BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 2428

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          Date of Hearing:  May 4, 2016


                               Lorena Gonzalez, Chair

          2428 (Ting) - As Amended April 7, 2016

          |Policy       |Transportation                 |Vote:|10 - 5       |
          |Committee:   |                               |     |             |
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          |             |                               |     |             |

          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          This bill directs Caltrans to lease any airspace under or  
          adjacent to a freeway or other specified property within in the  
          City and County of San Francisco to the City for park,  
          recreational, or open-space purposes.  Specifically, this bill:

          1)Directs Caltrans to offer first right of refusal to lease air  
            space or other real property acquired for highway purposes  
            that is within a priority development area, as defined, to San  
            Francisco, a political subdivision of the city and county, or  
            a state agency for park, recreational, or open-space purposes.


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

          3)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, with the  
            state's share to be deposited into the State Highway Account.

          FISCAL EFFECT:

          According to Caltrans, there are 77 airspace lots in SF that can  
          be leased, and 75 are currently leased (tenants also for pay  
          maintenance), including 66 to private entities at market rate  
          for parking or storage. These leases generate $9.25 million  
          annually in revenue to the General Fund, which would be an  
          average of $140,000 per lease. If 10 expiring leases were  
          instead leased for open space or park purposes at 10% of market  
          value, the annual revenue General Fund loss would be $1.25  
          million. It is unclear to what extent the limited revenue  
          generation model would provide additional, offsetting state  


          Purpose. AB 2428, sponsored by San Francisco, is intended to  
          encourage the City to leverage existing Caltrans property so San  
          Francisco can implement its sustainable community strategies by  
          providing green spaces and recreational opportunities for its  


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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. 

          Current law provides a number of examples wherein Caltrans is  
          directed to lease or sell at well below market rate:

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

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

                 For feeding programs in San Joaquin County for $1 per  

          Analysis Prepared by:Chuck Nicol / APPR. / (916)  


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