BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  SB 1094|
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                                 THIRD READING


          Bill No:  SB 1094
          Author:   Kehoe (D)
          Amended:  5/29/12
          Vote:     27 - Urgency

           
           SENATE NATURAL RESOURCES AND WATER COMM  :  8-0, 4/10/12
          AYES:  Pavley, La Malfa, Cannella, Fuller, Kehoe, Padilla, 
            Simitian, Wolk
          NO VOTE RECORDED:  Evans

          SENATE GOVERNANCE & FINANCE COMMITTEE  :  8-0, 4/25/12
          AYES:  Wolk, Dutton, DeSaulnier, Fuller, Hancock, 
            Hernandez, Kehoe, La Malfa
          NO VOTE RECORDED:  Liu

           SENATE APPROPRIATIONS COMMITTEE  :  7-0, 5/24/12
          AYES:  Kehoe, Walters, Alquist, Dutton, Lieu, Price, 
            Steinberg


           SUBJECT  :    Land use:  mitigation lands:  nonprofit 
          organizations

           SOURCE  :     California Council of Land Trusts


           DIGEST  :    This bill allows certain community foundations 
          and congressionally chartered foundations to hold endowment 
          accounts for mitigation lands.  This bill also expands and 
          modifies conditions which all endowment holders must abide.

           ANALYSIS :    Under existing law, when state or local 
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          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, 
          Statutes of 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.

          This bill expands 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: 

          1.Allows a governmental entity to manage mitigation lands 
            and the associated endowment.

          2.Expands the definition of special district.

          3.Requires 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.

          4.Deletes the requirement that local and state agencies 
            must exercise due diligence in reviewing the 
            qualifications of an entity holding an endowment account.

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          5.Defines endowments as charitable assets that are 
            permanently restricted funds.

          6.Expands local agency fee recovery.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No

          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.

           SUPPORT  :   (Verified  5/29/12)

          California Council of Land Trusts (source) 
          Big Sur Land Trust
          California Community Foundation
          Center for Natural Lands Management
          Community Foundation for Monterey County
          Community Foundation of Mendocino County
          Community Foundation of San Joaquin
          Community Foundation of Sonoma County
          Community Foundation of the Verdugos
          Community Foundation Santa Cruz County
          Contra Costa Water District
          East Bay Municipal Utility District
          Fresno Regional Foundation
          Kern Community Foundation
          Land Trust of Santa Cruz County
          League of California Community Foundations
          Marin Community Foundation
          Mendocino Land Trust
          Metropolitan Water District
          Napa Valley Community Foundation
          Ojai Valley Land Conservancy
          Orange County Community Foundation
          Pasadena Community Foundation
          Peninsula Open Space Trust
          Redwood Coast Land Conservancy
          Rocky Mountain Elk Foundation
          Sacramento Region Community Foundation
          San Diego County Water Authority
          San Luis Obispo County Community Foundation

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          Santa Barbara Foundation
          Shasta Regional Community Foundation
          Sierra Foothill Conservancy
          Silicon Valley Community Foundation
          Solano Land Trust
          Stanislaus Community Foundation
          Tahoe Truckee Community Foundation
          The Community Foundation
          The San Diego Foundation
          The San Francisco Foundation
          Trust for Public Land
          Ventura County Community Foundation
          Wildlife Heritage Foundation

           ARGUMENTS IN SUPPORT  :    According to the California 
          Council of Land Trusts, "many diverse stakeholders worked 
          for several years to establish strong laws and protections 
          for holding, managing, investing and disbursing mitigation 
          endowment funds. Ý?] In 2011 and after years of work and 
          education, SB 436 was chaptered and provided a very strong 
          law for mitigation endowments."  Further, California "has a 
          vital and continuing interest in ensuring that the 
          mitigation endowment funds being set aside pursuant to the 
          issuance of state permits are well-managed by experienced 
          and competent organizations, are permanently restricted and 
          dedicated to the mitigation property they were created for, 
          are not consolidated into a single vast holding that is 
          inherently risky, and that the funds are transparent so 
          that the public can track them."


          CTW:nl  5/29/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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