BILL ANALYSIS Ó
AB 746
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Date of Hearing: April 22, 2015
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Brian Maienschein, Chair
AB 746
(Ting) - As Amended April 14, 2015
SUBJECT: San Francisco Bay Restoration Authority.
SUMMARY: Extends the sunset date from January 1, 2029, to
January 1, 2049, for statutes governing the San Francisco Bay
Restoration Authority (Authority) and makes other specified
changes. Specifically, this bill:
1)Extends the sunset date for the Authority from January 1,
2029, to January 1, 2049.
2)Extends the sunset date for the Authority to levy a benefit
assessment, special tax, or property-related fee, as
specified, from December 31, 2028, to December 31, 2048.
3)Adds a cross reference to Article XIII A of the California
Constitution to a provision in existing law that authorizes
the Authority to levy a benefit assessment, special tax or
property-related fee pursuant to the requirements in Section
XIII C and D of the California Constitution.
4)Extends the date that the Authority must pay and discharge the
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principal and interest of any bond indebtedness from January
1, 2029, to January 1, 2049.
5)Repeals a provision of current law that prohibits the
Authority from incurring more bonded indebtedness than 10% of
the Authority's total revenues in the preceding fiscal year.
6)Makes changes to provisions in current law that establish
procedures for the Authority in conducting a multi-county
election for a proposed special tax measure, as follows:
a) Deletes references to a "special tax" and replaces with
the term "measure";
b) Adds to the list of provisions in existing law the
Authority can propose a measure to generate revenues, a
cross reference to current law which allows the Authority
to incur indebtedness, subject to certain requirements;
and,
c) Adds to the list of constitutional requirements a
proposed measure must comply with, a cross reference to
Article XIII A of the Constitution (tax limitation relating
to ad valorem property tax).
7)Extends the repeal date, from January 1, 2017, to January 1,
2019, for provisions in existing law which requires the
Authority to reimburse each county for the incremental costs
of the first election at which the Authority proposes a
measure.
8)Requires the appropriations limit for the Authority to be
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originally established based on the receipt from the initial
revenue generating measure because the Authority has no state
revenues as of the effective date of this bill. Prohibits the
establishment of an appropriations limit from being deemed a
change in an appropriations limit for purposes of Article XIII
B, Section 4 of the Constitution.
9)Requires an elected official of a bayside city or county,
instead of a resident of the San Francisco Bay Area, to serve
as the Chair of the Authority.
10)Finds and declares that the Authority has not assumed any
existing duties from another local or state government entity
and has received no state or local government revenues not
counted toward another entity's appropriations limit;
therefore, the Authority has no associated appropriations
limit pursuant to Article XIII B of the Constitution as of the
date of enactment of this bill.
11)Provides that no reimbursement is required by this bill
because the local agency has the authority to levy service
charges, fees, or assessments sufficient to pay for the
program or level or service mandated by this bill.
12)Makes other technical changes.
EXISTING LAW:
1)Establishes the San Francisco Bay Restoration Authority Act
(Act), which establishes the jurisdiction of the Authority to
include all areas within the San Francisco Bay Area
Conservancy Program, which includes the Counties of Alameda,
Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa
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Clara, Solano, and Sonoma.
2)States the Authority's purpose is to raise and allocate
resources for the restoration, enhancement, protection, and
enjoyment of wetlands and wildlife habitats in the San
Francisco Bay and along its shoreline.
3)Establishes the governing board for the Authority composed of
seven members, as specified, to be appointed by the
Association of Bay Area Governments, including one member, to
serve as chair, who must be a resident of the Bay Area with
expertise in the implementation of the San Francisco Bay Area
Conservancy Program.
4)Authorizes the Authority, until December 31, 2028, to levy a
benefit assessment, special tax, or property-related fee
consistent with the requirements of Articles XIIIC and XIIID
of the California Constitution, as specified.
5)Allows the Authority to issue revenue bonds and incur bond
indebtedness, subject to the following requirements:
a) Requires the principal and interest of any bond
indebtedness to be paid and discharged prior to January 1,
2029;
b) Requires the Authority to comply with provisions in
existing law that govern recreation and park districts
incurring general obligation bonded indebtedness; and,
c) Prohibits the total amount of indebtedness incurred
outstanding at any one time from exceeding 10% of the
Authority's total revenue in the preceding fiscal year.
6)Requires, when the Authority proposes to levy a special tax,
the board of supervisors of the county or counties in which
the special tax is proposed to be levied, to call a special
election on the measure.
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7)Repeals the Act as of January 1, 2029.
FISCAL EFFECT: This bill is keyed fiscal and contains a
state-mandated local program.
COMMENTS:
1)The San Francisco Bay Restoration Authority. AB 2954
(Lieber), Chapter 690, Statutes of 2008, created the Authority
as a regional government agency charged with raising and
allocating resources for the restoration, enhancement,
protection, and enjoyment of wetlands and wildlife habitat in
the San Francisco Bay and along its shoreline. The
Authority's mission is to formulate a strategy for raising
local revenues to help restore 36,000 acres of publicly owned
Bay shoreline into tidal wetlands. The estimated cost of such
an endeavor is about $1.43 billion over 50 years.
The Legislature granted the Authority the ability to utilize
several financial tools to raise revenue, including levying a
benefit assessment, special tax, or property-related fee,
subject to constitutional requirements. Proposition 218
(1996) established that a tax levied by a special-purpose
authority is a special tax which requires two-thirds voter
approval. Additionally, the Authority can issue revenue bonds
under the Revenue Bond Law of 1941 and incur bond
indebtedness, subject to specified requirements.
As a regional government agency, the Authority spans across
nine counties. AB 2103 (Hill), Chapter 373, Statutes of 2010,
prescribes the method of how the Authority places a proposal
to levy a special tax before the voters. The Authority's
officials wanted to specify the procedures for conducting a
special election on a special tax proposed by the Authority
and to clarify their existing statutory authority to levy
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special taxes.
AB 1656 (Fong), Chapter 535, Statutes of 2012, made membership
and project eligibility changes, but also contained a
provision to extend the sunset date for the Authority from
2029 to 2036. At the time, the Authority wanted the extension
to ensure that they would be able to administer revenues from
a regional ballot measure they planned to submit to voters.
The sunset date extension was removed from AB 1656 following
policy concerns raised over the lack of information about the
timing of a proposed ballot measure.
SB 279 (Hancock), Chapter 514, Statutes of 2013, specified
procedures for conducting a multi-county election to approve a
special tax measure proposed by the Authority.
2)Bill Summary. Current law provides several sunset dates that
govern the Authority. This bill provides a 20-year sunset
date extension for the following: 1) The Authority, until
January 1, 2049; 2) The power to levy a benefit assessment,
special tax, or property-related fee, until December 31, 2048;
and, 3) The date the principal and interest of any bond
indebtedness must be paid, until January 1, 2049.
Current law requires the board of supervisors of a county or
counties to call a special election if the Authority proposes
to levy a special tax pursuant to existing law, which allows
the Authority to levy special taxes, pursuant to Article XIII
C (voter approval for local tax levy) and Article XIII D
(assessment and property-related fees), of the Constitution.
This bill makes changes to this provision by requiring a
county or counties to call a special election if the Authority
proposes a measure to incur bond indebtedness pursuant to
existing law which establishes requirements for general
obligation bonded indebtedness, pursuant to Article XIIIA,
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relating to ad valorem taxes.
Current law establishes appropriations limits to create a
restriction on the amount of government revenue that can be
appropriated in any fiscal year. This bill finds and declares
that the Authority has no appropriations limit pursuant to the
Constitution because it has not received any state or local
government revenues. Under this bill, the appropriations
limit for the Authority would be established based on the
revenue generated by receipt of a measure adopted by the
voters.
Current law requires a resident of the San Francisco Bay Area
to serve as Chair of the Authority. This bill replaces the
public member, and instead, requires an elected official of a
bayside city or county to serve as Chair.
This bill is sponsored by the Authority.
3)Author's Statement. According to the author, "The San
Francisco Bay is one of our nation's greatest natural
treasures, and has a critical impact on the health and
well-being
of all the local communities it surrounds. However, the San
Francisco Bay has endured enormous harm over the last century
caused by landfill and toxic pollution. In 2008, following
years of budget cuts for natural resources protection, the
Legislature created the Authority, to determine how to raise
local revenues to restore over 36,000 acres of publicly-owned
bay shoreline into tidal wetlands, and to provide oversight of
funded restoration projects.
"In addition to providing clean water, flood control, habitat
protection, and recreational benefits, there are significant
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economic advantages that stem from wetlands restoration.
Restoration provides hundreds of jobs by creating long-term
projects that require project planning, implementation,
assessments, and observation after completion. In addition,
over $60 billion worth of goods pass through the narrow
channel of the Golden Gate Strait every year, and the effects
of pollution and other environmental threats directly affect
the security of the local Bay Area economy.
"Restoring the wetlands along the San Francisco Bay requires
long-term investment, estimated to cost about $1.43 billion
over 50 years. Since limited state and federal funds are
available for these projects, the Authority is in the process
of raising new revenue to narrow the funding gap and is
authorized to do so by a variety of means. The Authority has
statutory power to levy benefit assessments, property-related
fees, and special taxes consistent with the requirements of
Proposition 218 throughout its nine-county jurisdiction, in
addition to applying for grants, fundraising, and issuing
bonds. After years of careful consideration, the Authority
believes that a bond, rather than an assessment, fee, or tax,
would provide the most stable source of revenue for ongoing
restoration projects. However, the SFBRA's underlying statute
also inadvertently includes certain limitations that
effectively preclude it from using its bonding authority to
maximum benefit.
"This bill allows the Authority to effectively carry out its
statutory mission to restore critical bay wetlands along the
San Francisco Bay shoreline, by ensuring it has the ability to
issue bonds in an amount and for a duration that will leverage
the greatest impact. The bill would eliminate the restrictive
limitation of the Authority's bonding authority to 10% of its
prior year's revenue, which makes significant projects nearly
impossible, and extend its existence to January 1, 2049, long
enough for it to meet the obligations of any bonds issued.
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The bill would also ensure that any bond measure is uniformly
submitted to voters across the nine counties within the
Authority's jurisdiction, allowing the Authority to move
forward in planning and seeking voter approval for an initial
revenue measure to fund needed restoration projects."
4)Revenue Options Identified by the Authority. The Authority
decided against placing a parcel tax measure on the ballot in
2014 and has continued to examine revenue options. Most
recently, the Authority has discussed at several meetings of
their governing board the feasibility of placing a parcel tax
measure or a general obligation bond (GO bond) measure backed
by ad valorem property taxes on the ballot in 2016.
In addition to cities, counties, and school districts, the
Legislature has granted the authority to several types of
special districts to issue GO bonds. GO bonds are secured by
the legal obligation to levy an ad valorem property tax on
taxable property in an amount sufficient to pay the debt
service. Two-thirds of voters must approve the issuance of a
GO bond, and in doing so, approve the levy of an ad valorem
tax to pay the bond.
5)Policy Considerations. The Committee may wish to consider the
following:
a) GO Bonds. Supporters of this bill argue that current
law provides the Authority the ability to issue GO bonds
backed by ad valorem taxes. Absent any specific
discussions in any past analysis of the four Authority
bills prior to this one, or more explicit statutory
authority, the Committee may wish to consider, if it was,
and continues to be, the Legislature's intent to give the
Authority the power to issue GO bonds backed by ad valorem
property taxes. Additionally, the Committee may wish to
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consider, if this bill will provide the Authority with
sufficient assurances to place a GO bond on the ballot and
aid in protecting it from any future legal challenges.
b) Fourth Time is a Charm? The Legislature established the
Authority in 2008, and since then, the Legislature has
passed three bills making additional changes to their
enabling Act, as requested by the Authority. However, the
Authority has yet to raise any revenue to fulfill their
statutory purpose. Supporters of this bill argue that the
sunset extension is necessary to accommodate a 30-year GO
bond or revenue bond term that would allow the Authority to
fulfill their statutory mission. The Committee may wish to
consider, given recent history, if this is a reasonable
extension.
6)Arguments in Support. Supporters argue that this bill is
essential for the Authority to propose a revenue measure to
the voters in 2016 and accomplish its statutory mission.
7)Arguments in Opposition. Opposition argues that by removing
bonding caps and increasing the number of years to generate
revenue, this bill inhibits accountability and exposes Bay
Area residents to the threat of higher taxes and assessments.
REGISTERED SUPPORT / OPPOSITION:
Support
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San Francisco Bay Restoration Authority [SPONSOR]
Audubon California
Bay Area Council
California League of Conservation Voters
Ducks Unlimited
San Francisco Bay Conservation and Development Commission
Save the Bay
Opposition
Howard Jarvis Taxpayers Association
Analysis Prepared by:Misa Lennox / L. GOV. / (916) 319-3958
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