BILL ANALYSIS
AB 444
Page 1
ASSEMBLY THIRD READING
AB 444 (Caballero)
As Amended April 15, 2009
Majority vote
WATER, PARKS & WILDLIFE 13-0 LOCAL
GOVERNMENT 7-0
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|Ayes:|Huffman, Fuller, |Ayes:|Caballero, Knight, |
| |Anderson, Chesbro, Tom | |Arambula, Davis, Duvall, |
| |Berryhill, Blumenfield, | |Krekorian, Skinner |
| |Caballero, Fletcher, | | |
| |Krekorian, Bonnie | | |
| |Lowenthal, John A. Perez, | | |
| |Salas, Yamada | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 17-0
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| | |
|Ayes:|De Leon, Nielsen, |
| |Ammiano, |
| |Charles Calderon, Davis, |
| |Duvall, Fuentes, Hall, |
| |Harkey, Miller, John A. |
| |Perez, Price, Skinner, |
| |Solorio, Audra |
| |Strickland, Torlakson, |
| |Krekorian |
|-----+--------------------------|
| | |
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SUMMARY : Clarifies that funds set aside for long term
management of mitigation lands conveyed to a nonprofit
organization may also be conveyed to the nonprofit, and
authorizes the nonprofit to hold, manage, invest, and disburse
the funds for management and stewardship of the land or easement
for which the funds were set aside. Specifically, this bill :
1)Authorizes funds set aside for long-term management of lands
or easements conveyed to a nonprofit organization to also be
AB 444
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conveyed to the nonprofit organization, and allows the
nonprofit to hold, manage, invest and disburse the funds in
furtherance of managing and stewarding the land or easement
for which the funds were set aside.
2)Requires a state or local agency to exercise due diligence in
reviewing the qualifications of a nonprofit organization to
both effectively manage and steward the land or resources and
the accompanying funds.
3)Authorizes the state or local agency to require the nonprofit
to submit an annual report, to review accounting documents,
and to require an audit of the funds. Provides for reversion
of the funds to the state or other organization approved by
the state if the nonprofit is dissolved, becomes bankrupt or
fails to perform.
4)Authorizes the state or local agency to adopt guidelines.
5)Requires the state or local agency to determine that the
holder of the funds has the capacity to manage the funds, has
the capacity to achieve reasonable rates of return similar to
those of other prudent investors, utilizes generally accepted
accounting practices, and has adopted an investment policy
that is consistent with other specified laws relating to funds
management.
EXISTING LAW :
1)Allows a state or local agency to authorize a nonprofit
organization to hold title to and manage an interest in real
property that the agency requires a property owner to transfer
to the agency to mitigate for adverse impacts on natural
resources caused by a project permitted by the agency, or
which the agency itself is required by law to transfer to
mitigate an adverse impact upon natural resources caused by
the agency's own project.
2)Requires funds under certain circumstances to be set aside to
cover costs of long term management of mitigation lands.
AB 444
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3)Requires funds received by the Department of Fish and Game
(DFG) for management of mitigation lands to be deposited in
the Fish and Game Mitigation and Protection Endowment Account
or the Fish and Game Mitigation Expendable Funds Account,
which are held in the State Special Deposit Fund. Requires
interest generated on endowment funds deposited in the former
account to be made available to DFG, upon appropriation by the
Legislature, to fund long-term management of habitat lands.
Funds other than endowment funds received by DFG and deposited
in the latter account are continuously appropriated to DFG for
expenditure for management of lands set aside for mitigation.
FISCAL EFFECT : According the Assembly Appropriations Committee:
1)Potentially significant shift in the formal management and
disposition of funds from the State Treasury to individual
nonprofit organizations, to the extent that state agencies
convey such funds in response to the this bill.
2)Ongoing costs of approximately $200,000 to the Department of
Fish and Game, which manages much of the state's endowments,
to review and facilitate endowment transfer. (General Fund or
bond funds)
COMMENTS : This bill seeks to clarify and affirm that nonprofits
and special districts, if authorized to do so by a state or
local agency, may hold funds dedicated for the long-term
management of land or easements the organization has accepted
through the mitigation process. While existing law allows
nonprofits to hold and manage these lands, current law does not
expressly address whether the nonprofit or special district may
also hold and manage the endowment funds set aside for
management of the property. The lack of express authorization
in the statute, and the lack of clarity in the existing codes
has led to reluctance on the part of some agencies to allow
third parties to hold and manage mitigation funds. Legislative
Counsel concluded in 2006 that existing statute allows a state
agency to authorize nonprofit organizations to hold and manage
funds set aside for the purpose of long-term management of
mitigation lands. The bill's sponsor reports that it is common
practice among some public agencies to transfer endowment funds
to nonprofit agencies for the management of mitigation
properties.
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Requiring that the funds be held in the State Deposit Fund has
also created challenges to effective stewardship of conservation
lands for some land managers. The monies in these accounts are
invested through the State's Pooled Money Investment Account.
Since endowment funds are generally designed to be non-wasting
accounts, where only the interest earned is available for
expenditure, the inability of the Pooled Money Investment
Account to earn higher rates of return has in the past limited
the amount of funds available for land management. Land
managers have also experienced delays in reimbursement payments
in some cases.
Supporters assert that passage of this legislation will have the
following beneficial affects: 1) will strengthen and enhance
habitat conservation efforts and the resources available for
long-term stewardship and management of lands set aside for
environmental mitigation; 2) will enable better fiscal
management, higher rates of return, more timely disbursement of
funds needed for land management, and reduced administrative
costs to state agencies; 3) will be mutually beneficial for both
land trusts and state agencies, by reducing the administrative
burden on agencies for day to day management, and allowing them
to focus instead on oversight and annual review of management
activities; 4) affirms a practice already widespread in
California; and, 5) gives local and state agencies the
discretion but does not require that they follow this practice.
Analysis Prepared by : Diane Colborn / W., P. & W. / (916)
319-2096
FN: 0001355