BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 2797 |Hearing |6/15/16 |
| | |Date: | |
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|Author: |Chiu |Tax Levy: |No |
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|Version: |4/13/16 |Fiscal: |Yes |
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|Consultant|Weinberger |
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City and County of San Francisco: Mission Bay South Project:
redevelopment plan
Modifies state laws governing state tideland property managed by
the Port of San Francisco.
Background
The common law doctrine of the public trust (Public Trust
Doctrine) protects the public's right to use California's
waterways for commerce, navigation, fishing, boating, natural
habitat protection, and other water-oriented activities. The
Public Trust Doctrine provides that filled and unfilled tide and
submerged lands and the beds of lakes, streams, and other
navigable waterways, known as public trust lands, are to be held
in trust by the state for the benefit of the people of
California.
The Legislature has granted public trust lands to local trustees
so the lands can be managed locally for the benefit of the
people of California. The 1968 Burton Act resulted in
transferring the state tidelands along San Francisco's
waterfront to the City and County of San Francisco, which
assumed $55 million in state debt obligations, and gave the San
Francisco Port Commission jurisdiction over San Francisco's tide
and submerged lands. The State Lands Commission (SLC) is the
steward and manager of the state's public trust lands and
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maintains oversight authority over public trust lands granted by
the Legislature to local public agencies.
The San Francisco waterfront includes a number of seawall lots
controlled by the Port, that have been used for decades as
parking lots, a use that is inconsistent with the trust and does
not conform with the surrounding urban landscape. In 2007, the
Legislature freed trust use restrictions from specified seawall
lots and allowed the Port to lease these properties at market
rates for non-trust purposes provided specified conditions were
met (SB 815, Migden, 2007). Revenues from these non-trust
leases must be deposited into a separate account and used for
the preservation of historic piers and construction or the
construction and maintenance of waterfront plazas and open
space, as specified. Before using any revenues for any pier or
structure subject to public trust restrictions, the SLC's
executive officer must approve the proposed uses. The non-trust
lease must be for fair market value, subject to SLC's approval,
and in the best interest of the state. The port is authorized
to use part of the non-trust lease revenues, as specified, for
any purpose consistent with the public trust and the act. SB
815 authorized leases for nontrust uses to have 75-year terms
until January 1, 2094, at which time the public trust
restrictions on the land are restored.
Included among the seawall lots subject to SB 815's provisions
is Seawall Lot 337, which currently functions as the San
Francisco Giants' parking lot in Mission Bay, located
immediately south of AT&T Park. After SB 815's enactment, the
Port initiated a planning process for Seawall Lot 337 and in
2009, the Port Commission selected a development team led by an
affiliate of the San Francisco Giants for exclusive negotiations
with the Port for the development of Seawall Lot 337,
rehabilitation and reuse of Pier 48, and expansion of China
Basin Park. The Giants' proposal, known as the Mission Rock
project, includes 8 acres of parks; approximately 1,500 rental
apartments, 40% of which would be designated affordable units to
families earning between 45% - 150% of Area Median Income;
approximately 1.3 million square feet of office space; 3,100
parking spaces; and 250,000 square feet of retail,
manufacturing, and restaurants on the ground floors of the
buildings. Seventy four percent of San Francisco voters
approved Proposition D in November 2015, approving a height
increase for this proposed project and endorsing the policy
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objectives of the proposed project.
The Mission Rock project calls for substantial investments in
public infrastructure, including new streets, sidewalks, bicycle
paths, utility infrastructure, and 8 acres of parks. In
addition, to address the effects of climate change, the project
sponsor proposes to raise the elevation of portions of Seawall
Lot 337 and new streets within the Mission Rock project site to
be resilient to future sea level rise. SB 815's provisions did
not take into account the need to finance these infrastructure
investments. Port officials want the Legislature to allow the
Port to use specified revenues to finance these infrastructure
costs and to make additional modifications to state law to
accommodate other aspects of the Mission Rock development that
were not contemplated when SB 815 was enacted.
Proposed Law
Assembly Bill 2797 authorizes the Port of San Francisco (Port)
to loan specified nontrust lease revenues for infrastructure
costs for the development of Seawall Lot 337, and expands the
boundaries of Seawall Lot 337. Specifically, AB 2797:
Provides numerous definitions, pursuant to Seawall Lot
337, and financing options for development.
Makes findings regarding the San Francisco Bay, the San
Francisco waterfront, public trust, and SB 815 (Migden),
Chapter 660, Statutes of 2007.
Expands the boundaries of Seawall Lot 337 to include
Parcel 20 (P20), Third Street, and Terry Francois
Boulevard, as specified.
Provides exemptions to specified statutes, which govern
the dissolution of redevelopment agencies, and would
otherwise prohibit P20 from being removed from the Mission
Bay South redevelopment plan and redevelopment project
area.
Authorizes the Port, for Seawall Lot 337, to enter into
nontrust leases of development parcels, subject to
specified requirements, if the State Lands Commission (SLC)
has approved port advances from nontrust lease revenue for
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infrastructure.
Authorizes the Port to enter into a 75-year nontrust
lease that terminates after January 1, 2094. Requires a
nontrust lease to terminate no later than the later date of
January 1, 2094, or the date 75 years after the Port first
issues a certificate of occupancy for the improvement on
the leased site or development parcel.
Authorizes the Port to use its nontrust lease revenue
from the development of parcels in Seawall Lot 337 to make
advances to fund Seawall Lot 337 infrastructure, if the
State Lands Commission (SLC) has approved Port advances
from nontrust lease revenue for infrastructure.
Prohibits revenue from being expended for historic piers
or historic structures on land subject to public trust use
restrictions, unless the SLC's executive officer has
approved the proposed uses of the pier or structure.
Requires SLC, for nontrust leases of Seawall Lot 337, to
consider whether the Port will receive consideration equal
to the fair market value on terms consistent with prudent
land management practices based on specified procedures.
Requires the Port, following the BOS approval of the
development project, to submit to SLC the proposed
disposition and development agreement between the master
developer and Port governing the development of Seawall Lot
337.
Requires additional information, such as the proposed
procedures for the disposition of nontrust development
parcels, including a proposed financing plan, proposed
procedures for establishing the fair market value of each
nontrust lease of a development parcel, a description of
expected nontrust sources, and a description of how the
Port will select the developer of each development parcel.
Requires the Port to submit specified project documents,
following BOS approval for the development project of
Seawall Lot 337.
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Requires the SLC, within 75 days after BOS approval of
the project and receipt of all required documentation, to
either approve or deny the Port advances from nontrust
lease revenues for Seawall Lot 337 infrastructure based on
the information provided and whether Port advances are
consistent with the goals of SB 815.
Requires the Port to bear the costs of any study or
investigation that the SLC undertakes, as specified.
Requires the Port to provide separate accounting and
final audit reports, as specified.
Requires the Port to ensure repayment, with interest, of
each port advance within 50 years, or longer with SLC
approval.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . Developed in concert with San
Francisco's partners at the SLC and the San Francisco Giants, AB
2797 would greatly assist San Francisco in the development of
the new Mission Rock neighborhood in San Francisco's Mission
Bay. The bill is necessary to address challenges of financing
the infrastructure and public facilities required for the
project, which the Port has come to better understand since
2007. In addition to having support of affordable housing, open
space, public transit, and other advocates, San Francisco's
voters strongly supported the project. AB 2797 removes
substantial obstacles to the development of the Mission Rock
project and the public benefits it will provide.
2. RDA dissolution exemption . AB 2797 clarifies the status of
a narrow strip of land located along the northern line of the
realigned Mission Rock Street, known as Parcel P20. Under the
land transfer agreements for Mission Bay, the public trust and
Burton Act trust restrictions were removed from proposed
development parcels and imposed on certain proposed open space
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and street segments, including Parcel P20. Under a related land
transfer agreement, the Port agreed to lease the trust property
to the redevelopment agency when required for development. The
Port continues to hold Parcel P20, which has been used for
parking under the current Seawall Lot 337 lease. AB 2797
authorizes the successor agency to the San Francisco
Redevelopment Agency to remove Parcel P20 from the Mission Bay
South Redevelopment Plan and related plans and agreements, which
would not otherwise be authorized under state laws governing the
dissolution of former redevelopment agencies. By exempting San
Francisco's redevelopment successor agency from provisions of
state law governing former redevelopment agencies' dissolution,
AB 2797 could establish a precedent that invites similar
exemption requests from other jurisdictions. However, there are
unique circumstances that may justify this exemption that would
not apply in other jurisdictions. Specifically, parcel P20 was
never transferred to the former redevelopment agency and the
changes that will be made to the former redevelopment agency's
Mission Bay South project area and redevelopment plan may
benefit the state by facilitating revenue-generating development
on Seawall Lot 337 that will advance public trust purposes. To
lessen the possibility that AB 2797 will set a precedent for
future exemptions, the Committee may wish to consider amending
the bill to include legislative declarations citing the unique
circumstances that justify the bill's exemptions from
redevelopment dissolution laws.
3. Double-referred . The Senate Rules Committee has ordered a
double-referral of AB 2797, first to the Senate Governance &
Finance Committee, which hears bills relating to former
redevelopment agencies, and then to the Senate Natural Resources
& Water Committee which has jurisdiction over bills relating to
state tidelands. Stakeholders in the development of Seawall Lot
337, including the Port, the State Lands Commission, and the Bay
Conservation and Development Commission, are engaged in
discussions about possible amendments to AB 2797 that would,
among other things, clarify numerous definitions, avoid
potential conflicts with language enacted by SB 815, and make
other changes recommended by stakeholders. However, none of the
amendments under discussion propose substantive changes to the
portions of the bill which fall within the Senate Governance &
Finance Committee's jurisdiction. As a result, the possible
amendments will be addressed in Senate Natural Resources & Water
Committee if the bill is approved by the Senate Governance &
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Finance Committee.
Assembly Actions
Assembly Natural Resources Committee: 9-0
Assembly Local Government Committee: 8-0
Assembly Appropriations Committee:20-0
Assembly Floor: 26-0
Support and
Opposition (6/9/16)
Support : City and County of San Francisco; SPUR (San Francisco
Bay Area Planning and Urban Research Association); San Francisco
Housing Action Coalition.
Opposition : Unknown.
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