Agenda

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LEGISLATION COMMITTEE

Meeting Date:	04/03/2014
Submitted For:	LEGISLATION COMMITTEE
Department:	County Administrator
Referral No.:	2014-08
Referral Name:	State Legislation
Presenter:	Lara DeLaney	Contact:	L. DeLaney, 925-335-1097

Information

Referral History:

This bill was referred to the Legislation Committee by the Public Works Department.

Referral Update:

As part of a proposed project, public entities must often obtain a permit from a state regulatory agency prior to commencing work in sensitive environments such as streams, wetlands, or habitat occupied by protected species. In those situations where environmental impacts remain after all other steps have been taken to avoid or minimize impacts resulting from the project, the permitting agency requires the public entity to offset those remaining impacts by providing “compensatory mitigation” that, as its name implies, compensates for those impacts by replacing and/or restoring the impacted natural resources. These compensatory mitigation properties then must be maintained and managed in perpetuity.

Current law allows a permitting agency to identify how the long-term maintenance and management, or stewardship, of the property will be funded. One such way is by requiring the establishment of an endowment, where the permittee must set aside a substantial amount of public funds and use the interest earned on it to pay for the long-term maintenance and management of the mitigation site. To generate the interest required for stewardship efforts, endowment funds must be substantially greater than the actual cost of the annual stewardship efforts. In addition, endowment funds are permanently restricted for this purpose and cannot be used for anything else, regardless of circumstances. When taxpayer funding is permanently tied up in this manner, a public entity’s ability to fund other projects and carry out its work is negatively impacted, as funds are diverted to endowments and permanently unavailable for other, critical public projects.

AB 1799 would exempt public entities from having to provide endowments or other funding instruments for the long-term stewardship of mitigation properties, provided certain requirements are met. Specifically, the entity would need to demonstrate financial reliability through the possession of an investment-grade credit rating by a nationally recognized statistical rating organization. It would also need to provide a resolution to fund the long-term stewardship of the property that is adopted by the board or legislative body of the governmental entity or special district, or a contractual agreement with the regulatory agency that is enforcing the mitigation requirements to fund the long-term stewardship of the property. By demonstrating strong financial reliability and a commitment to fund the maintenance requirements in perpetuity, a public entity would prove to a permitting agency that there is no need for an endowment or other funding instrument for long-term stewardship of its mitigation property.

Analysis
While Contra Costa County has not yet had to purchase mitigation property and therefore has not been subject to establishing a permanent endowment for the long-term stewardship of a mitigation property, AB 1799 would provide significant protection from a future situation in which it would be required to do so. Staff also notes that this bill does not reduce or eliminate a public entity’s obligation to provide mitigation; rather, it simply allows public entities more flexibility for financing its mitigation obligations. If enacted into law, the provisions of the bill would provide this flexibility and prevent public funds from being permanently restricted and therefore unavailable to address other priority needs of Contra Costa County. Finally, AB 1799 would have an indirect benefit of enhancing our local economy, because funds that might otherwise have been permanently restricted would be available to create jobs and complete critical public projects for the County.

For these reasons, staff recommends that the Board of Supervisors adopt a position of support on AB 1799 and send a letter of support to Assemblymember Gordon and members of our state delegation.

Recommendation(s)/Next Step(s):

Staff recommends that the Legislation Committee consider recommending a position of "support" to the Board of Supervisors on AB 1799 (Gordon).

Fiscal Impact (if any):

AB 1799 would eliminate the requirement of an endowment or other financial mechanism for long-term stewardship of mitigation property, and replace that requirement with more flexible alternatives to finance mitigation obligations. Specifically, a governmental entity would be exempted from providing an endowment or other funding instrument for long-term stewardship if two requirements are met: 1) the entity must demonstrate financial reliability through possession of an investment-grade credit rating and 2) the entity must provide either a resolution adopted by its legislative body or a contractual agreement with the permitting agency enforcing the mitigation requirements.

Attachments
AB 1799 Bill Text