BILL ANALYSIS Ó
AB 2797
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CONCURRENCE IN SENATE AMENDMENTS
AB
2797 (Chiu)
As Amended August 19, 2016
Majority vote
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|ASSEMBLY: |76-0 |(May 19, 2016) |SENATE: |32-7 |(August 23, |
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Original Committee Reference: NAT. RES.
SUMMARY: Authorizes the Port of San Francisco (Port) to loan
specified nontrust lease revenues to cover the infrastructure
costs for the development of Seawall Lot 337. Expands the
boundaries of Seawall Lot 337 and extends permissible lease
periods. Specifically, this bill:
1)Exempts specified actions amending the Mission Bay South
Redevelopment Plan from certain redevelopment agency
dissolution provisions.
2)Requires the San Francisco Bay Conservation and Development
Commission (BCDC), on January 1, 2017, to designate Pier 48,
the wharf between Pier 48 and Pier 50, and a portion of
Seawall Lot 337 as not a Port priority use area.
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3)Allows the Port to enter into 75-year leases and prohibits
nontrust leases from extending beyond December 31, 2105.
4)Allows the Port to use its nontrust lease revenues from
Seawall Lot 337 to make Port advances to fund Seawall Lot 337
infrastructure.
6)Requires State Lands Commission (SLC) to either approve or
disapprove the procedures for establishing the fair market
value of the development parcels, the form of ground lease,
and the Port's use of Port advances to pay for Seawall Lot 337
infrastructure costs.
7)Prohibits SLC from approving the Port's use of Port advances
unless SLC determines that the Port advances are in the best
interests of the state, will benefit the public trust, and is
consistent with the Port's fiduciary duties as trustee.
Requires SLC to only approve the Port's use of Port advances
if it finds that there are sufficient assurances that the
trust will be made whole.
8)Requires the Port to ensure repayment, with interest, of each
Port advance within 25 years after the Port advance is made.
Allows extension of the repayment period beyond 25 years if
SLC approves. Requires SLC to base its approval, in part, on
whether the port is taking actions that ensure the trust is
made whole, consistent with its fiduciary duties as a trustee
of the public trust.
The Senate amendments:
1)Allow the Port to revise the boundaries of Seawall Lot 337 to
the realigned or reconfigured park or street boundaries if the
new boundaries are approved by the executive officer of SLC
rather than specifying the boundaries.
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2)Require BCDC, on January 1, 2017, to designate Pier 48, the
wharf between Pier 48 and Pier 50, and a portion of Seawall
Lot 337 as not a Port priority use area.
3)Limit nontrust leases from extending beyond December 31, 2105.
4)Allow SLC to only approve the Port's use of Port advances if
it finds that there are sufficient assurances that the trust
will be made whole.
5)Reduce the time limits on repayment of each port advance from
50 years to 25 years after the Port advance is made.
6)Require that no later than December 31, 2105, the use of the
designated seawall lot or development parcel in Seawall Lot
337 be consistent with the public trust.
EXISTING LAW:
1)Protects, pursuant to the common law doctrine of the public
trust (Public Trust Doctrine), 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 (public trust lands)
are to be held in trust by the state for the benefit of the
people of California.
2)Establishes that SLC is the steward and manager of the state's
public trust lands. SLC has direct administrative control
over the state's public trust lands and oversight authority
over public trust lands granted by the Legislature to local
public agencies (granted lands).
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3)Grants in trust to the Port, pursuant to the Burton Act,
Chapter 1333, Statutes of 1968, administrative control over
the public trust lands in the harbor of San Francisco for
purposes of commerce, navigation, and fisheries.
4)Authorizes the Port, pursuant to SB 815 (Migden), Chapter 660,
Statutes of 2007, to lease all or any portion of designated
seawall lots free from use requirements established by the
public trust, the Burton Act trust, and the Burton Act
Transfer Agreement (hereinafter "nontrust leases"), provided
certain conditions are met, including:
a) The term of any individual non-trust lease, including
any extension of the term allowed by right of renewal, does
not exceed 75 years, and the non-trust lease will terminate
no later than January 1, 2094;
b) All revenues received by the Port from the non-trust
lease will be deposited in a separate account in the harbor
fund to be expended for the preservation of historic piers
and historic structures, or for the construction and
maintenance of waterfront plazas and open space required by
the special area plan. Prior to the use of revenues for
any pier of structure subject to public trust restrictions,
the executive officer of SLC must approve the proposed uses
of the piers or structures; and,
c) The non-trust lease is for fair market value subject to
the approval of SLC, which must find that the lease is
consistent with the terms of the public trust and Burton
Act trust, other than their restrictions on use, and that
it is in the best interest of the state.
5)Requires that, prior to the lease of Seawall Lot 337 for
nontrust uses, a study is undertaken and approved by SLC.
Requires the study to analyze the need to retain
trust-consistent uses on the site. Requires that, prior to
the lease of Seawall Lot 337 for nontrust uses, the San
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Francisco Bay Conservation and Development Commission has
amended the seaport plan to remove the port priority use
designation from lands to be leased for nontrust uses.
6)Allows the Port to lease Seawall Lot 330 to any person, free
of the public trust, the Burton Act trust, and the
restrictions of SB 815 if all specified conditions are met.
7)Authorizes the Port, conditioned on the approval of SLC, to
provide a rent credit or other waiver or deferral of rent in
connection with a nontrust lease of Seawall Lot 337 that
results in an effective rent to the port below fair market
value for affordable housing.
FISCAL EFFECT: According to the Senate Appropriations
Committee:
1)Unknown, significant SLC costs to review development project
documents, review and approve non-trust leases, make fair
market value determinations, and approve or disapprove the
Port's use of non-trust lease revenues for specified purposes.
These SLC costs must be reimbursed by the Port.
2)Unknown ongoing SLC costs (General Fund) for oversight of the
non-trust leases and land uses in the project area through
2120. Staff notes that the current termination date for any
authorized non-trust leases is 2094.
3)Unknown temporary loss of local trust revenues, likely in
excess of $150 million, for 50 or more years, for loans of
non-trust revenues to the Port to pay for Seawall Lot 337
infrastructure (including a return on developer equity) or to
reimburse the developer directly for those costs. These costs
represent a diversion of funds that would otherwise be used to
preserve historic piers and structures, or the construction
and maintenance of waterfront plazas and open space,
consistent with public trust purposes.
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4)Likely minor costs to the BCDC to update and reprint the
seaport plan to reflect the removal of Pier 48 from the port
priority use area designation, as specified. (General Fund).
COMMENTS:
1)Public Trust. The foundational principle of the common law
Public Trust Doctrine is that it is an affirmative duty of the
state to protect the people's common heritage in navigable
waters for their common use. The traditional uses allowed
under the Public Trust Doctrine were described as
water-related commerce, navigation, and fisheries. As a
common law doctrine, the courts have significantly shaped the
Public Trust Doctrine in a number of important ways. Courts
have found that the public uses to which sovereign lands are
subject are sufficiently flexible to encompass changing public
needs. The courts have also found that preservation of these
lands in their natural state, so that they may serve as
ecological units for scientific study, as open space, and as
environments that provide food and habitat for birds and
marine life, are appropriate uses under the common law Public
Trust Doctrine. Courts have also made clear that sovereign
lands subject to the Public Trust Doctrine cannot be sold into
private ownership.
2)Background on Granted Lands. For over 100 years the
Legislature has granted public trust lands to local
governments so the lands can be managed locally for the
benefit of the people of California. There are over 80
trustees in the state, including the ports of Los Angeles,
Long Beach, San Diego, San Francisco, Oakland, Richmond,
Benicia, and Eureka. While these trust lands are managed
locally, SLC has oversight authority to ensure those local
trustees are complying with the Public Trust Doctrine and the
applicable granting statutes.
3)Port of San Francisco. In 1968, the Legislature enacted the
Burton Act, which transferred, in trust, the interest of the
state in, and the control and management of the Port.
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However, when this occurred, the Port's assets were in poor
condition. For example, 23 of the piers transferred in 1968
were virtually unusable for maritime purposes because of their
poor physical condition. Those piers which were structurally
sound were only marginally productive because containerized
shipping was already replacing break bulk shipping at the time
of the transfer.
The City was also required to assume $55 million of the
state's bond debt, which, according to the Port, hampered its
ability to make capital improvements to its assets. The age
and condition of Port facilities, some of which are historic
structures at the end of their useful life, combined with
their construction on filled tidelands in a high risk seismic
area, has created a significant capital funding challenge for
the Port.
In 2007, after lengthy discussions between the Port and SLC,
the Legislature enacted SB 815. That statute recognized that
several of the seawall lots granted under the Burton Act,
including portions of Seawall Lot 337, ceased to be useful for
the promotion of the public trust except for the generation of
revenues for the public trust. SB 815 lifted the public trust
and the Burton Act use restrictions on the designated seawall
lots, subject to the requirement that the revenues be used by
the Port for preservation of historic piers and historic
structurers. The bill also authorized leases for nontrust
uses to have 75-year terms, with an end date of January 1,
2094.
Analysis Prepared by:
Michael Jarred / NAT. RES. / (916) 319-2092 FN:
0004812
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