BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair SB 551 (DeSaulnier) Hearing Date: 05/26/2011 Amended: 04/07/2011 Consultant: Brendan McCarthy Policy Vote: NR&W 9-0 _________________________________________________________________ ____ BILL SUMMARY: SB 551 grants certain tide lands to the cities of Pittsburg and Martinez. The bill requires these cities to use the lands for the benefit of the public. The bill requires the cities to remit to the state 20 percent of all gross revenues generated from those lands. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund Administrative costs Minor costs, to be reimbursed by granteesGeneral Lease revenue losses $160 $320 $320 General Lease revenue gains Unknown additional revenues over timeGeneral / Special * * Land Bank Fund. _________________________________________________________________ ____ STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED. Under current law, the State Lands Commission may grant public trust lands, such as tide lands and submerged lands, to local governments with legislative permission. Local grantees are required to manage such public trust lands for the public benefit. Current law grants certain public trust lands to the cities of Pittsburg and Martinez, respectively. In addition, the State Lands Commission directly oversees some leases on tide lands in Pittsburg and Martinez. Under both the existing grants and the leases, the state General Fund receives all of the lease revenues generated from these properties. SB 551 (DeSaulnier) Page 1 SB 551 revises the existing grants and authorizes the grant of additional public trust lands to the cities of Pittsburg and Martinez. The bill requires both cities to submit a plan for the public trust lands by 2017 and limits the duration of any lease on those lands to 49 years. The bill requires both cities to remit 20 percent of all gross lease revenues generated from the granted lands to the state. Of these remittances, 80 percent are to be deposited in the General Fund and 20 percent are to be deposited in the Land Bank Fund. (The Land Bank Fund is used by the State Lands Commission to purchase lands for public benefit.) Under the bill, any administrative costs incurred by the State Lands Commission in administering the grants will be covered by the grantees. Such costs are not expected to be significant. In the short term, the bill will reduce General Fund revenues by about $330,000 per year. However, the State Lands Commission believes that, over time, the bill will lead to increased state revenues. The Commission indicates that the two cities are better able to develop these properties in ways that will generate lease revenues. Under the terms of the bill, the state will potentially share in the increased revenues (in other words, the state will get a smaller share of a larger revenue stream). The extent of future revenues is unknown. The Land Bank Fund is continuously appropriated to the State Lands Commission. By requiring the deposit of revenues in the Land Bank Fund, this bill makes an appropriation. The proposed author's amendments delete the provisions of the bill regarding tidelands in the City of Martinez.