BILL ANALYSIS Ó
AB 746
Page 1
ASSEMBLY THIRD READING
AB
746 (Ting)
As Amended April 14, 2015
Majority vote
-----------------------------------------------------------------
|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+--------------------+--------------------|
|Local |6-3 |Gonzalez, Alejo, |Maienschein, |
|Government | |Chiu, Cooley, |Linder, Waldron |
| | |Gordon, Holden | |
| | | | |
|----------------+------+--------------------+--------------------|
|Appropriations |12-5 |Gomez, Bloom, |Bigelow, Chang, |
| | |Bonta, Calderon, |Gallagher, Jones, |
| | |Daly, Eggman, |Wagner |
| | |Eduardo Garcia, | |
| | |Holden, Quirk, | |
| | |Rendon, Weber, Wood | |
| | | | |
| | | | |
-----------------------------------------------------------------
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:
AB 746
Page 2
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 California Constitution Article XIII A
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 California Constitution Articles
XIII C and XIII D.
4)Extends the date that the Authority must pay and discharge the
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
AB 746
Page 3
indebtedness, subject to certain requirements; and,
c) Adds to the list of constitutional requirements a proposed
measure must comply with, a cross reference to California
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
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 California
Constitution Article XIII B, Section 4.
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
California Constitution Article XIII B as of the date of
enactment of this bill.
11)Provides that no reimbursement is required by this bill because
AB 746
Page 4
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 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 California Constitution
Articles XIII C and XIII D, as specified.
5)Allows the Authority to issue revenue bonds and incur bond
indebtedness, subject to the following requirements:
AB 746
Page 5
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.
7)Repeals the Act as of January 1, 2029.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, negligible state fiscal impact.
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.
AB 746
Page 6
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 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. Most recently, 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
AB 746
Page 7
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 California
Constitution Article XIII C (voter approval for local tax levy)
and California Constitution Article XIII D (assessment and
property-related fees). 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 California Constitution Article XIII A, 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.
AB 746
Page 8
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
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
AB 746
Page 9
stable source of revenue for ongoing restoration projects.
However, the SFBRA's [Authority] 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. 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
AB 746
Page 10
pay the bond.
5)Policy Considerations. The Legislature 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 Legislature 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 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 Legislature 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
AB 746
Page 11
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.
Analysis Prepared by:
Misa Lennox / L. GOV. / (916) 319-3958 FN:
0000336