BILL ANALYSIS                                                                                                                                                                                                    ”

                                                                    AB 2428

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          2428 (Ting)

          As Amended  May 31, 2016

          Majority vote

          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |Transportation  |10-5 |Frazier, Bloom,       |Linder, Baker, Kim, |
          |                |     |Brown, Chu, Daly,     |Mathis, Melendez    |
          |                |     |Dodd, Gomez, Medina,  |                    |
          |                |     |Nazarian, O'Donnell   |                    |
          |                |     |                      |                    |
          |Appropriations  |14-6 |Gonzalez, Bloom,      |Bigelow, Chang,     |
          |                |     |Bonilla, Bonta,       |Gallagher, Jones,   |
          |                |     |Calderon, Daly,       |Obernolte, Wagner   |
          |                |     |Eggman, Eduardo       |                    |
          |                |     |Garcia, Roger         |                    |
          |                |     |HernŠndez, Holden,    |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Weber, Wood           |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |

          SUMMARY:  Directs the California Department of Transportation  


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          (Caltrans) to lease to the City and County of San Francisco (San  
          Francisco) up to 10 airspace parcels 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  

          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.  

             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.  

          2)Directs Caltrans to offer first right of refusal to lease air  


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            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)For up to 10 parcels, 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.  

          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.

          FISCAL EFFECT:  According to the Appropriations Committee,  
          Caltrans indicates that of the 77 airspace lots in San Francisco  
          that can be leased, 75 are currently leased, 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  


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          limited revenue generation model would provide additional,  
          offsetting state revenue.

          COMMENTS:  The author introduced this bill 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.

          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.  

          Committee comments:  Although this bill would likely result in  
          lost revenue for Caltrans, it could improve San Francisco's  


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          ability to successfully implement its greenhouse gas  
          emission-reducing strategies and provide much needed housing for  
          the area.

          Please see the policy committee analysis for a full discussion  
          of this bill.

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