BILL ANALYSIS                                                                                                                                                                                                    Ó



                             SENATE JUDICIARY COMMITTEE
                         Senator Hannah-Beth Jackson, Chair
                             2015-2016  Regular  Session


          AB 1900 (Jones-Sawyer)
          Version: March 31, 2016
          Hearing Date: June 21, 2016 
          Fiscal: Yes
          Urgency: Yes
          ME   


                                        SUBJECT
                                           
                                San Pedro Courthouse

                                      DESCRIPTION  

          This bill would authorize the Judicial Council to sell the San  
          Pedro Courthouse, which has not been in use for three years, and  
          to use the proceeds to pay for planning, design, construction,  
          rehabilitation, renovation, replacement, or acquisition of court  
          facilities.  This bill also requires that the County of Los  
          Angeles receive the opportunity to purchase the property at a  
          fair market price before the property is offered to others for  
          purchase.  

                                      BACKGROUND  

          There have been 53 courthouse closures and 215 courtroom  
          closures throughout California since 2008.   Los Angeles County  
          alone has suffered 78 courtroom and 8 courthouse closures since  
          2008.  The San Pedro Courthouse was closed by the Superior Court  
          of Los Angeles in June 2013 due to budget cuts and remains  
          closed to this day.  Nonetheless, the Judicial Council continues  
          to fund the maintenance of the San Pedro Courthouse, including  
          payment for utilities, landscaping, and vandalism prevention.  

          The Judicial Council recently declared the San Pedro Courthouse  
          as surplus property pursuant to their requirement under  
          Government Code Section 11011 to identify real properties that  
          are no longer needed.  The Judicial Council, sponsor of this  
          bill, seeks legislative authorization to sell the San Pedro  
          Courthouse and legislative direction to use the proceeds to pay  
          for planning, design, construction, rehabilitation, renovation,  
          replacement, or acquisition of court facilities.  Under current  
          law, proceeds from the sale of the San Pedro Courthouse, or any  
          courthouse, would be directed into the Special Reserve for  








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          Economic Uncertainties.  Additionally, under current law, the  
          Judicial Council is required to consult with the County in which  
          the surplus property is located and if the County expresses an  
          interest in purchasing the property, the Judicial Council is  
          also obligated to offer the surplus property to the County at  
          fair market value prior to offering the property to another  
          state agency or local government agency.  (Gov. Code Sec.  
          70391(c)(2).)  In a letter dated March 30, 2015, the County of  
          Los Angeles confirmed it wants to purchase the San Pedro  
          Courthouse after it is declared surplus.  

          This bill would authorize the Judicial Council to sell the San  
          Pedro Courthouse and provide that the proceeds could only be  
          used for planning, design, construction, rehabilitation,  
          renovation, replacement, or acquisition of court facilities.   
          The bill would also require the Judicial Council to give the  
          County of Los Angeles the right to purchase the San Pedro  
          Courthouse for fair market value before otherwise offering the  
          property for sale.
                                              
                                CHANGES TO EXISTING LAW
           
           Existing law  establishes the Immediate and Critical Needs  
          Account of the State Court Facilities Construction Fund (ICNA)  
          and limits how ICNA funds may be spent.  (Gov. Code Sec.  
          70371.5.)

           Existing law  permits ICNA funds to only be used for the  
          following purposes:
           planning, design, construction, rehabilitation, renovation,  
            replacement, or acquisition of court facilities;
           repayment for moneys appropriated for lease of court  
            facilities pursuant to the issuance of lease-revenue bonds;
           payment for lease or rental of court facilities or payment of  
            service contracts, including those made for facilities in  
            which one or more private sector participants undertake some  
            of the risks associated with the financing, design,  
            construction, or operation of the facility; or
           trial court operations.  (Gov. Code Sec. 70371.5(a)(1)-(4).)

           Existing law  provides that notwithstanding any law, the  
          Controller may use ICNA funds for cash flow loans to the General  
          Fund as specified.  (Gov. Code Sec. 70371.5(g).)










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           Existing law  establishes the Special Fund for Economic  
          Uncertainties.  (Gov. Code Sec. 16418.) 

          Existing law  requires that proceeds from the sale of surplus  
          state property be deposited into the Special Fund for Economic  
          Uncertainties after paying the principal and interest on the  
          2004 Economic Recovery Bond Act.  (Cal. Const. art. 3, Sec. 9;  
          Gov. Code Sec. 11011(g).)

           Existing law  provides that upon legislative authorization, the  
          Department of General Services may sell or dispose of excess  
          property, as specified.  (Gov. Code Sec. 11011 et seq.)

           Existing law  directs each state agency to annually review lands  
          under their jurisdiction to determine what lands are in excess  
          of their foreseeable needs and to report on their findings to  
          the DGS.  (Gov. Code Sec. 11011.)  
           Existing law  provides that the Judicial Council has authority  
          with regard to court facilities, including, to: 
           exercise full responsibility, jurisdiction, control and  
            authority as an owner would have over trial court facilities,  
            the title of which is held by the state, including, but not  
            limited to, the acquisition and development of facilities;
           exercise the full range of policymaking authority over trial  
            court facilities, including, but not limited to, the  
            acquisition and development of facilities, planning,  
            construction, and operation of court facilities, to the extent  
            not expressly otherwise limited by law; and 
           dispose of surplus court facilities following the transfer of  
            responsibility for court facility from the county to the  
            Judicial Council, as specified, including consulting with the  
            county concerning the disposition of the facility and offering  
            the surplus facility to the county at fair market value prior  
            to offering it to other state agencies or local government  
            agencies, when the transferring county requests it.  (Gov.  
            Code Sec. 70391.)

           This bill  would provide that notwithstanding any other law, the  
          Judicial Council may sell the San Pedro Courthouse located at  
          505 South Centre Street with Assessor Parcel Number  
          7455-0130901.  

           This bill  would provide that the sale of the San Pedro  
          Courthouse must be at fair market value and upon the terms and  









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          conditions and subject to the reservations the Judicial Council  
          deems in the best interests of the state if the following  
          requirements are met:
             the sale complies with Section 70391 of the Government Code,  
             as applicable;  
             the Judicial Council consults with the County of Los Angeles  
             concerning the sale of the courthouse; and
             the Judicial Council offers the County of Los Angeles the  
             right to purchase the courthouse at a fair market value  
             before otherwise offering the property for sale.

           This bill  would provide that notwithstanding any other law, the  
          proceeds from the sale of the courthouse shall be deposited into  
          the Special Fund for Economic Uncertainties, and then must be  
          immediately transferred to the ICNA.

           This bill  would provide that the proceeds from the sale of the  
          San Pedro Courthouse shall be appropriated from the ICNA to the  
          Judicial Council and can only be used for planning, design,  
          construction, rehabilitation, renovation, replacement, or  
          acquisition of court facilities.

           This bill  makes related legislative findings and contains an  
          urgency clause.






                                        COMMENT
           
          1.    Stated need for the bill

           The author writes:

             The bill would declare the existing San Pedro Courthouse  
             surplus property and allow for its disposal by the  
             Judicial Council.  The state of California, acting by and  
             through the Judicial Council, holds title to the San Pedro  
             Courthouse.  The Courthouse is a shared-use facility, with  
             the Judicial Council holding a 95.15 percent equity  
             interest and the County of Los Angeles holding the  
             remaining 4.85 percent.









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             The Superior Court of California, County of Los Angeles  
             closed the Courthouse on June 30, 2013, and has since  
             advised Judicial Council staff that the court does not  
             have a current or any future need for the Courthouse.   
             According to a report by the Judicial Council, the County  
             of Los Angeles has expressed its desire to purchase the  
             Courthouse at its fair market value as soon as possible  
             and the court supports the sale to the County.

             After the Judicial Council declared and proposed  
             legislation required to dispose of the Courthouse as  
             surplus property, the Legislature requested an alternative  
             proposal framed in a manner authorizing the sale not as  
             surplus property so as to allow the Judicial Council to  
             retain the proceeds from its sale.

          2.   The County of Los Angeles is interested in purchasing the  
          Courthouse  

          The County of Los Angeles, in a "letter of interest" regarding  
          the "San Pedro Courthouse Acquisition," writes that the "County  
          wants to purchase the San Pedro Courthouse after it has been  
          declared surplus."  This triggers the Judicial Council's  
          statutory duty to give the County of Los Angeles the right of  
          first refusal to purchase the San Pedro Courthouse for fair  
          market value.  It appears that if the Legislature approves this  
          bill, the Judicial Council already has a buyer lined up and  
          will, as quickly as possible be able to sell the property and  
          cease paying maintenance fees.  

          3.   Allows Judicial Council to spend proceeds on court  
          facilities  

          Under the California Constitution, the proceeds from the sale of  
          the San Pedro Courthouse (surplus property) must be directed  
          into the Special Fund for Economic Uncertainties (SFEU).   
          Without legislation, the proceeds would remain in the SFEU and  
          not be redirected to the Judicial Council for court facilities.   
          The Legislature may appropriate funds in the SFEU for any  
          purpose by majority vote.  This bill would require the proceeds  
          from the sale of the San Pedro Courthouse to be directed into  
          the SFEU and then appropriated into the Immediate and Critical  
          Needs Account of the State Court Facilities Construction Fund  









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          (ICNA).  The author notes that the legislature has approved  
          several bills that disposed of surplus property in the same  
          manner.<1>  

          Current law delineates what ICNA funds may be spent on.  ICNA  
          funds may be spent on planning, design, construction,  
          rehabilitation, renovation, replacement, or acquisition of court  
          facilities.  However, ICNA funds can be spent in other ways  
          including on trial court operations.  The bill would further  
          require that the ICNA funds generated from the sale of the San  
          Pedro Courthouse to only be spent on planning, design,  
          construction, rehabilitation, renovation, replacement, or  
          acquisition of court facilities.  An argument could be made that  
          since the funds are being deposited into ICNA that the Judicial  
          Council should be allowed to spend the funds on everything they  
          can currently use ICNA funds for, including trial court  
          operations.  However, because the funds arise from the closure  
          and sale of a courthouse, the funds arguably most appropriately  
          should be used to open new court facilities or ensure that  
          existing facilities remain open.  


          Support  :  County of Los Angeles

           Opposition  :  None Known

                                        HISTORY
           
           Source  :  Judicial Council of California

           Related Pending Legislation  :  None Known

           Prior Legislation  :

          SB 1407 (Perata, Ch. 311, Stats. 2008) created the Immediate and  
          Critical Needs Account of the State Court Facilities  
          Construction Funds and authorized the Judicial Council up to $5  
          billion in bond financing for court construction projects.
          ---------------------------
          <1> See e.g. AB 826 (Jones-Sawyer, Ch. 505, Stats. 2013)  
          authorized Department of General Services to dispose of 8  
          parcels of state property with some of the proceeds being  
          redirected; SB 1580 (Governmental Organization, Ch. 798, Stats.  
          2012) authorized sale of armories and have proceeds deposited in  
          the Armory Fund.








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           Prior Vote  :

          Assembly Floor (Ayes 79, Noes 0)
          Assembly Appropriations Committee (Ayes 20, Noes 0)
          Assembly Judiciary Committee (Ayes 9, Noes 0)

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