BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2649 (Ammiano) - Tidelands and submerged lands: City and
County of San Francisco: seawall lots.
Amended: May 2, 2012 Policy Vote: NR&W 9-0
Urgency: No Mandate: No
Hearing Date: August 6, 2012 Consultant:
Bob Franzoia
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 2649 would declare that, upon the State Lands
Commission making certain findings, seawall lot 322-1 is free
from public trust use requirements and would authorize the Port
of San Francisco to lease the lot for a nontrust use.
Fiscal Impact: Major General Fund loss to the state of a public
trust resource through 2094.
There is no fair market value appraisal of seawall lot
322-1.
Background: For over 100 years, the Legislature has granted
public trust lands to local governments so the lands can be
managed locally for the benefit of the people of California.
There are over 80 trustees in the state, including the ports of
Los Angeles, Long Beach, San Diego, San Francisco, Oakland,
Richmond, Benicia, and Eureka. While these trust lands are
managed locally, the commission has oversight authority to
ensure those local trustees are complying with the public trust
doctrine and the applicable granting statutes.
Existing law protects, pursuant to the common law doctrine of
the public trust, the public's right to use California's
waterways for commerce, navigation, fishing, boating, natural
habitat protection, and other water oriented activities. The
public trust doctrine provides that filled and unfilled tide and
submerged lands and the beds of lakes, streams, and other
navigable waterways (public trust lands) are to be held in trust
by the state for the benefit of the people of California.
Existing law requires the commission to be the steward and
manager of the state's public trust lands. The commission has
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direct administrative control over the state's public trust
lands and oversight authority over public trust lands granted by
the Legislature to local public agencies (granted lands).
Existing law grants in trust to the port, pursuant to the Burton
Act (Chapter 1333/1968), administrative control over the public
trust lands in the harbor of San Francisco for purposes of
commerce, navigation, and fisheries and subject to other terms
and conditions specified in the act.
Seawall lots are filled tidelands.
The port is governed by a five member Board of Commissioners,
each of whom is appointed by the Mayor and subject to
confirmation by the City's Board of Supervisors. Each
commissioner is appointed to a four-year term. The port
commission is responsible for the seven and one-half miles of
waterfront adjacent to San Francisco Bay, which the port
develops, markets, leases, administers, manages, and maintains.
Its jurisdiction stretches along the waterfront from Hyde Street
Pier on the north to India Basin on the south. The port's
operating portfolio is composed of over 550 ground, commercial,
retail, office, industrial and maritime industrial leases.
Pier 70 is a port site that is approximately 67 acres located in
San Francisco's central waterfront, sitting at the foot of
Potrero Hill and generally located between Mariposa and 22nd
Street, east of Illinois Street. This site has been identified
as a future National Historic District due to its over 150 years
of continuous operations in ship building and repair and the
role it played in the industrialization of the western United
States, the war efforts, and architectural and engineering
feats. Despite its desirable climate and historical features,
Pier 70 is in need of major rehabilitation as a result of
dilapidated and unsafe structures as well as contamination that
occurred during its long history of industrial use.
Pier 70 is generally made up of public trust lands. As part of
its Pier 70 master plan, the port would like to develop
non-trust uses in areas that it believes are least suitable for
public trust uses. The contemplated non-trust development
includes cultural, institutional, office, biotech, other
commercial, and perhaps a limited amount of residential uses.
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Seawall lot 322-1, which is located in the Pier 70 area, is
subject to public trust and Burton Act use restrictions. The
port would like the Legislature to find that the parcel is no
longer useful for trust purposes and lift the trust to allow for
the development of affordable housing, which is not a trust
consistent use.
Proposed Law: This bill authorizes the port, notwithstanding the
fair market value requirements in SB 815 (Migden) Chapter
660/2007, to provide a rent credit or other waiver or deferral
of rent in connection with either a nontrust lease of seawall
lot 322-1, or, with the approval of the commission, a lease of
any other designated seawall lot or other port property that is
not subject to public trust or Burton Act trust use
restrictions, that results in an effective rent to the port
below fair market value, if the commission finds that both of
the following conditions are met:
(1) The nontrust lease is for affordable housing. The lease may
allow other uses, including, but not limited to, commercial uses
and market rate housing, provided that no portion of the rent
credit, waiver, or deferral is applied to the rent for those
other uses.
(2) The port is entitled to apply the value of the rent credit,
waiver, or deferral as an offset against fees or other exactions
or obligations that would otherwise be levied or imposed by the
city on development projects located on Pier 70, or on other
lands under the port's jurisdiction, if approved by the
commission, relating to the projects' impacts on or demand for
affordable housing, including, but not limited to, fees imposed
pursuant to the city's jobs-housing linkage program.
Related Legislation: SB 815 (Migden), Chapter 660/2007 contained
findings and declarations that several seawall lots (identified
as seawall lots 328, 330, 337, and 347S, including a portion of
Mission Rock Street) have ceased to be useful for the promotion
of the public trust and the Burton Act trust and are freed from
the use requirements of the public trust and the Burton Act
until January 1, 2094.
Staff Comments: The "temporary" lifting (for a period of 81
years) of public trust use restrictions from a parcel of public
land through legislation will likely prompt a future act to
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permanently lift the trust from the parcel. Given the
significance of eliminating lands from the public's use, the
Legislature should ensure that the state conducts its due
diligence in reviewing the facts and laws to ensure terminating
the trust is appropriate and in the best interest of the state.
Chapter 660/2007 provides an example for this concern. Chapter
660 authorized the temporary lifting of the public trust use
restrictions from certain filled tidelands scattered along the
San Francisco's waterfront. Seawall lot 330 was one of these
parcels of filled tidelands. It is a two acre lot located on
The Embarcadero between the Ferry Building and AT&T Park with
unobstructed views of San Francisco Bay. The justification for
temporarily lifting the trust use restrictions from these filled
tidelands was that (1) the lands were not being used for trust
purposes, (2) significant revenues can be generated from these
lands if they are utilized for nontrust purposes, (3) the
revenues generated from these lands will go to improve other
public trust lands, such as the city's historical piers, and (4)
the trust use restrictions will only be lifted temporarily. No
major objection was raised to this bill due in large part to the
"temporary" nature of the act.
On December 14, 2010, three years after the enactment of Chapter
660, the city entered into the 34th America's Cup Host and Venue
Agreement with the America's Cup Event Authority and San
Francisco America's Cup Organizing Committee. In this
agreement, the city agreed to a term that "unconditionally
obligated" it to remove in its entirety the common law public
trust and Burton Act trust from Seawall Lot 330 for conveyance
to a private party. The city did not have the authority to
unconditionally obligate itself to this action.
AB 418 (Ammiano) Chapter 477/2011 permanently terminated the
public trust from Seawall Lot 330. That bill relied heavily on
findings in Chapter 660/2007 to conclude that the parcel was no
longer useful for trust purposes. This provided the
justification in the bill to exclude the parcel from public use
in perpetuity.
Realistically, once the state authorizes use of seawall lot
322-1 for nontrust purposes until January 1, 2094, this lot will
likely never again be available for public trust purposes.
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Recommended Amendments:
(1) This bill is proposing to allow the use of public trust land
for non-trust purposes for a period of 75 years for less than
fair market value. Staff recommends amending Sec 4 of this bill
as noted below in order to ensure commission consideration and
approval prior to the issuance of any such lease and to provide
the Legislature with greater assurance that the affordable
housing, the non-trust purpose, will be constructed on Seawall
lot 322-1 in conjunction with the development of Pier 70, thus
benefitting the public trust.
SEC. 4. (a) Notwithstanding subdivision (c) of Section 4 of
Chapter 660 of the Statutes of 2007 , the port may, conditioned
on the approval of the commission, provide a rent credit or
other waiver or deferral of rent in connection with either a
nontrust lease of seawall lot 322-1 , or, with the approval of
the commission, a nontrust lease of any other designated seawall
lot or other port property that is not subject to the use
restrictions of the public trust or, the Burton Act trust use
restrictions, or the Burton Act transfer agreement, that results
in an effective rent to the port below fair market value, if the
commission finds that both of the following conditions are met:
(1) The nontrust lease is for affordable housing. The lease
may allow other uses, including, but not limited to, commercial
uses and market rate housing, provided that no portion of the
rent credit, waiver, or deferral is applied to the rent for
those other uses.
(2) The port is entitled to apply the value of the rent
credit, waiver, or deferral as an offset against fees or other
exactions or obligations that would otherwise be levied or
imposed by the city on development projects located on Pier 70.
, or on other lands under the port's jurisdiction, if approved
by the commission in accordance with this paragraph, relating to
the projects' impacts on or demand for affordable housing,
including, but not limited to, fees imposed pursuant to the
city's jobs-housing linkage program. If the development project
benefiting from the offset is not located on Pier 70, the
commission shall not make an approval under this paragraph
unless the project is located on the designated seawall lot on
which the affordable housing is located, or the commission finds
that the development project includes investment in the
preservation of a historic pier or historic structure in an
amount equal to or greater than the amount of the offset.
(b) The port shall provide the commission with documentation
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necessary to support the findings required by Section 3 of this
act and subdivision (a) of this section at or prior to the time
the port submits the proposed nontrust lease and other
documentation required under subdivision (c) of Section 4 of
Chapter 660.
(c) Nothing in this section shall be construed as limiting
the port's authority to provide rent credits, waivers, or
deferrals under a nontrust lease in exchange for other valuable
consideration provided by the lessee that meets the fair market
value requirement of Chapter 660.
(d) Nothing in this section shall be construed as limiting
the port's authority under the Burton Act to use or lease the
designated seawall lots for uses permitted by the Burton Act,
subject to any applicable limitations of state law.
(2) To ensure that the state protects public trust lands and
resources, staff recommends amending this bill to allow the
port, as an alternative to pursuing a non-trust lease that must
terminate in 2094 as described in Sections 3 and 4 and with the
approval of the commission in consultation with the California
Coastal Conservancy, to acquire land of equal monetary value to
seawall lot 322-1 that is adjacent to the water and has
dedicated public trust values in exchange for permanently
lifting the trust use restrictions at seawall lot 322-1. If the
port is unable to find available and suitable land to acquire,
the port shall make a deposit of equal value to seawall lot
322-1 to the Kapiloff Land Bank Fund pursuant to Division
(commencing with Section 8600) of the Public Resources Code.
This amendment will hopefully set the precedent for any future
actions to temporarily or permanently lift trust use
restrictions from public trust lands. This amendment will also
assist with avoiding a scenario where the state allows for a
"temporary" lifting of trust use restrictions, which in all
reality may lead to the permanent lifting of trust use
restrictions without a state review of whether such actions are
in the best interests of the state or securing other more
beneficial public trust land.