BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 436|
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THIRD READING
Bill No: SB 436
Author: Kehoe (D)
Amended: 5/31/11
Vote: 21
SENATE NAT. RESOURCES AND WATER COMMITTEE : 9-0, 4/26/11
AYES: Pavley, La Malfa, Cannella, Evans, Fuller, Kehoe,
Padilla, Simitian, Wolk
SENATE GOVERNANCE & FINANCE COMMITTEE : 9-0, 5/4/11
AYES: Wolk, Huff, DeSaulnier, Fuller, Hancock, Hernandez,
Kehoe, La Malfa, Liu
SENATE APPROPRIATIONS COMMITTEE : 8-0, 5/26/11
AYES: Kehoe, Walters, Alquist, Lieu, Pavley, Price,
Runner, Steinberg
NO VOTE RECORDED: Emmerson
SUBJECT : Land use: mitigation lands: nonprofit
organizations
SOURCE : California Council of Land Trusts
DIGEST : This bill authorizes state and local agencies to
transfer any funds set aside for long-term management of
land acquired as environmental mitigation related to a
development project, if the interest in the land is
transferred to a qualified nonprofit organization (land
trust), and this bill authorizes a state or local agency to
provide funds to a land trust to acquire land or easements
CONTINUED
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that satisfy the agency's mitigation obligations, allows
ten nonprofits to be certified to take on mitigation funds
on behalf of the state, and requires fiscal oversight by
the State Controller rather than DFG. The bill's
provisions sunset on January 1, 2022.
ANALYSIS :
Existing law:
1. Allows the state and local governments to impose
conditions on developers during the permitting process
to mitigate the environmental impact of a development
project, which may include the transfer property to the
public entity for preservation purposes to offset the
conversion of other property for a development purpose.
2. Authorizes the public entity to turn the property over
to nonprofit groups to manage the land, such as public
land trusts that meet specified qualifications. State
and local officials are required to review the
qualifications of nonprofits prior to transferring title
to the property.
This bill allows state and local agencies to convey to
nonprofit organizations funds that have been set aside for
the long-term management of land or easements that have
been conveyed to those organizations. This bill allows
agencies to provide funds to nonprofit organizations to
acquire land or easements to meet the agencies' mitigation
obligations. The bill requires the nonprofit organizations
to manage those funds to further the managing and
stewarding of those lands or easements. The agencies must
determine that the nonprofit organization meets four
criteria involving managerial capacity, investment
capacity, ac-counting practices, and investment policies.
State or local agencies can contract with or designate
independent third parties to review nonprofit
organizations' land management qualifications, financial
management qualifications, adherence to statutory criteria,
and other performance indicators. Agencies can require
administrative endowments to pay for these reviews.
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Agencies can also require project proponents to provide for
initial management costs while the endowment matures.
State or local agencies can require nonprofit organizations
to provide annual financial reports. If a state or local
agency determines that there is a concern over the funds'
management, this bill allows the agency to review
accounting documents or require an audit report. The funds
held by the nonprofit organization revert to the agency if
the nonprofit organization stops operating, dissolves,
becomes bankrupt or insolvent, or fails to perform. This
bill allows agencies to adopt guidelines for their
financial reviews.
This bill prohibits agencies from applying its provisions
to endowment funds held by the state in the Pooled Money
Investment Account on January 1, 2012.
This bill's provisions automatically terminate on January
1, 2022, unless the Legislature extends that date.
Background
When state or local agencies approve land use projects,
they can require the project applicant to transfer interest
in real property (either fee title or easements) to the
agency in order to mitigate the impact that the development
will have on natural resources. The Department of Fish and
Game (DFG) frequently requires such mitigations. A state
or local public agency may also require itself to protect
lands in order to mitigate impacts caused by its own
project. Under Section 65965 of the Government Code, a
state or local agency may authorize a nonprofit
organization to hold title and to manage the mitigation
lands. Eligible nonprofit organizations must be a
501(c)(3) organization under the Internal Revenue Code
whose principal purpose is the protection or stewardship of
natural land or natural, cultural, or historic resources.
The project applicant may also be required to provide funds
to finance the management of lands provided for mitigation
in perpetuity, also known as an endowment. Under Section
13014 of the Fish and Game Code, such mitigation funds are
deposited in the Fish and Game Mitigation and Protection
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Endowment Principal Account (account). The account is held
in the Special Deposit Fund and invested with the Pooled
Money Investment Account. Interest generated on endowment
funds in the account is available to DFG, upon
appropriation by the Legislature, for long-term management,
enhancement, and enforcement activities on habitat lands in
a manner consistent with the underlying mitigation
agreement.
The Uniform Management of Institutional Funds Act
(Act)(Part 7 (commencing with Section 18501) of Division 9
of the Probate Code) establishes management and investment
guidelines for funds that are held by individuals,
organizations, or governmental agencies (institutions) for
charitable purposes. The Act requires that the funds must
be invested with consideration to the general economic
conditions, the possible effect of inflation or deflation,
the needs that the funds are to finance, the need for
portfolio diversification, and the need to preserve the
fund's capital.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13
2013-14 Fund
Mitigation fund shift unknown,
potentially significant Special*
future shift of funds from state to
nonprofit organizations
DFG regulations $150 General/
Special**
SCO monitoring costs covered by
non-profits General
* Special Deposit Fund in the PMIA
** Fish and Game Preservation Fund or General Fund
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SUPPORT : (Verified 5/27/11)
California Council of Land Trusts (source)
Amargosa Conservancy
American Land Conservancy
American River Conservancy
Bay Area Open Space Council
Bay Area Ridge Trail Council
Big Sur Land Trust
Catalina Island Conservancy
Center for Natural Lands Management
East Austin Creek Conservation Bank
Eastern Sierra Land Trust
Elkhorn Slough Foundation
Lake County Land Trust
Land Conservancy of San Luis Obispo County
Land Trust for Santa Barbara County
Land Trust of Santa Cruz County
Marin Agricultural Land Trust
Mendocino Land Trust
Monterey County Board of Supervisors
Muzzy Ranch Conservation Company
Pacific Forest Trust
Palos Verdes Peninsula Land Conservancy
Placer Land Trust
Redlands Conservancy
Redwood Coast Land Conservancy
Sacramento Valley Conservancy
Sanctuary Forest
San Joaquin River Parkway and Conservation Trust
Save Mount Diablo
Sequoia Riverlands Trust
Sierra-Cascade Land Trust Council
Solano Land Trust
Southern California Open Space Council
T.J. Nelson & Associates
The Nature Conservancy
Transition Habitat Conservancy
Tri-Valley Conservancy
Trust for Public Land
Wildlife Heritage Foundation
ARGUMENTS IN SUPPORT : The California Council of Land
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Trusts, the sponsor of the bill, states, "One key component
of the win-win partner-ship between nonprofit land trusts
and public agencies is the management of mitigation lands.
In recent years, numerous local, state, and federal
agencies have turned to land trusts to be the long-term
holders and managers of mitigation projects?However,
long-term stewardship requires a dedicated investment for
these purposes- an endowment that perpetually replenishes
itself through interest earned on principal. These
endowments are attached to the mitigation projects, but are
not necessarily conveyed from the project proponent to the
nonprofit charged with preserving these mitigation lands.
In some cases, the public agency chooses to hold the
endowment although it does not hold the land or the
associated stewardship responsibility. This often creates
challenges in sustaining a healthy endowment that range
from reimbursement delays to reasonable rates of return."
CTW:do 5/31/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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