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April 27, 2010 -
Recent legislation authorized the Department of General Services (DGS) to sell and then lease back 11 state-owned office properties. The sale-leaseback is designed to free up the state’s equity in the buildings to provide one-time revenue for addressing the state’s current budgetary shortfall. We estimate that the sale of buildings would result in one-time revenue to the state of between $600 million and $1.4 billion, but that annual leasing costs would eventually exceed ownership costs by approximately $200 million.
Over the lives of these buildings, we estimate the transaction would cost the state between $600 million and $1.5 billion. The Legislature will need to weigh how these costs compare to other alternatives for addressing the state’s budget shortfall. In our view, taking on long-term obligations—like the lease payments on these buildings—in exchange for one-time revenue to pay for current services is bad budgeting practice as it simply shifts costs to future years. Therefore, we encourage the Legislature to strongly consider other budget alternatives.
(Short video introducing this report)
January 12, 2010 - This report presents a summary of reports received by the LAO from California counties on construction projects that they completed with the design-build delivery method. Although it was difficult to draw conclusions from the reports received about the effectiveness of design-build compared to other project delivery methods, we do not think that the reports provide any evidence that would discourage the Legislature from granting design-build authority to local agencies on an ongoing basis. In doing so, however, we recommend the Legislature consider some changes such as creating uniform design-build statute, eliminating cost limitations, and requiring project cost to be a larger factor in awarding the design-build contract.
October 30, 2009 - Sent to: Members, Senate Natural Resources and Water Committee and Assembly Water, Parks, and Wildlife Committee
May 14, 2009 - We examine the steps that the California Department of Corrections and Rehabilitation (CDCR) has taken to implement Chapter 7, Statutes of 2007 (AB 900, Solorio) which authorized a total of approximately $7.7 billion for a broad package of prison construction and rehabilitation initiatives in order to relieve the significant overcrowding problems facing state prisons. Based on our review, we identify several issues that merit legislative consideration. For example, we note that the department’s construction cost estimates for the infill bed projects reflect an almost quadrupling of costs since the last state prison was built about seven years ago. Moreover, we find that the cost to operate the infill bed and reentry facilities and pay the annual debt service for the lease-revenue bonds to construct these facilities will be significant. Based on the department’s estimates, when fully implemented, the infill bed and reentry facilities could increase General Fund costs by $1.3 billion annually.
June 13, 2008 - Item 5225-301-0001 of the 2008 Budget Conference Committee (page 330).
February 20, 2008 - The Governor’s budget proposes to ask for voter approval of $48 billion in general obligation bonds. In this piece, we provide an update on the implementation of the bond package approved in 2006, describe the Governor’s new bond-related proposals, and analyze how the proposed additional bonds would affect the state’s debt-service payments for infrastructure.review infrastructure
February 21, 2007 - Analysis of the 2007-08 Budget Bill, Capital Outlay Chapter
February 5, 2007 - Our office recently issued Implementing the 2006 Bond Package, aimed at helping the Legislature in overseeing the spending of the $43 billion in bond funds just approved by the voters. This report is intended to complement the report on the 2006 bond package. It answers basic questions about the state’s use of bonds to finance its infrastructure.review infrastructure
January 22, 2007 - At her media presentation held on January 22nd, 2007, Elizabeth Hill discusses recommendations to assist the Legislature in implementing the bond package approved by voters in November 2006.
January 22, 2007 - In November 2006, California voters approved $42.7 billion in general obligation bonds to fund infrastructure projects in transportation, education, resources, and housing. The 2006 bond package represents a major opportunity for the Legislature to address many of the state’s most pressing infrastructure concerns. With more than $18 billion allocated to new programs, effective legislative oversight is critical to the success of the programs. In this report, we offer key considerations and recommendations to assist the Legislature in implementing the bonds. (Video Summary)review infrastructure
February 16, 2006 - We review infrastructure proposals in the Governor's Strategic Growth Plan. Presented to the Conference Committee on Infrastructure Bonds.
February 16, 2006 - An overview of major state infrastructure in which we review infrastructure planning, recent infrastructure expenditures, and sources of infrastructure funding. Presented to the Conference Committee on Infrastructure Bonds.
January 31, 2006 - We review the Governor's critical infrastructure facilities bond proposal. Presented to the Assembly Judiciary Committee. review infrastructure