BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 2428 (Ting) - State highways: property leases
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|Version: August 1, 2016 |Policy Vote: T. & H. 8 - 3 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 1, 2016 |Consultant: Mark McKenzie |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 2428 would require the Department of Transportation
(Caltrans) to lease on a first right of refusal basis any
airspace under or adjacent to a freeway, or other property
acquired for highway purposes to San Francisco for park,
recreational, or open-space purposes. The bill requires that
the lease amount would be 10 percent or less of the average fair
market lease value for up to 10 parcels.
Fiscal
Impact:
Unknown loss of Caltrans lease revenues for 20 years or more,
potentially over $1 million per year initially, and likely
increasing in future years as the gap between lease payments
and fair market value increases. Actual lease revenue losses
would depend upon the fair market lease value of selected
properties. Staff notes that these revenue losses would be a
General Fund impact because lease revenues are currently used
AB 2428 (Ting) Page 1 of
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to partially offset General Fund payments for
transportation-related debt service.
Background: Existing law authorizes Caltrans to lease the areas above or
below state highways to public agencies or private entities.
Leases to private entities are subject to competitive bidding
requirements. Existing law authorizes Caltrans to lease any
airspace under a freeway, or property acquired for highway
purposes, that is not excess property, to the City and County of
San Francisco, or a political subdivision thereof, for an
emergency shelter or feeding program at a rate of $1 per month.
Caltrans has negotiated several long-term agreements with the
City and County of San Francisco to lease airspace under
freeways, including a project that provides volleyball and
basketball courts and pedestrian trails under Interstate-280,
and a dog park and skatepark on two parcels under the Route 101
Central Freeway.
Proposed Law:
AB 2428 would require Caltrans to lease any airspace under or
adjacent to a freeway, or other specified property located in
San Francisco, which is not excess property and is within a
"priority development area," to the City and County of San
Francisco, or a political subdivision thereof, for park,
recreational, or open-space purposes. The bill would require
the lease amount for up to 10 parcels to be 10 percent or less
of the average fair market lease value for each of the parcels.
The bill requires the lessee to fund any associated
infrastructure, to accept full liability for non-highway uses,
and to fund all non-highway-related maintenance costs associated
with park, recreational, and open-space uses. The bill also
requires the lease to authorize the lessee 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.
Finally, the bill defines "priority development area" as an area
identified in a Sustainable Communities Strategy, as specified.
AB 2428 (Ting) Page 2 of
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Staff
Comments: Caltrans indicates that there are 77 available
airspace lots in San Francisco; 75 of these parcels are
currently leased to a variety of public and private entities,
including 66 that are leased at market rate for parking or
storage purposes. The leases generate approximately $9.25
million in annual revenue. Caltrans indicates that the monthly
rents, current lease terms, and parcel sizes vary dramatically
among the currently-leased parcels, but comprehensive data on
all of the properties is currently unavailable.
This bill requires Caltrans to give San Francisco the first
right of refusal for any properties located within a "priority
development area," including those with current lease tenants
that may be interested in renewing an expiring lease. The bill
also requires up to ten parcels to be leased for a discounted
rate of 10 percent or less of the average fair market lease
value. The resulting loss in Caltrans lease revenues are
unknown, and could exceed $1 million each year initially. The
actual revenue loss would depend on the current fair market
value of those parcels that are chosen by San Francisco for
park, recreation, or open-space purposes, and the lease terms.
Staff notes that the revenue losses are likely to increase in
future years since the lease terms are likely to be at least 20
years, and the fair market lease value is likely to increase
over the duration of the lease, but the annual lease payments
are unlikely to increase over time.
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