BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON GOVERNANCE AND FINANCE
                         Senator Robert M. Hertzberg, Chair
                                2015 - 2016  Regular 

                              
          
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          |Bill No:  |AB 746                           |Hearing    | 6/17/15 |
          |          |                                 |Date:      |         |
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          |Author:   |Ting                             |Tax Levy:  |No       |
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          |Version:  |6/10/15                          |Fiscal:    |Yes      |
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          |Consultant|Weinberger                                            |
          |:         |                                                      |
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                        SAN FRANCISCO BAY RESTORATION AUTHORITY



          Makes several changes to statutes relating to the San Francisco  
          Bay Restoration Authority's governing board and financing  
          powers.


           Background

           State law creates the San Francisco Bay Restoration Authority  
          (SFBRA) as a regional entity with jurisdiction extending  
          throughout the San Francisco Bay Area (AB 2954, Lieber, 2008).   
          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.

          Since 2009, the SFBRA has been planning to submit a ballot  
          measure to voters in the nine San Francisco Bay Area counties  
          seeking approval of revenues to fund the Authority's restoration  
          activities.  In recent years, the Legislature has amended the  
          SFBRA's enabling act to:
                 Specify requirements that apply to a regional ballot  
               measure submitted to voters by the Authority (AB 2103,  
               Hill, 2010).

                 Revise the Authority's boundaries and revise the  
               definition of eligible projects (AB 1656, Fong, 2012).







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

          The SFBRA's governing board is now preparing to submit a ballot  
          measure to voters in 2016 seeking approval either of parcel  
          taxes or general obligation bonds to finance restoration  
          projects around the San Francisco Bay.  In anticipation of  
          submitting a ballot measure to voters, SFBRA officials want to  
          amend the statutes that govern the Authority to:

                 Clarify the Authority's powers to incur general  
               obligation bonded indebtedness.

                 Define the manner in which the Authority's  
               appropriations limit is to be established.

                 Extend statutory sunset dates in the Authority's  
               enabling act.

                 Modify the qualifications that apply to the Chair of the  
               Authority's governing board.


           Proposed Law

            General obligation bonds  .  Current law, the San Francisco Bay  
          Restoration Authority Act, explicitly allows the Authority to  
          issue revenues bonds.  The Act also allows the Authority to  
          incur bonded indebtedness subject to a requirement that the  
          Authority must comply with specified statutes that allow  
          recreation and park districts' boards of directors, with 2/3  
          voter approval, to issue general obligation bonds to pay for  
          acquiring or improving real property.  Assembly Bill 746: 
                 Specifies that the Authority may incur a general  
               obligation bonded indebtedness for the acquisition or  
               improvement of real property or for funding or refunding of  
               any outstanding indebtedness. 

                 Requires that the total amount of bonded indebtedness  
               that the Authority may incur pursuant to both its revenue  
               bond and general obligation bond authority must not exceed  
               $1.5 billion.








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                 Contain a legislative finding and declaration that the  
               changes the bill makes to specified provisions in existing  
               law explicitly affirm the San Francisco Bay Restoration  
               Authority's authority to incur general obligation bond  
               indebtedness so as to implement the Legislature's intent  
               when those provisions were first enacted.

           Appropriations limit  .  Article XIIIB of the California  
          Constitution establishes and defines annual appropriation limits  
          on each local government based on an annual appropriation for  
          the prior fiscal year and requires adjustments for changes in  
          the cost of living, changes in population, and other specified  
          factors.  Assembly Bill 746: 
                 Contains a legislative finding and declaration that the  
               Authority has no associated appropriations limit as of the  
               bill's effective date because 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.

                 Requires that the appropriations limit for the Authority  
               must be originally established based on receipts from the  
               initial measure that would generate revenues for the  
               authority, and that establishment of an appropriations  
               limit must not be deemed a change in an appropriations  
               limit for purposes of the California Constitution.

           Sunset extensions  .  Current law prohibits the Authority from  
          levying a benefit assessment, special tax, or property-related  
          fee after December 31, 2028.  Assembly Bill 746 extends the  
          period of time during which the Authority can levy a benefit  
          assessment, special tax, or property-related fee by 20 years,  
          through December 31, 2048.

          Current law requires that the Authority must reimburse counties  
          only for the incremental costs incurred by the county elections  
          official related to submitting a ballot measure proposed by the  
          Authority to the voters.  Assembly Bill 746 extends by two  
          years, from January 1, 2017 to January 1, 2019, the sunset date  
          on the election cost reimbursement requirements.

          Current law automatically repeals the San Francisco Bay  








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          Restoration Authority Act on January 1, 2029.  Assembly Bill 746  
          extends the sunset date on the statutes governing the San  
          Francisco Bay Restoration Authority by 20 years, until January  
          1, 2049.

           Chair of the governing board  .  Current law requires that the  
          Authority's governing board must be comprised of seven members,  
          including a Chair, who must be a resident of the San Francisco  
          Bay Area and have expertise in the implementation of the  
          California Coastal Conservancy's San Francisco Bay Area  
          Conservancy Program.  Assembly Bill 746 requires that the Chair  
          of the Authority's governing board must be an elected official  
          of a bayside county, city, or special district who has expertise  
          in the implementation of the California Coastal Conservancy's  
          San Francisco Bay Area Conservancy Program.



          Assembly Bill 746 makes additional technical and conforming  
          changes to the statutes governing the San Francisco Bay  
          Restoration Authority.


           State Revenue Impact

           No estimate.


           Comments

           1.  Purpose of the bill  . Providing clean water, flood control,  
          habitat, and economic benefits, wetlands are crucial to the  
          health of the San Francisco Bay and the well-being of the  
          millions of residents in the communities that surround it.  In  
          2008, following years of budget cuts for natural resources  
          protection, the Legislature created the San Francisco Bay  
          Restoration 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.  Restoring the wetlands along the San  
          Francisco Bay requires long-term investment, estimated to cost  
          about $1.43 billion over 50 years.  Because 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  








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          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 enabling act  
          contains ambiguities and limitations could preclude the  
          Authority from using its bonding authority to maximum benefit.   
          AB 746 will allow 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. 

          2.   Expanded powers  .  By adding 20 years to the period of time  
          during which current law allows the SFBRA to raise revenues and  
          work on restoration projects, AB 746 makes it easier to finance  
          the Authority's activities using long-term debt.  However, these  
          sunset extensions and the repeal of an existing cap on the  
          Authority's bonding capacity may result in Bay Area taxpayers  
          paying more in taxes over a longer period of time than they  
          would under existing law.  Despite the fact that the Authority  
          must obtain voter approval before imposing any new taxes,  
          assessments, or fees, some taxpayer advocates object to any  
          expansion of the Authority's current revenue and financing  
          powers.

          3.   Crunching numbers  .  The $1.5 billion cap on the SFBRA's  
          bonding capacity that would be imposed by AB 746 represents  
          slightly more than 0.1% of the $1.3 trillion total assessed  
          value of taxable property within the nine counties that are  
          included within the Authority's boundaries.  SFBRA officials  
          estimate that, if the full amount of $1.5 billion in general  
          obligation debt were authorized over 30 years, it would result  
          in ad valorem taxes of approximately $9.66 per $100K of assessed  
          value of taxable property within the Authority's jurisdiction.   
          Between 2012 and 2014, voters in six Bay Area counties approved  
          seven local general obligation bond ballot measures requiring a  
          2/3 vote that authorized, in total, more than $1.5 billion in  
          long-term bonded indebtedness.









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          4.   Let's get technical  .  To clarify AB 746's provisions, the  
          Committee may wish to consider amending the bill to insert "San"  
          before "Francisco" on page 9, line 1.

          5.   Mandate  .  The California Constitution requires the state to  
          reimburse local governments for the costs of new or expanded  
          state mandated local programs.  Because AB 746 imposes  
          additional duties on local officials who must implement the  
          bill's provisions, Legislative Counsel says that it imposes a  
          new state mandate.  However, AB 746 disclaims the state's  
          responsibility for reimbursing local costs because the local  
          agencies have the authority to levy service charges, fees, or  
          assessments sufficient to pay for the program or level of  
          service mandated by the bill.  


          Assembly Actions

           Assembly Local Government Committee:  6-3
          Assembly Appropriations Committee: 12-5
          Assembly Floor:                    51-24


           Support and  
          Opposition   (6/11/15)


           Support  :  San Francisco Bay Restoration Authority; Audubon  
          California; Bay Area Council; California League of Conservation  
          Voters; City of Redwood City; Ducks Unlimited; San Francisco Bay  
          Conservation and Development Commission; San Mateo County Board  
          of Supervisors; Santa Clara County Open Space Authority; Save  
          the Bay; Silicon Valley Leadership Group; Sonoma Agricultural  
          Preservation and Open Space District; Sonoma Land Trust; The  
          Nature Conservancy.

           Opposition  :  Howard Jarvis Taxpayers Association.


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