BILL ANALYSIS                                                                                                                                                                                                    



                                                                       AB 746


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          ASSEMBLY THIRD READING


          AB  
          746 (Ting)


          As Amended  May 14, 2015


          Majority vote


           ----------------------------------------------------------------- 
          |Committee       |Votes |Ayes                |Noes                |
          |                |      |                    |                    |
          |                |      |                    |                    |
          |----------------+------+--------------------+--------------------|
          |Local           |6-3   |Gonzalez, Alejo,    |Maienschein,        |
          |Government      |      |Chiu, Cooley,       |Linder, Waldron     |
          |                |      |Gordon, Holden      |                    |
          |                |      |                    |                    |
          |----------------+------+--------------------+--------------------|
          |Appropriations  |12-5  |Gomez, Bloom,       |Bigelow, Chang,     |
          |                |      |Bonta, Calderon,    |Gallagher, Jones,   |
          |                |      |Daly, Eggman,       |Wagner              |
          |                |      |Eduardo Garcia,     |                    |
          |                |      |Holden, Quirk,      |                    |
          |                |      |Rendon, Weber, Wood |                    |
          |                |      |                    |                    |
          |                |      |                    |                    |
           ----------------------------------------------------------------- 


          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:  









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          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 California Constitution Article XIII A  
            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 California Constitution Articles  
            XIII C and XIII D.  


          4)Specifies that the Authority may incur bond indebtedness  
            consistent with California Constitution Article XIIIA, Section 1  
            (tax limitation relating to ad valorem property tax). 


          5)Extends the date that the Authority must pay and discharge the  
            principal and interest of any bond indebtedness from January 1,  
            2029, to January 1, 2049.  


          6)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.  


          7)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";








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             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 California  
               Constitution (tax limitation relating to ad valorem property  
               tax).  


          8)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. 


          9)Requires the appropriations limit for the Authority to be  
            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 California  
            Constitution Article XIII B, Section 4.  


          10)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.  


          11)Finds and declares that it is the intent of the Legislature to  
            explicitly affirm the Authority's ability to incur general  
            obligation bond indebtedness, pursuant to a specified paragraph  
            and subdivision in California Constitution Article XIIIA,  
            Section 1 of the Constitution and existing law which governs  








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            recreation and park districts incurring general obligation  
            bonded indebtedness.


          12)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  
            California Constitution Article XIII B as of the date of  
            enactment of this bill.  


          13)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.  


          14)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 Clara, Solano, and  
            Sonoma.  
          2)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.  










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


          4)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.  


          5)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.  
          6)Repeals the Act as of January 1, 2029. 


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, negligible state fiscal impact.  


          COMMENTS:  


          1)The San Francisco Bay Restoration Authority.  AB 2954 (Lieber),  
            Chapter 690, Statutes of 2008, created the Authority as a  








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            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 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  








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            proposed ballot measure.  Most recently, 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 California  
            Constitution Article XIII C (voter approval for local tax levy)  
            and California Constitution Article XIII D (assessment and  
            property-related fees).  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 California Constitution Article XIII A, relating to  
            ad valorem taxes.  Additionally, this bill specifies that the  
            Authority may incur bonded indebtedness consistent with the  
            provisions in the Constitution which establish a tax limitation  
            for ad valorem property tax.  


            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  








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            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.  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.  
            "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.  The  
            bill would also ensure that any bond measure is uniformly  








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            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 Consideration.  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 Legislature  
            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  








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            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.  




          Analysis Prepared by:                                               
                          Misa Lennox / L. GOV. / (916) 319-3958  FN:  
          0000383