BILL ANALYSIS Ó AB 2428 Page 1 Date of Hearing: May 4, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2428 (Ting) - As Amended April 7, 2016 ----------------------------------------------------------------- |Policy |Transportation |Vote:|10 - 5 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: 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. AB 2428 Page 2 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 revenue. COMMENTS: 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 people. AB 2428 Page 3 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 month Analysis Prepared by:Chuck Nicol / APPR. / (916) 319-2081 AB 2428 Page 4