BILL ANALYSIS Ó SENATE COMMITTEE ON GOVERNANCE AND FINANCE Senator Robert M. Hertzberg, Chair 2015 - 2016 Regular ------------------------------------------------------------------ |Bill No: |AB 746 |Hearing | 6/17/15 | | | |Date: | | |----------+---------------------------------+-----------+---------| |Author: |Ting |Tax Levy: |No | |----------+---------------------------------+-----------+---------| |Version: |6/10/15 |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant|Weinberger | |: | | ----------------------------------------------------------------- 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). AB 746 (Ting) 6/10/15 Page 2 of ? 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. AB 746 (Ting) 6/10/15 Page 3 of ? 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 AB 746 (Ting) 6/10/15 Page 4 of ? 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 AB 746 (Ting) 6/10/15 Page 5 of ? 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. AB 746 (Ting) 6/10/15 Page 6 of ? 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. -- END -- AB 746 (Ting) 6/10/15 Page 7 of ?