BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1094| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 CONTINUED SB 1094 Page 2 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. CONTINUED SB 1094 Page 3 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 CONTINUED SB 1094 Page 4 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 **** END **** CONTINUED