BILL ANALYSIS Ó SENATE COMMITTEE ON NATURAL RESOURCES AND WATER Senator Fran Pavley, Chair 2015 - 2016 Regular Bill No: SB 1020 Hearing Date: April 12, 2016 ----------------------------------------------------------------- |Author: |Wieckowski | | | ----------------------------------------------------------------- ----------------------------------------------------------------- |Version: |March 29, 2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |No | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|William Craven | | | | ----------------------------------------------------------------- Subject: Land use: mitigation lands BACKGROUND AND EXISTING LAW Existing law (Government Code Section 65967) authorizes an agency required to mitigate its environmental impacts to pay for that mitigation in several ways including transferring an interest in land to a third party, providing funds to third parties to acquire land or easements or to undertake the mitigation, or to create an endowment under specified terms. For mitigation that will not be completed prior to the start of activities that will affect wildlife species listed under the California endangered species act, the Department of Fish and Wildlife (DFW) requires that a trust account or other form of approved security document is established to ensure that funding is available to carry out mitigation and monitoring measures in the event the applicant fails to complete these activities. DFW generally requires that the performance security be in the form of an irrevocable letter of credit, surety bond, a bank trust or escrow account, or another form of security approved in writing in advance. PROPOSED LAW This bill would create another way for a public entity, specifically the East Bay Regional Parks District, to fulfill its mitigation responsibilities. The bill states that in lieu of an endowment or other method mentioned above, that an entity may do all of the following: SB 1020 (Wieckowski) Page 2 of ? A) Possess budget reserves in excess of the funds required to meet the mitigation obligation; B) Retain permanent stewardship and maintenance staff to manage the resource; and does both of the following: 1) Acts as an agent for the state to acquire, plan, and develop units of the state park system pursuant to section 5003.03 of the Public Resources Code. 2) Works in collaboration with the state and other local entities to implement a project pursuant to the Natural Communities Conservation Planning Act. ARGUMENTS IN SUPPORT According to the author, East Bay Regional Parks District has an 80-year history of responsible fiscal and environmental governance and is organized to serve a steward of parklands in perpetuity. In his view, it is unreasonable to require districts to set aside mitigation funds which could be better used for staffing to actually manage protected land. He believes that the district should be able to rely on proven asset liquidity as an alternative form of mitigation. Save Mount Diablo works closely with the district and stated that any concern about changing the provisions in this law should not apply to the district because of its record, funding, staff, and experience that can't be matched by any other public agency. ARGUMENTS IN OPPOSITION A coalition of land trusts and other conservation groups, including the California Council of Land Trusts (CCLT), is in opposition. CCLT and others have built California's endowment procedures in a series of 5 bills over the past several years that it considers to be the nation's premier law regarding how mitigation endowments are held and managed. The coalition is very concerned that the exception for East Bay Regional Parks inevitably opens the door to a myriad of exceptions for every agency not wishing to meet mitigation endowment requirements-a policy it states has been rejected on three previous occasions in both houses of the California Legislature. The coalition points out that other funding mechanisms are specifically allowed in existing law (such as performance bonds) for the long-term stewardship of the mitigation property. It considers SB 1020 as "jumping completely past other funding SB 1020 (Wieckowski) Page 3 of ? mechanisms to completely exempt selected public parties from any form of dedicated financial assurance for mitigation lands." COMMENTS This bill is a work in progress and it may turn out that in this case the absence of a bill may define success. In conversation with the regional park district and DFW, staff is not convinced the two entities are talking with each other as closely as they could or should. For example, the district's estimates of what may be required in an endowment vastly exceed what the department thinks may be required. The district's estimate is based on an array of current and future projects that it is not sure DFW is aware of. DFW thinks it may be aware of all the proposed projects. That said, because this is an area of the law that DFW and other parties worked for several years to solidify, DFW and many of those other parties are very reluctant to carve out another exemption that could be exploited by third parties that are far less successful than the district in protecting natural resources. The proposed language on budget reserves does not work for the department because a budget reserve one month may not be there the next. On the other hand, in a quick conversation with the district, and based on the information on the DFW website, it appears that at least some potential common ground exists regarding the use of irrevocable letters of credit. These are relatively inexpensive, would not tie up a lot of the district's capital, and can be constructed to meet DFW's requirement of permanence. The suggested amendments delete the budget reserve provision, add a provision for an irrevocable letter of credit or trust funds, and clarify that the district retains the obligation to maintain the mitigation consistent with permit requirements which ensures that the state will not be eventually liable for any mitigation costs. It also narrows the applicability of this proposed new section to special districts established to create and operate parks. With those additional provisions it does not seem necessary to include the other provisions regarding section 5003.3 of the Public Resources Code or the Natural Communities SB 1020 (Wieckowski) Page 4 of ? Conservation Planning Act. These amendments are not intended to be a final work product. They are intended to set the stage for continued conversations between the parties and represent a good-faith effort based on available information. Committee staff should be involved in subsequent conversations and all future amendments and the Committee of course reserves the right to re-hear the bill at a future time. SUGGESTED AMENDMENTS 1. Add restriction that the new language only applies to entities created pursuant to Public Resources Code Section 5500. 2. Page 4, line 15. Delete budget reserves provision and substitute irrevocable letter of credit or trust funds. 3. Page 4, line 17. Add provision that in addition to entity retaining permanent stewardship and maintenance staff, that it will also maintain mitigation obligations consistent with permit requirements, and insure that there will be no state financial liabilities incurred through a failure to maintain those mitigation obligations. 4. Delete page 4, lines 19-25. SUPPORT East Bay Regional Park District (sponsor) John Muir Land Trust Save Mount Diablo OPPOSITION California Council of Land Trusts Center for Natural Lands Management Defenders of Wildlife Sequoia Riverlands Trust Sierra Foothill Conservancy The Nature Conservancy Wildlife Heritage Foundation -- END -- SB 1020 (Wieckowski) Page 5 of ?