BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          SB 122 (Lieu) - Vessels: abandonment: abatement.
          
          Amended: As introduced          Policy Vote: NR&W  9-0
          Urgency: No                     Mandate: No
          Hearing Date: April 22, 2013                      Consultant:  
          Marie Liu     
          
          This bill meets the criteria for referral to the Suspense File.
          
          
          Bill Summary: SB 122 removes the sunset date on a pilot program  
          that allows boat owners to voluntarily surrender a vessel to a  
          public agency at no cost, if that vessel is in danger of being  
          abandoned. 

          Fiscal Impact: At least $250,000 annually in costs and cost  
          pressures to the Abandoned Watercraft Abatement Fund (Special  
          Fund) for grants. 

          Background: The passage of AB 166 (Lieu) Chapter 416/2009,  
          created the pilot Vessel Turn-in Program (VTIP) program that  
          allowed boat owners to voluntarily surrender a vessel to a  
          public agency at no cost to the owner, if that vessel is in  
          danger of being abandoned and thereby causing environmental  
          degradation or a navigational hazard. The public agency may then  
          immediately sell or otherwise dispose of the vessel. Any  
          proceeds from the sale of the vessel are deposited in the  
          Abandoned Watercraft Abatement Fund (AWAF) to be made available  
          for grants, issued by the Department of Boating and Waterways  
          (DBW), to local agencies for the abatement, removal, storage,  
          and disposal of any abandoned vessels or to accept surrendered  
          vessels.

          The DBW is required to report to the Legislature by July 1, 2013  
          on the number of vessels surrendered under this pilot program  
          and on all expenditures from the Abandoned Watercraft Abatement  
          Fund for surrendered vessel abatement between January 1, 2010  
          and January 1, 2013.

          The voluntary vessel surrender pilot program is to sunset on  
          January 1, 2014.









          SB 122 (Lieu)
          Page 1


          Proposed Law: This bill would remove the sunset date for the  
          pilot program and would delete the reporting requirements.

          Staff Comments: The DBW report regarding the implementation of  
          the VTIP is not yet due. However, according to DBW, since the  
          2010, the inception of the pilot program, $400,000 from the AWAF  
          had been appropriated for VTIP. To date, these funds have  
          allowed public agencies to accept 165 surrendered vessels at an  
          average cost to the state of approximately $1,600 per vessel  
          (grantees have up to three years to spend the grant so the  
          number of vessels affected is anticipated to increase  
          significantly as grants are expended). For comparison, over the  
          same time period, it cost the state over $4,000 per abandoned  
          vessel for removal and disposal. Public agencies are highly  
          unlikely to accept a surrendered vessel unless it receives a  
          grant from DBW to pay for the disposal of that vessel. 

          According to DBW, VTIP has been a substantially oversubscribed  
          program. In FY 2010-11, FY 2011-12, and FY 2012-13, $150,000,  
          $100,000, and $150,000 was appropriated to VTIP respectively.  
          But as a better reflection of funding needs for surrendered  
          vessels, DBW received funding request in excess of $260,000 in  
          FY 2012-13. This program poses a corresponding cost pressure on  
          the AWAF. 

          This bill would remove the sunset date for the VTIP and thereby  
          continues a substantial cost pressure to the AWAF. Although the  
          AWAF is authorized in statute to receive abandoned vessel fines  
          and revenues from abandoned vessels that have been sold, no fine  
          or sales revenue have been received in almost 20 years. Instead,  
          the AWAF is funded through a transfer from the Harbors and  
          Watercraft Fund.

          When AB 166 was being considered, DBW indicated anticipated  
          administrative costs of $84,000 for one PY to administer the  
          VTIP. However no additional PY funding was ever appropriated so  
          the administrative costs for the program have been absorbed.