BILL ANALYSIS �
AB 1943
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Date of Hearing: April 30, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1943 (Chesbro) - As Amended: March 24, 2014
Policy Committee: Local
GovernmentVote:9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill revises the statutory requirement for an annual
remittance from the City of Eureka to the state for obligations
regarding tidelands and submerged lands located in Humboldt Bay.
Specifically, this bill:
1)Deletes the statutory obligation that the City of Eureka
annually transfer to the State Controller, a sum of at least
15% of the amount of money deposited by the city into the
Humboldt Bay Fund during the preceding fiscal year in lieu of
obligations incurred by the city to the state in 1970.
2)Requires instead, beginning June 30, 2015, and annually
thereafter, that the city transmit 4% of all gross revenue
generated from the trust lands, to the State Lands Commission
(Commission) to be deposited in the Kapiloff Land Bank Fund
for management of the Commission's granted lands program.
FISCAL EFFECT
Minor costs to the General Fund in the range of $30,000 to
$60,000 annually. Minor increases to the Land Bank Fund in the
range of $8,000 to $16,000 annually.
The Kapiloff Land Bank Fund is continuously appropriated to the
State Lands Commission. By requiring the deposit of revenues in
the Land Bank Fund, this bill makes an appropriation.
COMMENTS
1)Background . The City of Eureka holds in trust from the state
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the submerged lands in Humboldt Bay. Under the terms of the
trust, the city has the right to extract oil and gas from the
lands. Current law requires, since 1979, the City of Eureka to
transfer to the General Fund at least 15% of the annual net
revenue derived from its extraction of oil in those submerged
lands in return for an appropriation of $750,000 to the
Humboldt Bay Fund and forgiveness of the unpaid balance of a
$250,000 loan made by the State to the City of Eureka in 1972
(Chapter 1095, Statutes of 1978).
Chapter 1095 requires the transfers to be made each year in
perpetuity and imposes no cap on the cumulative amount of the
transfers. Eureka has transferred approximately $1.2 million
in tidelands revenue to the state through 2012-13.
This unique arrangement was agreed to when the State Lands
Commission found that the defense of litigation the City of
Eureka initiated to protect a state grant of sovereign tide
and submerged lands at the edge of the city and Humboldt Bay
from private encroachment was essential to statewide public
trust interests. Because the city could no longer financially
support the litigation and it would have been more expensive
for the state to enter into its own litigation, the state
instead financially supported the city in continuing its
litigation.
2)Purpose . There is historical debate as to whether the $750,000
appropriation was a loan or a grant to the City of Eureka, but
there is no dispute that the city has remitted more than that
amount back to the state, and the city continues to protect
the lands. Removing the requirement for payment to the state
General Fund and instead transferring funds to the Land Bank
is a compromise that quiets the dispute surrounding the
original agreement, responds to past veto messages, and
according to the author, "?will allow the City of Eureka to
place all of its tideland resources into operating and
maintaining its tideland facilities, which will in turn help
the City achieve the State's goals for Public Trust Tidelands,
?"
3)Kapiloff Land Bank Fund . The Kapiloff Land Bank Act of 1982
was established to facilitate public trust settlements and
mitigation projects. The Kapiloff Land Bank Fund continuously
appropriates moneys in the fund subject to a statutory trust
to the State Lands Commission, acting as the Land Bank
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Trustee, to acquire real property or any interest in real
property for public trust title settlements and for mitigation
of adverse environmental impacts.
The transfer of 4% of the gross trust revenue from the city's
granted lands to the Commission required in this bill is
consistent with several other granting statutes and is
intended to ensure that the State's public trust lands
resources are used appropriately.
4)Previous Legislation . SB 1126 (Chesbro, 2006) would have
required that, until January 1, 2010, the tideland revenues
paid by the City of Eureka to the state be deposited by the
state in a special subaccount of the Humboldt Bay Fund, to be
used by Eureka to further its protection and enhancement of
public trust lands while remaining under the control of the
state. Governor Schwarzenegger vetoed the bill. The veto
message was similar to that of SB 742, below.
SB 742 (Chesbro, 2005) would have ended the transfers from
Eureka to the State Controller after June 30, 2005. Governor
Schwarzenegger vetoed the bill noting in his veto message that
the bill was "contrary to the original agreement memorialized
in Chapter 1095, Statutes of 1978."
Analysis Prepared by : Jennifer Swenson / APPR. / (916)
319-2081