BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 317 (De León) - The Safe Neighborhood Parks, Rivers, and Coastal Protection Bond Act of 2016. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 5, 2015 |Policy Vote: N.R. & W. 7 - 1, | | | GOV. & F. 5 - 1 | | | | |--------------------------------+--------------------------------| | | | |Urgency: Yes |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 18, 2015 |Consultant: Marie Liu | | | | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 317 would put before the voters the Safe Neighborhood Parks, Rivers, and Coastal Protection Bond Act of 2016 Fiscal Impact: Estimated annual costs of $159 million for 30 years to the General Fund for a total of $4.781 billion in current dollars. Background: In 2000 and 2002, the Legislature passed two parks bond measures that were subsequently ratified by the voters. Prop 12 passed in 2000 and Prop 40 passed in 2002. These bonds invested in state parks, local parks, conservancies, and a variety of other resource programs. These were the last two parks bonds that were approved by the voters that focused exclusively on parks and resources funding. According the LAO, 95% of Prop 12 has been expended; 88% of Prop 40 has been expended. Prop 84, passed by the voters in 2006 as a citizen initiative, contained some funding for parks and other resource protection programs but was primarily focused on water projects. All of the remaining Prop 84 funds were later encumbered by the State Water Resources Control Board. Proposed Law: SB 317 is an urgency measure that if approved by the Legislature and signed by the Governor, would authorize the sale of general obligation bonds in the amount of $2.45 billion. The bond is presently divided into four areas of emphasis: (1) parks; (2) rivers, lakes, and streams; (3) coast and ocean protection; and (4) climate resilience as follows: Parks ($1.45 billion) $800 million to the Department of Parks and Recreation (DPR) for the creation of neighborhood parks in park-poor communities $200 million to the DPR for local park rehabilitation, allocated on a per capita basis $200 million to the DPR for restoration, preservation and protection of regional parks $200 million to the DPR for the restoration and preservation of existing state parks $50 million to the DPR for revenue generation activities at state parks Rivers, Lakes, and Streams ($370 million) $100 million to the Natural Resources Agency for the protection, restoration, and development of river parkways $100 million for implementation of the Lake Tahoe Environmental Improvement Program $100 million for protection, restoration, and development of Los Angeles River parkway projects $50 million for the Salton Sea Restoration Fund $20 million for urban stream restoration Coast and Ocean Protection ($350 million) $300 million to the Coastal Conservancy for protection of beaches, bays and coastal watersheds, including protection of coastal agricultural land and California Coastal Trail projects $50 million to the Santa Monica Mountains Conservancy for the protection of coastal watersheds of the Santa Monica Mountains Climate Resilience ($280 million) $100 million to the Strategic Growth Council for grants to: o Develop or implement a regional or local greenprint or climate adaptation plan, o Update or add climate adaptation to a general plan, o Protect agricultural and open-space resources that support adopted sustainable communities strategies. $150 million to the Wildlife Conservation Board for the protection and expansion of wildlife corridors $30 million for the Department of Forestry and Fire Protection for urban forestry grants In its general provisions, the following criteria would apply to all grants made with bond funds: All funds would be required to promote the state's planning priorities and the sustainable communities strategies. The wildlife conservation objectives would occur on public lands or through voluntary projects on private lands. Allow funds to be used for habitat credit exchanges. Priority would be given to wildlife and habitat projects that SB 317 (De León) Page 4 of ? implement natural community conservation plans or endangered species recovery plans. Restoration projects would include the planning, monitoring, and reporting necessary to ensure successful implementation of the project objectives. Related Legislation: SB 1086 (de Leon) would have enact the "Safe Neighborhood Parks, Rivers, and Coastal Protection Bond Act of 2014," which authorizes the sale of an unspecified amount of bonds for parks, state conservancies, coastal and ocean programs, urban forestry, river parkways and urban rivers, and other resource protection and restoration efforts. SB 1086 died on the Senate Floor inactive file. Staff Comments: Bond indebtedness: Assuming an interest rate of 5%, the debt service as a result of this bond would be approximately $159 million annually for 30 years. This amount will vary depending on when the bonds to fund this bill's programs are actually issued. As noted by the Senate Governance and Finance Committee, this bond is an in amount that is consistent with the last two legislatively enacted park bonds and can be considered affordable by the state. However, the committee noted that the more the state must spend to debt service, there will be less funding available to other priorities. Furthermore, as noted by the Senate Governance and Finance Committee, there are nearly $30.4 billion in bonds that have been authorized but not issued. These previously approved bonds may slow the availability of bond money for the purposes set by this bill should it be passed by the Legislature and the voters. Do the benefits of the project last the length of the bond? Existing law (GOV §16727) essentially provides that general obligation bonds, such as the one in this bill, are to be used for capital purposes. This provision aims to ensure that the benefits of a project at least roughly match the period during which the bond must be repaid. Bonds are best used for large, discrete capital projects that would ordinarily not be able to be supported by ongoing funding mechanisms and that meet a need over several decades. Using bond funds to pay for operations and maintenance or SB 317 (De León) Page 5 of ? for short-lived projects in essence dramatically increases the cost of that project compared to using non-bond funds. The useful life of resource investments are often more difficult to project compared to other infrastructure projects (for example, projecting the useful life of highway bridge is easier than projecting the useful life of an urban forestry project). While most of the funding categories in this bill appear to be for capital projects, staff notes several provisions that merit consideration on whether the useful life of the expenditure is an appropriate use of bond funds, including: "Habitat credit exchanges" - This bill would allow funds to be used for payments for the creation of measurable habitat improvements through the development of "habitat credit exchanges." Staff notes that are no guiding state statutes regarding such exchanges and no requirements that the improvements be lasting. Planning grants to the Strategic Growth Council - The $100 million allocated to the Strategic Growth Council could be used to assist local governments in the development of a "greenprint" (which is an undefined document with no existing guiding state statutes), a climate adaption plan, or a general plan. Arguably planning activities can have lasting impacts if they are followed and implemented; however, with the exception of Proposition 84, bond monies have not been used for planning projects. Projects with planning as a component, on the other hand, have been funded. To some extent, ensuring that spending is limited to capital outlay will be done in the Legislature's appropriation of these funds. However, additional specificity could be added to this bill to aid this process. In this vein, in past park bonds, there have been discussions on what should be considered a capital cost, specifically as it relates to park revitalization. In many communities, there may be an existing park that is either underutilized or not usable by the community because of a multitude of issues such as deferred maintenance needs. Presumably this bill speaks to this issue by making a specific pot of money for local park rehabilitation, though this term is not defined. -- END -- SB 317 (De León) Page 6 of ?