BILL ANALYSIS Ó
AB 484
Page 1
ASSEMBLY THIRD READING
AB 484 (Alejo)
As Amended May 27, 2011
Majority vote
WATER, PARKS & WILDLIFE 13-0 LOCAL
GOVERNMENT 9-0
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|Ayes:|Huffman, Halderman, Bill |Ayes:|Smyth, Alejo, Bradford, |
| |Berryhill, Blumenfield, | |Campos, Davis, Gordon, |
| |Campos, Fong, Gatto, | |Hueso, Knight, Norby |
| |Roger Hernández, Hueso, | | |
| |Jones, Lara, Olsen, | | |
| |Yamada | | |
| | | | |
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APPROPRIATIONS 17-0
Ayes:Fuentes, Harkey, Blumenfield,
Bradford, Charles Calderon,
Campos, Davis, Donnelly, Gatto,
Hall, Hill, Lara, Mitchell, Nielsen,
Norby, Solorio, Wagner
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 land or easement
for which the funds were set aside. Specifically, this bill :
1)Authorizes a state or local public agency that transfers
mitigation lands to a nonprofit organization for management to
also convey funds set aside for the long-term management of
the lands or easements to the nonprofit. Requires the
nonprofit to hold, manage, invest and disburse the funds for
management and stewardship of the land or easement for which
the funds were set aside.
2)Authorizes the agency to require the nonprofit to submit an
annual report, to review accounting documents, and require an
independent audit of the funds.
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3)Provides that the funds shall revert to the state or local
agency if specified conditions occur.
4)Requires the agency to determine that the holder of the funds
meets specified requirements relating to capacity, accounting
practices and consistency with requirements of the Uniform
Management of Institutional Funds Act and the Probate Code.
5)Authorizes the state or local agency to contract with a third
party to review nonprofit qualifications and other
information.
6)Authorizes the state or local agency to require an
administrative endowment from the project proponent for costs
associated with reviewing nonprofit qualifications and
oversight of compliance and performance. Also authorizes the
agency to require project proponents to provide a separate
account for initial management costs while the endowment
matures.
7)States that this bill shall not apply retroactively to
endowment funds held by the state in the Pooled Money
Investment Account as of January 1, 2012.
8)Prohibits a property that has been previously protected for
conservation purposes, including placement of a conservation
easement on the property, from being used for mitigation.
9)States legislative intent that this section not interfere with
existing authorities related to mitigation requirements.
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.
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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 lands.
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. 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.
Funds other than endowment funds received by DFG and deposited
in the latter account are continuously appropriated to DFG for
expenditure for management of lands set aside for mitigation.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1) Potentially significant shift in the formal management and
disposition of millions of dollars of funds from the State
Treasury to individual nonprofit organizations, to the extent
that state agencies convey such funds in response to this
bill.
2)Significant start-up costs of an unknown amount but likely in
the hundreds of thousands of dollars (General Fund ÝGF] or
bond fund), to DFG during 2011-12 and 2012-13 to establish
tracking systems and guidelines for due-diligence review of
proposals to allow nonprofit organizations and special
districts to manage funds.
3)Significant ongoing annual costs of an unknown amount, likely
in the hundreds of thousands of dollars (GF or bond funds) to
DFG beginning in 2012-13 to process requests, review proposals
and establish and manage contracts.
COMMENTS : The author has introduced this bill to facilitate
environmental review and permitting of transportation
infrastructure projects. The author notes that currently an
agency proposing construction of a major transportation
infrastructure project that will result in habitat loss is
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typically required to purchase and manage in perpetuity land or
conservation easements to offset the project's environmental
impacts. The permit and certification process can be lengthy
and add unknown costs to the project as the cost of the
mitigation is tied to land values at the time of purchase.
Under current law, lands that are required to be set aside as
mitigation can be transferred to a nonprofit organization for
management as a result of enactment of AB 2746 (Blakeslee),
Chapter 577, Statutes of 2006, but the law lacks clarity as to
whether the endowment funds for that long-term management can
also be conveyed to the nonprofit.
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, by
authorizing the management funds to be held by a nonprofit
organization, would help expedite these kinds of projects.
This bill is substantially similar to AB 444 (Caballero) of 2009
which was vetoed by the Governor. This bill would allow
nonprofits, if authorized to do so by a state or local agency,
to hold funds dedicated for the long-term management of land or
easements the organization has accepted through the mitigation
process. While the law allows nonprofits to hold and manage the
lands, current law does not expressly address whether the
nonprofit may also hold and manage the endowment funds set aside
for long-term management of the property. 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.
Requiring that the funds be held by the state has also created
challenges to effective stewardship of conservation lands for
some land managers. The monies in these accounts are invested
through the State's Pooled Money Investment Account. Since
endowment funds are designed to be non-wasting accounts, where
only the interest earned is available for expenditure, the
inability of the Pooled Money Investment Account to earn higher
rates of return has in the past limited the amount of funds
available for land management. Land managers have also
experienced delays in reimbursement payments in some cases. The
investment limitations of the Pooled Money Investment Account
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were potentially remedied to some extent by the passage of SB
1538 (Steinberg), Chapter 411, Statutes of 2008, which allows
DFG some fund investment flexibility by requiring the State
Treasurer, at DFG's request, to transfer endowment account funds
from the Pooled Money Investment Account to another account
within the State Treasury system to increase earnings over time
while providing adequate liquidity. SB 1538 (Steinberg) also
authorizes DFG to retain investment advisers to develop and
maintain the investment strategy for these accounts. The intent
is that these funds would thus be able to generate yields more
comparable to those achieved by third-party nonprofit managers,
however, the provisions of SB 1538 (Steinberg) have not been
fully implemented to date.
Analysis Prepared by : Diane Colborn / W., P. & W. / (916)
319-2096
FN: 0001149