BILL ANALYSIS Ó
AB 484
Page 1
Date of Hearing: April 6, 2011
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 484 (Alejo) - As Amended: March 29, 2011
SUBJECT : Mitigation lands: long-term management funds.
SUMMARY : Clarifies that funds set aside for the long-term
management of mitigation lands conveyed to a nonprofit
organization may also be conveyed to the nonprofit, and
authorizes the nonprofit to hold, manage, invest and disburse
the funds for management and stewardship of the lands or
easement for which the funds were set aside. Specifically, this
bill :
1)Allows funds set aside for the long-term management of any
lands or easements conveyed to a nonprofit organization to
also be conveyed to the nonprofit organization.
2)Allows the nonprofit organization to hold, manage, invest, and
disburse the funds in furtherance of managing and stewarding
the land or easement for which the funds were set aside.
3)Allows the state or local agency to require the nonprofit
organization to submit an annual report that details the
management and condition of the property or easement and the
accompanying funds.
4)Allows, after the state or local agency receives the report,
the state or local agency to determine whether there is cause
to consider that the terms of the mitigation of funding
agreement has been violated, and allows the state or local
agency to review the accounting documents involving the funds
or require an independent audit of the funds to be performed.
5)Provides for specified conditions in which the funds for the
long-term management would revert back to the state or local
agency, including:
a) The nonprofit organization ceases operations;
b) The nonprofit organization is dissolved;
c) The nonprofit organization becomes bankrupt or
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insolvent; or,
d) The nonprofit organization fails to perform its duties.
6)Requires the state or local public agency to exercise due
diligence in reviewing the qualifications of a nonprofit
organization to hold and manage funds.
EXISTING LAW :
1)Allows a state or local agency to authorize a nonprofit
organization to hold title to and manage an interest in real
property that:
a) The agency requires a property owner to transfer to the
agency to mitigate for adverse impacts on natural resources
caused by a project permitted by the agency; or,
b) The agency is required by law to transfer to mitigate an
adverse impact upon natural resources caused by the
agency's own project.
2)Requires project proponents to mitigate for adverse
environmental impacts which may include a requirement for
funds to be set aside to cover costs of long-term management
of mitigation land.
3)Requires funds received by the Department of Fish and Game
(DFG) for management of mitigation lands to be deposited in
the Fish and Game Mitigation and Protection Endowment Account
or the Fish and Game Mitigation Expendable Funds Account,
which are held in the State Special Deposit Fund, and requires
interest generated on endowment funds deposited in the former
account to be made available to DFG, upon appropriation by the
Legislature, to fund long-term management of habitat lands.
FISCAL EFFECT : Unknown
COMMENTS :
1)Under current law, lands that are required to be set aside as
mitigation can be transferred to a nonprofit organization for
management. This policy came about as a result of AB 2746
(Blakeslee), Chapter 577, Statutes of 2006. However, the law
lacks clarity as to whether the endowment funds for that
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long-term management can also be conveyed to the nonprofit.
While it has been common practice in the past for many public
agencies to allow the nonprofit to manage the funds, there is
no existing statute providing explicit affirmation of this
practice. Additionally, land managers have experienced delays
in reimbursement payments of up to six months to a year in
some cases. This bill has been introduced to help clarify
existing law which is silent on whether endowment funds can be
transferred.
2)The author cites a specific example in Monterey County - the
US 101/Prunedale Improvement Project - which is awaiting
determination of the amount of an endowment needed to manage
lands required to be protected as part of the project's
habitat mitigation requirements. The author believes that
this bill would help expedite these kinds of projects by
authorizing the management funds to be held by a nonprofit
organization.
3)The Assembly Water, Parks and Wildlife Committee asked for a
written opinion on this topic in 2006. Legislative Counsel
opined that existing law already allows the state to authorize
nonprofit organizations to hold and manage funds set aside for
the purpose of long-term management of mitigation lands. In
Legislative Counsel's opinion, existing law already allows a
state agency, including DFG, to enter into an agreement
authorizing a nonprofit organization to hold and manage
mitigation funds sets aside for the long-term management of
the property. Because of the lack of express authorization in
the statute and the lack of clarity in existing codes has led
to the reluctance on the part of some state agencies, most
notably DGF, to allow third parties to hold and manage
mitigation funds.
4)In 2006, the Assembly Water, Parks and Wildlife Committee
sponsored a similar bill,
AB 2916, that would have authorized DFG to enter into agreements
with eligible nonprofit organizations to hold and manage
endowment accounts, subject to specified standards and
conditions, including annual audit and reporting requirements.
AB 2916 passed the Assembly on a vote of 79-0, but was
ultimately held in the Senate Appropriations Committee.
a) In 2007, SB 1011 (Hollingsworth) similarly proposed to
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allow DFG to authorize a local public entity or a nonprofit
to hold and manage mitigation endowment funds, subject to
specified conditions. SB 1011 was held in the Senate
Appropriations Committee.
b) AB 2746 (Blakeslee), Chapter 577, Statues of 2006, and
AB 1246 (Blakeslee), Chapter 330, Statutes of 2007,
clarified the authority of state and local agencies to
allow nonprofit land trusts to accept and hold mitigation
lands. Both of these bills were enacted with unanimous
bipartisan support.
5)This bill is substantially similar to AB 444 (Caballero,
2009), which was vetoed by Governor Schwarzenegger. The
Governor's veto message states:
"Although I am support of this bill's efforts to allow
non-governmental entities to manage funds set aside for the
long-term management of lands and easements, authorizing them
to hold funds without adequate fiscal assurances, as this bill
would provide, is unacceptable.
"I am directing the Department of Fish and Game to work with
the author and interested parties toward developing an
alternative that provides sufficient protections for the
financial and environmental resources subject to third-party
agreements."
6)Since AB 444 was vetoed, DFG has proposed the implementation
of a pilot project that would give applicants two options for
the management of endowment funds required under a California
Endangered Species Act (CESA) incidental take permit. The two
options recommended by DGF would be to either: a) have the
funds held in the State Deposit Fund; or, b) have the funds
held and managed by a single third party endowment manager as
an alternative to the State Deposit Fund. The single third
party endowment manager proposed by DGF to manage CESA
endowment funds is the National Fish and Wildlife Foundation.
7)This bill is double-referred and passed the Water, Parks and
Wildlife Committee on
March 22, 2011 with a 13-0 vote. Amendments taken in that
Committee require that the nonprofit entity comply with
prudent investor standards, file an annual report as required
by the authorizing agency, authorize the agency to require
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audits, and establish a process for reversion of funds, if
necessary.
8)A similar bill, SB 436 (Kehoe), has been introduced in the
Senate and is sponsored by the California Council of Land
Trusts.
9)Support argument: TAMC argues that the bill will speed up the
environmental review and permitting process by allowing state
agencies to transfer both the land and management funds to
non-profit organizations.
Opposition argument: While there is no registered opposition to
the bill, it may be prudent to ask interested parties and
stakeholders to work with DFG on implementation of the pilot
project as another way to accomplish the goals of the bill.
REGISTERED SUPPORT / OPPOSITION :
Support
Transportation Agency for Monterey County (TAMC) ÝSPONSOR]
County of Monterey
Elkhorn Slough Foundation
Grower-Shipper Association of Central CA
Opposition
None on file
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958