BILL ANALYSIS �
AB 1943
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1943 (Chesbro)
As Amended June 30, 2014
2/3 vote
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|ASSEMBLY: |72-0 |(May 8, 2014) |SENATE: |32-2 |(August 19, |
| | | | | |2014) |
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Original Committee Reference: L. GOV.
SUMMARY : Revises the statutory obligation for the City of
Eureka (City) to remit certain funds to the state related to
tidelands and submerged lands located in Humboldt Bay that were
granted to the City in the 1970s.
The Senate amendments revise the date, from September 30 to
December 31, for the annual statement of financial condition and
operation to be submitted to the State Lands Commission by the
City.
EXISTING LAW :
1)Grants to the City all the right, title, and interest of the
State of California in and to certain tidelands and submerged
lands located in Humboldt Bay in trust for specified purposes.
2)Requires the City to establish the Humboldt Bay Fund and to
deposit all moneys received directly from, or indirectly
attributable to, the tide and submerged lands into the
Humboldt Bay Fund.
3)Requires the City, prior to June 30 of each year, to pay to
the State Controller at least 15% of the money deposited by
the city in the Humboldt Bay Fund during the preceding fiscal
year as a condition of a $750,000 loan made to the City by the
state in 1970.
4)Establishes the Kapiloff Land Bank Act (Act) of 1982, for the
purpose of facilitating public trust settlements and
mitigation projects.
5)Creates the Land Bank Fund and continuously appropriates
moneys in the fund subject to a statutory trust to the State
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Lands Commission, acting as the Land Bank Trustee, to acquire
real property or any interest in real property for the
purposes of public trust title settlements and for mitigation
of adverse environmental impacts.
AS PASSED BY THE ASSEMBLY , this bill:
1)Deleted the statutory obligation that requires the City to
remit to the Controller, annually, a sum not less than 15% of
the amount of money deposited by the city into the Humboldt
Bay Fund during the preceding fiscal year as a condition of a
$750,000 loan made to the City by the state in 1970.
2)Required, on June 30, 2015, and at the end of every fiscal
year thereafter, 4% of all gross revenue generated from the
trust lands, to be transmitted to the State Lands Commission
(Commission) and deposited in the Kapiloff Land Bank Fund for
expenditure by the Commission for management of the
Commission's granted lands program.
FISCAL EFFECT : According to the Senate Appropriations
Committee, this bill contains:
1)Revenue losses of $30,000 to $60,000 to the General Fund from
eliminated payments from the City.
2)Increased revenues of $8,000 to $16,000 to the Kapiloff land
Bank Fund (special) from the City.
COMMENTS :
1)Purpose of this bill. This bill revises the statutory
obligation for the City to remit certain funds to the state
related to tidelands and submerged lands located in Humboldt
Bay that were granted to the City in the 1970. The bill
deletes the annual requirement for the City to remit a sum not
less than 15% of the amount of money deposited by the City
into the Humboldt Bay Fund, during the preceding fiscal year,
and instead, requires annual remittance by the City of 4% of
all gross revenue generated from the trust lands to the State
Lands Commission, to be deposited in the Kapiloff Land Bank
Fund. This bill is sponsored by the City.
2)Background on lawsuit and loan to the City. In 1970, the City
initiated a lawsuit to protect a state grant of sovereign tide
and submerged lands at the edge of the City and Humboldt Bay
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from private encroachment. The grant was intended to assist
the City in its redevelopment efforts and conferred management
and control responsibilities to the City. In subsequent
years, the City found that it could no longer financially
support the lawsuit. Because the State Lands Commission found
that defense of the litigation was essential to statewide
public trust interests, and because it would be more expensive
for the state to enter into its own litigation to protect
those interests, the state entered into a unique agreement to
loan the city up to $750,000 to continue the litigation.
In making the loan, the Legislature found that it would
provide significant fiscal and time savings to the state,
since the City would continue to pursue litigation that the
state would otherwise be forced to take on. In return for the
loan, the City agreed to undergo very strenuous grant
oversight in a number of ways, including audits of its books
and oversight of leases of the granted lands.
3)Statutory repayment provisions of the loan. The statutes
dealing with repayment of the $750,000 loan do not include
provisions for ending the City's payment obligations.
Instead, they require the City to pay to the State Controller,
in perpetuity, at least 15% funds deposited in the Humboldt
Bay Fund on an annual basis.
4)Kapiloff Land Bank Act. The Act was introduced by Assembly
Member Lawrence Kapiloff and enacted by the Legislature in
1982. The Act is an extension of State Lands Commission
authority as set forth in Public Resources Code Section 6307,
which was enacted to facilitate settlements of title to real
property with cash payments where exchange parcels are not
readily available or are not of equal value and to facilitate
mitigation through the pooling of such payments. The
Commission holds and administers the acquired lands as
sovereign lands of the legal character of tidelands and
submerged lands.
5)Author's statement. According to the author, "the City of
Eureka has paid back the initial loan to the state and then
some. To date the city has repaid $1,167,000 on an $800,000
loan. The loan has greatly helped the City but the Harbor
[Humboldt Bay Harbor] continues to operate at a deficit, with
a projected operating deficit of $122,748 for fiscal year
2013-14, further lowering the unrestricted fund balance
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deficit to over $800,000. Additionally, the dissolution of
the Eureka Redevelopment Agency has saddled the successor
agency's continued repayment of Harbor bonds which amount to
about $100,000 per year, further impacting the Harbor Fund's
deficit, and reducing its ability to become an economically
viable proprietary fund.
"Removing the requirement for payment to the state 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, as well as helping spur local economic
development."
6)Previous legislation. There have been several previous
attempts to modify the loan repayment provisions, including
the following bills:
SB 1126 (Chesbro) of 2006. This bill would have allowed the
Humboldt Bay Harbor District to transfer the loan obligations
from a 1970 loan (that was refinanced in 1982) to a special
sub-account in house. The bill was vetoed by Governor
Schwarzenegger who noted in his veto message that "this bill
is contrary to the original agreement memorialized in Chapter
1095, Statutes of 1978, which specified that the grant was
contingent upon Eureka's agreement to make an annual
remittance to the State in perpetuity." Governor
Schwarzenegger also wrote in his veto message that revenue
reduction was not prudent at that time, given the state's
fiscal condition.
SB 742 (Chesbro) of 2005. This bill would have ended the 1970
loan agreement to the City of Eureka that was renegotiated in
1982. The veto message was substantially similar to the veto
message for SB 1126.
7)Continuous appropriation. The bill requires a two-thirds vote
of each house because of the continuous appropriation.
8)Arguments in support. The City argues that this bill will
acknowledge Eureka's repayment to the state but still require
a reduced payment of 4% of the Harbor Fund revenues with no
end date.
9)Arguments in opposition. None on file.
AB 1943
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Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
FN: 0004723