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.
       
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       |Version: May 5, 2015            |Policy Vote: N.R. & W. 7 - 1,   |
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       |Urgency: Yes                    |Mandate: No                     |
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       |Hearing Date: May 18, 2015      |Consultant: Marie Liu           |
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       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  







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         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  








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       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.
                                        

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