BILL ANALYSIS Ó
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| SENATE COMMITTEE ON NATURAL RESOURCES AND WATER |
| Senator Fran Pavley, Chair |
| 2011-2012 Regular Session |
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BILL NO: AB 418 HEARING DATE: June 28, 2011
AUTHOR: Ammiano URGENCY: No
VERSION: June 23, 2011 CONSULTANT: Marie Liu
DUAL REFERRAL: No FISCAL: Yes
SUBJECT: Tidelands and submerged lands: City and County of San
Francisco: Pier 70.
BACKGROUND AND EXISTING LAW
Section 3 of Article X of the California Constitution prohibits
all tidelands within two miles of any incorporated city, city
and county, or town from being granted or sold to private
parties unless the Legislature finds that these tidelands are
not used or necessary for navigation. The Legislature may impose
conditions on these sales and grants to protect the public
interest.
Chapter 1333 of the Statutes of 1968, otherwise known as the
Burton Act, allowed the granting of the Port of San Francisco
from the state to the City and County of San Francisco. The Act
allows San Francisco to operate, manage, regulate, and improve
the granted lands in a manner consistent with the public trust.
Allowable activities include: activities for the promotion and
accommodation of commerce and navigation; and the construction,
maintenance, and operation of public buildings, parks, and
public educational and recreational facilities. The Burton Act
also allows San Francisco to lease portions of the granted lands
for periods up to 66 years for uses that are consistent with the
public trust and the state's commerce and navigation needs.
Revenues from the leases and other uses of the granted lands are
deposited into the Harbor Trust Fund (Harbor Fund) and may only
be used for the management of San Francisco's granted trust
lands.
PROPOSED LAW
This bill removes and impresses the public trust on several
parcels within San Francisco's granted lands that are managed by
the Port of San Francisco (Port). This bill is divided into two
main sections - Pier 70 and Seawall Lot 330.
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Regarding Pier 70, this bill would:
Authorize the State Lands Commission (Commission) to approve
an exchange of trust lands within Pier 70 to allow for the
development of the area, subject to multiple conditions,
including:
o The lands being exchanged out of the public trust and
Burton Act trusts are filled so that they are no longer
tidelands or navigable waterways;
o The lands being impressed with the trust have a monetary
value equal to or greater than the monetary value of the
lands being exchanged out of the trust;
o The lands being impressed with the trust will provide a
significant benefit to the trust;
o There is public access to the trust lands and streets,
and other transportation facilities will provide access to
shoreline improvements; and
o The exchange is in the best interests of the statewide
public.
Allow the Port to continue to hold title to lands that are
released from the public trust (e.g. trust termination lands)
so long as they are managed as assets of the public trust. Any
revenues generated from these trust termination lands must be
deposited into the Harbor Fund. The Harbor Fund may be used by
the Port for the management of the trust termination lands
subject to certain conditions.
Allow historic buildings on the trust lands to be leased for
non-trust purposes so long as the buildings are rehabilitated
to federal restoration standards, the leases allow for public
access to view the historic architectural amenities of the
buildings, and the Executive Officer of the Commission finds
that the leases are part of an overall program that furthers
trust purposes.
Make numerous findings and declarations regarding the history
of Pier 70, the future plans for the area, and the need for a
trust exchange.
Regarding Seawall Lot 330, this bill would:
Terminate the public trust on Seawall Lot 330 in perpetuity.
Allow the Port to convey the title and interest of Seawall Lot
330 to any person so long as the Port receives at least fair
market value. Revenues or considerations from the sale must be
used for trust purposes. Considerations may be in the form of
improvements to other trust lands within the Port's
jurisdiction.
Require the Commission to review the appraisals used to
determine the fair market value of the lot.
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Require the Port, as a condition of selling the fee title to
Seawall Lot 330, to impress new lands with the public trust.
The new lands must be within or adjacent to the San Francisco
Bay, have a total area equal to or greater than the area of
Seawall Lot 330, and be useful for trust purposes as
determined by the Commission.
Make numerous findings and declarations regarding extensive
needed capital improvements along the waterfront, the
insufficient revenues from the trust lands to fund such
improvements, the host agreement for the 34th America's Cup,
the economic impacts of hosting the 34th America's Cup, and
the current underutilization of Seawall Lot 330.
ARGUMENTS IN SUPPORT
According to the Port of San Francisco, in support of the bill,
"A trust realignment will make both trust and non-trust parcels
more valuable by enabling major economic development and
waterfront restoration and providing for the preservation of
ongoing ship repair and historic resources, while creating a
vibrant and authentic historic district that will activate new
waterfront open spaces and development?Market potential and
community consensus suggest that cultural, institutional,
office, biotech, other commercial, and perhaps a limited amount
of residential uses, most of which are not consistent with the
public trust, should be developed at Pier 70 in areas that are
least suitable for public trust uses, as reflected in the Master
Plan. Higher land value uses are essential to generating the
revenues needed to realize Pier 70's potential and the Port's
overarching goals. Realigning the land use regulations is
imperative to realizing the vision of a revitalized Pier 70."
ARGUMENTS IN OPPOSITION
None received.
COMMENTS
Development plans for Pier 70: Pier 70 is a 69-acre brownfields
site on San Francisco's Central Waterfront that has been used
for ship building and repair for over 150 years. In April 2010,
the Port published its Master Plan for the Pier 70 area to
create a "vibrant and authentic historic district." Plans
include preserving and integrating ongoing ship repair
operations; providing sites for office, research, light
industry, commercial, and recreational uses; remediating past
environmental contamination; and extending the San Francisco Bay
Trail and Blue Greenway.
The Pier 70 area is comprised of parcels acquired from the
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state, the federal government, and private parties. The result
is a patchwork of sites subject to public trust restrictions.
According to the author, the purpose of this bill is to allow a
public trust swap that will consolidate trust properties along
the water's edge to promote maritime uses and public access. In
exchange, upland portions of the area will be exchanged out of
the public trust for development.
Trust termination lands at Pier 70 - Expanded uses- and
revenues- for the Harbor Fund: The Committee may wish to find
that the authorization for the Pier 70 trust exchange is
generally consistent with past exchanges approved by the
Legislature. One notable unique aspect of this authorization,
however, is the allowance for the Port to remain in control of
some of the non-trust lands, or trust termination lands, and use
the Harbor Fund for some management costs. Under the bill, the
Port would manage these lands as an investment of sorts -
revenues generated from the trust termination lands will be
deposited in the Harbor Fund. The Port would, in exchange, have
a limited ability to use the Harbor Fund to manage and
administer the non-trust lands, which is a new use of the Harbor
Fund.
According to the Port, it is their belief that more revenues
will be generated on the trust termination lands than will be
needed to administer the lands - thereby ensuring a net benefit
for the Harbor Fund. The committee should note that the author
intends to work with the Commission to draft a future amendment
to this bill that would add a reporting requirement in
approximately 35 years to assure that the Harbor Fund was held
whole under this authorization and potentially require the Port
to make the Harbor Fund whole, if necessary.
Seawall Lot 330 and America's Cup: On December 31, 2010, San
Francisco was chosen as the host location for the 34th America's
Cup in 2013. A host and venue agreement between San Francisco
and the America's Cup Event Authority (Authority). This
agreement, however, is contingent on California Environmental
Quality Act compliance; improvements to and use of specific
facilities; and city, state, and federal approvals. These are
all currently underway.
The host agreement includes approximately $55 M in improvements
to the waterfront (mostly pier improvements and public viewing
facilities), which will be made by the Authority with private
funds. In exchange, the Port will grant the Authority long-term
leases, probably for two sites, one of which is Seawall Lot 330.
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The Authority will receive rent credits equal the capital
improvements that the Authority actually makes to the
waterfront.
Seawall Lot 330 currently serves as a surface parking lot. The
Legislature has previously found that Seawall Lot 330 was no
longer useful to the trust (SB 815 (Migden, 2007)) and allowed
the Port to use the property for non-trust purposes on a
temporary but long-term basis (up to 75 years) so long as the
revenues from the lot continue to be used for specific trust
purposes. This bill proposes to permanently release the lot from
the public trust and further allow the Port to sell the property
for fair market value, consistent with the host agreement. The
author estimates that the property is worth approximately $25 M.
The proceeds from this sale will essentially decrease the amount
of rent credits the Authority will receive from the Port.
Presumably the Authority will develop the property for its
highest and best use, residential development.
Under the host agreement, if the Legislature does not allow the
property sale and permanent lifting of the public trust, the
Port will grant the Authority a 75-year lease on Seawall Lot
330, which would preclude residential development. Thus the Port
will have to offer the Authority significantly more rent
credits.
Authority to sell trust lands to a private entity outside of an
equal-value trust exchange is unprecedented : In the past, the
Legislature has approved the sale and lifting of the public
trust on trust lands, but only as part of an exchange so that
the state receives trust land that is equal in value, as
required by §6307 of the Public Resources Code. For example, the
Legislature has previously allowed the sale of a small portion
of Seawall Lot 330 (0.52 acres) for the construction of a
22-store condominium tower. Replacement lands of equal value
were placed in trust and the Port additionally agreed to use $9M
of the sale proceeds to construct the Brannan Street Wharf
(Chapter 310, Statutes of 1987). The requirement that the
exchange is equal in value assures that the statewide public's
interest is kept whole in the sale.
This bill would obligate the Port, as a condition of selling
Seawall Lot 330, to impress the public trust on new lands in the
San Francisco Bay that are at least equal in area of Seawall Lot
330, but not equal in value, thereby arguably not necessarily
keeping the statewide public interest whole. The Committee may
wish to consider whether it is in the best interest of the state
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to receive less revenue or land value than normal in these land
exchanges, in exchange for the Authority making upfront
investments to the waterfront that the Port otherwise does not
have the cash flow to do.
Permits are required by the San Francisco Bay Conservation and
Development Commission (BCDC) : This bill contains language that
specifies how San Francisco will satisfy BCDC's regulatory
requirements in order to receive a development permit. BCDC's
standard practice is to only issue a permit after the local
agency has given final approval for the project. As recently
amended, this bill would require BCDC to issue a permit before
the local government's final approval, which means BCDC might
have to revise its permits if the local government makes any
changes before final approval. The author contends that BCDC's
standard process does not work well for large projects that are
built in phases over time. The committee may wish to delete the
recent amendments to this section of the bill to allow BCDC and
the Port to continue conversations on how best to address the
permit and approval sequencing for the Pier 70 project.
SUGGESTED AMENDMENTS
AMENDMENT 1
Beginning on page 18, line 40, delete "that is consistent
with an approved financial and land use plan for the Pier 70
area as permitted under charter section B7.310" and insert "and
city final approval of all necessary amendments to the city's
general plan, planning code, and zoning maps."
SUPPORT
City and County of San Francisco
Dogpatch Neighborhood Association
GreenTrustSF- Central Waterfront
Neighborhood Parks Council
Northern California District Council of the International
Longshore and Warehouse Union
Port of San Francisco
Potrero Boosters Neighborhood Association
San Francisco Architectural Heritage
San Francisco Building and Construction Trades Council
San Francisco Chamber of Commerce
San Francisco Planning and Urban Research Association
OPPOSITION
None Received
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