Amended in Assembly April 5, 2016

Amended in Assembly March 29, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2797


Introduced by Assembly Member Chiu

February 19, 2016


An act to amend Sections 4 and 7begin delete ofend deletebegin insert of, and to add Section 4.5 to,end insert Chapter 660 of the Statutes of 2007, relating to tidelands and submerged lands.

LEGISLATIVE COUNSEL’S DIGEST

AB 2797, as amended, Chiu. City and County of San Francisco: Mission Bay South Project: redevelopment plan.

Existing law grants to the City and County of San Francisco the right, title, and interest of the state in and to certain tidelands and submerged lands in trust for certain purposes. Under existing law, the Burton Act, and the Burton Act transfer agreement, the interest of the state in and to the Harbor of San Francisco was transferred in trust to the City and County of San Francisco. The State Lands Commission has jurisdiction over tidelands and submerged lands of the state.

Existing law declares that, until January 1, 2094, certain parcels of real property denominated as the designated seawall lots are free from the use requirements of the public trust, the Burton Act trust, and the Burton Act transfer agreement, and authorizes the San Francisco Port Commission to lease all or a portion of the designated seawall lots for nontrust uses if specified conditions are met, including that the lease shall terminate no later than January 1, 2094.

This bill would revise those conditions to specify that a nontrust lease shall terminate no later than January 1, 2094, or the date that is 75 years after thebegin delete date the port first issues a certificate ofend deletebegin insert initialend insert occupancybegin insert dateend insert for thebegin delete improvements on the site.end deletebegin insert leased site or development parcel.end insert The bill would also prescribe the boundaries of a specified seawall lot for purposes of the Mission Bay South redevelopment plan.begin insert The bill would authorize the port to use its nontrust lease revenues from specified development parcels in a specified seawall lot to make port advances, as defined, to fund specified infrastructure if the commission makes specified findings related to the use of the development parcels and complies with certain procedures for the disposition of those parcels, as prescribed.end insert

This bill would make legislative findings and declarations as to the necessity of a special statute for the waterfront property at the Mission Bay South redevelopment area in the City and County of San Francisco.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

For the purposes of this act the following terms
2have the following meanings:

3(a) “Assembly Bill 26” means Chapter 5 of the First
4Extraordinary Session of the Statutes of 2011, in which certain
5provisions were amended by Chapter 26 of the Statutes of 2012,
6effective as provided in California Redevelopment Assn. v.
7Matosantos (2011) 53 Cal.4th 231.

8(b) “Assembly Bill 2649” means Chapter 757 of the Statutes of
92012.

10(c) “Board of supervisors” means the Board of Supervisors of
11the City and County of San Francisco.

12(d) “Burton Act” means Chapter 1333 of the Statutes of 1968,
13as amended, which authorized the state to convey to the city, in
14trust and subject to certain terms, conditions, and reservations, the
15state’s interest in certain tidelands, including filled lands.

16(e) “Burton Act lands” means the tidelands that the state granted
17to the city under the Burton Act, including the San Francisco
18waterfront from the Hyde Street pier to India Basin.

19(f) “Burton Act transfer agreement” means the agreement dated
20January 24, 1969, between the state and the city, relating to the
P3    1transfer of the Burton Act lands from the state to the city, and any
2amendments to that agreement in accordance with its terms.

3(g) “Burton Act trust” means the statutory trust imposed by the
4Burton Act on Burton Act lands and lands dedicated to or acquired
5by the city as assets of the trust.

6(h) “Capital plan” means the 10-year capital plan for port land
7prepared in accordance with Sections 2.30 and 2.31 of the San
8Francisco Administrative Code, adopted in 2007 by the board of
9supervisors, as amended.

begin insert

10
(i) “CFD law” means the Mello-Roos Community Facilities
11Act of 1982 (Chapter 2.5 (commencing with Section 53311)) of
12Part 1 of Division 2 of Title 5 of the Government Code) or the San
13Francisco Special Tax Financing Law (San Francisco Admin.
14Code Ch. 43, Art. X), as applicable.

end insert
begin delete

15(i)

end delete

16begin insert(j)end insert “City” means the City and County of San Francisco, a charter
17city and county, and includes the port.

begin delete

18(j)

end delete

19begin insert(k)end insert “Commission” means the State Lands Commission.

begin delete

20(k)

end delete

21begin insert(l)end insert “Designated seawall lot” or “designated seawall lots” means
22any of those parcels of real property situated in the city that are
23defined as designated seawall lots in Senate Bill 815 or Assembly
24Bill 2649, as those parcels may be modified by Section 3 of this
25act.

begin insert

26
(m) “Development parcel” means a portion of a designated
27seawall lot that is subdivided for construction improvements, or
28rehabilitation of historic buildings for reuse, and that will be used
29for nontrust land uses.

end insert
begin insert

30
(n) “IFD law” means the Infrastructure Financing Districts
31law set forth in Chapter 2.8 (commencing with Section 53395) of
32Part 1 of Division 2 of Title 5 of the Government Code, which
33authorizes the use of property tax increment to finance
34infrastructure.

end insert
begin insert

35
(o) “Infrastructure costs” or “costs of infrastructure” means
36the cost of constructing the Seawall Lot 337 infrastructure,
37including related costs of planning and design work and a return
38on developer equity, as provided in a plan of finance in a
39disposition and development agreement for which the commission
P4    1has made findings in accordance with paragraph (3) of subdivision
2(a) of Section 4.5 of Senate Bill 815.

end insert
begin insert

3
(p) “Initial occupancy date” means the date on which the port
4issues the first certificate of occupancy for a building on the leased
5seawall lot or development parcel in Seawall Lot 337, as
6applicable.

end insert
begin delete

7(l)

end delete

8begin insert(q)end insert “Mission Bay developer” means an “owner,” as defined in
9the Mission Bay South owner participation agreement.

begin delete

10(m)

end delete

11begin insert(r)end insert “Mission Bay South owner participation agreement” means
12 the agreement between the redevelopment agency and Catellus
13Development Corporation, dated November 16, 1998, as amended.

begin delete

14(n)

end delete

15begin insert(s)end insert “Mission Bay South redevelopment plan” means the
16Redevelopment Plan for the Mission Bay South Project adopted
17by the board of supervisors on October 26, 1998, as amended.

begin delete

18(o)

end delete

19begin insert(t)end insert “Mission Bay South redevelopment project area” means the
20area in the city subject to the Mission Bay South redevelopment
21plan.

begin insert

22
(u) “Nontrust lease revenues” means revenues that the port
23receives from nontrust leases of designated seawall lots or
24development parcels in Seawall Lot 337, as applicable.

end insert
begin insert

25
(v) “Nontrust sources” means sources of consideration other
26than nontrust lease revenues or moneys in the port’s harbor fund.
27Nontrust sources include, without limitation, fee credits that may
28be applied to offset local impact fees or exactions, special taxes,
29tax increment, proceeds of general obligation bonds, proceeds of
30community facilities bonds, and proceeds of tax allocation bonds.

end insert
begin delete

31(p)

end delete

32begin insert(w)end insert “Oversight board” means the body that the board of
33supervisors created to oversee the fiscal management of the
34successor agency in accordance with Assembly Bill 26.

begin delete

35(q)

end delete

36begin insert(x)end insert “Parcel P20” means a parcel owned by the port within the
37Mission Bay South redevelopment project area that lies partially
38within the southern portion of Seawall Lot 337.

begin insert

39
(y) “Port advances” means nontrust lease revenues that the
40port uses to pay directly or to reimburse the Seawall Lot 337
P5    1developer or any district providing project-based public financing
2for costs of infrastructure in accordance with the terms and
3conditions of this act. Port advances do not include nontrust lease
4revenues that the port uses to pay directly for the preservation of
5historic piers and historic structures or for purposes that are
6otherwise authorized by this act.

end insert
begin delete

7(r)

end delete

8begin insert(z)end insert “Port of San Francisco,” “port commission,” or “port” means
9the city acting by and through the San Francisco Port Commission.

begin insert

10
(aa) “Project-based public financing” means special taxes from
11development parcels in community facilities district project areas
12formed under CFD law, property tax increment from development
13parcels in infrastructure financing district project areas established
14under the IFD law, bond proceeds secured by special taxes, tax
15increment, or both, and any other mechanisms available to finance
16infrastructure and public facilities that rely on revenues produced
17by the area to be improved.

end insert
begin delete

18(s)

end delete

19begin insert(ab)end insert “Public trust” or “trust” means the common law public
20trust for commerce, navigation, and fisheries.

begin delete

21(t)

end delete

22begin insert(ac)end insert “Redevelopment agency” means the San Francisco
23redevelopment agency, that the board of supervisors formed under
24the former California Community Redevelopment Law and that
25was dissolved on February 1, 2012, by operation of Assembly Bill
2626.

begin delete

27(u)

end delete

28begin insert(ad)end insert “San Francisco Bay” or “bay” means those areas defined
29by Section 66610 of the Government Code.

begin delete

30(v)

end delete

31begin insert(ae)end insert “San Francisco waterfront” means the portions of San
32Francisco Bay that the state transferred to the city under the Burton
33Act.

begin delete

34(w)

end delete

35begin insert(af)end insert “Seawall Lot 337” means that parcel of real property in the
36city known as Seawall Lot 337, as shown on that certain map
37entitled “revised map of designed seawall lots,” which is on file
38with thebegin delete port.end deletebegin insert port, as those boundaries may be modified by Section
393 of thiend insert
begin inserts act.end insert

begin delete

40(x)

end delete

P6    1begin insert(ag)end insert “Seawall Lot 337 developer” means the person selected
2by the port to negotiate exclusively with the port for the master
3development of Seawall Lot 337 and Pier 48, and its successors
4and authorized assigns.

begin insert

5
(ah) “Seawall Lot 337 infrastructure” means infrastructure
6and other public facilities that serve Seawall Lot 337 and are
7located on Seawall Lot 337 or on lands immediately adjacent to
8the seawall lot area, such as water, sewer, stormwater
9management, and other utility installations, streets, roadways,
10sidewalks, parks, public access and open space areas, shoreline
11improvements, and other public facilities.

end insert
begin delete

12(y)

end delete

13begin insert(ai)end insert “Senate Bill 815” means Chapter 660 of the Statutes of
142007,begin delete in which certain provisions wereend deletebegin insert asend insert amended by Chapter
15208 of the Statutes ofbegin delete 2009 andend deletebegin insert 2009,end insert Assembly Billbegin delete 2649.end deletebegin insert 2649,
16and this act.end insert

begin delete

17(z)

end delete

18begin insert(aj)end insert “State” means the State of California.

begin delete

19(aa)

end delete

20begin insert(ak)end insert “Successor agency” means the San Francisco Office of
21Community Investment and Infrastructure, which the board of
22supervisors created in accordance with Assembly Bill 26 to serve
23as the successor to the redevelopment agency.

begin delete

24(ab)

end delete

25begin insert(al)end insert “Successor agency commission” means the San Francisco
26Commission on Community Investment and Infrastructure.

begin insert

27
(am) “Termination date” means the date determined in
28accordance with subdivision (a) of Section 4 of Senate Bill 815
29for the termination of a nontrust lease.

end insert
begin delete

30(ac)

end delete

31begin insert(an)end insert “Tidelands” means the lands lying below the elevation of
32ordinary high water, whether filled or unfilled, and includes
33submerged lands.

34

SEC. 2.  

The Legislature finds and declares all of the following:

35(a) San Francisco Bay is a valuable public trust asset of the state
36that provides special maritime, navigational, recreational, cultural,
37and historical benefits to the people of the region and the state.
38Tidelands in California are held in trust for enjoyment and use by
39the people of the state under the common law public trust doctrine.
40Public trust lands may be used for water-related purposes, including
P7    1commerce, navigation, fishing, swimming, recreation, open space,
2and wildlife habitat.

3(b) The San Francisco waterfront consists primarily of sovereign
4tidelands that the state granted to the city pursuant to the Burton
5Act. Under the Burton Act and the city’s charter, the port holds
6and manages the granted lands. The Burton Act authorizes the port
7to use, conduct, operate, maintain, manage, regulate, improve, and
8control the San Francisco waterfront consistent with the public
9trust and the Burton Act trust.

10(c) The San Francisco waterfront provides special maritime,
11navigational, recreational, cultural, and historical benefits to the
12entire San Francisco Bay area and serves as a unique destination
13for the public from throughout the region.

14(d) A unique feature of the San Francisco shoreline is the
15numerous historic maritime resources present on port property,
16many of which are in need of major structural repairs and are not
17currently available for the use and enjoyment of the public. The
18Legislature has previously found that rectifying the deteriorating
19conditions along the San Francisco waterfront, the preservation of
20the numerous historic piers and other historic structures on port
21land, and the construction of waterfront plazas and open space are
22matters of statewide importance that will further the purposes of
23the public trust and the Burton Act trust.

begin insert

24
(e) The San Francisco shoreline is a valuable public trust asset,
25a vibrant and world-renowned tourist destination, and a vital
26component of the regional, state, and national economies. The
27success of the port’s efforts to revitalize the waterfront depends,
28in part, on strategies for optimizing uses of and increasing revenues
29and other public trust benefits from port lands in addition to using
30funding sources other than the port harbor fund to finance
31development on port lands.

end insert
begin delete

32(e)

end delete

33begin insert(f)end insert The seawall lots are tidelands that were filled and cut off
34from the waterfront by the construction of the great seawall, now
35occupied by the Embarcadero and other roadways, in the late 19th
36and early 20th centuries. Over time, some of the seawall lots,
37including the designated seawall lots, have ceased to be useful in
38whole or in part for the promotion of the public trust and the Burton
39Act trust, except for the production of revenue to support the
40purposes of the Burton Act trust. The designated seawall lots are
P8    1presently either vacant or leased on an interim basis, primarily for
2commuter parking.

begin delete

3(f)

end delete

4begin insert(g)end insert (1) In Senate Bill 815, the Legislature found all of the
5following:

6(A) The designated seawall lots are, in whole or in part, no
7longer necessary for the purposes of the public trust or Burton Act
8trust.

9(B) Costs to implement the port’s capital plan exceed projected
10revenues of the port available for these purposes, in part due to
11the port’s inability to make optimal use of the designated seawall
12lots.

13(C) Future revenues from the development and leasing of the
14designated seawall lots are an essential source of funds to preserve
15the port’s numerous historic piers and historic structures, construct
16and maintain waterfront plazas and open space, and improve public
17access to the waterfront.

18(2) Senate Bill 815 lifted the use restrictions of the public trust
19and Burton Act trust from the designated seawall lots and
20authorized the port to enter into nontrust leases of the lands, subject
21to certain conditions and subject to the requirement that the nontrust
22lease revenues be used for specified trust purposes.

begin delete

23(g)

end delete

24begin insert(h)end insert Seawall Lot 337, the largest of the designated seawall lots,
25is located just south of China Basin and is presently used as a
26surface parking lot. Senate Bill 815 depicts Seawall Lot 337 as
27bounded by Mission Rock Street, Terry A. Francois Boulevard,
28and Third Street. Following an extensive community process led
29by a citywide advisory panel and a solicitation process to identify
30qualified developers, the port commission entered into exclusive
31negotiations with the Seawall Lot 337 developer for the lease,
32construction, and operation of the proposed project at Seawall Lot
33337, a portion of Terry A. Francois Boulevard, Pier 48, and the
34marginal wharf between Pier 48 and Pier 50. The proposed project
35would include a mix of uses, such as commercial retail and office,
36market-rate and affordable residential, rehabilitation of Pier 48,
37new parks, expansion of the existing China Basin Park with a
38portion of Terry A. Francois Boulevard, and new and expanded
39shoreline access. The Legislature finds that the revitalization of
40Seawall Lot 337 and Pier 48 through mixed-use development is
P9    1of particular importance to the state for the reasons stated in Senate
2Bill 815.

begin delete

3(h)

end delete

4begin insert(i)end insert The Mission Bay area surrounding Seawall Lot 337 is the
5site of a major mixed-use redevelopment project. As a result of
6Assembly Bill 26, the redevelopment agency was dissolved on
7February 1, 2012, and the successor agency assumed certain
8executory obligations of the redevelopment agency. The successor
9agency commission exercises land use, development, and design
10approval authority for the remaining projects of the former
11redevelopment agency, including Mission Bay.

begin delete

12(i)

end delete

13begin insert(j)end insert The Mission Bay South redevelopment project area,
14established in 1998 by the board of supervisors’ adoption of the
15Mission Bay South redevelopment plan, lies to the west and south
16of Seawall Lot 337. Parcel P20 is a narrow, undeveloped strip of
17land within the Mission Bay South redevelopment project area
18that is bounded on the north by the northern line of Mission Rock
19Street in its former location, and overlaps a portion of Seawall Lot
20337, as depicted in Senate Bill 815. In accordance with the Mission
21Bay South redevelopment plan, the Mission Bay developer has
22since realigned Mission Rock Street from its northeasterly
23orientation to an east-west orientation, such that a portion of Parcel
24P20 and the former Mission Rock Street right of way now lie north
25of the northerly line of Mission Rock Street. The development
26proposal for Seawall Lot 337 includes this portion of Parcel P20
27and former Mission Rock Street.

begin delete

28(j)

end delete

29begin insert(k)end insert Under its development proposal, the Seawall Lot 337
30developer would realign Terry A. Francois Boulevard and use part
31of the northern section of the street to expand China Basin Park.
32The remaining portion of the realigned Terry A. Francois
33Boulevard would be a working waterfront street that would support
34active maritime, industrial, and production uses at the waterfront.
35Terry A. Francois Boulevard would include areas for social spaces
36and loading zones serving proposed buildings, a pedestrian
37throughway, a shared zone, and the Blue Greenway adjacent to
38the Bay and Piers 48 and 50, contributing to uninterrupted public
39access along San Francisco’s eastern waterfront.

begin insert

P10   1
(l) In connection with the project, a substantial investment in
2new infrastructure and public facilities is necessary for the port
3to fully realize the public benefits of those portions of Seawall Lot
4337 that will be used for trust purposes, and to maximize the value
5of development parcels that will be subject to nontrust leases. The
6infrastructure costs for Seawall Lot 337 are expected to exceed
7one hundred fifty million dollars ($150,000,000). The development
8proposal for Seawall Lot 337 provides for the Seawall Lot 337
9developer to construct the needed infrastructure and public
10facilities, which would be funded by developer equity to the extent
11that port advances and project-based public financing are not then
12available. Project-based public financing would be used to pay
13directly or to reimburse the Seawall Lot 337 developer for its
14equity advances and the port for port advances for infrastructure
15costs under the CFD law, IFD law, and other applicable laws.

end insert
begin insert

16
(m) Because special taxes, property tax increment, and other
17nontrust funding sources arising from the project may not become
18available until well after the port receives nontrust lease revenues
19from development parcels in Seawall Lot 337, it is critical that the
20port be able to use those revenues to pay Seawall Lot 337
21infrastructure costs to minimize the cost of development capital
22and maximize the land value that the port is able to realize for
23preservation of its historic piers and historic structures, and for
24other public trust uses. This act authorizes the port to make
25advances of nontrust lease revenues from Seawall Lot 337 to pay
26Seawall Lot 337 infrastructure costs, subject to the requirements
27of this act.

end insert
begin delete

28(k)

end delete

29begin insert(n)end insert This act clarifies that the boundaries of Seawall Lot 337
30extend to the line of Mission Rock Street and to the line of Terry
31A. Francois Boulevard, as those streets have been or may be
32realigned, and to the boundary of China Basin Park as finally
33established, such that Seawall Lot 337 includes those portions of
34Parcel P20 and the former Mission Rock Street right of way
35embraced within those boundaries. This act also allows the
36successor agency to remove Parcel P20 from the Mission Bay
37South redevelopment plan and related documents and agreements
38without the need for Department of Finance or Controller approval.

begin insert

39
(o) This act also amends Senate Bill 815 to provide that the
4075-year limitation on the term of authorized nontrust leases for
P11   1designated seawall lots and development parcels at Seawall Lot
2337, as applicable, begins to run on the initial occupancy date for
3the leased site.

end insert
4

SEC. 3.  

For purposes of Senate Bill 815 and Assembly Bill
52649, the boundaries of Seawall Lot 337 extend to the line of, but
6do not include, Third Street on the west, Mission Rock Street on
7the south, and Terry A. Francois Boulevard on the east, as those
8streets are ultimately constructed, realigned, or reconfigured in
9connection with the Mission Bay South redevelopment plan and
10the development of Seawall Lot 337. If there is any conflict
11between this section and the diagram in Section 15 of Senate Bill
12815 or Section 9 of Assembly Bill 2649, this section shall control.

13

SEC. 4.  

Subdivisions (c), (d), and (f) of Section 34163 of the
14Health and Safety Code, and subdivisions (a) and (b) of Section
1534164 of the Health and Safety Code, shall not apply to, and no
16action of the Department of Finance or the Controller shall be
17required for, any action taken by the oversight board, the successor
18agency commission, the board of supervisors, or any other
19governmental body required to act to amend the Mission Bay South
20redevelopment plan to remove Parcel P20 from the Mission Bay
21South redevelopment project area, or to amend any related
22documents or agreements to delete regulatory requirements, zoning
23controls, and the Mission Bay developer’s obligations with respect
24to Parcel P20.

25

SEC. 5.  

Section 4 of Chapter 660 of the Statutes of 2007 is
26amended to read:

27

Sec. 4.  

begin deleteSubject to the applicable terms and conditions in Section
286 pertaining to end delete
begin insertExcept for end insertSeawall Lot 337, the port may enter into
29a lease of all or any portion of the designated seawall lots free from
30the use requirements established by the public trust, the Burton
31Act trust, and the Burton Act transfer agreementbegin delete (nontrust lease),
32provided all of the following conditions are met:end delete
begin insert (nontrust lease)
33subject to the requirements of this section. For Seawall Lot 337,
34the port may enter into nontrust leases of development parcels,
35subject to the requirements of this section, if the commission has
36made all of the findings in paragraph (3) of subdivision (a) of
37Section 4.5, and if all of the conditions of Section 6 end insert
begin insertare met.end insert

38(a) Notwithstanding the Burton Act, Section 718 of the Civil
39Code, Section 37384 of the Government Code, or any other
40provision of law to the contrary, the term of any individual nontrust
P12   1lease, including any extension of the term allowed by right of
2renewal, shall not exceed 75begin delete years.end deletebegin insert years from the initial occupancy
3date for the leased site or development parcel.end insert
Each nontrust lease
4shall terminate no later thanbegin insert the date that is the later ofend insert January 1,
52094, or the date that is 75 years after the date that the port first
6issues a certificate of occupancy for the improvements on the
7leasedbegin delete site.end deletebegin insert site or development parcel.end insert Nothing in this section
8shall be construed as limiting the term of any lease, or portion
9thereof, that is for uses consistent with the public trust and the
10Burton Act.

11(b) (1) begin insert(A)end insertbegin insertend insert Except as provided in this subdivision, allbegin insert nontrust
12leaseend insert
revenues received by the portbegin delete from the nontrust lease willend delete
13begin insert shallend insert be deposited in a separate account in the harbor fund to be
14expended for the preservation of historic piers and historic
15structures, or for the construction and maintenance of waterfront
16plazas and openbegin delete space required by the special area plan. Revenuesend delete
17
begin insert space.end insert

begin insert

18
(B) The port may use its nontrust lease revenues from
19development parcels in Seawall Lot 337 to make port advances to
20fund Seawall Lot 337 infrastructure, except for facilities for which
21expenditures are authorized under subparagraph (A), if the
22commission has made the findings under paragraph (3) of
23subdivision (a) of Section 4.5.

end insert

24begin insert (C)end insertbegin insertend insertbegin insertRevenuesend insert shall not be expended under this subdivision for
25historic piers or historic structures on land subject to public trust
26use restrictions unless the executive officer of the commission has
27approved the proposed uses of the pier orbegin delete structure.end deletebegin insert structure or,
28for Pier 48 and related historic structures, the executive officer of
29the commission has made the findings under paragraph (3) of
30subdivision (a) of Section 4.5 and has otherwise complied with
31this act.end insert

32(2) The port may annually transfer from the separate account
33and deposit in the general account of the harbor fund, to be used
34for any purpose consistent with the public trust and the Burton
35Act, an amount equal to the sum of the baseline revenue streams
36for each designated seawall lot subject tobegin delete aend deletebegin insert one or moreend insert nontrust
37begin delete lease (hereafter leasedend deletebegin insert leases (leasedend insert seawallbegin delete lot),end deletebegin insert lots),end insert less any
38revenues received by the port, for the year preceding the transfer
39of funds, from any portion or portions of the leased seawall lots
40that were not subject to a nontrust lease. For purposes of this
P13   1subdivision, the baseline revenue stream for a designated seawall
2lot is the average annual revenue received by the port from that
3seawall lot over the five years prior to January 1, 2008, adjusted
4for inflation.

5(3) For purposes of this subdivision, the term “revenue” shall
6exclude any costs incurred by the port to administer the lease and
7to operate and maintain the leased property and any improvements
8thereon.

9(4) For each nontrust lease of a designated seawall lot, the port
10shall maintain a separate accounting of all revenues transferred
11pursuant to paragraph (2), all costs excluded pursuant to paragraph
12(3), and all revenues deposited into the separate account.

13(5) If the funds in the separate account exceed the amount
14needed for the preservation of historic piers and historic structures
15and for construction of waterfront plazas and open space, the excess
16funds shall be deposited in the harbor fund to be used for purposes
17consistent with the public trust and the Burton Act.

18(c) begin deleteThe end deletebegin insertA end insertnontrust leasebegin delete isend deletebegin insert shall beend insert for fair market value and on
19terms consistent with prudent land management practices as
20determined by the port and subject to approval by the commission
21as provided in paragraph (1).

22(1) Prior to executingbegin delete theend deletebegin insert aend insert nontrust lease, the port shall submit
23the proposed lease to the commission for its consideration, and
24the commission shall grant its approval or disapproval in writing
25within 90 days of receipt of the lease and supporting
26documentation, including documentation related to value. In
27approving a nontrust lease, the commission shall find that the lease
28meets all of the following:

29(A) Is for fair market value.

30(B) Is consistent with the terms of the public trust and the Burton
31Act trust, other than their restrictions on uses.

32(C) Is otherwise in the best interest of the state.

33(2) Whenever a nontrust lease is submitted to the commission
34for its consideration, the costs of any study or investigation
35undertaken by or at the request of the commission, including
36reasonable reimbursement for time incurred by commission staff
37in processing, investigating, and analyzing such submittal, shall
38be borne by the port; however, the port may seek payment or
39reimbursement for these costs from the proposed lessee.

P14   1begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 4.5 is added to Chapter 660 of the Statutes of
22007, to read:end insert

begin insert
3

begin insertSec. 4.5.end insert  

(a) For nontrust leases of Seawall Lot 337 that are
4entered into in accordance with the terms of a disposition and
5development agreement for the master development of Seawall
6Lot 337, the commission shall consider whether the port will
7receive consideration equal to the fair market value on terms
8consistent with prudent land management practices based on, and
9in accordance with, all of the following procedures:

10
(1) At least 30 days prior to approval by the board of supervisors
11of the development project for Seawall Lot 337, the port shall
12submit the proposed disposition and development agreement
13between the master developer and the port governing the master
14development of Seawall Lot 337 and the following information, to
15the extent not contained in the agreement, to the commission for
16its consideration:

17
(A) The proposed procedures for the disposition of nontrust
18development parcels and including the proposed plan of finance
19for the development project that describes the proposed port
20advances for Seawall Lot 337 infrastructure costs.

21
(B) The proposed procedures for establishing the fair market
22value of each nontrust lease of a development parcel, consistent
23with the land uses permitted under the disposition and development
24agreement, including the appraisal instructions.

25
(C) A description of the nontrust sources that the port expects
26to receive for the project and how theses nontrust sources will be
27applied to the project.

28
(D) A description of the manner by which the port will select
29the developer of each development parcel, including the form of
30ground lease.

31
(2) Following approval of the development project for Seawall
32Lot 337 by the board of supervisors, the port shall submit to the
33commission the project documents described in paragraph (1) as
34finally approved by the board of supervisors.

35
(3) Within 75 days after approval of the project by the board
36of supervisors and receipt of all required documentation from the
37port, the commission shall consider whether to make all of the
38following findings:

39
(A) The disposition and development agreement, including the
40plan of finance and use of port advances, the procedures for
P15   1establishing rent for future nontrust leases of individual
2development parcels, including appraisal instructions, and other
3consideration to the port will provide the port with fair market
4value.

5
(B) The submitted documentation identifies the projected amount
6of port advances and the nontrust sources projected to repay port
7advances with interest. If port advances are not projected to be
8repaid with interest within 40 years after the port makes its first
9port advance, the projections and other evidence shall demonstrate
10the availability and viability of those sources for full repayment
11within an additional period that the commission finds reasonable
12and consistent with subparagraph (E).

13
(C) The master development on the whole is consistent with the
14port study required by Section 6.

15
(D) The use of port advances will not substantially interfere
16with trust uses and purposes and will reduce Seawall Lot 337
17infrastructure financing costs.

18
(E) The port advances will generate increased revenues for the
19trust, including revenues available for historic pier and historic
20structure preservation.

21
(F) The master development is consistent with the terms of the
22public trust and the Burton Act trust, other than their restrictions
23on uses.

24
(G) The development is otherwise in the best interest of the
25state.

26
(4) If the commission does not make the findings under
27paragraph (3), the port advances from nontrust lease revenues for
28Seawall Lot 337 infrastructure shall not be allowed.

29
(5) The port shall bear the costs of any study or investigation
30that the commission undertakes or requests, including reasonable
31reimbursement for commission staff time in processing,
32investigating, and analyzing the port’s submittal. The port’s
33reimbursement obligation does not affect its ability to seek payment
34or reimbursement for these costs from the master developer.

35
(b) In addition to any statement of expenditures and revenues
36that the port is required by law to submit to the commission
37annually, the port shall provide a separate accounting of all
38consideration from nontrust sources and other port revenues spent
39on Seawall Lot 337, including any port advances and any revenues
40from nontrust sources received by the port to repay those advances.

P16   1
(c) The port shall provide the commission with copies of the
2final audit report for each phase of the project and the final audit
3report for the project within 90 days after the port receives each
4audit report.

5
(d) If, within 20 years after the first port advance, the port has
6not submitted an audit report to the commission indicating that
7all of the port advances have been repaid, the port shall report to
8the commission the total amount of revenues from nontrust leases
9that the port used to fund port advances, the amount that the port
10has received to repay port advances, the projected sources to repay
11any balance still owing on account of port advances, and the
12expected timing of repayment of the balance still owing. Thereafter,
13the port shall provide supplemental reports containing updates to
14this information to the commission every five years.

15
(e) If, by the date 40 years after the first port advance, the
16amount of port advances still exceeds the repayments and other
17consideration from nontrust sources received by the port for its
18advances, then the commission, following consultation with the
19port, may require the port to take actions to remedy any shortfall
20as may be in the best interest of the state. In determining the
21amount of repayments that the port has received under this
22subdivision, the commission may consider all forms of
23consideration from nontrust sources received by the port after the
24first port advance has been made.

end insert
25

begin deleteSEC. 6.end delete
26
begin insertSEC. 7.end insert  

Section 7 of Chapter 660 of the Statutes of 2007 is
27amended to read:

28

Sec. 7.  

Sectionsbegin delete 3 andend deletebegin insert 3, 4, 4.5, andend insert 6 of this act shall be
29inoperativebegin insert as to a designated seawall lot on the later of (a) the
30last termination date of any nontrust lease on the site, or (b)end insert
on
31January 1, 2094, after whichbegin insert laterend insert date the use of the designated
32seawallbegin delete lotsend deletebegin insert lotend insert shall be consistent with the public trust, the Burton
33Act trust, and the Burton Act transfer agreement. No later than
34January 1, 2094,begin insert or the last termination date of any nontrust lease
35on the site, whichever is later,end insert
all structures, buildings, and
36appurtenances onbegin delete theend deletebegin insert aend insert designated seawallbegin delete lotsend deletebegin insert lotend insert not consistent
37with the purposes of the public trust, the Burton Act trust, and
38Burton Act transfer agreement,begin delete except those subject to a lease as
39provided in subdivision (a) of Section 4,end delete
shall be repurposed or
P17   1modified, including any necessary restoration or remediation of
2the seawallbegin delete lots,end deletebegin insert lotend insert to facilitate public trust uses.

3

begin deleteSEC. 7.end delete
4
begin insertSEC. 8.end insert  

If any provision of this act, or its application to any
5person, property, or circumstance, is held invalid by any court, the
6invalidity or inapplicability of that provision shall not affect any
7other provision of this act or the application of that provision to
8any other person, property, or circumstance, and the remaining
9portions of this act shall continue in full force and effect, unless
10enforcement of this act as so modified by and in response to that
11invalidation would be grossly inequitable under all of the
12circumstances, or would frustrate the fundamental purposes of this
13act.

14

begin deleteSEC. 8.end delete
15
begin insertSEC. 9.end insert  

The Legislature finds and declares that, because of the
16unique circumstances applicable only to the lands described in this
17act in the City and County of San Francisco, a statute of general
18applicability cannot be enacted within the meaning of subdivision
19(b) of Section 16 of Article IV of the California Constitution.



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