BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1900


                                                                    Page  1


          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          1900 (Jones-Sawyer and O'Donnell)


          As Amended  August 19, 2016


          2/3 vote.  Urgency


           -------------------------------------------------------------------- 
          |ASSEMBLY:  |79-0  |(April 21,     |SENATE: |39-0  |(August 23,      |
          |           |      |2016)          |        |      |2016)            |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |
           -------------------------------------------------------------------- 


          Original Committee Reference:  JUD.


          SUMMARY:  Authorizes the sale of the San Pedro Courthouse and  
          moves proceeds from the sale to the Immediate and Critical Needs  
          Account, a fund that provides for court construction and other  
          facility-related projects.  Specifically, this bill:


          1)Authorizes Judicial Council to sell the San Pedro Courthouse  
            at fair market value, upon the terms and conditions that  
            Judicial Council deems in the best interests of the state, as  
            long as the following requirements are met:


             a)   The sale complies with Judicial Council's  
               responsibilities and authorities with regard to court  
               facilities as provided by law and as applicable;


             b)   The Judicial Council consults with the County of Los  








                                                                    AB 1900


                                                                    Page  2


               Angeles on the sale; and


             c)   The Judicial Council offers the County of Los Angeles  
               the right to purchase the property at fair market value.


          2)Provides that the proceeds from the sale of the San Pedro  
            Courthouse shall be deposited into the Immediate and Critical  
            Needs Account of the State Court Facilities Construction Fund.


          3)Makes needed findings and declarations.


          4)Provides that the act is an urgency statute, and it is  
            necessary that it take effect immediately to enable the sale  
            of the San Pedro court facility to occur as soon as possible.


          5)Provides that the disposition of the property shall not  
            constitute a sale of surplus state property within the meaning  
            of the California Constitution.


          The Senate amendments provide that the disposition of the  
          property shall not constitute a sale of surplus state property  
          within the meaning of the California Constitution and make  
          technical changes.


          EXISTING LAW:  


          1)Requires proceeds from the sale of surplus state property,  
            after paying the principal and interest on the 2004 Economic  
            Recovery Bond Act, to be deposited into the Special Fund of  
            Economic Uncertainties, or any successor fund.  (California  
            Constitution, Article IV, Section 9; Government Code Section  
            11011 (g).)










                                                                    AB 1900


                                                                    Page  3


          2)Provides that upon legislative authorization, the Department  
            of General Services may sell or dispose of the excess property  
            upon any terms and conditions and subject to any reservations  
            and exceptions as the Department of General Services may deem  
            to be in the best interests of the state.  (Government Code  
            Section 11011 et seq.  Unless stated otherwise, all further  
            statutory references are to that code.)


          3)Directs each state agency to annually review lands under its  
            jurisdiction to determine what, if any, land is in excess of  
            its foreseeable needs and to report its finding to the  
            Department of General Services.  (Id.)


          4)Provides that the Judicial Council, as the policymaking body  
            for the judicial branch, shall have certain responsibilities  
            and authorities with regard to court facilities, including,  
            among other things, the following:  


             a)   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.  


             b)   Exercise the full range of policymaking authority over  
               trial court facilities, including, but not limited to,  
               planning, construction, acquisition, and operation, to the  
               extent not expressly otherwise limited by law.  (Section  
               70391.)


             c)   Dispose of surplus court facilities following the  
               transfer of responsibility for court facilities from the  
               county to the Judicial Council, subject to, among other  
               things, the following requirements:


               i)     The Judicial Council shall consult with the county  








                                                                    AB 1900


                                                                    Page  4


                 concerning the disposition of the facility.  


               ii)    When requested by the transferring county, a surplus  
                 facility shall be offered to that county at fair market  
                 value prior to being offered to another state agency or  
                 local government agency.  The Judicial Council shall  
                 consider whether the potential new or planned use of the  
                 facility is:  compatible with the use of other adjacent  
                 public buildings; unreasonably departs from the historic  
                 or local character of the surrounding property or local  
                 community; has a negative impact on the local community;  
                 unreasonably interferes with other governmental agencies  
                 that use or are located in or adjacent to the building  
                 containing the court facility; and is of sufficient  
                 benefit to outweigh the public good in maintaining it as  
                 a court facility or building.  (Id.)


          5)Establishes the Immediate and Critical Needs Account of the  
            State Court Facilities Construction Fund, whose proceeds shall  
            only be used for any of the following:


             a)   The 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.  


             b)   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.  


             c)   For trial court operations, as provided.  (Section  
               70371.5.)










                                                                    AB 1900


                                                                    Page  5


          FISCAL EFFECT:  According to the Senate Appropriations analysis:


          1)Sale proceeds:  Redirection of one-time revenue potentially in  
            excess of several million dollars from the Special Fund for  
            Economic Uncertainties (SFEU) to the Immediate and Critical  
            Needs Account (ICNA).  Under existing law, the proceeds from  
            the sale of surplus state property are to be deposited into  
            the SFEU (now that the principal and interest on the 2004  
            Economic Recovery Bonds have been fully paid).  The 2016  
            Budget Act reflects a 2016-17 ending balance of $1.75 billion  
            in the SFEU.  Absent the declaration of the courthouse as  
            "surplus property," the net proceeds of the sale would  
            potentially be subject to reversion to the General Fund and  
            the State Court Facilities Construction Fund pursuant to  
            Government Code Section 70391(c)(1).


          2)Appropriation to Judicial Council:  One-time appropriation  
            potentially in excess of several million dollars to the  
            Judicial Council from the ICNA.  Annual revenues to the ICNA  
            have been declining, and the 2016 Budget Act reflects a  
            2016-17 ending balance of $87.8 million in the ICNA.


          3)Operations/maintenance:  Future cost savings (General Fund*)  
            to the Judicial Council in avoided maintenance and operations  
            costs.  Despite the closure of the courthouse at the end of  
            June 2013, the Judicial Council continues to share  
            responsibility with the county for maintenance and operations  
            costs pursuant to Government Code Section 70343(a)(2). 


            *Trial Court Trust Fund


          COMMENTS:  Due to the Judicial Council's ongoing budget  
          constraints, many of California's courts have closed.  Indeed,  
          since 2008, 53 courthouses have closed, which has resulted in a  
          closure of 215 courtrooms statewide.  Presently, 48 courthouses  
          and 200 courtrooms remain closed.  In order to preserve access  
          to justice, ideally those courthouses should be re-opened.   








                                                                    AB 1900


                                                                    Page  6


          Realistically, however - given the courts' funding challenges -  
          not all courthouses will be able to be re-opened.  According to  
          Judicial Council staff, it has become unsustainable to have as  
          many courthouses as the State once did.


          Of all these closures, eight of the courthouses and 78 of the  
          courtrooms are in the County of Los Angeles.  In June 2013, the  
          Superior Court of Los Angeles County closed the San Pedro  
          Courthouse, and shifted the court's caseload to the new  
          Deukmejian Courthouse in Long Beach.  Currently, there are no  
          plans to reopen the San Pedro Courthouse.  Although the San  
          Pedro Courthouse has been vacated since its closure, the  
          Judicial Council continues to pay for the costs of the  
          operations and the maintenance of that site.  


          This bill authorizes Judicial Council to sell the San Pedro  
          Courthouse at fair market value, upon the terms and conditions  
          that Judicial Council deems in the best interests of the state,  
          as long as the following requirements are met:  1) the sale  
          complies with Judicial Council's responsibilities and  
          authorities with regard to court facilities; 2) the Judicial  
          Council consults with the County of Los Angeles on the sale; and  
          3) the Judicial Council offers the County of Los Angeles the  
          right to purchase the property at fair market value.  Upon the  
          sale of the San Pedro Courthouse, the proceeds are to be  
          transferred to the Immediate and Critical Needs Account of the  
          State Court Facilities Construction Fund.


          Immediate and Critical Needs Account.  The Immediate and  
          Critical Needs Account of the State Court Facilities  
          Construction Fund (ICNA) was established by SB 1407 (Perata),  
          Chapter 311, Statutes of 2008, and provides funds for court  
          construction projects and other facility-related expenses.   
          Under SB 1407, Judicial Council is authorized up to $5 billion  
          in bond financing for court construction projects repayment  
          funded by increases in civil and criminal fines and fees and  
          other revenue.  










                                                                    AB 1900


                                                                    Page  7


          Of course, Judicial Council cannot fund every facilities  
          project.  In deciding which projects to undertake, Judicial  
          Council is required to consider construction proposals that are  
          in "immediate and critical need."  ICNA also prohibits Judicial  
          Council from approving projects that cannot be fully financed  
          with the fund's revenue.  With that in mind, Judicial Council  
          initially selected 41 immediate and critical need projects.   
          However, due to a decrease in revenue from civil and criminal  
          fines and fees and other reduction in available funds, Judicial  
          Council has cancelled and indefinitely delayed 15 of those  
          projects in order to preserve the ICNA funds.  But even with  
          these cancelled projects, the ICNA fund cannot support all the  
          critical court projects.  Indeed, even if Judicial Council  
          completes the remaining 26 facility projects, ICNA is estimated  
          to become insolvent by 2023-24.  In an attempt to improve this  
          outcome, this bill provides that proceeds from the sale of the  
          San Pedro Courthouse be deposited into ICNA.  Although the sale  
          of the San Pedro Courthouse is unlikely to resolve the ongoing  
          revenue problem with ICNA, it seems appropriate that proceeds  
          from the sale of a courthouse be deposited into a fund that  
          re-invests in courts that are in the most immediate and critical  
          need. 


          This Bill Correctly Places the Authority of the Sale of the San  
          Pedro Courthouse with the Judicial Council, Rather than the  
          Department of General Services.  Current law gives the  
          Department of General Services (DGS) the responsibility of  
          managing and disposing surplus property.  Since this bill  
          provides that the sale does not constitute the sale of surplus  
          state property, the provisions relating to DGS do not apply.   
          Instead, this bill provides that Judicial Council has the  
          responsibility of managing the sale of the San Pedro Courthouse.  
           Given that the proceeds are distributed back to building  
          additional courts or providing for operational costs, it seems  
          appropriate for the Judicial Council to manage the sale of the  
          San Pedro courthouse.  


          This Bill Allows the County of Los Angeles to be Given the  
          Option to First Purchase the Property, Similar to Existing Law.   
          Existing law provides that when Judicial Council disposes of  








                                                                    AB 1900


                                                                    Page  8


          court facilities, it must consult with the county concerning the  
          disposition, and offer to the county at fair market value prior  
          to being offered to another state or local governmental agency.   
          Similar to existing law, this bill requires Judicial Council to  
          consult with the County of Los Angeles on the sale, and to offer  
          to the County of Los Angeles the right to purchase the  
          courthouse.


          Analysis Prepared by:                                             
          Eric Dang / JUD. / (916) 319-2334  FN:  0004906