BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2726|
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THIRD READING
Bill No: AB 2726
Author: Daly (D)
Amended: 3/28/14 in Assembly
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 7-3, 6/24/14
AYES: Correa, De Le�n, Galgiani, Hernandez, Lieu, Padilla,
Torres
NOES: Berryhill, Cannella, Vidak
NO VOTE RECORDED: Vacancy
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/4/14
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NOES: Walters, Gaines
ASSEMBLY FLOOR : 64-8, 5/23/14 - See last page for vote
SUBJECT : University of California: real property sales
SOURCE : University of California
DIGEST : This bill revises existing law governing how the
University of California (UC) sells real property.
ANALYSIS : 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
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reject all bids.
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 accepted in
settlement of a defaulted mortgage or other legal settlement,
to the list of transactions currently exempt from competitive
bidding.
Background
Currently, UC is required 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 will 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 will 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
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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 complete any needed rehabilitation
of the property being offered for sale.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Unknown overall administrative savings to UC, potentially
several hundred thousand dollars annually, by exempting sales
of properties valued between $500,000 and $1 million from
specified public notice, sealed bid, and public acceptance of
offers procedures.
Unknown overall impact on net UC revenues derived from
property sales. There could be revenue gains by increasing
the public notice and sealed bid thresholds, and by
streamlining sales of foreclosed properties. Revenue impacts
related to provisions that authorize consideration of bidder
qualifications in the sealed bid process are unknown.
SUPPORT : (Verified 8/6/14)
University of California (source)
ARGUMENTS IN SUPPORT : 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 allows 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.
ASSEMBLY FLOOR : 64-8, 5/23/14
AYES: Achadjian, Alejo, Ammiano, Bigelow, Bloom, Bocanegra,
Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Ch�vez, Chesbro, Conway, Cooley, Dababneh,
Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier, Garcia,
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Gatto, Gomez, Gonzalez, Gordon, Gray, Hagman, Hall, Jones,
Jones-Sawyer, Levine, Linder, Lowenthal, Maienschein, Medina,
Melendez, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan,
Perea, John A. P�rez, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Skinner, Stone, Ting, Wagner, Weber,
Wieckowski, Williams, Yamada, Atkins
NOES: Allen, Donnelly, Beth Gaines, Gorell, Grove, Mansoor,
Salas, Waldron
NO VOTE RECORDED: Harkey, Roger Hern�ndez, Holden, Logue,
Patterson, V. Manuel P�rez, Wilk, Vacancy
MW:d 8/6/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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