BILL ANALYSIS �
Bill No: AB
2726
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Lou Correa, Chair
2013-2014 Regular Session
Staff Analysis
AB 2726 Author: Daly
As Amended: March 28, 2014
Hearing Date: June 24, 2014
Consultant: Paul Donahue
SUBJECT
University of California: Real property sales
DESCRIPTION
Revises existing law governing how the University of
California (UC) sells real property. Specifically, this
bill :
1)Increases the estimated value of real property, from
$500,000 to $1 million, that triggers a requirement for
UC to sell using a competitive bidding process.
2)Requires UC to publicly accept the bid which offers the
best combination of price, terms and bidder
qualifications or reject all bids or proposals.
3)Specifies that the bidder qualifications may include
factors other than price and terms, such as the bidder's
ability to complete the transaction or secure development
entitlements.
4)Gives UC the discretion, in the event a successful bidder
fails to perform, to accept from the remaining bids or
proposals the one that is most advantageous to UC, rather
than start the bid process over.
5)Adds properties acquired through foreclosure, deed in
lieu of foreclosure, and transactions involving property
AB 2726 (Daly) continued
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accepted in settlement of a defaulted mortgage or other
legal settlement, to the list of transactions currently
exempt from competitive bidding.
EXISTING LAW
Existing law requires UC to sell real property valued at
more than $500,000 through competitive bidding and provides
a list of categorical exemptions. In addition, UC is
required to provide public notice of the sale, as
specified, and to accept in public the bid which offers the
combination of price and terms deemed to be in the best
interest of UC or reject all bids.<1>
BACKGROUND
UC is sponsoring this bill to reduce administrative costs
associated with the sale or other disposition of UC-owned
property. UC states that the flexibility provided in this
bill will allow UC to seek the highest and best use of
properties, many of which are single family homes that have
been donated to UC, within its real estate portfolio.
Current law requires UC to dispose of any real property
worth more than $500,000 through a competitive sealed bid
process. This bill raises that threshold to $1 million.
According to UC, this change would facilitate sales of
smaller value properties to a broader range of buyers
represented by the traditional real estate brokerage
community. UC notes that brokers representing these
properties have estimated that as many as half of potential
buyers do not follow through with the transaction because
they have to obtain a binding financing commitment and
complete other due diligence at their own expense prior to
submitting their bid. This change would allow these
properties to be sold through more efficient and
conventional means.
This bill also enables UC to consider a bidder's
qualifications in addition to price and monetary terms when
selling real property. Currently, UC is required to accept
the highest price that is offered. This bill allows UC to
consider other relevant factors, such as a potential
buyer's financial capacity, ability to secure local zoning
changes and other development entitlements, and ability to
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<1> Public Contract Code � 10511
AB 2726 (Daly) continued
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complete any needed rehabilitation of the property being
offered for sale.
PRIOR/RELATED LEGISLATION
AB 738 (Papan), Chapter 576, Statutes of 1997. Establishes
the $500,000 limit on the estimated value of real
properties owned by UC that must be competitively bid.
SUPPORT:
University of California
OPPOSE:
None on file
FISCAL COMMITTEE: Senate Appropriations Committee
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