BILL ANALYSIS �
AB 1656
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Date of Hearing: April 30, 2014
ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW
Jim Frazier, Chair
AB 1656 (Dickinson) - As Amended: March 28, 2014
SUBJECT : Department of General Services: State Board of
Equalization headquarters
SUMMARY : Authorizes the Department of General Services (DGS),
with the consent of the Board of Equalization (BOE), to enter
into agreements for the planning, design, construction, and
acquisition of facilities to relocate the BOE headquarters in
the Sacramento region. Specifically, this bill :
1)Directs DGS to complete the site selection for the BOE
headquarters that will consolidate the current headquarters
and annexes in the Sacramento region by June 30, 2015.
2)Authorizes BOE to relocate its offices from existing
state-owned or state-leased facilities to consolidate its
headquarters and annexes to a single location without any
obligation to pay rent on those facilities after leaving.
3)Requires DGS to solicit and accept proposals for acquiring or
constructing consolidated facilities for the BOE on the "best
value" basis, as specified.
4)Requires DGS to develop terms and conditions of the agreements
or leases authorized by this bill by December 31, 2015.
5)Allows DGS to solicit and accept proposals for the sale,
exchange, lease, rehabilitation, or any combination of these
for all or part of the current BOE headquarters in connection
with the selection and acquisition of a lease, lease-purchase,
or a lease with the option to purchase for a new headquarters.
6)Requires DGS to provide notice of terms and conditions of the
proposed agreements or leases to the chairs of the fiscal
committees of the Legislature and the Joint Legislative Budget
Committee, or their designees, at least 45 days prior to
executing the agreements.
7)Requires DGS to determine if selling the current headquarters,
leasing it to other tenants, or exchanging it is in the best
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interest of the state.
8)Requires DGS to report to the chairs of the fiscal committees
of the Legislature and the Joint Legislative Budget Committee,
or their designees, on the most cost-effective option for the
state.
9)Requires the Director of DGS, upon the decision to sell,
exchange, or lease the headquarters, to make an early payoff
of the total outstanding lease revenue bonds on the current
headquarters from sale, exchange, or lease revenues.
EXISTING LAW creates DGS to provide centralized services to
state agencies, including those related to planning,
acquisition, construction, and maintenance of state buildings
and properties.
FISCAL EFFECT : Unknown
COMMENTS : This bill, which is sponsored by BOE, would direct
DGS with the consent of BOE to enter into agreements for the
planning, design, construction, and acquisition of facilities to
relocate the BOE headquarters in the Sacramento region. BOE,
which administers tax and fee programs, is seeking to leave its
current headquarters at 405 N Street in downtown Sacramento
because of space constraints and various ongoing building
maintenance issues that have arisen since moving to the location
in 1993.
The current building was designed to house 2,200 employees, but
space is now needed for approximately 3,150 employees.
According to BOE, staff size has grown largely to meet
Legislative mandates for additional revenue administration,
collection and enforcement efforts. The lack of space has
required BOE to move about a quarter of its headquarters
operations to four annexes in the Sacramento region. The
downtown headquarters building and all annexes are currently at
capacity. BOE explains that operating a headquarters function
from five locations creates inefficiencies and increases costs.
In addition to space constraints, the headquarters building has
had several issues that have required and are still requiring
extensive repairs. According to BOE, the state has spent
approximately $59 million since the 1990s to repair the
building. Issues have involved water intrusion, mold growth
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that required extensive remediation, deficiencies with the
exterior wall window system, and the need to update several
building systems.
BOE reports more problems have recently been discovered and
efforts to correct them are expected to cost the state between
$30 and $40 million over the next few years. Repair work
includes replacing more than 2,000 exterior glass panels and
wastewater pipes throughout the building. Also, more mold
remediation is needed and the building requires various
infrastructure repairs.
According to BOE, the high cost of staying in the building
justifies relocation, especially since repair work would be less
expensive if it could be done while the building was vacant.
For certain work, BOE has had to move floors of employees to
temporary spaces while their regular areas were repaired.
Additionally, BOE has had to pay greater rates since some work
can only be done during non-business hours when employees are
not present.
BOE has been in discussion with DGS for several years to try and
resolve the headquarters issues. DGS indicates that generally
agencies work with DGS when they have space constraints. DGS
looks for opportunities within buildings that the state already
owns or leases as well as opportunities to enter into leases or
purchases. For large projects like a new building, agencies then
usually work through the budget process to secure funds.
According to BOE, it has engaged in the budget process, but has
not been able to secure funding for a new headquarters.
While the typical process for such a project involves securing
funds through the budget process, several state building
projects have been authorized by the Legislature.
This bill does not appropriate funds. According to the author,
it is meant to move the process forward. This bill specifically
directs DGS to complete site selection by June 30, 2015, and to
develop terms and conditions of the agreements or leases
authorized by this bill by December 31, 2015.
This bill provides a starting point for DGS and BOE to advance
this project and keeps the Legislature informed and engaged in
the process.
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PRIOR LEGISLATION : AB 151 (Jones) of 2010, similar to this bill,
was sponsored by BOE and was vetoed. The veto message stated
that the fiscal condition of the state at that time precluded
relocating and consolidating the headquarters. It also raised
concerns about administrative oversight and the bond debt
related to the current building.
REGISTERED SUPPORT / OPPOSITION :
Support
BOE (sponsor)
California Taxpayers Association
SEIU Local 1000
Opposition
None on file
Analysis Prepared by : Scott Herbstman / A. & A.R. / (916)
319-3600