BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  April 22, 2015 


                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT


                              Brian Maienschein, Chair


          AB 746  
          (Ting) - As Amended April 14, 2015


          SUBJECT:  San Francisco Bay Restoration Authority.


          SUMMARY:  Extends the sunset date from January 1, 2029, to  
          January 1, 2049, for statutes governing the San Francisco Bay  
          Restoration Authority (Authority) and makes other specified  
          changes.  Specifically, this bill:  


          1)Extends the sunset date for the Authority from January 1,  
            2029, to January 1, 2049.  


          2)Extends the sunset date for the Authority to levy a benefit  
            assessment, special tax, or property-related fee, as  
            specified, from December 31, 2028, to December 31, 2048.  


          3)Adds a cross reference to Article XIII A of the California  
            Constitution to a provision in existing law that authorizes  
            the Authority to levy a benefit assessment, special tax or  
            property-related fee pursuant to the requirements in Section  
            XIII C and D of the California Constitution.  


          4)Extends the date that the Authority must pay and discharge the  








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            principal and interest of any bond indebtedness from January  
            1, 2029, to January 1, 2049.  


          5)Repeals a provision of current law that prohibits the  
            Authority from incurring more bonded indebtedness than 10% of  
            the Authority's total revenues in the preceding fiscal year.  


          6)Makes changes to provisions in current law that establish  
            procedures for the Authority in conducting a multi-county  
            election for a proposed special tax measure, as follows:


             a)   Deletes references to a "special tax" and replaces with  
               the term "measure";


             b)   Adds to the list of provisions in existing law the  
               Authority can propose a measure to generate revenues, a  
               cross reference to current law which allows the Authority  
               to incur indebtedness, subject to certain requirements;  
               and,


             c)   Adds to the list of constitutional requirements a  
               proposed measure must comply with, a cross reference to  
               Article XIII A of the Constitution (tax limitation relating  
               to ad valorem property tax).  


          7)Extends the repeal date, from January 1, 2017, to January 1,  
            2019, for provisions in existing law which requires the  
            Authority to reimburse each county for the incremental costs  
            of the first election at which the Authority proposes a  
            measure. 


          8)Requires the appropriations limit for the Authority to be  








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            originally established based on the receipt from the initial  
            revenue generating measure because the Authority has no state  
            revenues as of the effective date of this bill.  Prohibits the  
            establishment of an appropriations limit from being deemed a  
            change in an appropriations limit for purposes of Article XIII  
            B, Section 4 of the Constitution.  


          9)Requires an elected official of a bayside city or county,  
            instead of a resident of the San Francisco Bay Area, to serve  
            as the Chair of the Authority.  


          10)Finds and declares that the Authority has not assumed any  
            existing duties from another local or state government entity  
            and has received no state or local government revenues not  
            counted toward another entity's appropriations limit;  
            therefore, the Authority has no associated appropriations  
            limit pursuant to Article XIII B of the Constitution as of the  
            date of enactment of this bill.  


          11)Provides that no reimbursement is required by this bill  
            because the local agency has the authority to levy service  
            charges, fees, or assessments sufficient to pay for the  
            program or level or service mandated by this bill.  


          12)Makes other technical changes.  


          EXISTING LAW:   


          1)Establishes the San Francisco Bay Restoration Authority Act  
            (Act), which establishes the jurisdiction of the Authority to  
            include all areas within the San Francisco Bay Area  
            Conservancy Program, which includes the Counties of Alameda,  
            Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa  








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            Clara, Solano, and Sonoma.  

          2)States the Authority's purpose is to raise and allocate  
            resources for the restoration, enhancement, protection, and  
            enjoyment of wetlands and wildlife habitats in the San  
            Francisco Bay and along its shoreline.

          3)Establishes the governing board for the Authority composed of  
            seven members, as specified, to be appointed by the  
            Association of Bay Area Governments, including one member, to  
            serve as chair, who must be a resident of the Bay Area with  
            expertise in the implementation of the San Francisco Bay Area  
            Conservancy Program.  

          4)Authorizes the Authority, until December 31, 2028, to levy a  
            benefit assessment, special tax, or property-related fee  
            consistent with the requirements of Articles XIIIC and XIIID  
            of the California Constitution, as specified.  

          5)Allows the Authority to issue revenue bonds and incur bond  
            indebtedness, subject to the following requirements:

             a)   Requires the principal and interest of any bond  
               indebtedness to be paid and discharged prior to January 1,  
               2029;

             b)   Requires the Authority to comply with provisions in  
               existing law that govern recreation and park districts  
               incurring general obligation bonded indebtedness; and,

             c)   Prohibits the total amount of indebtedness incurred  
               outstanding at any one time from exceeding 10% of the  
               Authority's total revenue in the preceding fiscal year.  

          6)Requires, when the Authority proposes to levy a special tax,  
            the board of supervisors of the county or counties in which  
            the special tax is proposed to be levied, to call a special  
            election on the measure.  









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          7)Repeals the Act as of January 1, 2029. 

          FISCAL EFFECT:  This bill is keyed fiscal and contains a  
          state-mandated local program.  


          COMMENTS:  


          1)The San Francisco Bay Restoration Authority.  AB 2954  
            (Lieber), Chapter 690, Statutes of 2008, created the Authority  
            as a regional government agency charged with raising and  
            allocating resources for the restoration, enhancement,  
            protection, and enjoyment of wetlands and wildlife habitat in  
            the San Francisco Bay and along its shoreline.  The  
            Authority's mission is to formulate a strategy for raising  
            local revenues to help restore 36,000 acres of publicly owned  
            Bay shoreline into tidal wetlands.  The estimated cost of such  
            an endeavor is about $1.43 billion over 50 years.  


            The Legislature granted the Authority the ability to utilize  
            several financial tools to raise revenue, including levying a  
            benefit assessment, special tax, or property-related fee,  
            subject to constitutional requirements.  Proposition 218  
            (1996) established that a tax levied by a special-purpose  
            authority is a special tax which requires two-thirds voter  
            approval.  Additionally, the Authority can issue revenue bonds  
            under the Revenue Bond Law of 1941 and incur bond  
            indebtedness, subject to specified requirements.  


            As a regional government agency, the Authority spans across  
            nine counties.  AB 2103 (Hill), Chapter 373, Statutes of 2010,  
            prescribes the method of how the Authority places a proposal  
            to levy a special tax before the voters.  The Authority's  
            officials wanted to specify the procedures for conducting a  
            special election on a special tax proposed by the Authority  
            and to clarify their existing statutory authority to levy  








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            special taxes.  


            AB 1656 (Fong), Chapter 535, Statutes of 2012, made membership  
            and project eligibility changes, but also contained a  
            provision to extend the sunset date for the Authority from  
            2029 to 2036.  At the time, the Authority wanted the extension  
            to ensure that they would be able to administer revenues from  
            a regional ballot measure they planned to submit to voters.   
            The sunset date extension was removed from AB 1656 following  
            policy concerns raised over the lack of information about the  
            timing of a proposed ballot measure.  


            SB 279 (Hancock), Chapter 514, Statutes of 2013, specified  
            procedures for conducting a multi-county election to approve a  
            special tax measure proposed by the Authority.  


          2)Bill Summary.  Current law provides several sunset dates that  
            govern the Authority.  This bill provides a 20-year sunset  
            date extension for the following: 1) The Authority, until  
            January 1, 2049; 2) The power to levy a benefit assessment,  
            special tax, or property-related fee, until December 31, 2048;  
            and, 3) The date the principal and interest of any bond  
            indebtedness must be paid, until January 1, 2049.  


            Current law requires the board of supervisors of a county or  
            counties to call a special election if the Authority proposes  
            to levy a special tax pursuant to existing law, which allows  
            the Authority to levy special taxes, pursuant to Article XIII  
            C (voter approval for local tax levy) and Article XIII D  
            (assessment and property-related fees), of the Constitution.   
            This bill makes changes to this provision by requiring a  
            county or counties to call a special election if the Authority  
            proposes a measure to incur bond indebtedness pursuant to  
            existing law which establishes requirements for general  
            obligation bonded indebtedness, pursuant to Article XIIIA,  








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            relating to ad valorem taxes.  


            Current law establishes appropriations limits to create a  
            restriction on the amount of government revenue that can be  
            appropriated in any fiscal year.  This bill finds and declares  
            that the Authority has no appropriations limit pursuant to the  
            Constitution because it has not received any state or local  
            government revenues.  Under this bill, the appropriations  
            limit for the Authority would be established based on the  
            revenue generated by receipt of a measure adopted by the  
            voters.  


            Current law requires a resident of the San Francisco Bay Area  
            to serve as Chair of the Authority.  This bill replaces the  
            public member, and instead, requires an elected official of a  
            bayside city or county to serve as Chair.  


            This bill is sponsored by the Authority. 


          3)Author's Statement.  According to the author, "The San  
            Francisco Bay is one of our nation's greatest natural  
            treasures, and has a critical impact on the health and  
            well-being 


          of all the local communities it surrounds.  However, the San  
            Francisco Bay has endured enormous harm over the last century  
            caused by landfill and toxic pollution.  In 2008, following  
            years of budget cuts for natural resources protection, the  
            Legislature created the Authority, to determine how to raise  
            local revenues to restore over 36,000 acres of publicly-owned  
            bay shoreline into tidal wetlands, and to provide oversight of  
            funded restoration projects. 
            "In addition to providing clean water, flood control, habitat  
            protection, and recreational benefits, there are significant  








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            economic advantages that stem from wetlands restoration.   
            Restoration provides hundreds of jobs by creating long-term  
            projects that require project planning, implementation,  
            assessments, and observation after completion.  In addition,  
            over $60 billion worth of goods pass through the narrow  
            channel of the Golden Gate Strait every year, and the effects  
            of pollution and other environmental threats directly affect  
            the security of the local Bay Area economy.


            "Restoring the wetlands along the San Francisco Bay requires  
            long-term investment, estimated to cost about $1.43 billion  
            over 50 years.  Since limited state and federal funds are  
            available for these projects, the Authority is in the process  
            of raising new revenue to narrow the funding gap and is  
            authorized to do so by a variety of means.  The Authority has  
            statutory power to levy benefit assessments, property-related  
            fees, and special taxes consistent with the requirements of  
            Proposition 218 throughout its nine-county jurisdiction, in  
            addition to applying for grants, fundraising, and issuing  
            bonds.  After years of careful consideration, the Authority  
            believes that a bond, rather than an assessment, fee, or tax,  
            would provide the most stable source of revenue for ongoing  
            restoration projects.  However, the SFBRA's underlying statute  
            also inadvertently includes certain limitations that  
            effectively preclude it from using its bonding authority to  
            maximum benefit.  



            "This bill allows the Authority to effectively carry out its  
            statutory mission to restore critical bay wetlands along the  
            San Francisco Bay shoreline, by ensuring it has the ability to  
            issue bonds in an amount and for a duration that will leverage  
            the greatest impact.  The bill would eliminate the restrictive  
            limitation of the Authority's bonding authority to 10% of its  
            prior year's revenue, which makes significant projects nearly  
            impossible, and extend its existence to January 1, 2049, long  
            enough for it to meet the obligations of any bonds issued.   








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            The bill would also ensure that any bond measure is uniformly  
            submitted to voters across the nine counties within the  
            Authority's jurisdiction, allowing the Authority to move  
            forward in planning and seeking voter approval for an initial  
            revenue measure to fund needed restoration projects."  


          4)Revenue Options Identified by the Authority.  The Authority  
            decided against placing a parcel tax measure on the ballot in  
            2014 and has continued to examine revenue options.  Most  
            recently, the Authority has discussed at several meetings of  
            their governing board the feasibility of placing a parcel tax  
            measure or a general obligation bond (GO bond) measure backed  
            by ad valorem property taxes on the ballot in 2016.  


            In addition to cities, counties, and school districts, the  
            Legislature has granted the authority to several types of  
            special districts to issue GO bonds.  GO bonds are secured by  
            the legal obligation to levy an ad valorem property tax on  
            taxable property in an amount sufficient to pay the debt  
            service.  Two-thirds of voters must approve the issuance of a  
            GO bond, and in doing so, approve the levy of an ad valorem  
            tax to pay the bond.  


          5)Policy Considerations.  The Committee may wish to consider the  
            following:


             a)   GO Bonds.  Supporters of this bill argue that current  
               law provides the Authority the ability to issue GO bonds  
               backed by ad valorem taxes.  Absent any specific  
               discussions in any past analysis of the four Authority  
               bills prior to this one, or more explicit statutory  
               authority, the Committee may wish to consider, if it was,  
               and continues to be, the Legislature's intent to give the  
               Authority the power to issue GO bonds backed by ad valorem  
               property taxes.  Additionally, the Committee may wish to  








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               consider, if this bill will provide the Authority with  
               sufficient assurances to place a GO bond on the ballot and  
               aid in protecting it from any future legal challenges.   


             b)   Fourth Time is a Charm?  The Legislature established the  
               Authority in 2008, and since then, the Legislature has  
               passed three bills making additional changes to their  
               enabling Act, as requested by the Authority.  However, the  
               Authority has yet to raise any revenue to fulfill their  
               statutory purpose.  Supporters of this bill argue that the  
               sunset extension is necessary to accommodate a 30-year GO  
               bond or revenue bond term that would allow the Authority to  
               fulfill their statutory mission.  The Committee may wish to  
               consider, given recent history, if this is a reasonable  
               extension.  


          6)Arguments in Support.  Supporters argue that this bill is  
            essential for the Authority to propose a revenue measure to  
            the voters in 2016 and accomplish its statutory mission.  


          7)Arguments in Opposition.  Opposition argues that by removing  
            bonding caps and increasing the number of years to generate  
            revenue, this bill inhibits accountability and exposes Bay  
            Area residents to the threat of higher taxes and assessments.   






          REGISTERED SUPPORT / OPPOSITION:




          Support








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          San Francisco Bay Restoration Authority [SPONSOR]


          Audubon California


          Bay Area Council


          California League of Conservation Voters


          Ducks Unlimited


          San Francisco Bay Conservation and Development Commission


          Save the Bay




          Opposition


          Howard Jarvis Taxpayers Association




          Analysis Prepared by:Misa Lennox / L. GOV. / (916) 319-3958













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