BILL ANALYSIS �
AB 1656
Page 1
ASSEMBLY THIRD READING
AB 1656 (Dickinson)
As Amended May 23, 2014
Majority vote
ADMINISTRATIVE REVIEW 13-0 APPROPRIATIONS 12-0
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|Ayes:|Frazier, Achadjian, |Ayes:|Gatto, Bocanegra, |
| |Buchanan, Ian | |Bradford, |
| |Calderon, Cooley, Gorell, | |Ian Calderon, Campos, |
| |Hagman, Lowenthal, | |Eggman, Gomez, Holden, |
| |Medina, Olsen, | |Pan, Quirk, |
| |Quirk-Silva, Salas, | |Ridley-Thomas, Weber |
| |Wagner | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Authorizes the Department of General Services (DGS),
with the consultation of the Board of Equalization (BOE), to
enter into agreements for the planning, design, construction,
and acquisition of facilities to relocate BOE headquarters in
the Sacramento region. Specifically, this bill :
1)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.
2)Requires DGS to solicit and accept proposals for acquiring or
constructing consolidated facilities for BOE on the "best
value" basis, as specified.
3)Requires DGS to develop terms and conditions of the agreements
or leases authorized by this bill by December 31, 2015.
4)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.
5)Authorizes expenditures of up to $3 million from the BOE
building repair funds to develop acquisition-related
AB 1656
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agreements.
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 : According to the Assembly Appropriations
Committee:
1)A consolidated facility for the BOE would be around one
million gross square feet and cost in the range of $500
million, with occupancy in five to six years following
authorization. As this facility would likely be acquired under
a lease with a purchase option or a lease-purchase agreement,
payments would be made for 25-30 years through augmentations
to the BOE's operating budget.
2)DGS' one-time cost will be up to $3 million to complete an
acquisition agreement.
3)BOE would incur one-time moving costs in the low millions of
dollars.
COMMENTS : This bill, which is sponsored by BOE, would direct
DGS in consultation with 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.
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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
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 million 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
specifically directs DGS to develop terms and conditions of the
agreements or leases authorized by this bill by December 31,
2015.
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This bill authorizes expenditures of up to $3 million from the
BOE building repair funds to develop acquisition-related
agreements. Specifically, DGS will be reimbursed for its costs
from this fund and BOE would be required to repay these amounts
within five years from its operating funds.
Prior legislation: AB 151 (Jones) of 2010, similar to this
bill, was sponsored by BOE and was vetoed by the Governor. 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.
Analysis Prepared by : Scott Herbstman / A. & A.R. / (916)
319-3600
FN: 0003804