Existing law authorizes the Judicial Council to dispose of surplus court facilities pursuant to a specified process that requires, among other things, the Judicial Council to consult with the county where the court facility is located, offer the facility to the county at a fair market value before offering it to another state agency or local government agency, and deposit the funds received from a sale into the State Court Facilities Construction Fund. The process further requires the Judicial Council, if the court facility was previously the responsibility of a county, to comply with certain requirements applicable to the sale of surplus state property. Existing law establishes the Immediate and Critical Needs Account of the State Court Facilities Construction Fund, for the planning, design, construction, rehabilitation, renovation, replacement, or acquisition of court facilities and for trial court operations, as defined. The California Constitution requires the proceeds from the sale of surplus state property to be deposited into the Special Fund for Economic Uncertainties, a continuously appropriated fund.

This bill would, notwithstanding any other law, specifically authorize the Judicial Council to sell the West Los Angeles Courthouse, as specified, and the Mental Health Courthouse, as described, if the sale complies with certain requirements applicable to the disposal of court facilities and if the Judicial Council consults with, and first offers the right to purchase the property to, the County of Los Angeles. The bill would require the net proceeds from the sale of the courthouse to be deposited into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund. The bill would state that the disposition of this property is not a sale or other disposition of surplus state property within the meaning of the California Constitution.

The bill would include a statement of legislative intent in support of its provisions.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law authorizes the Judicial Council to dispose of surplus court facilities pursuant to a specified process that requires, among other things, the Judicial Council to consult with the county where the court facility is located, offer the facility to the county at a fair market value before offering it to another state agency or local government agency, and deposit the funds received from a sale into the State Court Facilities Construction Fund. The process further requires the Judicial Council, if the court facility was previously the responsibility of a county, to comply with certain requirements applicable to the sale of surplus state property. Existing law establishes the Immediate and Critical Needs Account of the State Court Facilities Construction Fund, for the planning, design, construction, rehabilitation, renovation, replacement, or acquisition of court facilities and for trial court operations, as defined. The California Constitution requires the proceeds from the sale of surplus state property to be deposited into the Special Fund for Economic Uncertainties, a continuously appropriated fund.

This bill would, notwithstanding any other law, specifically authorize the Judicial Council to sell the West Los Angeles Courthouse, as specified, and the Mental Health Courthouse, as described, if the sale complies with certain requirements applicable to the disposal of court facilities and if the Judicial Council consults with, and first offers the right to purchase the property to, the County of Los Angeles. The bill would require the net proceeds from the sale of the courthouse to be deposited into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund. The bill would state that the disposition of this property is not a sale or other disposition of surplus state property within the meaning of the California Constitution.

The bill would include a statement of legislative intent in support of its provisions.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law authorizes the Judicial Council to dispose of surplus court facilities pursuant to a specified process that requires, among other things, the Judicial Council to consult with the county where the court facility is located, offer the facility to the county at a fair market value before offering it to another state agency or local government agency, and deposit the funds received from a sale into the State Court Facilities Construction Fund. The process further requires the Judicial Council, if the court facility was previously the responsibility of a county, to comply with certain requirements applicable to the sale of surplus state property. Existing law establishes the Court Facilities Trust Fund and requires the Judicial Council to use moneys deposited in the fund, upon appropriation by the Legislature, to operate, repair, and maintain court facilities, as specified. Existing law establishes the Immediate and Critical Needs Account of the State Court Facilities Construction Fund, for the planning, design, construction, rehabilitation, renovation, replacement, or acquisition of court facilities and for trial court operations, as defined. The California Constitution requires the proceeds from the sale of surplus state property to be deposited into the Special Fund for Economic Uncertainties, a continuously appropriated fund.

This bill would, notwithstanding any other law, specifically authorize the Judicial Council to sell the West Los Angeles Courthouse, as specified, and the Mental Health Courthouse, as described, if the sale complies with certain requirements applicable to the disposal of court facilities and if the Judicial Council consults with, and first offers the right to purchase the property to, the County of Los Angeles. The bill would require the net proceeds from the sale of the courthouse to be deposited into the Court Facilities Trust Fund. Immediate and Critical Needs Account of the State Court Facilities Construction Fund. The bill would state that the disposition of this property is not a sale or other disposition of surplus state property within the meaning of the California Constitution.

The bill would include a statement of legislative intent in support of its provisions.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law authorizes the Judicial Council to dispose of surplus court facilities pursuant to a specified process that requires, among other things, the Judicial Council to consult with the county where the court facility is located, offer the facility to the county at a fair market value before offering it to another state agency or local government agency, and deposit the funds received from a sale into the State Court Facilities Construction Fund. The process further requires the Judicial Council, if the court facility was previously the responsibility of a county, to comply with certain requirements applicable to the sale of surplus state property. Existing law establishes the Court Facilities Trust Fund and requires the Judicial Council to use moneys deposited in the fund, upon appropriation by the Legislature, to operate, repair, and maintain court facilities, as specified. The California Constitution requires the proceeds from the sale of surplus state property to be deposited into the Special Fund for Economic Uncertainties, a continuously appropriated fund.

This bill would, notwithstanding any other law, specifically authorize the Judicial Council to sell the West Los Angeles Courthouse, as specified, if the sale complies with certain requirements applicable to the disposal of court facilities and if the Judicial Council consults with, and first offers the right to purchase the property to, the County of Los Angeles. The bill would require the net proceeds from the sale of the courthouse to be deposited into the Court Facilities Trust Fund. The bill would state that the disposition of this property is not a sale or other disposition of surplus state property within the meaning of the California Constitution.

The bill would include a statement of legislative intent in support of its provisions.

This bill would declare that it is to take effect immediately as an urgency statute.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 2309

Author:(Bloom)

As Amended Ver:June 6, 2018

2/3 vote. Urgency

Original Committee Reference: JUD.

SUMMARY: Authorizes the Judicial Council to sell the closed courthouses known as the West Los Angeles Courthouse and the Mental Health Courthouse. Specifically, this bill:

1. Requires the Judicial Council to adhere to existing procedures for selling surplus court facilities.
2. Requires the Judicial Council to consult with the County of Los Angeles concerning the sale of the property.
3. Requires the Judicial Council to offer the County of Los Angeles the right to purchase the property at fair market value before otherwise offering the property for sale.
4. Provides that the proceeds from the sale of the properties be placed into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund.
5. Defines the West Los Angeles Courthouse as the facility located at 1633 Purdue Avenue, City of Los Angeles, County of Los Angeles, Assessor Parcel Numbers 4261-011-908, 4261-011-909, 4261-011-910, 4261-011-913, 4261-011-914, and 4261-011-915.
6. Defines the Mental Health Courthouse as the facility located at 1150 North San Fernando Road, City of Los Angeles, County of Los Angeles, Assessor Parcel Number 5453-002-900.
7. Provides that the disposition of the properties do not constitute the sale of surplus property within Section 9 of Article III of the California Constitution, thereby exempting the courthouse sale from the requirement that all sale proceeds be deposited into the Special Fund of Economic Uncertainties, or any successor fund, as set forth in subdivision (g) of Section 11011 of the Government Code

The Senate amendments:

1. Additionally permit the sale of the Mental Health Courthouse located at 1150 North San Fernando Road, City of Los Angeles, County of Los Angeles, Assessor Parcel Number 5453-002-900.
2. Redirect the proceeds from the property sales from the Court Facilities Trust Fund to the Immediate and Critical Needs Account of the State Court Facilities Construction Fund.

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).)
2. Provides that upon legislative authorization, the Department of General Services (DGS) may sell or dispose of the excess property upon any terms and conditions and subject to any reservations and exceptions as DGS may deem to be in the best interests of the state. (Government Code Section 11011 et seq.)
3. Directs each state agency to annually review lands under its jurisdiction to determine what, if any, land in the agency’s control is in excess of its foreseeable needs, and to report its findings to DGS. (Ibid.)
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:
   1. 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.
   2. 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.
   3. 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:
      1. The Judicial Council shall consult with the county concerning the disposition of the facility.
      2. 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. (Government Code Section 70391.)
5. Establishes the Court Facilities Trust Fund and provides that money deposited in the fund, upon appropriation by the Legislature, shall be administered by the Judicial Council for the operation, repair, and maintenance of court facilities. (Government Code Section 70352.)
6. Authorizes the Judicial Council to sell seven closed courthouses, as provided, at fair market value and upon the terms and conditions and subject to the reservations the Judicial Council deems in the best interests of the state, if all of the following requirements are satisfied:
   1. The sale complies with 4), above.
   2. The Judicial Council consults with the county where the property is located concerning the sale of the property.
   3. The Judicial Council offers the county in which the property is located the right to purchase the property at fair market value before otherwise offering the property for sale.
   4. All proceeds from the sale of the property shall be deposited into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund, as defined. (Government Code Section 70396.)
7. Authorizes the Judicial Council to sell the San Pedro superior courthouse, as provided, at fair market value and upon the terms and conditions and subject to the reservations the Judicial Council deems in the best interests of the state, if all of the following requirements are satisfied:
   1. The sale complies with 4), above.
   2. The Judicial Council consults with the County of Los Angeles concerning the sale of the property.
   3. The Judicial Council offers the County of Los Angeles the right to purchase the property at fair market value before otherwise offering the property for sale. The net proceeds from the sale of the property shall be deposited into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund, as defined. (Government Code Section 70395.)

FISCAL EFFECT: According to the Senate Appropriations Committee, one-time revenue increases likely in the millions of dollars and likely one-time costs to the Judicial Council to Judicial Council for expenses incurred for the disposition process. Additional annual savings of $240,000 to Judicial Council in avoided maintenance and operation costs.

COMMENTS: This bill seeks to authorize the Judicial Council to sell the now-closed West Los Angeles Courthouse and Mental Health Courthouse and provides that the revenue generated by the sales would be deposited in the into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund.

This bill is similar to several measures the Legislature in years past. In 2016, the Legislature passed AB 1900 (Jones-Sawyer), Chapter 510, Statutes of 2016, which authorized the Judicial Council to sell the San Pedro courthouse located in Los Angeles County. Similar to this bill, AB 1900 required the Judicial Council to consult with the County of Los Angeles on the sale, and offer the County of Los Angeles the right of first refusal to purchase the property at fair market value. AB 1900 led to the eventual sale of the San Pedro courthouse property for $5.1 million.

Last year, the Legislature approved SB 403 (Canella), Chapter 358, Statutes of 2017, which authorized the Judicial Council to sell seven closed courthouse properties across the Central Valley. That bill also required the Judicial Council to consult with the county government where the court property is located and provide the county government the right of first refusal to purchase the property at a fair market value. The Judicial Council anticipates the sale of the seven courthouses will generate a minimum of $1.6 million in revenue for the Immediate and Critical Needs Account.

Since the State consolidated county court operations, the Judicial Council has faced significant shortfalls in funding for court construction and maintenance. To remedy some of this shortfall, the Immediate Critical Needs Account of the State Court Facilities Construction Fund was established by SB 1407 (Perata), Chapter 311, Statutes 2008, to utilize increased civil and criminal fine and fee revenues to help fund a $5 billion courthouse construction bond. However, revenue dramatically missed projections, forcing the Judicial Council to indefinitely delay 15 construction projects and halt an additional 17 projects after the initial phase of their construction. To remedy some of this budgetary shortfall, prior courthouse disposition bills directed proceeds from the sale of court facilities to be deposited in the Immediate Critical Needs Account of the State Court Facilities Construction Fund. This bill proposes to do the same.

As a part of the consolidation of California’s courts in 2002, recognizing that county governments previously owned many of California’s courthouses, the Judicial Council was required to offer the county in which the property is located a chance to repurchase the surplus court facility at the fair market value. However, in 2004, Proposition 60A enacted Section 9 of Article III of the California Constitution and required that all surplus property be disposed of by DGS and that all sale proceeds be provided to the State’s the Special Fund of Economic Uncertainties, or any successor fund. Existing law generally requires state agencies to report to DGS all property that can be deemed surplus. DGS then submits a list of properties to the Legislature to be officially declared surplus by legislation. Upon approval by the Legislature, DGS must determine whether the land could first be used by any other state agency, local agency, or nonprofit affordable housing organization. The property can only be sold to the public once DGS determines that the property cannot be utilized by one of the aforementioned entities. The DGS process for selling surplus property can be time consuming, and does not generate revenue for the individually impacted state agency.

This bill, like its predecessors, provides that the courthouse properties are not surplus properties, thereby exempting the sale from the DGS process, and authorizing the Judicial Council to manage the sale itself. Given that this bill provides that the proceeds from the sale of courthouses are distributed back to funds managed by the Judicial Council for courthouse maintenance and operational costs, this exemption is reasonable and ensures that the proceeds from the courthouse property sale will be used to maintain court access for the public.

Analysis Prepared by: Nicholas Liedtke / JUD. / (916) 319-2334 FN: 0004218

 THIRD READING  

Bill No: AB 2309

Author:

:

Vote:

SENATE JUDICIARY COMMITTEE: 7-0, 6/19/18

AYES: Jackson, Moorlach, Anderson, Hertzberg, Monning, Stern, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/16/18

AYES: Portantino, Bates, Beall, Bradford, Hill, Nielsen, Wiener

SENATE FLOOR: 26-1, 8/29/18 (FAIL)

AYES: Allen, Atkins, Beall, Bradford, De León, Delgado, Dodd, Galgiani, Glazer, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leyva, McGuire, Mitchell, Monning, Pan, Portantino, Roth, Skinner, Stern, Wieckowski, Wiener

NOES: Nielsen

NO VOTE RECORDED: Anderson, Bates, Berryhill, Cannella, Chang, Fuller, Gaines, Moorlach, Morrell, Nguyen, Stone, Vidak, Wilk

ASSEMBLY FLOOR: 68-0, 4/12/18 (Consent) - See last page for vote

SUBJECT:

SOURCE: Judicial Council

DIGEST:

This bill authorizes the Judicial Council to sell the West Los Angeles Courthouse and the Mental Health Courthouse in Los Angeles County; requires that the Judicial Council consult with, and first offer the right to purchase the properties at fair market value, to the county of Los Angeles; and requires the Judicial Council to deposit the net proceeds from the sales of the courthouses into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund. This bill additionally makes legislative findings in support of its provisions and takes effect immediately as an urgency statute.

ANALYSIS:

Existing law:

1. Permits the Judicial Council to sell the San Pedro, Chico, Corning, Clovis, Firebaugh, Reedley, Avenal, and Corcoran superior courthouses, at fair market value and upon the terms and conditions the Judicial Council deems in the best interest 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 Counties in which the properties are located concerning the sale of the property; and
• the Judicial Council offers the respective Counties the right of first refusal for the properties at fair market value before otherwise offering the properties for sale. (Gov. Code Secs. 70395(a) & 70396(a).)

1. Requires the proceeds from the sale of the San Pedro, Chico, Corning, Clovis, Firebaugh, Reedley, Avenal, and Corcoran superior courthouses be deposited into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund (ICNA). (Gov. Code Secs. 70395(b) & 70396(b).)
2. Establishes the ICNA and limits how ICNA funds may be spent. (Gov. Code Sec. 70371.5.)
3. 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).)

1. 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).)
2. Establishes the Special Fund for Economic Uncertainties. (Gov. Code Sec. 16418.)
3. 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).)
4. Provides that upon legislative authorization, the Department of General Services (DGS) may sell or dispose of excess property, as specified. (Gov. Code Sec. 11011 et seq.)
5. 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 DGS. (Gov. Code Sec. 11011.)
6. 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; and
• 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. (Gov. Code Sec. 70391(a)-(b).)

1. Provides that the Judicial Council has the authority to dispose of surplus court facilities following the transfer of responsibility under Article 3, subject to certain conditions. (Gov. Code Sec. 70391(c).)
2. Allows the Judicial Council and the county to enter into agreements regarding the shared use of buildings. (Gov. Code Sec. 70341.) In these shared use buildings, the rights and responsibilities of the Judicial Council, the court, and the county shall be established by an agreement between the parties. This agreement may be modified by the consent of both the Judicial Council and the county. (Gov. Code Sec. 70343.)

This bill:

1. Specifies that it is the intent of the Legislature to specifically authorize the Judicial Council to sell the property known as the West Los Angeles Courthouse, a closed court facility that is unsuitable for the needs of the judicial branch, and to transfer those sale proceeds to the Court Facilities Trust Fund.
2. Provides that notwithstanding any other law, the Judicial Council may sell the property, at fair market value and upon the terms and conditions and subject to the reservations the Judicial Council deems in the best interests of the state, if all of the following requirements are satisfied:

• 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 property; and
• the Judicial Council offers the County of Los Angeles the right to purchase the property at fair market value before otherwise offering the property for sale.

1. Provides that notwithstanding any other law, the net proceeds from the sale of the property shall be deposited into the ICNA, established by Section 70371.5 of the Government Code.
2. Provides that “property” means each of the following: West Los Angeles Courthouse located at 1633 Purdue Avenue, City of Los Angeles, County of Los Angeles, Assessor Parcel Numbers 4261-011-908, 4261-011-909, 4261-011-910, 4261-011-913, 4261-011-914, and 4261-011-915; and The Mental Health Courthouse located at 1150 North San Fernando Road, City of Los Angeles, County of Los Angeles, Assessor Parcel Number 5453-002-900.
3. Provides that the disposition of the property authorized in this section does not constitute a sale or other disposition of surplus state property within the meaning of Section 9 of Article III of the California Constitution and not be subject to subdivision (g) of Section 11011 of the Government Code.
4. Takes effect immediately as an urgency statute.

Background

There have been 53 courthouse closures and 215 courtroom closures throughout California since 2008. The Judicial Council’s Facilities Policies Working Group, formerly the Trial Court Facility Modification Advisory Committee, works with each county’s superior court to identify closed facilities that will not be reopened in the future. The Facilities Policies Working Group then makes recommendations to the Judicial Council regarding what they see as the best course of action for the future of that particular facility. In 2015, the Facilities Policies Working Group recommended for the first time that the Judicial Council authorize the disposition of one of these closed courthouses. In April of 2015, the Judicial Council declared the San Pedro Courthouse a surplus property and directed Judicial Council staff to notify the Legislature of this determination and seek the Legislature’s authorization to dispose of this surplus facility as allowed under Government Code sections 70391 and 11011. (Jud. Council of Cal. Facilities Policies Working Group, Rep. to the Jud. Council Court Facilities: Judicial Council- Sponsored Legislation: Disposition of the San Pedro Courthouse (Nov. 2015), pp. 2-3.)

In 2016, the Legislature passed AB 1900 (Jones-Sawyer, Chapter 510, Statutes of 2016), which authorized the Judicial Council to sell the San Pedro Courthouse and to direct the proceeds to the ICNA. Pursuant to the legislation, the Judicial Council was required to offer the property at a fair market price to the County of Los Angeles before offering the property to others for purchase. As the bill moved through the legislative process, the County of Los Angeles expressed interest in purchasing the property. The passing of AB 1900 provided the Judicial Council with the authorization needed to sell the San Pedro Courthouse.

In 2017, the Legislature passed SB 403 (Cannella, Chapter 358, Statutes of 2017), which authorized the Judicial Council to sell the Chico, Corning, Clovis, Firebaugh, Reedley, Avenal, and Corcoran superior courthouses and required the proceeds to be deposited into the ICNA. The bill also required that the counties in which the courthouses are located receive the right to purchase the properties first.

AB 2309 authorizes the Judicial Council to sell the West Los Angeles Courthouse and Mental Health Courthouse in Los Angeles County, as specified, requires Los Angeles County to have the right to purchase the properties at fair market value before others, and requires the proceeds to be deposited into the ICNA.

Comments

The author writes, “The West LA courthouse and the Mental Health Courthouse in Los Angeles County are unsuitable to the needs of the judicial branch and the local court supports the sale of the properties. The judicial council and the judicial branch will benefit from the disposition due to the elimination of operations and maintenance costs, and because net sales proceeds will be directed to the Court Facilities Construction Fund to help fund the on-going maintenance and repair of existing court facilities.”

In support, the City of Santa Monica writes, “By authorizing the sale of the West Los Angeles Courthouse, the State of California would free up this piece of property to once again be put to productive use. By offering the County of Los Angles the right of refusal the State would be demonstrating that it firmly believes that local jurisdictions are best suited to take over local lands that have fallen out of use. The City of Santa Monica firmly believes in local control and when appropriate, local jurisdictions should be the first option when selling unused state lands.”

Related/Prior Legislation

SB 403 (Cannella, Chapter 358, Statutes of 2017) authorized the Judicial Council to sell seven closed Superior Courthouses and direct the proceeds into the ICNA.

AB 1900 (Jones-Sawyer, Chapter 510, Statutes of 2016) authorized the Judicial Council to sell the San Pedro Courthouse and direct the proceeds to the ICNA.

SB 1407 (Perata, Chapter 311, Statutes of 2008) created the Immediate and Critical Needs Account of the State Court Facilities Construction Fund and authorized the Judicial Council up to $5 billion in bond financing for court construction projects.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

• Redirection of sale proceeds: Redirection of one-time revenue, likely in the millions of dollars depending on the fair market value at the time of the disposition, in net sale proceeds from the Special Fund for Economic Uncertainties to the ICNA.
• Disposition process: One-time costs (sale proceeds) to Judicial Council for expenses incurred for the disposition process including, but not limited to, title and escrow fees to be recovered from the gross proceeds of the sale of the properties.
• Operations/maintenance: Future cost savings of approximately $240,000 annually to Judicial Council in avoided maintenance and operation costs. (General Fund*)

*Trial Court Trust Fund

SUPPORT: (Verified 8/17/18)

Judicial Council (source)

City of Santa Monica

OPPOSITION: (Verified 8/17/18)

None received

ASSEMBLY FLOOR: 68-0, 4/12/18

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bonta, Brough, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gallagher, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Grayson, Harper, Holden, Irwin, Kalra, Kiley, Lackey, Levine, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Bloom, Cristina Garcia, Gray, Jones-Sawyer, Limón, Low, Mullin, Santiago, Steinorth

Prepared by:

8/30/18 9:54:07

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2017 - 2018 Regular Session

AB 2309 (Bloom) - Sale of the West Los Angeles Courthouse

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 2309, an urgency measure, would allow for the sale of the West Los Angeles Courthouse and the Mental Health Courthouse.

Fiscal Impact:

• Redirection of sale proceeds: Redirection of one-time revenue, likely in the millions of dollars depending on the fair market value at the time of the disposition, in net sale proceeds from the Special Fund for Economic Uncertainties (SFEU) to the Immediate and Critical Needs Account (ICNA) in the State Court Facilities Construction Fund. See below for more detail.
• Disposition process: One-time costs (sale proceeds) to Judicial Council for expenses incurred for the disposition process including, but not limited to, title and escrow fees to be recovered from the gross proceeds of the sale of the properties.
• Operations/maintenance: Future cost savings of approximately $240,000 annually to Judicial Council in avoided maintenance and operation costs. (General Fund*)

*Trial Court Trust Fund

Background:

As reported by the Legislative Analyst’s Office in “Completing the Goals of Trial Court Realignment,” (September 28, 2011), although the state assumed responsibility for funding the operations of trial courts in 1997, the state did not begin to take over the responsibility for and ownership of trial court facilities from counties until 2002 with the enactment of SB 1732 (Escutia) Chapter 1082/2002, more commonly referred to as the Trial Court Facilities Act of 2002. In contrast to the Legislature's decision to decentralize control of court employees to individual trial courts, SB 1732 realigned responsibility for facilities to the Judicial Council. SB 1732 included the following key components:

Transfer of Responsibility for Trial Court Facilities. The legislation authorized the transfer of title and all management responsibility for most court facilities from the counties to the state by June 30, 2007, and required the Judicial Council and the California State Association of Counties to establish a process for transferring facilities on a building-by-building basis. Moreover, the Judicial Council—not individual trial courts—was given the primary responsibility for the provision of court facilities, as well as the authority to own and construct future court facilities. The Judicial Council has since assumed responsibility from the counties for all trial court facilities.

Required County Facility Payment. Although the state would assume responsibility for trial court facilities, the legislation required counties to make annual payments into a newly created Court Facilities Trust Fund based on the amount the county had historically spent on the maintenance and operation of the transferred facilities. The state would be responsible for all operation and maintenance costs above the fixed county payment.

Established State Court Facility Construction Fund (SCFCF). In order to support the improvement of existing court facilities and the construction of new facilities, the legislation increased fines and fees, the resulting revenues of which are deposited into SCFCF. These funds were used to finance $1.5 billion in lease–revenue bonds to support 13 trial court facility projects.

Existing law provides that the Judicial Council, as the policymaking body for the judicial branch, has the responsibility and authority to dispose of surplus court facilities following the transfer of responsibility from the counties to the state pursuant to trial court realignment, subject to all of the following conditions:

(1) If the property was a court facility previously the responsibility of the county, the Judicial Council shall comply with the requirements of Government Code section 11011 et seq. [surplus property statutes], except that, notwithstanding any other provision of law, the proportion of the net proceeds that represents the proportion of other state funds used on the property other than for operation and maintenance shall be returned to the fund from which it came and the remainder of the proceeds is to be deposited into SCFCF.

(2) The Judicial Council is required to consult with the county concerning the disposition of the facility. Notwithstanding any other law, including Government Code section 11011, 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.

(3) The Judicial Council is required to 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; or is of sufficient benefit to outweigh the public good in maintaining it as a court facility or building.

(4) All funds received for disposal of surplus court facilities shall be deposited by the Judicial Council into SCFCF.

(5) If the facility was acquired, rehabilitated, or constructed, in whole or in part, with moneys in SCFCF that were deposited in that fund from the state fund, any funds received for disposal of that facility shall be apportioned to the state fund and SCFCF in the same proportion that the original cost of the building was paid from the state fund and other sources of SCFCF.

(6) Submission of a plan to the Legislature for the disposition of court facilities transferred to the state, prior to, or as part of, any budget submission to fund a new courthouse that will replace the existing court facilities transferred to the state. (Gov. Code § 70391(c).)

Proposed Law:

This bill would allow for the sale of the West Los Angeles and the Mental Health courthouses. The net proceeds of the sales of the properties are to be deposited into ICNA.

Related Legislation:

SB 403 (Cannella, Ch. 358, Stats. 2017) allowed Judicial Council to sell various courthouses and direct the proceeds to ICNA.

AB 1900 (Jones-Sawyer, Ch. 510, Stats. 2016) allowed Judicial Council to sell the San Pedro superior courthouse and direct the proceeds to ICNA.

Staff Comments:

The California Constitution provides that proceeds from the sale of “surplus state property” occurring on or after November 2, 2004 are required to be used to pay the principal and interest on bonds issued pursuant to the Economic Recovery Bond Act of 2004. Once the principal and interest on those bonds are fully paid (which occurred in 2015), the proceeds from the sale of surplus state property are required to be deposited into SFEU or any successor fund. This bill, however, would direct the net proceeds from the sale of the courthouses, what otherwise would be considered surplus state property, into ICNA as it states that the disposition of the courthouses “do not constitute a sale or other disposition of surplus state property.” The 2018 budget reflects a 2018-19 ending balance for SFEU of about $2.2 billion and an ending balance for ICNA of $167.6 million.

Additionally, the sale of all of the affected courthouses would result in a savings of approximately $240,000 annually to the General Fund in avoided ongoing maintenance and operation of the properties. Despite the closure of the courthouses, the Judicial Council continues to share responsibility for maintenance and operations cost with the counties. (Gov. Code § 70343(a)(2).)

-- END --

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2017-2018 Regular Session

Bill No: AB 2309 (Author:Bloom)

Version: June 6, 2018

Hearing Date: June 19, 2018

Fiscal: Yes

Urgency: Yes

Consultant: MEC

SUBJECT

Sale of the West Los Angeles Courthouse

DESCRIPTION

This bill would authorize the Judicial Council to sell the West Los Angeles Courthouse and the Mental Health Courthouse in Los Angeles County. This bill would require that the Judicial Council consult with, and first offer the right to purchase the properties at fair market value, to the county of Los Angeles. The Judicial Council would be required to deposit the net proceeds from the sales of the courthouses into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund.

This bill would additionally make legislative findings in support of its provisions and would take effect immediately as an urgency statute.

BACKGROUND

There have been 53 courthouse closures and 215 courtroom closures throughout California since 2008. The Judicial Council’s Facilities Policies Working Group, formerly the Trial Court Facility Modification Advisory Committee, works with each county’s superior court to identify closed facilities that will not be reopened in the future. The Facilities Policies Working Group then makes recommendations to the Judicial Council regarding what they see as the best course of action for the future of that particular facility. In 2015, the Facilities Policies Working Group recommended for the first time that the Judicial Council authorize the disposition of one of these closed courthouses. In April of 2015, the Judicial Council declared the San Pedro Courthouse a surplus property and directed Judicial Council staff to notify the Legislature of this determination and seek the Legislature’s authorization to dispose of this surplus facility as allowed under Government Code sections 70391 and 11011. (Jud. Council of Cal. Facilities Policies Working Group, Rep. to the Jud. Council Court Facilities: Judicial Council- Sponsored Legislation: Disposition of the San Pedro Courthouse (Nov. 2015), pp. 2-3.)

In 2016, the Legislature passed AB 1900 (Jones-Sawyer, Ch. 510, Stats. 2016), which authorized the Judicial Council to sell the San Pedro Courthouse and to direct the proceeds to the Immediate and Critical Needs Account of the State Court Facilities Construction Fund. Pursuant to the legislation, the Judicial Council was required to offer the property at a fair market price to the County of Los Angeles before offering the property to others for purchase. As the bill moved through the legislative process, the County of Los Angeles expressed interest in purchasing the property. The passing of AB 1900 provided the Judicial Council with the authorization needed to sell the San Pedro Courthouse.

In 2017, the Legislature passed SB 403 (Cannella, Ch. 358, Stats. 2017), which authorized the Judicial Council to sell the Chico, Corning, Clovis, Firebaugh, Reedley, Avenal, and Corcoran superior courthouses and required the proceeds to be deposited into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund. The bill also required that the counties in which the courthouses are located receive the right to purchase the properties first.

AB 2309 would authorize the Judicial Council to sell the West Los Angeles Courthouse and Mental Health Courthouse in Los Angeles County, as specified, would require Los Angeles County to have the right to purchase the properties at fair market value before others, and would require the proceeds to be deposited into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund.

CHANGES TO EXISTING LAW

Existing law permits the Judicial Council to sell the San Pedro, Chico, Corning, Clovis, Firebaugh, Reedley, Avenal, and Corcoran superior courthouses, at fair market value and upon the terms and conditions the Judicial Council deems in the best interest 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 Counties in which the properties are located concerning the sale of the property; and
• the Judicial Council offers the respective Counties the right of first refusal for the properties at fair market value before otherwise offering the properties for sale. (Gov. Code Secs. 70395(a) & 70396(a).)

Existing law requires the proceeds from the sale of the San Pedro, Chico, Corning, Clovis, Firebaugh, Reedley, Avenal, and Corcoran superior courthouses be deposited into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund. (Gov. Code Secs. 70395(b) & 70396(b).)

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).)

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 (DGS) 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 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; and
• 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. (Gov. Code Sec. 70391(a)-(b).)

Existing law provides that the Judicial Council has the authority to dispose of surplus court facilities following the transfer of responsibility under Article 3, subject to certain conditions. (Gov. Code Sec. 70391(c).)

Existing law allows the Judicial Council and the county to enter into agreements regarding the shared use of buildings. (Gov. Code Sec. 70341.) In these shared use buildings, the rights and responsibilities of the Judicial Council, the court, and the county shall be established by an agreement between the parties. This agreement may be modified by the consent of both the Judicial Council and the county. (Gov. Code Sec. 70343.)

This bill would specify that it is the intent of the Legislature to specifically authorize the Judicial Council to sell the property known as the West Los Angeles Courthouse, a closed court facility that is unsuitable for the needs of the judicial branch, and to transfer those sale proceeds to the Court Facilities Trust Fund.

This bill would provide that notwithstanding any other law, the Judicial Council may sell the property, at fair market value and upon the terms and conditions and subject to the reservations the Judicial Council deems in the best interests of the state, if all of the following requirements are satisfied:

• 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 property; and
• the Judicial Council offers the County of Los Angeles the right to purchase the property at fair market value before otherwise offering the property for sale.

This bill would provide that notwithstanding any other law, the net proceeds from the sale of the property shall be deposited into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund, established by Section 70371.5 of the Government Code.

This bill would provide that “property” means each of the following: West Los Angeles Courthouse located at 1633 Purdue Avenue, City of Los Angeles, County of Los Angeles, Assessor Parcel Numbers 4261-011-908, 4261-011-909, 4261-011-910, 4261-011-913, 4261-011-914, and 4261-011-915; and The Mental Health Courthouse located at 1150 North San Fernando Road, City of Los Angeles, County of Los Angeles, Assessor Parcel Number 5453-002-900.

This bill would provide that the disposition of the property authorized in this section does not constitute a sale or other disposition of surplus state property within the meaning of Section 9 of Article III of the California Constitution and not be subject to subdivision (g) of Section 11011 of the Government Code.

This bill would take effect immediately as an urgency statute.

COMMENT

1. Stated need for the bill

According to the author:

The West LA courthouse and the Mental Health Courthouse in Los Angeles County are unsuitable to the needs of the judicial branch and the local court supports the sale of the properties. The judicial council and the judicial branch will benefit from the disposition due to the elimination of operations and maintenance costs, and because net sales proceeds will be directed to the Court Facilities Construction Fund to help fund the on-going maintenance and repair of existing court facilities.

In support, the City of Santa Monica writes:

By authorizing the sale of the West Los Angeles Courthouse, the State of California would free up this piece of property to once again be put to productive use. By offering the County of Los Angles the right of refusal the State would be demonstrating that it firmly believes that local jurisdictions are best suited to take over local lands that have fallen out of use. The City of Santa Monica firmly believes in local control and when appropriate, local jurisdictions should be the first option when selling unused state lands.

2. Judicial Council proposes to sell courthouse valued at over $42 million

According to an August 17, 2017, Judicial Council of California Memorandum entitled Court Facilities: Disposition of West Los Angeles Courthouse:

The state holds 100 percent equity interest in this facility [ . . . ] The two-story building contains four courtrooms, four judges’ chambers, and clerk and administrative space. The Los Angeles Superior Court closed the facility to the public in June 2013 for budgetary and operational reasons. In an appraisal dated August 6, 2017, the fair market value of the West Los Angeles Courthouse was $38,880,000. The Judicial Council is responsible for the ongoing costs of operations and maintenance of the facility.

The West Los Angeles Courthouse facility is unsuitable to the needs of the judicial branch and the court supports the sale of the facility [ . . . ] The court has had discussions with the City of Los Angeles, which has expressed an interest in the courthouse property. The County of Los Angeles has previously notified the Judicial Council that it is not interested in acquiring the courthouse property. The council and judicial branch as a whole will benefit from the transaction because of the elimination of operations and maintenance costs and liability risks associated with the closed facility, and because sales proceeds will be directed to ICNA or another Judicial Council facilities fund authorized by the Legislature.

According to an April 23, 2018 Judicial Council of California Memorandum entitled Judicial Council-Sponsored Legislation (Court Facilities): Disposition of Mental Health Courthouse:

The state holds 71.31 percent equity interest in this facility with the County of Los Angeles holding the remainder. [ . . . ] An April 25, 2017 appraisal determined the fair market value of the Mental Health Courthouse was $3,830,000. The Judicial Council remains responsible for the ongoing maintenance costs of the Mental Health Courthouse even though it remains unoccupied.

This facility is unsuitable to the needs of the judicial branch, and the Los Angeles Superior Court supports the sale of the facility [.]

3. Allows Judicial Council to spend proceeds on court facilities

The Judicial Council has not deemed these courthouses surplus property, therefore Section 9 of Article III of the California Constitution does not require the proceeds from the sale of this courthouse to be directed into the Special Fund for Economic Uncertainties (SFEU). This differs from the sale of the San Pedro Courthouse, which was deemed surplus property and thus, without legislation, the proceeds would have remained in the SFEU and not have been redirected to the Judicial Council for court facilities.

This bill states that it is the Legislature’s intent that the proceeds from the sale of the courthouse approved in this bill be transferred to the Judicial Council’s Immediate and Critical Needs Account of the State Court Facilities Construction Fund.

Support: City of Santa Monica

Opposition: None Known

HISTORY

Source: Judicial Council

Related Pending Legislation: None Known

Prior Legislation:

SB 403 (Cannella, Ch. 358, Stats. 2017) authorized the Judicial Council to sell seven closed Superior Courthouses and direct the proceeds into the Immediate and Critical Needs Account of the State Court Facilities Fund.

AB 1900 (Jones-Sawyer, Ch. 510, Stats. 2016) authorized the Judicial Council to sell the San Pedro Courthouse and direct the proceeds to the Immediate and Critical Needs Account of the State Court Facilities Construction Fund.

SB 1407 (Perata, Ch. 311, Stats. 2008) created the Immediate and Critical Needs Account of the State Court Facilities Construction Fund and authorized the Judicial Council up to $5 billion in bond financing for court construction projects.

Prior Vote:

Assembly Floor (Ayes 68, Noes 0)

Assembly Appropriations Committee (Ayes 15, Noes 0)

Assembly Judiciary Committee (Ayes 10, Noes 0)

**************

Date of Hearing: April 4, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 2309

Author:(Bloom) – As Introduced Ver:February 13, 2018

Urgency: Yes State Mandated Local Program: No Reimbursable: No.

SUMMARY:

This bill authorizes sale of the West Los Angeles Courthouse. Specifically, this bill:

1. Authorizes the Judicial Council to sell the West Los Angeles Courthouse at fair market value and upon the terms and conditions and subject to the reservations the Judicial Council deems in the best interests of the state.
2. Conditions the sale upon Judicial Council consulting with the County of Los Angeles and offering the county the right to purchase the property at fair market value.
3. Requires net proceeds from the sale to be deposited into the Court Facilities Trust Fund.

FISCAL EFFECT:

Up to several million dollars of one-time revenue to the Court Facilities Trust Fund from the proceeds of the sale, less the Judicial Council's administrative costs, and ongoing savings in avoided operations and maintenance costs for the courthouse.

COMMENTS:

1. Background and Purpose. As a result of budget constraints, since 2008, dozens of courthouses have been closed statewide, including the West Los Angles Courthouse, which closed in 2013. According to the author, both the Judicial Council (sponsor) and the local courts support the sale of the West Los Angeles Courthouse.
2. Bill directs proceeds of sale to where they are needed. This bill is similar to bills passed by the Legislature in recent years to authorize the sale of obsolete court properties. Those bills directed proceeds of the sale of the court properties to the Immediate Critical Needs Account (ICNA) of the State Court Facilities Construction Fund to pay for court construction and maintenance. This bill, in contrast, directs the proceeds of the sale of the West Los Angeles Courthouse to the Court Facilities Trust Fund. This is because the 2018-19 budget, as proposed by the governor, includes significant new resources for the up-till-now underfunded ICNA, obviating the need to direct funding to that account. This bill instead directs proceeds of the sale of the courthouse to the Court Facilities Trust Fund, which provides funding for the operation, repair, and maintenance of court properties.

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing: March 20, 2018

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

ABPCA Bill Id:AB 2309

Author:(Bloom) – As Introduced Ver:February 13, 2018

PROPOSED CONSENT

SUBJECT: Sale of the West Los Angeles Courthouse

KEY ISSUE: SHOULD The WEST LOS ANGELES COURTHOUSE, A CLOSED COURT FACILITY, BE SOLD BY THE JUDICIAL COUNCIL UTILIZING EXISTING PROCEDURES AND PROVIDING THE COUNTY OF LOS ANGELES with the RIGHT OF FIRST REFUSAL to purchase the property at fair market value?

SYNOPSIS

This bill is the latest in a series of bills sponsored by the Judicial Council that this Committee has heard over the past several years, and will likely continue to hear, related to the disposition of closed courthouses across California. According to the Judicial Council, 50 courthouses are presently closed across the State, forcing millions of Californians to travel great distances to obtain basic court services. While the Judicial Council anticipates that some courthouses will likely reopen as budget conditions improve, realistically, budget conditions will likely keep some courthouses closed permanently.

In order to keep funds related to courts within the judicial branch, this bill authorizes the Judicial Council, the sponsor of this bill, to manage the sale of the West Los Angeles courthouse, and distribute the proceeds to the Court Facilities Trust Fund to pay for on-going court facility operations, repairs, and maintenance, thereby preserving the public’s access to existing court facilities. The City of Santa Monica supports the bill. There is no opposition to the bill on file.

SUMMARY: Authorizes the Judicial Council to sell the closed courthouse known as the West Los Angeles Courthouse. Specifically, this bill:

1. Requires the Judicial Council to adhere to existing procedures for selling surplus court facilities.
2. Requires the Judicial Council to consult with the County of Los Angeles concerning the sale of the property.
3. Requires the Judicial Council to offer the County of Los Angeles the right to purchase the property at fair market value before otherwise offering the property for sale.
4. Provides that the proceeds from the sale of the West Los Angeles Courthouse be placed into the Court Facilities Trust Fund.
5. Defines the West Los Angeles Courthouse as the facility located at 1633 Purdue Avenue, City of Los Angeles, County of Los Angeles, Assessor Parcel Numbers 4261-011-908, 4261-011-909, 4261-011-910, 4261-011-913, 4261-011-914, and 4261-011-915.
6. Provides that the disposition of the West Los Angeles Courthouse does not constitute a sale of surplus property within Section 9 of Article III of the California Constitution, thereby exempting the courthouse sale from the requirement that all sale proceeds be deposited into the Special Fund of Economic Uncertainties, or any successor fund, as set forth in subdivision (g) of Section 11011 of the Government Code

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. (Cal. Const., Art. IV, Section 9; Government Code Section 11011 (g).)
2. Provides that upon legislative authorization, the Department of General Services (DGS) may sell or dispose of the excess property upon any terms and conditions and subject to any reservations and exceptions as DGS may deem to be in the best interests of the state. (Government Code Section 11011 et seq.)
3. Directs each state agency to annually review lands under its jurisdiction to determine what, if any, land in the agency’s control is in excess of its foreseeable needs, and to report its findings to DGS. (Ibid.)
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:
   1. 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.
   2. 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.
   3. 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:
      1. The Judicial Council shall consult with the county concerning the disposition of the facility.
      2. 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. (Government Code Section 70391.)
5. Establishes the Court Facilities Trust Fund and provides that money deposited in the fund, upon appropriation by the Legislature, shall be administered by the Judicial Council for the operation, repair, and maintenance of court facilities. (Government Code Section 70352.)
6. Authorizes the Judicial Council to sell seven closed courthouses, as provided, at fair market value and upon the terms and conditions and subject to the reservations the Judicial Council deems in the best interests of the state, if all of the following requirements are satisfied:
   1. The sale complies with 4), above.
   2. The Judicial Council consults with the county where the property is located concerning the sale of the property.
   3. The Judicial Council offers the county in which the property is located the right to purchase the property at fair market value before otherwise offering the property for sale.
   4. All proceeds from the sale of the property shall be deposited into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund, as defined. (Government Code Section 70396.)
7. Authorizes the Judicial Council to sell the San Pedro superior courthouse, as provided, at fair market value and upon the terms and conditions and subject to the reservations the Judicial Council deems in the best interests of the state, if all of the following requirements are satisfied:
   1. The sale complies with 4), above.
   2. The Judicial Council consults with the County of Los Angeles concerning the sale of the property.
   3. The Judicial Council offers the County of Los Angeles the right to purchase the property at fair market value before otherwise offering the property for sale. The net proceeds from the sale of the property shall be deposited into the Immediate and Critical Needs Account of the State Court Facilities Construction Fund, as defined. (Government Code Section 70395.)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: This bill seeks to authorize the Judicial Council to sell the now-closed West Los Angeles Courthouse and provides that the revenue generated by the sale would be deposited in the Court Facilities Trust Fund to fund court facility operations, repair, and maintenance.

Author’s Statement. In support of the bill, the author notes that, “The West LA courthouse is unsuitable to the needs of the judicial branch and the local court supports the sale of the property. The [Judicial] Council and the judicial branch will benefit from the disposition…because the proceeds will be directed to the Court Facilities Trust Fund.”

Years of Budget Constraints Have Forced Court Closures Statewide. This bill is substantially similar to several measures this Committee has heard in years past. In 2016, this Committee approved AB 1900 (Jones-Sawyer, Chapter 510, Statutes of 2016) which authorized the Judicial Council to sell the San Pedro courthouse located in Los Angeles County. Similar to this bill, AB 1900 required the Judicial Council to consult with the County of Los Angeles on the sale, and offer the County of Los Angeles the right of first refusal to purchase the property at fair market value. AB 1900 led to the eventual sale of the San Pedro courthouse property for $5.1 million.

Last year, this Committee once again addressed the need to sell courthouses as a result of budget-induced court closures. This Committee unanimously approved SB 403 (Canella, Chapter 358, Statutes of 2017) which authorized the Judicial Council to sell seven closed courthouse properties across the Central Valley. That bill also required the Judicial Council to consult with the county government where the court property is located and provide the county government the right of first refusal to purchase the property at a fair market value. The Judicial Council anticipates the sale of the seven courthouses will generate a minimum of $1.6 million in revenue for the Immediate and Critical Needs Account.

Same Story, Different Courthouse. The Los Angeles Superior Court, due to budgetary and operational constraints, closed the West Los Angeles courthouse in June 2013, and transferred most of the West Los Angeles courthouse’s operations to the nearby Santa Monica courthouse. Since the courthouse’s closure, the Los Angeles City Council has worked to preserve and convert several portions of the building’s exterior and parking lot for use as a skate board park.

In accordance with existing law, this bill provides the Judicial Council with the legislative authorization necessary to dispose of the West Los Angeles courthouse property. Similar to its predecessors, this bill authorizes the Judicial Council to sell a courthouse facility that was closed due to consolidation and budget cuts. Additionally, like its predecessors, this bill requires the Judicial Council to consult with the county government, in this case the County of Los Angeles, and give the county the right to purchase the property at fair market value. However, unlike its predecessors, this bill—for reasons explained below--directs the proceeds from the sale of the property to the Court Facilities Trust Fund and not the Immediate and Critical Needs Account of the State Court Facilities Construction Fund.

Multiple State Funds Provide for Courthouse Maintenance and Construction. Since the State consolidated county court operations, the Judicial Council has faced significant shortfalls in funding for court construction and maintenance. To remedy some of this shortfall, the Immediate Critical Needs Account of the State Court Facilities Construction Fund was established by SB 1407 (Perata, Chapter 311, Statutes 2008) to utilize increased civil and criminal fine and fee revenues to help fund a $5 billion courthouse construction bond. However, revenue dramatically missed projections, forcing the Judicial Council to indefinitely delay 15 construction projects and halt an additional 17 projects after the initial phase of their construction. To remedy some of this budgetary shortfall, prior courthouse disposition bills directed proceeds from the sale of court facilities to be deposited in the Immediate Critical Needs Account of the State Court Facilities Construction Fund.

In a bit of good news for the Judicial Council, Governor Brown’s 2018-2019 Proposed Budget includes a one-time $32.2 million appropriation to complete the design of three new courthouse projects and provides $1.3 billion in bond revenue to complete ten of the 17 halted projects. Accordingly, with the Immediate Critical Needs Account stabilized for the near future, this bill proposes to direct the revenue from the sale of the West Los Angeles courthouse to the Court Facilities Trust Fund, which is designed to provide funding for the ongoing operation, repair, and maintenance of court facilities. The Court Facilities Trust Fund, like other court funds, has suffered from chronic budget shortfalls in recent years, and, according to the Judicial Council, the courts now face a $4 billion backlog in deferred maintenance. Given the high value of real estate on the west side of Log Angeles, the sale of the West Los Angeles courthouse is projected to generate proceeds of well over $10 million.

This Bill Seeks to Avoid the Cumbersome State Surplus Property Sale Process, Thereby Ensuring that Courthouse Sale Revenues Benefit the Court System. As a part of the consolidation of California’s courts in 2002, recognizing that county governments previously owned many of California’s courthouses, the Judicial Council was required to offer the county in which the property is located a chance to repurchase the surplus court facility at the fair market value. However, in 2004, Proposition 60A enacted Section 9 of Article III of the California Constitution and required that all surplus property be disposed of by DGS and that all sale proceeds be provided to the State’s the Special Fund of Economic Uncertainties, or any successor fund.

Existing law generally requires state agencies to report to DGS all property that can be deemed surplus. DGS then submits a list of properties to the Legislature to be officially declared surplus by legislation. Upon approval by the Legislature, DGS must determine whether the land could first be used by any other state agency, local agency, or nonprofit affordable housing organization. The property can only be sold to the public once DGS determines that the property cannot be utilized by one of the aforementioned entities. The DGS process for selling surplus property can be time consuming, and does not generate revenue for the individually impacted state agency.

This bill, like its predecessors, provides that the West Los Angeles courthouse is not surplus property, thereby exempting the sale from the DGS process, and authorizing the Judicial Council to manage the sale itself. Given that this bill provides that the proceeds from the sale of courthouses are distributed back to funds managed by the Judicial Council for courthouse maintenance and operational costs, this exemption is reasonable and ensures that the proceeds from the courthouse property sale will be used to maintain court access for the public.

REGISTERED SUPPORT / OPPOSITION:

Support

Judicial Council of California (sponsor)

City of Santa Monica

Opposition

None on file

Analysis Prepared by: Nicholas Liedtke / JUD. / (916) 319-2334