BILL ANALYSIS �
AB 442
Page 1
Date of Hearing: May 2, 2011
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 442 (Silva) - As Amended: March 31, 2011
SUBJECT : Public lands: lease
SUMMARY : Prohibits the State Lands Commission (SLC) from
charging rent for a cantilevered deck extending over state
waterways for the use of a littoral landowner.
EXISTING LAW :
1)Prohibits the Legislature from making any gift or authorizing
the making of any gift, of any public money or thing of value
to any individual, municipal, or other corporation.
2)Provides that SLC has exclusive jurisdiction and leasing
authority over all public trust lands owned by the state.
Public trust lands generally consist of tide and submerged
lands and beds of navigable channels, streams, rivers, creeks,
lakes, bays, and inlets.
3)Protects the public's right to use California's public trust
lands for commerce, navigation, fishing, boating, natural
habitat protection, and other water oriented activities.
4)Authorizes SLC to establish the public trust boundary line of
any of the swamp, overflowed, marsh, tide, or submerged lands
of the state, by agreement, arbitration, or action to quiet
title, whenever it is deemed expedient or necessary.
5)Establishes that SLC is not required to issue a private
recreational pier lease constructed on state lands for the use
of a littoral landowner, but if it does, it is prohibited from
charging rent for the lease.
6)Declares that private recreational piers on public trust lands
provide a public benefit by providing a safe harbor for
vessels that become disabled upon the waterways of the state,
a safe anchorage for vessels that become distressed in times
of severe weather conditions, the protection of the public
from navigational hazards often found adjacent to shorelines
along the waterways of this state, the elimination or
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retardation of erosion along the shoreline of rivers and
streams, and the provision of navigational aide to members of
the public utilizing the waterways of the state.
7)Declares that it is the intent of the Legislature in providing
for rent free private recreational piers to encourage members
of the public to construct such piers upon the navigable
lakes, rivers, and streams of the state.
8)Provides, according to the Supreme Court of California, that
property held by the state in trust for public use cannot be
gained by adverse possession, and the statute of limitations
does not apply to an action by the state or its agents to
recover such property from one using it for private purposes
not consistent with the public use.
9)Defines a "tax" as any levy, charge, or exaction of any kind
imposed by the state. Excludes from the definition of "tax" a
charge imposed for the rental or lease of state property.
THE BILL :
1)Prohibits SLC from charging rent for a cantilevered deck
extending over state waterways for the use of a littoral
landowner.
2)Defines "cantilevered deck" as any part of a fixed structure
that extends no more than five feet over state waterways and
is constructed for the use of a littoral landowner.
FISCAL EFFECT : SLC collects rent for cantilevered decks on
public trust land. The rent is deposited into the General Fund.
The exact fiscal effect is unknown, but the bill will deprive
the General Fund of some revenue.
COMMENTS :
1)Background.
This bill is in response to complaints made by Huntington
Harbour homeowners against SLC for charging rent for
residential cantilevered decks that extend over state public
trust land.
Huntington Harbour is a residential community located along
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the coast in the City of Huntington Beach. The community is
well developed with homes located on several islands and along
numerous water channels.
In 1961, SLC and the Huntington Harbour Corporation entered
into a land exchange and boundary line agreement for the
purpose of permanently fixing the boundary line between state
lands and the Huntington Harbour Corporation's lands, which
were eventually developed for residential purposes. The
boundary line agreement, which was recorded on January 31,
1961, establishes the state's fee ownership in Huntington
Harbour's Main and Midway Channels. The Main and Midway
Channels now have a significant amount of rent free
recreational piers and private, fenced-in cantilevered decks
that extend over the water from upland properties.
In 2003, the California Coastal Commission (CCC) informed SLC
that it was processing a number of applications for
cantilevered decks in Huntington Harbour. This was the first
time SLC had been notified about cantilevered decks on state
lands in Huntington Harbour.
SLC immediately conducted a review and discovered that (1) the
City of Huntington Beach had been approving the construction
of the cantilevered decks "in concept," (2) CCC had been
issuing Coastal Development permits for cantilevered decks,
and (3) SLC had not approved any leases for the cantilevered
decks on the Main and Midway Channels.
Beginning on December 9, 2004, SLC started bringing
cantilevered decks under lease and charging rent. Since most
homes in Huntington Harbour have 10-year recreational pier
leases, SLC developed the practice of waiting for the renewal
of a recreational pier lease to bring a cantilevered deck
under lease. As such, all of the cantilevered decks on the
Main and Midway Channels in Huntington Harbour should be under
lease with the state by the end of 2014.
SLC generally does not lease state public trust lands for the
purpose of private residential uses. Public trust lands are
managed for the benefit of the people of the state of
California for public trust purposes. It is generally
accepted that exclusive residential use of public trust lands
is not consistent with the public trust since it only benefits
a few people. SLC allows cantilevered decks in Huntington
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Harbour because they have already been built and they
generally do not interfere with water related navigation and
recreation-most are blocked by recreational piers, which
prevent boats and people from accessing the area under and
around the decks.
2)Rent.
SLC has traditionally employed professional appraisers for the
purpose of determining the rent value of state lands. For
recreational use leases, SLC is required under regulations to
charge an annual rent that is based on nine percent of the
land value of the leased land.
In determining the rent for cantilevered decks in Huntington
Harbour, SLC collects relevant sales information and prepares
an appraisal. The appraisal for the establishment of deck
rental is based on sales of similar residential waterfront
properties. The rent is discounted by 75% because SLC
recognizes that a cantilevered deck, although contributing to
the overall value of the property, does not have a foundation
in the underlying submerged lands, which makes it less
valuable than the upland area. At the height of the housing
market, SLC was charging an annual rent of $4.50 per square
foot of cantilevered deck area in Huntington Harbour. This
amounted to rent of less than $0.38 a month per square foot
for private, exclusive residential living space on state lands
in the City of Huntington Beach.
3)Unconstitutional Gift, "Air Tax," and Laches.
The California Constitution expressly prohibits the
Legislature from making any gift or authorizing the making of
any gift, of any public money or thing of value to any
individual, municipal, or other corporation. Free rent for
the use of state lands is generally considered a violation of
the gift clause.
The Legislature has, however, authorized free rent for
recreational piers on state lands. The Legislature adopted a
statute in 1977 (Chapter 431, Statutes of 1977) declaring that
recreational piers serve a public purpose by, for example,
providing safe harbor for vessels that become disabled upon
waterways of the state. According to this statute, by
providing rent free recreational piers, the state will
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encourage the public to construct more piers at no cost to the
state. This public benefit, according to the statute, is
sufficient to justify rent free recreational piers. There is,
however, an Attorney General Opinion that casts serious doubts
on the constitutionality of rent free recreational piers. SB
152 (Pavley) is a bill introduced this year that will repeal
the rent free recreational pier statute and allow SLC to
charge fair market rent.
For cantilevered decks, the author makes no claim that they
provide a public benefit to the state. Cantilevered decks are
generally closed off to the public, are for the private,
exclusive use of the littoral land owner, and, unlike
recreational piers, provide no alleged safety benefit to
boaters. For the littoral land owner, a cantilevered deck
provides additional living space and increases the value of
the upland property. If the Legislature authorized rent free
leases for these decks, it would more than likely be violating
the gift clause.
One particular Huntington Harbour resident has publicly
objected to paying rent for the cantilevered decks and has
characterized the rent as an "air tax" to local newspapers.
According to Proposition 26, which was adopted by the voters
in 2010, a charge imposed for the rental or lease of state
property is not a tax.
A different resident contacted SLC and asserted that the
doctrine of laches precludes SLC from charging rent for
cantilevered decks. Laches is a doctrine similar to the
statute of limitations. In People ex rel. State Board of
Harbor Comm'rs v. Kerber (1908) 152 Cal. 731, the Supreme
Court of California explained that property "held by the state
in trust for public use cannot be gained by adverse
possession, and the statute of limitations does not apply to
an action by the state or its agents to recover such property
from one using it for private purposes not consistent with the
public use." The Supreme Court explained the absurdity of
requiring the state to monitor trespasses on the millions of
acres of public trust lands to protect the public's interest
and the state's ownership in those lands.
4)State Audit.
In July 2010, Senator David Cogdill submitted a request to the
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Join Legislative Audit Committee (JLAC) for an audit of SLC's
leasing practices. In his request, Senator Cogdill explained
that "ensuring the state collects fair market value in rent
for our taxpayer-owned properties plays a vital and timely
role in easing our state's continued budget crisis." JLAC
approved Senator Cogdill's request and the State Auditor is
expected to provide an audit report to the Legislature at some
point this year. This bill appears to go against the
intention of Senator Cogdill's audit request by authorizing
free use of "taxpayer-owned properties" during a budget
crisis.
5)Unintended Consequences.
Under existing law, SLC is not required to issue leases if it
believes that it is not in the best interest of the state.
The bill will require the SLC to choose between issuing a rent
free cantilevered deck lease or no lease at all. If SLC
decides that it does not want to issue a lease because of the
rent free provision of the bill, it will be to the detriment
of Huntington Harbour residents who are willing to pay rent
for the deck.
The bill will also reward a property owner who knew or should
have known, either through the recorded boundary line
agreement or other means, that his/her cantilevered deck was
on state property but still decided to build or use the deck
without a lease.
6)Suggested Amendments. To avoid the gift clause issue, there
must be some quid pro quo that gives the state at least fair
market value compensation for use of state lands.
Compensation does not necessarily have to be payment to the
General Fund. Compensation could be made through payment to a
project or program that directly benefits the state but that
may have more significance to the residents of Huntington
Harbour. The author and the committee may wish to consider
amendments that allow a person with a cantilevered deck on
state lands in Huntington Harbour to pay rent that SLC will
ultimately deposit into accounts that benefit the Bolsa Chica
Wetland Restoration Project, Huntington State Beach, or, with
the approval of SLC, any other project of statewide
significance.
REGISTERED SUPPORT / OPPOSITION :
AB 442
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Support
None on file
Opposition
California State Lands Commission
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092