BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 746


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          746 (Ting)


          As Amended  June 22, 2015


          Majority vote


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          |ASSEMBLY:  |      | (May 18,      |SENATE: |26-11 | (August 17,     |
          |           |51-24 |2015)          |        |      |2015)            |
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          Original Committee Reference:  L. GOV.


          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.  


          The Senate amendments:


          1)Specify that the Authority may incur general obligation bonded  
            indebtedness for the acquisition or improvement of real  
            property or for funding or refunding of any outstanding  
            indebtedness.  


          2)Establish a cap for the total amount of outstanding bonded  
            indebtedness the Authority may incur not to exceed $1.5  
            billion.  








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          3)Add an elected official of a bayside special district to the  
            list of elected officials that may serve as the Chair of the  
            Authority, instead of a resident of the San Francisco Bay  
            Area.  


          4)Find and declare that the changes made by this bill explicitly  
            affirm the authority of the Authority to incur general  
            obligation (GO) bonded indebtedness, so as to implement the  
            Legislature's intent when the statute first became operative  
            on January 1, 2009.  


          5)Make technical and conforming 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.  


          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  








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            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 GO 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.  




          AS PASSED BY THE ASSEMBLY, this bill:  


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


          2)Extended 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)Added 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.  








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


          5)Extended 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)Repealed 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)Made 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  
               California Constitution (tax limitation relating to ad  
               valorem property tax).  


          8)Extended 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  








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            of the first election at which the Authority proposes a  
            measure. 


          9)Required 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)Required 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)Found and declared that it is the intent of the Legislature  
            to explicitly affirm the Authority's ability to incur GO bond  
            indebtedness, pursuant to a specified paragraph and  
            subdivision in California Constitution Article XIIIA, Section  
            1 of the Constitution and existing law which governs  
            recreation and park districts incurring GO bonded  
            indebtedness.


          12)Found and declared 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)Provided 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.  










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          14)Made other technical changes.  


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.


          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  
            special taxes.  









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            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.  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:  a) The Authority, until  
            January 1, 2049; b) The power to levy a benefit assessment,  
            special tax, or property-related fee, until December 31, 2048;  
            and, c) The date the principal and interest of any bond  
            indebtedness must be paid, until January 1, 2049.   
            Additionally, this bill specifies that the Authority may incur  
            GO bonded indebtedness for the acquisition or improvement of  
            real property or for funding or refunding any outstanding  
            indebtedness.  


            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  








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            bayside city, county, or special district 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  
            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  








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            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 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:  








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