BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1094 (Kehoe) - Land use: mitigation lands: nonprofit
organizations.
Amended: May 15, 2012 Policy Vote: NR&W 8-0, Gov&F 8-0
Urgency: Yes Mandate: No
Hearing Date: May 24, 2012 Consultant: Marie Liu
SUSPENSE FILE.
Bill Summary: SB 1094 would allow certain community foundations
and congressionally chartered foundations to hold endowment
accounts for mitigation lands. This bill would also expand and
modify conditions which all endowment holders must abide.
Fiscal Impact: Likely ongoing costs of $200,000 to $300,000 from
the Fish and Game Preservation Fund (special fund) beginning in
2012-13 for the oversight and tracking of endowments.
Background: When state or local agencies approve land use
projects, they can require the project applicant to transfer
interest in real property to the agency in order to mitigate the
impact that the development will have on natural resources.
Under Section 65965 of the Government Code, a state or local
agency may authorize a nonprofit organization to hold title and
to manage the mitigation lands.
The project applicant may also be required by the local and
state agency to provide funds to finance the management of
mitigation lands in perpetuity, also known as an endowment. Last
year, the passage of SB 436 (Kehoe) Chapter 590/2011 gave
explicit authority to state or local agencies to allow a
nonprofit or special district, which is holding and managing the
mitigation lands, to also hold the endowment account, subject to
certain conditions. SB 436 allowed for limited exceptions where
an endowment can be held by an entity other than the entity that
is holding and managing the land. The state or local agency is
required to exercise due diligence in reviewing the
qualifications of the entity managing the land and the
accompanying funds. The entity is required to meet certain
standards, including accounting standards, and specified
reporting requirements.
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Proposed Law: This bill would expand the situations where an
endowment can be held by an entity other than the one who is
holding and managing the mitigation land. The most notable
expansion is to allow certain community foundations and
congressionally chartered foundations to hold endowments. This
bill would also:
Allow a governmental entity to manage mitigation lands and
the associated endowment.
Expand the definition of special district.
Require any entity holding endowment accounts to provide
an annual fiscal report to the local or state agency that
required the endowment that contains specified information.
Delete the requirement that local and state agencies must
exercise due diligence in reviewing the qualifications of an
entity holding an endowment account.
Define endowments as charitable assets that are
permanently restricted funds.
Staff Comments: This bill is an expansion of the authority
granted in SB 436 for non-state and local agencies to hold
endowment accounts and a clean-up measure.
The Department of Fish and Game (DFG), who is the state agency
most frequently involved in requiring mitigation and associated
endowments, believed that the requirement in SB 436 for state
and local agencies to exercise due diligence in reviewing the
qualifications of an entity holding an endowment account would
cost DFG approximately $500,000. By removing this requirement,
this bill would result in a savings to DFG. The author and
sponsors feel that the numerous requirements on entities holding
endowments reduce the need for review by local and state
agencies. Staff notes that DFG (as well as any other state or
local agency requiring the mitigation) can assess a project
proponent a one-time fee to recover costs associated with
reviewing qualifications holders of the property. Staff believes
that this fee could be expanded to included review of holders of
the endowment in order to achieve the same cost savings without
removing a local or state agency's responsibility to exercise
due diligence in reviewing the endowment holder.
As this bill would expand the number of entities that can hold
endowment accounts, DFG will also have to expand its review and
oversight, including review of annual fiscal reports. DFG does
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not have a fiscal estimate for such expanded activities, but
staff estimates that these costs are likely to be between
$200,000 and $300,000.