Seaport Infrastructure Financing in California

Division 6, Part 1, Chapter 3 of the California Harbors and Navigation Code deals with seaport infrastructure financing districts. Section 1710 provides six legislative findings and declarations, including that the seaport infrastructure financing district is specifically developed to include publicly owned property, to improve that public property, and to achieve the public goals of improving the state’s waterborne commerce, enhancing economic prosperity, and financing the costs of environmental mitigation and improvement.

Section 1711 defines the term “public financing authority.”

Section 1712 requires the harbor agency to prepare a proposed infrastructure financing plan for a seaport infrastructure financing district covering a port or harbor infrastructure.

Section 1713 requires the harbor agency to have 60 days to consider the proposal. During this time, the harbor agency’s governing body must act at a duly noticed meeting to either vote to give preliminary approval of the proposal, subject to the provisions of this section, or disapprove the proposal and return it to the public financing authority. A harbor agency may give preliminary approval under this section only if it makes all of the four specified affirmative findings.

However, the harbor agency is prohibited from granting preliminary approval under this section unless both of the specified requirements apply. The term “transfers of funds or obligations” is defined.

Section 1714 provides that, upon receipt of a preliminary approval from a harbor agency, the State Lands Commission is required to consider the proposal and either grant or deny final approval. Prior to granting final approval, the State Lands Commission is required to complete two specified tasks. The State Lands Commission is required to grant final approval only if it makes all seven of the specified findings.

Section 1716 specifies that all permanent fixtures and capital improvements to the real property of a harbor agency that administers public trust tidelands made pursuant to a seaport infrastructure district’s approved infrastructure financing plan are a trust asset once completed. This provision does not apply to fixtures and improvements otherwise agreed as nonpermanent in a lease between the harbor agency and a private tenant.

Section 1717 provides that, if a harbor agency administering granted public trust property is a department of a local governmental body, any negotiations between the two entities with respect to any infrastructure financing, operations, or any other activity requiring action by the harbor agency are to be undertaken at arm’s length in recognition of the duties of the harbor agency to effectuate statewide interests.

Section 1718 makes clear that the State Lands Commission retains absolute discretion over the determination of whether or not investment of local resources in port or harbor infrastructure, the actions of a harbor agency, or any other action taken by a seaport infrastructure financing district is consistent with the state’s interests in its tidelands and submerged lands.

Section 1719 states that this chapter does not apply to the Stockton Port District, or to a river port district established.