BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 1546 HEARING: 5/9/12
AUTHOR: Cannella FISCAL: No
VERSION: 4/18/12 TAX LEVY: No
CONSULTANT: Weinberger
COUNTY PROPERTY SALES
Exempts counties' sales of county real property on former
military bases from the state laws that generally govern
the sale of county real property.
Background and Existing Law
As part of the Base Realignment and Closure (BRAC) process
that followed the end of the Cold War, Castle Air Force
Base in Merced County closed in 1995. To help local
officials convert the former bomber base into productive
civilian uses, the Legislature created the Castle Joint
Powers Redevelopment Agency with special powers (AB 69,
Canella, 1993). In 1994, the Legislature named the Agency
as the official "single local reuse entity" to cooperate
with state and federal officials (AB 3775, Honeycutt,
1994). In 1996, the Legislature set up a generic statute
to expedite the redevelopment of military bases (AB 2736,
Weggeland, 1996). Because many of the assumptions
underlying the 1993 special statute didn't materialize,
local officials asked the Legislature to repeal the special
law (AB 774, Cardoza, 2000). Instead, Merced County formed
its own redevelopment project area to develop county
property on the former Castle Air Force base.
Until 2011, the Community Redevelopment Law allowed local
officials to set up redevelopment agencies (RDAs), prepare
and adopt redevelopment plans, and finance redevelopment
activities. The Law authorized RDAs to sell or lease
property without public bidding as long as the RDA provided
public notice and held a public hearing. Merced County
officials sold real property on the former Castle Air Force
Base by transferring the property to the county's RDA,
which then sold the property to selected developers without
any bidding or other competitive process.
SB 1546 -- 4/18/12 -- Page 2
By contrast, state law generally requires a county to sell
or lease property using a competitive sealed-bid process.
A county board of supervisors must, by a two-thirds vote,
adopt a resolution in a regular open meeting declaring its
intention to sell or lease the property. The resolution
must describe the property and the terms upon which it will
be sold or leased. At least three weeks after adopting the
resolution, the board must hold a public meeting at which
sealed proposals to purchase or lease the property must be
considered. State law exempts a county from these
requirements, and allows it to sell real property at less
than fair market value, to provide housing that is
affordable to low and moderate income residents.
Citing a significant State General Fund deficit, Governor
Brown's 2011-12 budget proposed eliminating RDAs and
returning billions of dollars of property tax revenues to
schools, cities, and counties to fund core services. Among
the statutory changes that the Legislature adopted to
implement the 2011-12 budget, AB X1 26 (Blumenfield, 2011)
dissolved all RDAs.
Merced County officials worry that redevelopment agencies'
elimination will force the county to sell property on the
former Castle Air Force Base through a sealed-bid process
rather than through direct negotiation, complicating the
county's efforts to revitalize lands on the former base.
Proposed Law
Senate Bill 1546 allows a county that owns real property on
a converted military base to sell that real property, or
any interest in the property, in a manner and upon the
terms and conditions approved by the board of supervisors,
without complying with the state laws that govern the sale
of county-owned real property. SB 1546 requires a board of
supervisors to make a finding that the sale is in the
public interest.
State Revenue Impact
No estimate.
Comments
SB 1546 -- 4/18/12 -- Page 3
1. Purpose of the bill . Developing real property on a
decommissioned military base poses substantial challenges.
Revitalizing former base property that may contain outdated
structures, inadequate infrastructure, and toxic
contamination requires a sophisticated developer with
sufficient resources to make substantial capital
investments. In light of these challenges, Merced County
officials sold county-owned property on the former Castle
Air Force Base by transferring the property to the County's
former redevelopment agency, which was able to dispose of
the property through direct negotiation with a qualified
developer. Redevelopment agencies' dissolution leaves
Merced County without the ability to dispose of
county-owned real property on the former Castle Air Force
Base through direct negotiation with interest buyers. The
uncertainty associated with the sealed-bid process that
applies to county property sales deters potential investors
interested in developing lands on former military bases.
The sealed-bid process also offers no assurance to the
county that a purchaser who submits a winning bid intends
to develop property on a former base, or has sufficient
resources to do so. By exempting counties from the
statutory competitive bidding requirement when they sell
property on former military bases, SB 1546 offers counties
flexibility that is vital to their efforts to develop
former bases.
2. Too broad . To protect taxpayers' interests in
publicly-owned assets, state law requires advanced notice
of a proposed county land sale, a public hearing on the
sale, and a competitive sealed-bid sales process. These
requirements ensure that counties dispose of publicly-owned
lands transparently, with an opportunity for public input,
and in a manner that maximizes the compensation the county
receives. SB 1546 exempts counties from the state laws
that require advanced notice, public hearings, and
competitive bidding. Instead, the bill allows a county's
board of supervisors to determine the manner in which real
property on a former base is sold. This broad exemption
may allow a county to sell real property without any
advanced public notice or public hearing. It may even
allow a board of supervisors to delegate the authority to
sell county property to a designated county employee,
subject only to whatever terms and conditions the board of
supervisors may specify. The Committee may wish to
consider whether SB 1546's broad exemption from the
SB 1546 -- 4/18/12 -- Page 4
statutory requirements that generally govern county land
sales undermines taxpayers' ability to hold county
supervisors accountable for decisions to sell
publicly-owned real property on former military bases.
3. A narrower exemption . Merced County officials want to
replicate the no-bid process they used under redevelopment
law to sell real property on the former Castle Air Force
Base. Merced County's sales of real property on the former
base could be exempted only from competitive bidding if the
sales meet specified requirements that preserve the notice,
hearing, and super-majority approval requirements that
apply to other county land sales. Specifically, the
Committee may wish to consider amending SB 1546 to allow a
county to sell real property, or any interest in real
property, without public bidding if:
The property is located within the boundaries of
former military base that was closed as part of a Base
Realignment and Closure (BRAC) process.
The property is located within the boundaries of a
project area established by the county's former
redevelopment agency.
The county board of supervisors, by a two-thirds
vote, adopts a resolution of intention that:
o Describes the property and the terms upon which
it will be sold.
o Fixes a time, not less than three weeks after
the hearing at which the resolution is adopted, for
a public meeting at which the board will consider
approving the sale.
o Identifies a location, or locations, where the
county will make available, for public inspection
and copying at a cost not to exceed the cost of
duplication, a copy of the proposed sale agreement.
The board of supervisors, by a two-thirds vote,
adopts a resolution approving the sale which contains
the board's finding that the sale is in the public
interest.
4. A partial solution . SB 1546 addresses one problem
created by the Merced County Redevelopment Agency's
elimination. However, eliminating redevelopment agencies
had wider implications for efforts to develop properties on
decommissioned military bases in communities throughout
California. The bill does not help cities that are trying
to revitalize former military bases or counties in which
property on former military bases has been transferred to a
SB 1546 -- 4/18/12 -- Page 5
redevelopment agencies' successor agency. It does not
address local governments' needs for new financing
mechanisms and brownfield remediation tools to foster
development on former bases. The Committee may wish to
consider whether state law should be changed specifically
to help Merced County sell property on the former Castle
Air Force Base without addressing other challenges created
by RDAs' dissolution in other communities that are trying
to revitalize former military bases.
Support and Opposition (5/3/12)
Support : Merced County.
Opposition : Unknown.