BILL ANALYSIS
SB 1856
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Date of Hearing: June 24, 2002
ASSEMBLY COMMITTEE ON TRANSPORTATION
John Dutra, Chair
SB 1856 (Costa) - As Amended: July 3, 2002
SENATE VOTE : 22-9
SUBJECT : High-Speed Rail: bonds
SUMMARY : Enacts the High-Speed Train Bond Act of 2002, to
provide $9 billion in general obligation (GO) bonds to fund the
planning and construction of a high-speed passenger ("bullet")
train system in the State. The bill specifies the persons and
procedures for the administration of the bond provisions and
authority, establishes the details of the bond vote and makes
the necessary appropriations form the General Fund to retire the
bond principle and interest. Specifically, this bill :
1)Makes findings and declarations regarding the need and
establishment of a high-speed passenger rail network.
2)Defines "high-speed train" as a passenger train capable of
sustained revenue operating speeds of at least 200 miles per
hour where conditions permit such speeds.
3)Authorizes the sale of bonds in the amount of nine billion
dollars ($9,000,000,000) for the planning and construction of
the train system, consistent with the business plan submitted
to the Legislature by the High Speed Rail Authority (HSRA) in
2000. The bond proceeds would also be used for right-of-way
acquisition, rolling stock (train cars), track, station and
other related construction and capital expenditures. The
bonds' maturity period could not exceed 30 years. Bonds could
not be issued until after 2005.
4)Requires the authority to pursue and obtain other private and
public funds, including federal funds, revenue bonds and local
funds to augment the bond proceeds.
5)Creates a finance committee to administer the sale of the
bonds, consisting of the Treasurer, the Director of Finance
(DOF), the Controller, the Business, the Secretary of the
Transportation and Housing (BT&H) Agency and the chairperson
of the HSRA.
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6)Specifies the conditions, procedures and requirements for the
sale and administration of the bonds, including the
application of standard bond issuance requirements and
provisions in current law.
7)Makes an annual appropriation from the General Fund (GF) in
the amount necessary to pay the principal and interest on the
bonds.
EXISTING LAW :
1)Sets forth the California High Speed Rail Act, which, among
other things, establishes the High-Speed Rail Authority as a
nine-member agency for the purpose of developing formal plans
for the planning, financing, construction, and operation of a
statewide network of high-speed passenger rail service.
Membership of the HSRA consists of appointees named by the
Governor (five members), the Senate Committee on Rules (two
members), and the Speaker of the Assembly (two members).
Members serve four-year terms on a staggered expiration
schedule.
2)Requires the HSRA to direct the development and implementation
of intercity high speed rail service that is fully integrated
with the State's existing intercity rail and bus network,
consisting of interlinked conventional and high speed rail
lines and associated feeder buses.
FISCAL EFFECT : The Senate Appropriations Committee analysis
estimates that a 30-year, $9 billion bond would result in annual
GF costs of $567.375 million for principal and interest.
COMMENTS : The author was one of the two coauthors of SB 1420
(Kopp) Chapter 796, Statutes of 1996, which he authored jointly
with former Senator Quentin Kopp. SB 1420 established the HSRA
as the successor agency to the California Intercity High-Speed
Rail Commission (HSRC).
The HSRA was established in statute in 1996 to carry forward the
earlier commission's work, with the direction and authority to
develop a plan for the construction, operation and financing of
a statewide intercity high- speed passenger rail system. The
HSRA was required to submit a business plan to the Legislature
and the Governor for consideration, which it did in 2000. The
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business plan describes a 700-mile high-speed train system, and
indicates that high-speed rail service would provide the
"highest return on investment" along corridors connecting San
Francisco, Sacramento, Merced, Bakersfield, Los Angeles,
Riverside, and San Diego. The plan predicted that that the
high-speed rail system would eventually serve 32 million
passengers and generate $888 million in annual gross revenues.
The HSRA expects that this level of service would generate an
operating surplus of $300 million per year. Although the plan
predicts that high-speed rail service will not require an
operations subsidy, the plan does call for public assistance in
financing the construction of the high-speed rail network.
The Legislature approved AB 1703 (Florez), Chapter 791, Statutes
of 2000, which extended the HSRA's termination date from June
30, 2001, to December 31, 2003, thereby extended the life of the
HSRA by two-and-a-half years. AB 1703 also clarified that HSRA
has exclusive authority to plan, deliver, and operate for
passenger rail service with speeds of 125 miles per hour and
above.
The HSRA is currently preparing a program-level environmental
impact report/statement (EIR/EIS) in cooperation with the
Federal Railroad Administration (FRA) and a team of engineering
and related technical consultants. The program EIR/EIS is
expected to be completed and submitted to the Legislature and
others by December 2003, after which a much more extensive and
specific project environmental review process would be required
if the project proceeds. Although the formal route will not be
adopted until after the HSRA completes the environmental
process, proponents believe that this measure would provide part
of the initial funding for the first leg of the HSRA system,
potentially beginning in San Francisco, and extending to
downtown Los Angeles.
According to information provided by the author and provisions
in the bill, the events of September 11, 2002, made it clear
that a high-speed train network is an essential component of a
diverse transportation system needed to serve the state's
growing population and economic activity. Increasing congestion
and security considerations in air travel impediments to airport
expansion and related ground access requirements will increase
the need for the development and expansion of alternative means
of transportation and travel.
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The proponents foresee a high-speed train system that will
provide a new mode of travel that links the major metropolitan
areas of the State; connects with international airports, mass
transit, and the highway network; provides added capacity to
meet increases in intercity travel demand in California; and one
that would be constructed in a manner sensitive to, and
protective of, California's unique natural resources.
While not opposed to the bill, the Sierra Club California
provided a letter to the committee expressing concerns regarding
the potential for "a lack of environmental safeguards" regarding
the planning and construction of the system. They characterize
SB 1856 as "deficient from an environmental standpoint,"
highlighting several specific points. It should be noted that
many, if not all of the issues raised in the Sierra Club letter
could be addressed during the program level EIR/EIS process that
is currently underway.
Related legislation : This committee will also considering SB
1799 (Poochigian) on June 24, 2002. This bill would require that
the HSRA governing board include no less than two members from
the San Joaquin Valley.
REGISTERED SUPPORT / OPPOSITION :
Support
Amalgamated Transit Union
Bay Area Transportation & Land Use Coalition
California High Speed Rail Authority
California Labor Federation
California State Council of Laborers
California Teamsters Public Affairs Council
California/Nevada Conference of Operating Engineers
CH2M Hill
City of Bakersfield
City of Fresno
City of San Jose
Consulting Engineers and Land Surveyors of California)
Fresno, Madera, Tulare & Kings Counties Central Labor Council
(AFL-CIO)
Greyhound Lines Inc.
Office of the State Treasurer
Peninsula Policy Partnership
Planning and Conservation League
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Rail Passenger Association of California
Samceda
Silicon Valley Manufacturing Group
State Building and Construction Trades Council
U.S. Senator Barbara Boxer
U.S. Senator Diane Feinstein
Opposition
The Sacramento Area Council of Governments
Analysis Prepared by : Andrew Antwih / TRANS. / (916) 319-2093