Acquisition Overview

Functions/Objectives

1. Acquire by conveyance the real property rights needed for state facilities.
2. Ensure that each owner is treated in a just and equitable manner.
3. Serve as the direct representative of the State with the property owner.
4. Assure that the State’s title is adequate for the intended public use.

Acquisition Authority and Approvals

DGS Approval - Government Code Section 11005 mandates that except for fee acquisitions by the Department of Transportation for highway purposes, DGS approval is required for the acquisition or hiring of real property in fee or in any lesser estate or interest (unless the Legislature specifically provides that DGS approval is not required).

GC Section 11005. Unless the Legislature specifically provides that approval is not required, every gift or dedication to the state of personal property, or every gift to the state of real property in fee or in any lesser estate or interest, shall be approved by the Director of Finance, and every contract for the acquisition or hiring of real property in fee or in any lesser estate or interest, entered into by or on behalf of the state, shall be approved by the Director of General Services.  Any contract entered into in violation of this section is void. This section applies to any state agency which, by general or specific statute, is expressly or impliedly authorized to enter into transactions referred to in this section…

State Public Works Board (PWB) Authority - The State Public Works Board (PWB) has the authority pursuant to Government Code Section15850 et seq., the “Property Acquisition Law” (PAL) to select and acquire the fee or any lesser right or interest in real property for any state purpose or function.  Acquisitions subject to PAL require PWB approval and two separate PWB actions.

1. PWB “site selection” approval authorizes the acquisition agent to begin negotiations including disclosure of the appraised value of the property.
2. PWB ”site acquisition” approval authorizes the acquisition of the property subject to the terms and conditions of the property acquisition agreement.

DGS staff to PWB - DGS provides staff support to the PWB for real property acquisitions including the review and execution of acquisition documents in conjunction with PWB acquisition approval.  As staff to the PWB, DGS performs real estate oversight for the PWB.

GC Section 15850.  This part may be cited as the Property Acquisition Law.

GC Section 15851.  As used in this part, "board" means the State Public Works Board.

GC Section 15852.  The State Public Works Board has all the duties, powers, purposes, responsibilities, and jurisdiction of the Property Acquisition Board and whenever by law a duty or jurisdiction is imposed or authority conferred upon the Property Acquisition Board or upon any of its officers or employees such duty, jurisdiction, and authority are vested in the State Public Works Board with the same force and effect as if the title of the State Public Works Board had been specifically set forth therein.

GC Section 15853. 

(a) The board may select and acquire, in the name of and on behalf of the state, with the consent of the state agency concerned, the fee or any lesser right or interest in any real property necessary for any state purpose or function.

(b) If moneys are appropriated by the Budget Act for any fiscal year or by any other act for the acquisition of land or other real property, either (1) subject to this part or (2) for any state agency for whom property is acquired by the board, the moneys and acquisitions are subject to this part and the moneys shall be expended in accordance with this part, notwithstanding any other provisions of law.

(c) Notwithstanding any other provisions of law, all land and other real property to be acquired by or for any state agency, other than: the Department of Transportation, the Department of Water Resources, the State Reclamation Board, the Department of Fish and Game, the Wildlife Conservation Board, the Public Employees' Retirement System, the State Teachers' Retirement System, the Department of Housing and Community Development, and the State Lands Commission, except for property to be acquired for the State Lands Commission pursuant to an appropriation from the General Fund, shall be acquired by the State Public Works Board in accordance with this part.

Up to $150,000 Exemption from DGS Approval - Government Code Section 14667.1 authorizes DGS to exempt agencies from its approval for transactions of up to $150,000 in value.  Agencies with real estate staff and demonstrated proficiency may apply for this exemption.  This exemption applies only to DGS mandated approvals; it does not exempt agencies from DGS review and approval required on behalf of PWB.

GC Section 14667.1.  Notwithstanding Government Code Section 14616, the director may exempt from his or her approval, or from the approval of the department, any state real estate acquisition or conveyance involving not more than one hundred fifty thousand dollars ($150,000) for which approval is required by statute whenever, in his or her judgment, the state agency delegated that authority has the necessary real estate expertise and experience to complete the transaction competently and professionally while protecting the best interests of the state. Written notice of exemptions shall be given to the Controller.

Enabling Legislation

Legislation authorizing Acquisition by an entity - Whenever a property is acquired by the state, it must be accepted by an entity with the authority to accept the title.  This is documented with a properly executed certificate of acceptance or resolution attached to the grant deed (GC Section 27281); vesting must not conflict with the authority cited.  The authority of an entity to accept real estate is found in codified legislation specific.

Certain agencies and departments such as the Resource Agency departments and conservancies, Judicial Council of California, and High Speed Rail Authority have some level of autonomy through their enabling legislation.  The codes and authority varies between these agencies, and the enabling legislation must be researched for each to confirm what approvals are required, i.e. what entity is accepting the property and under what authority, and what approval signatures are required.

Enabling Legislation for the Project

Acquisitions by the State of California must be contemplated in law.  Although some enabling legislation is codified elsewhere, most appropriations for acquisition are made through the annual budget cycle (Budget Act).

This appropriation in the budget cycle or other codified legislation will dictate the scope of the project.  Scope relating to acquisition typically includes size, location, cost, and suitability for the specified use.  Other, more specific requirements may also be detailed in the budget package.  It is critical to identify early on what the scope of an acquisition project is because any change in scope for a project requiring PWB approval will also require 20 day notification from Department of Finance to the Joint Legislative Budget Committee (JLBC).

Type of Acquisition Assignments

Projects requiring DGS and/or PWB approval are not always managed by the Acquisition Unit of RPSS.  Many factors affect which agency or branch will have oversight for an acquisition project.  Oversight may rest with the client agency or the Project Management team of DGS.  In all cases the functions and objectives listed above apply.

• Client Agency Managing Project – Authorized agencies with adequate real estate staff typically conduct and complete the real property acquisition function and request only a review and approval function from DGS.The agency must submit a complete package to DGS for review.
• DGS Project Management Capital Outlay Projects - When a capital outlay project contains an acquisition component, the project director from the Project Management and Development Branch (PMDB) teams with the RPSS Acquisition Unit to accomplish the acquisition phase.For these assignments a matrix team is formed soon after the budget is enacted.One acquisition agent from RPSS is generally assigned to the team and one environmental specialist is assigned from DGS’ Environmental Services Section (ESS).
• Exercise of Lease Purchase Options - These are generally projects that were constructed with a lease build scenario.The lease is managed by DGS’ Real Estate Leasing and Planning Section (RELPS) and is structured with acquisition contemplated on or after a certain date.Because the building is already constructed, there is no project director involvement from PMDB.The overall management to exercise these lease purchase options is provided by the RPSS Acquisition Unit in coordination with the RELPS agent.
• DGS Acquisitions for Client Agency - Where a client agency requests DGS to manage the acquisition of a project, the Acquisitions Unit of RPSS provides project management oversight. This is typically the case where the agency does not have adequate real estate staff or the experience and expertise to perform the real property acquisition function.

Site Selection and Acquisition Phase

Using DGS as its agent, PWB selects and acquires real property for most departments when the appropriation is subject to the Property Acquisition Law.  Even if a specific site is designated for acquisition by the Legislature, PWB must approve the site before any purchasing activities can begin, including negotiating with the prospective seller.  DGS prepares all land acquisition and related agenda items for consideration and approval by the PWB.

The phase has two major steps: 

1. Site Selection - PWB approval of the chosen site with authorization to proceed to purchase, requires an approved DGS appraisal and Condition of Property Statement from ESS; and
2. Site Acquisition - CEQA compliance, PWB approval of the acquisition subject to the terms and conditions of the property acquisition agreement.

This phase starts when the client department makes a written request to DGS for real property acquisition services to select and acquire a site for the approved project.  The request must be made by a department manager authorized to commit project funds and must give the Budget Act appropriation citation or statutory authority.

After receiving a formal appraisal approved by DGS and condition of property statement from ESS, but before beginning any formal acquisition activities, DGS obtains PWB approval for a specific site consistent with the requirements of the Budget Act or enabling statute.  Where a specific site is not designated in the appropriation, DGS will first assist the department in searching and selecting a site through advertising and outreach to local real professionals and government agencies.

After PWB approves the site selection, DGS conducts their complete real estate due diligence and negotiates a settlement with the owner.  DGS returns to the board for approval of the negotiated acquisition.  Negotiations with the property owner shall not begin until:  a.) the Acquisition Unit has received a DGS approved appraisal covering the subject property and site selection has been authorized by the PWB, or b.) prenegotiations have been authorized.  All negotiations shall be directed to accomplish the end result that the property owner receives just compensation; that the settlement is fair to the public; that every courtesy, consideration, and patience is extended to the property owner; and to foster a feeling of confidence and respect toward the state and its employees by the property owner.  All offers shall represent the best estimate of market value determined through sound, approved appraisal and acquisition practices.

Site selection and acquisition tasks will include:

• Site Location (Site Criteria, Advertise, Market Research, Site Visits)
• Preliminary Site Investigation for Site Selection (Temporary Entry Permit, Preliminary Title Review, Preliminary Environmental Review, Appraisal, Relocation Assistance, Utilities)
• Complete Real Estate Due Diligence for Site Acquisition (Title Report/Issues, Legal Description, Access, Infrastructure/Utilities, Site Layout, Easements, Appraisal Valuation Issues, Relocation Assistance, Environmental Clearance-CEQA, Geotechnical, Design/Construction Issues, Local Issues, Entitlement/Politics, Legal Review, ADA, Seismic and Structural Evaluation)
• Negotiation (Property Acquisition Agreement, Offer Package, Legal Review)
• Escrow and Close Out (Title Insurance, Escrow Fees, Warrant Request, Tax Cancelation, Transfer Jurisdiction)

Site selection and acquisition costs will include but may not be limited to:

• Investigations, Surveys, Title costs, Appraisal fees, DGS Staff time, and Relocation assistance.

As staff to PWB on acquisition matters, DGS obtains the information needed to assure PWB that:

• The location of the proposed site meets the requirements of the department for which it is being acquired;
• The site is suitable for the project's purpose and will not result in increased project costs;
• The site can be acquired within the funds available and is in accordance with the intent of the Legislature; and
• The price paid for the property is fully supported by an appraisal.

Requesting DGS Real Estate Services

• CRUISE - Customer Requests: Upgraded Information Sharing Environment
• What is the CRUISE application?

  CRUISE is a DGS/RESD web based electronic business application located at: Global CRUISE

• State agencies use CRUISE to submit requests for real estate services.