BILL ANALYSIS �
AB 1664
Page 1
Date of Hearing: April 9, 2014
ASSEMBLY COMMITTEE ON EDUCATION
Joan Buchanan, Chair
AB 1664 (Hagman) - As Introduced: February 12, 2014
SUBJECT : School facilities: sale or lease of real property
SUMMARY : Specifies that prior to selling or leasing a
schoolsite to a city, park or recreation district, or any
regional park authority, a school district selling or leasing a
schoolsite that was purchased with or modernized with, or on
which improvements were constructed that were funded with, any
moneys from a state school facilities funding program, may offer
to sell or lease the property to another school district, a
county office of education, or an agency that will use the
property exclusively for the delivery of child care and
development services, after first offering the schoolsite for
sale or lease to a charter school. Makes amendments to cross
reference other sections.
EXISTING LAW :
1)Establishes the Leroy F. Greene School Facilities Act of 1998
(SB 50, Chapter 407, Statutes of 1998), also known as the
School Facility Program (SFP), which governs the
administration, allocation, and use of state education bond
funds. (Chapter 12.5 of the Education Code (EC))
2)Specifies that funds derived from the sale of surplus property
shall be used for capital outlay or for costs of maintenance
of school district property that the governing board
determines will not recur within a five-year period. Proceeds
from a lease of a school district property with an option to
purchase may be deposited into a restricted fund for the
routine repair of district facilities for up to a five-year
period. (EC Section 17462)
3)Authorizes the proceeds from the sale or lease with option to
purchase to be deposited in the general fund of the district
if the governing board and the State Allocation Board (SAB)
have determined that the district has no anticipated need for
additional sites or building construction for the ten-year
period following the sale or lease with option to purchase,
and the district has no major deferred maintenance
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requirements. Proceeds from the sale or lease with option to
purchase of school district property shall be used for
one-time expenditures, and may not be used for ongoing
expenditures, including, but not limited to, salaries and
other general operating expenses. (EC Section 17462)
4)Authorizes, until January 1, 2016, a school district to
deposit the proceeds from the sale of surplus real property,
together with any personal property located on the property,
purchased entirely with local funds into the general fund of
the school district and authorizes the school district to use
the proceeds for any one-time general fund purpose. (EC
Section 17463.7)
5)Requires the governing board of a school district seeking to
sell or lease surplus real property designed to provide direct
instruction or instructional support to first offer that
property to any charter school that has submitted a written
request to the school district and then to a contracting
agency to be used for child care and development services.
(EC Sections 17457.5 and 17458)
6)Requires a school district, prior to selling or leasing a
schoolsite containing all or a portion of the schoolsite which
is used for school playground, playing field, or other outdoor
recreational purposes and open space land, to, if a charter
school has not accepted an offer to purchase or lease the
schoolsite, offer to sell or lease the portion of the
schoolsite used for school playground, playing field, or other
outdoor recreational purposes to the following entities: 1)
any city; 2) any park or recreation district; 3) any regional
park authority; and 4) any county within which the land may be
situated. (EC Section 17489)
7)Authorizes the SAB to establish a program that requires a
school district, county office of education, or charter school
that sells real property to return any state funds that were
provided to purchase the property or on which improvements
were constructed if the real property was purchased, or the
improvements were constructed or modernized on the real
property within 10 years before the real property is sold, and
if the proceeds from the sale of the real property are not
used for capital outlay. (EC Section 17462.3)
FISCAL EFFECT : Unknown
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COMMENTS : Background . The construction and modernization of
public kindergarten through grade 12 (K-12) facilities are
funded by a combination of state and local general obligation
(G.O.) bonds, local assessments, and developer's fees. Since
the inception of the SFP in 1998, voters have approved $35.4
billion in state G.O. bonds for K-12 schools.
The SFP provides 50 percent of eligible state education bond
funds for the construction of new schools and 60 percent for the
modernization of school facilities. Districts considered
"financial hardship districts" receive up to 100 percent of
eligible grant funds. The SFP also provides funds to acquire
sites and supplemental funds for specified purposes, such as
meeting fire code, for multilevel construction, hazardous waste
removal, and others.
Existing law requires school districts to establish routine
facilities accounts and deferred maintenance accounts, and
requires proceeds from the sale of property to stay in capital
facilities or maintenance funds to ensure that districts protect
and maintain their facilities. School districts can also sell
surplus property and use the funds for one-time general fund
expenditures under specified conditions.
When selling or leasing surplus property, school districts are
required to first offer, until July 1, 2016, the property to a
charter school with at least 80 units of average daily
attendance. After charter schools, there are a number of
separate provisions that specify priorities for selling or
leasing real property, including offering the real property to
an entity that will use the property for the delivery of child
care and development services, park or recreational purposes, or
offered for sale or leased at fair market value to specified
entities, including state and local governments and agencies.
Existing law, under EC Section 17489, commonly known as the
"Naylor Act," requires a school district to offer any or all
portion of property used for a school playground, playing field
or other outdoor recreational purposes and open space, to the
following entities in order of priority:
1)A charter school.
2)Any city within which the land is located.
3)Any park or recreation district within which the land is
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located.
4)Any regional park authority having jurisdiction within the
area in which the land is located.
5)Any county within which the land may be situated.
The cost shall not exceed the cost of acquisition, adjusted by a
cost of living factor, plus the cost of any improvements made to
open-space portion of the property. The entity that purchases
or leases the property must maintain the property for
playground, playing field, or other outdoor recreational and
open-space uses.
This bill inserts in the Naylor Act the authority for a school
district to offer open-space property to a school district,
county office of education or an agency that will use the
property for child care and development services, prior to
offering the property to a city, park or recreation district,
regional park authority or a county, if the school district had
constructed, modernized, or made improvements on the property
using state bond funds.
According to the author's office, this bill is intended to
prevent school districts complying with the Naylor Act from
having to return state bond funds pursuant to legislation, AB
308 (Hagman), Chapter 496, Statutes of 2013, enacted last year.
AB 308 authorizes the SAB, a ten member board that allocates and
administers the SFP and state bond funds, to establish a process
whereby a school district, county office of education or a
charter school that sells real property that was purchased with,
modernized with, or on which improvements were constructed that
were funded with, any state bond funds within 10 years before
the property is sold, must return the portion received from the
state, if the funds are not used for capital outlay purposes.
Property sold to a charter school, a school district, a county
office of education or an agency that will use the property for
child care and development services is exempted from the
requirement to return funds to the state.
According to the author, a school district complying with the
Naylor Act by selling open-space property to a city, county, or
park authority would be required to return the amount received
from state bond funds, if the property is sold within 10 years
after receipt of state bond funds. By authorizing school
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districts to sell the property to another local educational
agency or a child care and development agency, prior to offering
the property to the entities specified under the Naylor Act, the
property would remain with an educational institution and the
school district would not be required to return state bond
funds. If the property is sold or leased to one of the entities
prescribed in the bill, the entities would maintain the property
as open space, consistent with the Naylor Act.
Committee amendments :
1)According to the author, the intent of the bill is to require
a school district, county office of education or a child care
and development agency to maintain the property as open-space,
consistent with the Naylor Act. However, the language in the
bill authorizes the sale of the property to a child care
agency for the delivery of child care and development
services, which is inconsistent with the intent of the Naylor
Act and the bill. Staff recommends an amendment to clarify
that the property may be offered to a child care agency that
provides child care services, not to a child care agency for
the purpose of providing child care services.
2)The Naylor Act expresses intent to give governmental or public
agencies the opportunity to acquire property and keep it
available for playground, playing field or other outdoor
recreational and open-space purposes. Staff recommends
clarifying that the offer to a child care agency must be one
operated by a governmental or other public entity.
Arguments in support. The California Charter Schools
Association Advocates supports the bill and states, "In this era
of limited state resources, AB 1664 provides a common sense
approach to make certain that state funds are not diverted from
their intended use. Charter schools face unique and challenging
needs related to facilities. In many instances throughout
California districts and charter schools enter into a mutually
agreed upon transactions in which property is sold or leased.
This measure ensures there is no disincentive to these types of
'win-win' arrangements by allowing the school district to retain
funds generated in sales or leases to charter schools."
Argument in opposition . The Coalition for Adequate School
Housing states, "Our opposition is based on our assertion that
school districts are adequately able to manage their assets
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under the current statute. Current Education Code and Government
Code provisions regarding disposition and prioritization of
surplus properties by K-12 school districts are complex and can
cause confusion. However, we do not believe AB 308 and the
Naylor Act are in conflict, and we caution against adding to
statutory complexity by making further changes.
"Options exist for a district to control the use and disposition
of its property. For example, if a
district desires for a specific property to continue to be used
for school purposes by another public K-12 entity, such as the
county office of education, the district need not endure the
rigorous public review and the subsequent notice to other
parties triggered by declaring a property surplus; it may
identify common interests and enter into negotiations with the
other entity, using a lease mechanism, purchase agreement, a
joint use agreement or other use agreement that each entity
would take to their respective boards, with public notice, for
action."
REGISTERED SUPPORT / OPPOSITION :
Support
California Charter Schools Association Advocates
Riverside County Superintendent of Schools
Opposition
Coalition for Adequate School Housing
Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087