting requirements. Specifically, this bill :
1)Revises the definition of a major acquisition by lowering the
expenditure threshold amount from $25 million to $15 million
before an independent appraisal is required to determine fair
market value (FMV) for conservation lands to be acquired by
the Wildlife Conservation Board (WCB), Department of Parks &
Recreation (DPR), or a state conservancy.
2)Requires the acquisition agency or project partner to contract
for the independent appraisal.
3)Requires, for any proposed conservation land acquisition
exceeding $1 million by the WCB, DPR or a state conservancy,
that the acquisition agency or project partner contract for an
appraisal. Permits the landowner or project partner to
contribute to the costs of the appraisal and be identified as
the intended user of the appraisal, and, until January 1,
2015, to be named as the co-client of the appraiser.
4)Requires all appraisals to meet specified statutory
requirements and to conform to the Uniform Standards of
Professional Appraisal Practice.
5)Requires appraisal reports for conservation land acquisitions
to include specified information, including:
a) Property photographs and maps, and market data;
b) Data on development potential for any valuations;
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c) A description of any development requirements;
d) Evidence of market demand for development; and,
e) Land title conditions and related appraisal reports.
6)Deletes obsolete provisions in existing law requiring the
Department of General Services (DGS) to convene a working
group to make recommendations on standards for the acquisition
of conservation lands.
7)Defines "project partner" to mean a public agency or
non-profit organization that is seeking state funding for
itself or for another public agency or non-profit
organization, from an acquisition agency for the acquisition
of conservation lands.
EXISTING LAW :
1)Requires an independent appraisal, contracted for by the
acquisition agency, to determine the FMV in major acquisitions
of conservation lands. Defines a major acquisition as an
acquisition that costs $25 million or more in state funds.
2)Requires the acquisition agency, for major acquisitions, to
hire a qualified independent appraiser to both review the
independent appraisal and prepare an independent appraisal
review report that shall be made publicly available at least
30 days prior to a public hearing to authorize 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 FMV of the property, as determined
by an appraisal prepared by a licensed real estate appraiser
and approved by the DGS.
4)Requires the DGS to convene a working group to develop and
adopt standards for the acquisition of conservation lands.
FISCAL EFFECT : Unknown
COMMENTS :
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Purpose of this bill . According to the author's office, "This
bill establishes best practices for the state purchase of lands
for conservation purposes. In doing so, this bill ensures that
potential purchases are thoroughly and uniformly reviewed and
the state gets the best value for its dollar."
Background . 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 FMV. Additional requirements for
independent appraisals and independent appraisal reviews apply
to major acquisitions that involve expenditure of over $25
million in state funds. This bill would revise the definition
of major acquisitions by lowering the expenditure threshold
amount to instead apply to land expenditures of $15 million or
more. This bill also provides best practices for the
preparation and review of appraisals for state purchases of
conservation lands.
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. According
to the Assembly Water, Parks and Wildlife Committee, the purpose
of this requirement is to remove landowners from commissioning
appraisals. The 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 to not 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
pursuant to SB 1285 (Corbett), Chapter 711, Statutes of 2008.
The DGS adopted those recommendations on appraisal report
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requirements for conservation lands acquired by WCB, DPR, or
state conservations through the regulatory process in February
2012, and this bill codifies those regulations.
On May 31, 2012, WCB recently adopted a policy that exceeds this
bill's requirements by requiring independent appraisals,
appraisal reviews, and a 30-day public notice of those reviews
prior to the public meeting where the project will be
considered, for WCB acquisitions that either cost $5 million or
more, or are 5,000 acres or larger. The WCB policy also
includes criteria for what must be included in an appraisal
review report and the WCB will report on this policy after one
year. The WCB indicates that the purpose of the policy is to
provide additional disclosures and transparency with respect to
acquisitions, and to demonstrate that the WCB conducts business
in accordance with prescribed statutory requirements,
professional industry standards, and with fiscal responsibility
and accountability.
Previous Legislation . SB 1285 (Corbett), Chapter 711, Statutes
of 2008, 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.
Support . According to the sponsor, the California Council of
Land Trusts, "SB 1266 ensures appraisals contain all the
necessary information for the state to conduct a comprehensive
review of the potential purchase and determine a strong,
competent and defensible value for the property. In addition,
it makes other changes where there are opportunities to improve
the appraisal process. By raising the standards and putting
them in law, SB 1266 protects taxpayers' money and makes sure
when the state undertakes conservation land purchases, the money
is well spent."
According to the Nature Conservancy, "This legislation will
ensure that appraisals for acquisitions by the WCB, DPR, and the
state conservancies contain the necessary information to permit
these agencies to determine FMV and ensure the prudent
expenditure of public dollars. SB 1266 seeks to raise the
standards for the appraisal of conservation lands, thereby
allowing for a comprehensive review of conservation real estate
acquisitions. All parties benefit from strong, competent, and
defensible valuations of real property. SB 1266 appropriately
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seeks to build public confidence in transactions designed to
advance conservation goals and provide a framework for fiscal
accountability. In addition, the state will realize cost
savings in the acquisition of conservation lands by continuing
to allow 'project partners' to contract for appraisals."
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
McKingleyville Land Trust
Mendocino Land Trust
Ojai Valley Land Conservancy
Pacific Forest Trust
Peninsula Open Space Trust
Redwood Coast Land Conservancy
Rocky Mountain Elk Foundation
Save Mount Diablo
Save the Redwoods League
Sierra Foothill Conservancy
Solano Land Trust
The Conservation Fund
The Nature Conservancy
Wildlife Heritage Foundation
Opposition
None on file.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301