BILL ANALYSIS �
SB 1266
Page 1
SENATE THIRD READING
SB 1266 (Corbett)
As Amended August 23, 2012
Majority vote
SENATE VOTE :31-8
WATER, PARKS & WILDLIFE 11-0 BUSINESS &
PROFESSIONS 9-0
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|Ayes:|Huffman, Bill Berryhill, |Ayes:|Hayashi, Bill Berryhill, |
| |Blumenfield, Campos, | |Allen, Butler, Eng, |
| |Fong, Gatto, | |Hagman, Hill, Ma, Smyth |
| |Roger Hern�ndez, Hueso, | | |
| |Jones, Lara, Yamada | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 16-0
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|Ayes:|Gatto, Harkey, |
| |Blumenfield, Bradford, |
| |Charles Calderon, Campos, |
| |Davis, Fuentes, Hall, |
| |Hill, Cedillo, Mitchell, |
| |Nielsen, Norby, Solorio, |
| |Wagner |
| | |
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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
review, and public disclosure of the review, is required to
include an acquisition for which one or more agencies propose
to spend more than $15 million of state funds. Current law
requires an independent appraisal review for expenditures of
more than $25 million in state funds. This bill also
clarifies that the appraisal review report shall be in a
narrative format.
SB 1266
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2)Prohibits the Wildlife Conservation Board (WCB), Department of
Parks and Recreation (DPR), or a state conservancy from
utilizing property acreage as a categorical threshold to
impose an independent review of an appraisal, but allows an
agency to otherwise consider possible impacts from the
acquisition of large acreages.
3)Requires for any proposed expenditure or grant of more than
$150,000 in state funds by the WCB, DPR or a state conservancy
for acquisition of conservation lands, that the acquisition
agency or project partner contract for an independent
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.
4)Requires the independent appraisal to meet specified
requirements including that it conform to all applicable laws
and Uniform Standards of Professional Appraisal Practice.
Prohibits appraisal fees based on a percentage of the
appraised value or allowed deduction, and prohibits the
appraisal from being prepared by an appraiser with a financial
interest in the property. Requires the appraiser to meet
certain qualifications or education, experience and knowledge,
as specified.
5)Requires, for properties involving specialty interests such as
timber, water, minerals or carbon credits, that the
professional valuing the specialty interest possess additional
qualifications, as specified.
6)Requires appraisal reports for conservation land acquisitions
to include specified information, including photographs and
maps of the property, market data relied on, verifiable data
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, any
specialty valuations, and a preliminary title report when such
a report is available. Requires the appraisal report to be
SB 1266
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prepared by an appropriately licensed or certified real estate
appraiser in good standing.
7)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 Assembly Appropriations
Committee:
1)Unknown costs, potentially ranging in the low to high hundreds
of thousands of dollars, to WCB, Department of Fish and Game
(DFG) and the state conservancies, to commission appraisals
beyond the number agencies would commission under current law
(General Fund (GF), bond funds and special funds).
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2)Unknown savings, of less than the costs identified above, to
acquisition agencies resulting from decreased review of
appraisals submitted following a prior appraisal rejected by
DGS (GF, bond funds and special funds).
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
funds. This bill also requires that appraisals for all
acquisitions involving state expenditure of $150,000 or more be
contracted for by the acquisition agency or the project partner.
SB 1266
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One of the purposes 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 goes beyond the requirements of this bill, by requiring
independent 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. This bill would preempt the WCB
policy in part by prohibiting acquisition agencies from
utilizing property acreage as a categorical threshold for
independent appraisal review requirements. Agencies would,
however, be permitted to consider other possible impacts from
the acquisition of large acreages. Supporters of this bill
assert that the proposed level of state expenditure rather than
the number of acres has more relevance to whether or not an
independent appraisal review should be required. As described
above, this bill would require an independent appraisal for all
conservation land acquisitions involving expenditures of
$150,000 or more, and also require an independent appraisal
review, with public disclosure, for any acquisition over $15
million. 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
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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.
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.
Analysis Prepared by : Diane Colborn / W., P. & W. / (916)
319-2096
FN: 0005426