BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1392 (Pavley) - Developmental services.
Amended: April 9, 2012 Policy Vote: GO 12-1
Urgency: No Mandate: No
Hearing Date: May 24, 2012 Consultant: Bob Franzoia
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: SB 1392 would require if a developmental center is
determined to no longer meet the needs of the state for directly
serving developmentally disabled persons that the grounds of the
center be made available for lease.
Fiscal Impact: Redirection of lease revenue from the General
Fund to a restricted purpose.
Unknown restricted lease revenue annually.
Unknown decrease in General Fund revenue annually.
Background: Existing law requires a state agency to review
annually its real property holdings and determine what, if any,
is in excess of its foreseeable needs. These properties are
commonly referred to as surplus state properties. They include
both unused properties and those which are underutilized by an
agency. Once real property has been identified as surplus, the
state attempts to sell the property, or dispose of it in some
other manner.
Existing law provides that the Department of General Services
(department) shall sell surplus property at fair market value
but provides discretion to sell at less than fair market value
under certain conditions. When surplus property is sold, the
sales revenues are deposited into the account that originally
paid for the acquisition of the property. In most instances,
sale revenues are deposited in the General Fund and are
available for expenditure on any state program.
Proposition 57, the Economic Recovery Bond Act of 2004,
authorized the sale of $15 billion in long term bonds to pay off
accumulated debt. Pursuant to Proposition 60A (2004), proceeds
from the sale of surplus properties are deposited in the Deficit
Recovery Bond Retirement Sinking Fund Subaccount and are be used
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to pay the principal and interest on Proposition 57 bonds. Once
these bonds are fully repaid, proceeds from surplus property
sales would be deposited in the General Fund. Proposition 60A
only applies to those properties that were purchased with
General Fund revenue or bonds secured by the General Fund.
Proposition 60A does not apply to the sale of surplus property
acquired with special funds.
Revenue from the leasing of state property may be used for any
purpose.
As of April 1, 2012, the balance on the $15 billion of economic
recovery bonds was $6.5 billion. This bill would prohibit the
sale of certain properties, the proceeds of which could be used
to reduce that balance.
Proposed Law: If the real property within the grounds of Agnews
State Hospital, Camarillo State Hospital, Fairview State
Hospital, Lanterman State Hospital, Porterville State Hospital,
Sonoma State Hospital, or Stockton State Hospital is determined
to no longer meet the needs of the state for directly serving
persons with developmental disabilities, the real property,
subject to any lease entered into pursuant to a statute enacted
prior to the effective date of this section, shall be made
available for lease and be leased in order to generate revenue
for deposit into the Californians with Developmental
Disabilities Fund, which is created by this bill.
Moneys in the fund shall, upon appropriation by the Legislature,
be made available to the Department of Developmental Services
(department) for purposes of supporting community services
(Welfare and Institutions Code 4688.6) for persons with
developmental disabilities.
Agnews State Hospital and Stockton State Hospital were
previously designated surplus and Camarillo State Hospital was
converted to CSU Channel Islands. At Lanterman State Hospital,
the department is proceeding with closure activities.
Staff Comments: While it may appear attractive to require the
lease, rather than the sale, of underutilized state property
such a requirement could result in major revenue losses one time
or ongoing depending on the real property. (Real property is
generally the land and structures affixed to the property.) For
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example, old buildings may be designed historical which makes
renovation extremely costly and leasing very difficult. The
state may be able to sell a property for a major revenue gain
but only lease the property for a minor revenue increase
annually. With a public private partnership agreement, the
state may negotiate a sale and lease arrangement that generates
a one time revenue increase and ongoing lease revenue (or an
offset).
Additionally, the state will forgive rent to offset capital
improvements made by the tenant further reducing lease revenue.
Thus, this bill could have the effect of generating a small
amount of lease revenue annually for a restricted use while
precluding a major General Fund revenue increase from a sale of
the property.
The proposed amendment would strike out "shall" and insert "may"
on page 2, line 30, thereby making leasing optional. Any lease
revenue would still be deposited in a restricted fund.