BILL ANALYSIS �
SB 1094
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Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1094 (Kehoe) - As Amended: June 19, 2012
Policy Committee: Local
GovernmentVote:8-1
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill authorizes specified governmental entities, special
districts and nonprofits, as defined, to hold title and manage a
property pursuant to a mitigation agreement and to hold the
endowment dedicated to that property. Specifically, this bill:
1)Allows a governmental entity, special district, or nonprofit
organization to contract with a community foundation or
congressionally chartered foundation at any time to hold,
manage, and invest the endowment for a mitigation property and
disburse payments from the endowment to the holder of the
mitigation property consistent with the fund agreement.
2)Requires, unless the mitigation agreement provides otherwise,
a governmental entity, community foundation, special district,
a congressionally chartered foundation, or a nonprofit
organization that holds funds, including an endowment of
moneys for initial stewardship costs, to provide the local or
state agency that required the endowment with an annual fiscal
report that contains at least the following elements with
respect to each individual endowment dedicated on a
property-by-property bases and held by that entity.
3)Specifies, if a state or local agency authorizes a
governmental entity, special district, or nonprofit
organization to hold property in connection with a development
project, that the agency may require a proponent to pay a
one-time fee that does not exceed the reasonable costs of the
agency in reviewing qualifications of potential holders of the
property, approving those holders, and any regular oversight
over those holders to ensure that the holders are complying
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with all applicable laws.
4)Requires a nonprofit corporation to utilize generally accepted
accounting practices that are promulgated by the Financial
Accounting Standards Board or any successor entity, if a
nonprofit corporation holds the endowment.
FISCAL EFFECT
Likely ongoing costs of $200,000 to $300,000 from the Fish and
Game Preservation Fund beginning in 2012-13 for the oversight
and tracking of endowments. This bill expands the number of
entities that can hold endowment accounts; DFG will also have to
expand its review and oversight, including review of annual
fiscal reports.
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COMMENTS
1)Purpose . According to the California Council of Land Trusts,
the sponsor of the bill, stakeholders have worked to establish
strong laws and protections for holding, managing, investing
and disbursing mitigation endowment funds. This work resulted
in the passage of SB 436 (Kehoe) of 2011. Further, California
has a vital and continuing interest in ensuring that the
mitigation endowment funds being set aside pursuant to the
issuance of state permits are well-managed by experienced and
competent organizations, are permanently restricted and
dedicated to the mitigation property they were created for,
are not consolidated into a single vast holding that is
inherently risky, and that the funds are transparent so that
the public can track them. This bill is an expansion of the
authority granted in SB 436 for non-state and local agencies
to hold endowment accounts and a clean-up measure.
2)Support . Supporters, including a number of land trusts and
community foundations, argue SB 1094 maintains strong
protections for mitigation endowments and continues to
maintain a strong link between the mitigation land and the
permanent funding for these lands. They point out there are
more than 120 nonprofit land trusts working in local
communities to conserve special lands and waters. These trusts
are often regarded as the premier partner of the state in
acting as stewards in perpetuity for many of our the state's
more magnificent natural treasures and are accountable to the
state, and more importantly, to the public, to perform this
task to the best of their ability.
3)Background . When state or local agencies approve land use
projects, they can require the project applicant to transfer
interest in real property to the agency in order to mitigate
the impact that the development will have on natural
resources. 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. The project
applicant may also be required by the local and state agency
to provide funds to finance the management of mitigation lands
in perpetuity, also known as an endowment.
Last year SB 436 (Kehoe) Chapter 590/2011 gave explicit
authority to state or local agencies to allow a nonprofit or
special district, which is holding and managing the mitigation
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lands, to also hold the endowment account, subject to certain
conditions. SB 436 allowed for limited exceptions where an
endowment can be held by an entity other than the entity that
is holding and managing the land. The state or local agency is
required to exercise due diligence in reviewing the
qualifications of the entity managing the land and the
accompanying funds. The entity is required to meet certain
standards, including accounting standards, and specified
reporting requirements.
4)Support . This bill is sponsored by the California Council of
Land Trusts (CCLT). Supporters argue that this is a
much-needed bill to address several outstanding issues after
SB 436 was signed and is urgently needed in order to ensure
that mitigation projects are approved in a timely manner.
5)Previous legislation . SB 436 (Kehoe), Chapter 590, Statutes
of 2011 authorized a state or local agency to allow a
qualified nonprofit organization or special district to hold
property and long-term endowments to mitigate adverse impacts
caused by development.
Analysis Prepared by : Roger Dunstan / APPR. / (916)
319-2081