BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 2428

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          Date of Hearing:  April 18, 2016


                                 Jim Frazier, Chair

          AB 2428  
          (Ting) - As Amended April 7, 2016

          SUBJECT:  State highways:  property leases

          SUMMARY:  Directs the California Department of Transportation  
          (Caltrans) to lease to the City and County of San Francisco (San  
          Francisco) any airspace under or adjacent to a freeway or other  
          real property acquired for highway purposes that is within a  
          priority development area, as defined, for park, recreational,  
          or open-space purposes.  Specifically, this bill:  

          1)Makes legislative findings and declarations:

             a)   Regarding the San Francisco Bay Area's sustainable  
               communities strategies, entitled "Plan Bay Area," that was  
               adopted in 2013 and that provides a strategy for meeting  
               80% of the area's future housing needs in priority  
               development areas (PDAs).  

             b)   Describing the relationship between planning for  
               population growth in PDAs and the provision of open space  
               and other amenities that are required to support the growth  
               and provide greater public health and quality of life  
               benefits for citizens and the workforce.  Further describes  


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               open space to include such amenities as baseball diamonds,  
               soccer fields, parks, playgrounds, tennis courts, flower  
               gardens, and greenways.

             c)   Asserting that many parcels and rights-of-way beneath  
               and adjacent to the freeways are within PDAs and could be  
               used for open space purposes except that that cost of  
               leasing these parcels from Caltrans is prohibitively  

             d)   Proposing a strategy to support greenhouse gas emission  
               reduction goals by decreasing the cost of providing open  
               space in PDAs via low-cost leases between Caltrans and San  
               Francisco for areas under freeways.  

             e)   Citing examples where this strategy has already been  
               deployed in leases between San Francisco and Caltrans.  

          2)Directs Caltrans to offer first right of refusal to lease air  
            space or other property to San Francisco, a political  
            subdivision of the city and county, or a state agency for  
            park, recreational, or open-space purposes. 

          3)Sets the lease amount for park, recreational, or open-space  
            purposes at 10% or less of the average fair market lease  
            value; prescribes how this value is to be calculated.

          4)Requires the lessee to fund associated infrastructure, to  
            accept full liability for non-highway uses of the  
            infrastructure, and to fund all non-highway-related  
            maintenance costs associated with the uses.  


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          5)Directs the lease to authorize the lessee, at its discretion,  
            to subsidize its associated maintenance costs by generating  
            revenue under a "limited revenue generation model" so long as  
            any excess revenue is shared 50/50 with Caltrans.

          6)Defines "priority development area" to mean a neighborhood  
            within walking distance of frequent transit service that  
            offers a wide variety of housing options and that features  
            various amenities, including grocery stores, community  
            centers, open space, and restaurants.

          EXISTING LAW:  

          1)Grants Caltrans broad authority to acquire by eminent domain  
            any property necessary for state highway purposes.

          2)Authorizes Caltrans to lease to public agencies or private  
            entities the use of areas above or below state highways.   
            Leases to private entities have to be made on the basis of  
            competitive bids.

          3)Authorizes Caltrans to make land or airspace available, with  
            or without charge, to a public entity to accommodate needed  
            passenger, commuter, or high-speed rail, magnetic levitation  
            systems, and highway and non-highway mass transit facilities.   

          4)Specifically authorizes Caltrans to lease to a local agency  
            for park purposes all or any portion of land outside the  
            boundary of a highway system when such use will preserve its  
            view, appearance, light, air, and usefulness.  


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          5)Authorizes Caltrans to lease to San Francisco, or a political  
            subdivision, any airspace under a freeway or property for an  
            emergency shelter or feeding program at a rate of $1 per  

          6)Authorizes Caltrans to lease non-operating right-of-way areas  
            to municipalities or other local agencies for public purposes,  
            and allows Caltrans to contribute toward the cost of  
            developing local parks and other recreational facilities on  
            such areas.  The lease may provide that the municipality or  
            other local agency can offset the cost of the lease by  
            providing maintenance or landscaping that would otherwise be  
            the responsibility of the state.  

          FISCAL EFFECT:  Unknown

          COMMENTS:  The author introduced AB 2428 to encourage San  
          Francisco to leverage existing Caltrans property so San  
          Francisco can implement its sustainable community  
          strategies by providing green spaces and recreational  
          opportunities for the people of San Francisco.   
          Specifically, the author seeks to ensure San Francisco has  
          first right of refusal to lease state-owned space at 10% of  
          the current market rate.  

          San Francisco is sponsoring this bill.  As one of the  
          nation's most densely populated cities, San Francisco lacks  
          the open space needed to provide opportunities to implement  
          its sustainable communities strategies, required by the  
          California Sustainable Communities and Climate Protection  
          Act of 2008, [SB 375, (Steinberg), Chapter 728, Statutes of  
          2008], including its robust housing development plan of  
          which open spaces are a critical component.  San Francisco  
          is looking to leverage unused right-of-way and airspace  
          below and adjacent to state freeways in order to develop  
          green spaces, parks, and recreational facilities.


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          While the authority to enter into these leases is already in  
          existing law, the challenge, apparently, is that Caltrans is  
          obligated to secure fair market value lease rates for these  
          parcels, based on the estimated highest and best use of the  
          property.  Not only is this rate too expensive for new open  
          space development, it reportedly tends to attract commercial  
          activities not particularly conducive to San Francisco's plans  
          for its priority development areas, such as parking lots.  

          AB 2428 is not without precedence.  Existing law provides a  
          number of examples wherein Caltrans is directed to lease or sell  
          at well below market rate, for example:

          1)For emergency shelters or feeding program in San Francisco, at  
            a lease rate of $1 per month.

          2)For emergency shelter, feeding program, or day care center in  
            San Diego, for $1 per month.

          3)For feeding programs in San Joaquin County for $1 per month

          Committee comments:  Although this bill would likely result in  
          lost revenue for Caltrans, it could improve San Francisco's  
          ability to successfully implement its greenhouse gas  
          emission-reducing strategies and provide much needed housing for  
          the area.




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          City and County of San Francisco (Sponsor)


          None on file

          Analysis Prepared by:Janet Dawson / TRANS. / (916) 319-2093