BILL ANALYSIS Ó
AB 1943
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Date of Hearing: April 2, 2014
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 1943 (Chesbro) - As Amended: March 24, 2014
SUBJECT : Tidelands: City of Eureka.
SUMMARY : Revises the statutory obligation for the City of
Eureka to remit certain funds to the state related to tidelands
and submerged lands located in Humboldt Bay that were granted to
the City in the 1970s. Specifically, this bill :
1)Deletes the statutory obligation that requires the City of
Eureka to remit to the Controller, annually, a sum not less
than 15% of the amount of money deposited by the city into the
Humboldt Bay Fund during the preceding fiscal year as a
condition of a $750,000 loan made to the City by the state in
1970.
2)Requires, on June 30, 2015, and at the end of every fiscal
year thereafter, 4% of all gross revenue generated from the
trust lands, to be transmitted to the State Lands Commission
(Commission) and deposited in the Kapiloff Land Bank Fund for
expenditure by the Commission for management of the
Commission's granted lands program.
EXISTING LAW :
1)Grants to the City of Eureka all the right, title, and
interest of the State of California in and to certain
tidelands and submerged lands located in Humboldt Bay in trust
for specified purposes.
2)Requires the City to establish the Humboldt Bay fund and to
deposit all moneys received directly from, or indirectly
attributable to, the tide and submerged lands into the Fund.
3)Requires the City of Eureka, prior to June 30 of each year, to
pay to the State Controller at least 15% of the money
deposited by the city in the Humboldt Bay Fund during the
preceding fiscal year as a condition of a $750,000 loan made
to the City by the state in 1970.
4)Establishes the Kapiloff Land Bank Act of 1982, for the
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purpose of facilitating public trust settlements and
mitigation projects.
5)Creates the Land Bank Fund and continuously appropriates
moneys in the fund subject to a statutory trust to the State
Lands Commission, acting as the Land Bank Trustee, to acquire
real property or any interest in real property for the
purposes of public trust title settlements and for mitigation
of adverse environmental impacts.
FISCAL EFFECT : This bill is keyed fiscal and contains an
appropriation.
COMMENTS :
1)Purpose of this bill . This bill revises the statutory
obligation for the City of Eureka to remit certain funds to
the state related to tidelands and submerged lands located in
Humboldt Bay that were granted to the City in the 1980. The
bill deletes the annual requirement for the City to remit a
sum not less than 15% of the amount of money deposited by the
City into the Humboldt Bay Fund, during the preceding fiscal
year, and instead, requires annual remittance by the City of
4% of all gross revenue generated from the trust lands to the
State Lands Commission, to be deposited in the Kapiloff Land
Bank Fund. This bill is sponsored by the City of Eureka.
2)Background on lawsuit and loan to the City of Eureka . In
1970, the City of Eureka initiated a lawsuit to protect a
state grant of sovereign tide and submerged lands at the edge
of the city and Humboldt Bay from private encroachment. The
grant was intended to assist the City in its redevelopment
efforts and conferred management and control responsibilities
to the City. In subsequent years, the City found that it
could no longer financially support the lawsuit. Because the
State Lands Commission found that defense of the litigation
was essential to statewide public trust interests, and because
it would be more expensive for the state to enter into its own
litigation to protect those interests, the state entered into
a unique agreement to loan the city up to $750,000 to continue
the litigation.
In making the loan, the Legislature found that it would
provide significant fiscal and time savings to the state,
since the City would continue to pursue litigation that the
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state would otherwise be forced to take on. In return for the
loan, the City agreed to undergo very strenuous grant
oversight in a number of ways, including audits of its books
and oversight of leases of the granted lands.
3)Statutory repayment provisions of the loan . The statutes
dealing with repayment of the $750,000 loan do not include
provisions for ending the City of Eureka's payment
obligations. Instead, they require the City to pay to the
State Controller, in perpetuity, at least 15% funds deposited
in the Humboldt Bay Fund on an annual basis.
4)Kapiloff Land Bank Act . The Kapiloff Land Bank Act (Act) was
introduced by Assemblyman Lawrence Kapiloff and enacted by the
Legislature in 1982. The Act is an extension of State Lands
Commission authority as set forth in Public Resources Code
Section 6307, which was enacted to facilitate settlements of
title to real property with cash payments where exchange
parcels are not readily available or are not of equal value
and to facilitate mitigation through the pooling of such
payments. The Commission holds and administers the acquired
lands as sovereign lands of the legal character of tidelands
and submerged lands.
5)Author's statement . According to the author, "The City of
Eureka has paid back the initial loan to the state and then
some. To date the city has repaid $1,167,000 on an $800,000
loan. The loan has greatly helped the City but the Harbor
continues to operate at a deficit, with a projected operating
deficit of $122,748 for fiscal year 2013-14, further lowering
the unrestricted fund balance deficit to over $800,000.
Additionally, the dissolution of the Eureka Redevelopment
Agency has saddled the successor agency's continued repayment
of Harbor bonds which amount to about $100,000 per year,
further impacting the Harbor Fund's deficit, and reducing its
ability to become an economically viable proprietary fund."
"Removing the requirement for payment to the State will allow
the City of Eureka to place all of its tideland resources into
operating and maintaining its tideland facilities, which will
in turn help the City achieve the State's goals for Public
Trust Tidelands, as well as helping spur local economic
development."
6)Previous legislation . There have been several previous
attempts to modify the loan repayment provisions, including
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the following bills:
SB 1126 (Chesbro, 2006). This bill would have allowed the
Humboldt Bay Harbor district to transfer the loan obligations
from a 1970 loan (that was refinanced in 1982) to a special
sub-account in house. The bill was vetoed by Governor
Schwarzenegger who noted in his veto message that "this bill
is contrary to the original agreement memorialized in Chapter
1095, Statutes of 1978, which specified that the grant was
contingent upon Eureka's agreement to make an annual
remittance to the State in perpetuity." Governor
Schwarzenegger also wrote in his veto message that revenue
reduction was not prudent at that time, given the state's
fiscal condition.
SB 742 (Chesbro, 2005). This bill would have ended the 1970
loan agreement to the City of Eureka that was renegotiated in
1982. The veto message was substantially similar to the veto
message for SB 1126.
7)Continuous appropriation . The bill requires a two-thirds vote
of each house because of the continuous appropriation.
8)Arguments in support . The City of Eureka argues that this
bill will acknowledge Eureka's repayment to the state but
still require a reduced payment of 4% of the Harbor Fund
revenues with no end date.
9)Arguments in opposition . None on file.
REGISTERED SUPPORT / OPPOSITION :
Support
City of Eureka [SPONSOR]
Opposition
None on file
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
AB 1943
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