BILL ANALYSIS
AB 144
Page 1
(Without Reference to File)
CONCURRENCE IN SENATE AMENDMENTS
AB 144 (Hancock)
As Amended July 6, 2005
2/3 vote. Urgency
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|ASSEMBLY: | |(May 5, 2005) |SENATE: |34-3 |(July 7, 2005) |
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(vote not relevant)
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|COMMITTEE VOTE: |11-0 |(July 12, 2005) |RECOMMENDATION: |concur |
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(Transportation)
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| | | | | | |
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|COMMITTEE VOTE: |13-2 |(July 13, 2005) |RECOMMENDATION: |concur |
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(Appropriations)
Original Committee Reference: BUDGET
SUMMARY : Provides a financing plan to address the current $3.6
billion shortfall in funding for the Toll Bridge Seismic Retrofit
Program (TBSRP) and establishes new project management, oversight
and reporting requirements. Identifies the sources and amounts of
funding, including the authority to increase the seismic retrofit
surcharge on state-owned toll bridges in the Bay Area, provides for
a timeline of contributions, and establishes numerous other
financial and programmatic requirements to complete TBSRP.
The Senate amendments delete the prior contents of this bill and
insert the following provisions regarding TBSRP:
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1)Find and declare that on August 16, 2004, the Department of
Transportation (Caltrans) reported to the Legislature that the
current sources of funding that have been identified for TBSRP
are insufficient to complete seismic retrofit and replacement
work on state-owned toll bridges, including replacement of the
San Francisco-Oakland Bay Bridge (Bay Bridge) due to cost
overruns in the program that are now estimated at $3.6 billion.
2)Identify the sources and amounts of the additional funds needed
to fund the new $3.6 billion cost overrun, as follows:
a) Not less than $2.15 billion derived from an additional $1
toll on state-owned toll bridges located in the Bay Area
region. The additional $1 toll would commence no sooner than
January 1, 2007;
b) Not less than $820 million made available through the
consolidation of all toll revenues and the refinancing of
existing bonds under the Bay Area Toll Authority (BATA);
c) $300 million to fund the cost of demolition of the existing
East span of the Bay Bridge, from state funding sources that
support the State Highway Operations and Protection Program
(SHOPP), project savings, or the federal Highway Bridge
Replacement and Rehabilitation (HBRR) Program; and,
d) $330 million from the following state sources:
i) $130 million from accumulated budget savings by
Caltrans from better efficiency, operational savings or
lower costs;
ii) $125 million from gasoline sales tax spillover revenues
in 2006-07, if available, otherwise from additional Caltrans
operational savings; and,
iii) An appropriation of $75 million from the Motor Vehicle
Account (MVA) fund reserve.
3)Provide that if the new cost overruns are less than $3.6 billion,
then the savings shall be returned to state transportation funds
and toll funds in shares that are proportional to the original
contribution to the cost overruns.
4)Authorize BATA to increase the toll bridge seismic retrofit
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surcharge to complete TBSRP and meet its obligations under the
act, but not before January 1, 2007.
5)Authorize the consolidation of all toll revenues under BATA's
administration and management, and allows BATA to refinance the
current program debt that is secured by toll revenues. Require
that Caltrans and the California Infrastructure and Economic
Development Bank (Infrastructure Bank) to promptly defease
existing debt obligations as part of the consolidation upon
BATA's request.
6)Specify that if the cost overruns exceed $3.6 billion, then BATA
would provide the additional financial resources under the toll
consolidation and other powers granted to it by this bill,
including the authority to increase the toll. The state would
not be responsible for any additional cost overruns.
7)Reaffirm and reference that the funds for the retrofit program
for the replacement of the east span of the Bay Bridge shall only
be used for the self-anchored suspension (SAS) design in current
law.
8)Transfer responsibility for funding the maintenance costs of the
state-owned toll bridges in the Bay Area from the state to BATA
and require that these costs be paid for by toll revenues,
commencing with the completion of the seismic retrofit or
replacement work on individual bridges.
9)Authorize Caltrans to include incentives and/or disincentives in
bid documents to maximize the number of retrofit program bidders,
and to encourage the timely completion of contracts.
10)Require the California Transportation Commission (CTC), by
December 1, 2005, to adopt a schedule for the payment of the
remaining state financial contributions to the retrofit program,
beginning in 2005-06, that insures that those contributions
provide a timely balance between state resources and the toll
revenue contribution. State contingency funding provided under
AB 1171 (Dutra), Chapter 907, Statutes of 2001, would be used
commencing in 2008-09 as provided in the adopted Fund Estimate
for the 2004 State Transportation Improvement Program (STIP).
11) Require the establishment of a Toll Bridge Program Oversight
Committee (Oversight Committee), consisting of the Executive
Director of BATA, the Director of Caltrans and the Executive
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Director of CTC. The Oversight Committee will perform project
status reviews, program costs and schedules, resolve project
issues, evaluate project changes, and develop and update cost
estimates, risk assessments and cash-flow requirements. The
Oversight Committee also will review project staffing levels and
consultant and contractor services, review contract bid
specifications and documents, review and approve all significant
change orders and claims and prepare project reports.
12) Authorize the Oversight Committee to create a project
management team to assist the committee in performing its duties.
BATA would also be authorized to contract with one or more
consulting firms to provide the technical and day-to-day
oversight functions of the committee.
13) Require the Oversight Committee to report quarterly, within 45
days, to CTC and the Transportation and fiscal committees in both
houses of the Legislature in detail on the status of TBSRP,
including program progress, construction costs and expenditures
and adherence to budgets, project milestones, etc. Require
Caltrans to report monthly to the Oversight Committee on the
construction status, actual expenditures and forecasted costs and
schedules of the retrofit program, including the Benicia-Martinez
Bridge project.
14) Declare that the Oversight Committee shall not be considered a
governmental entity for purposes of complying with the
Bagley-Keene Open Meetings Act.
15)Require Caltrans to establish a comprehensive risk management
plan to identify and quantify project risks, implement and track
risk response activities, and monitor and control risks
throughout the duration of the retrofit program.
16)Continue the provisions established for the program under the
California Environmental Quality Act (CEQA) until the toll bridge
seismic retrofit and replacement projects are complete.
17)Continue the use of the current $1 state seismic retrofit toll
surcharge for the repayment of existing bonds and debt
obligations until those bonds have been defeased and the debt
obligations retired. Subsequently, those revenues can be used
toward the new program bonds and financing authorized under this
bill and its consolidation and refinancing provisions.
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18)Make numerous technical and conforming changes related to the
provisions.
19)Declare that the provisions of this act are severable and that
if any provision of this act or its application is held invalid,
that invalidity shall not affect other provisions or applications
that can be given effect without the invalid provision or
application.
20)Declare an urgency, allowing this bill to take effect
immediately.
EXISTING LAW :
1)Specifies that Caltrans has full and sole responsibility for
completion of all seismic retrofit projects on the bay area
bridges.
2)Estimates the cost to seismically retrofit the state-owned toll
bridges and to replace the east span of the Bay Bridge at $4.6
billion, including $2.6 billion for replacement of the Bay Bridge
East span.
3)Identifies funding to be made available for this purpose from
various funding sources, including a $1 per vehicle toll
surcharge on Bay Area state-owned toll bridges and Proposition
192 seismic repair bond funds, among other sources.
4)Specifies the powers and duties of Caltrans, the Metropolitan
Transportation Commission (MTC), in its capacity as BATA, with
respect to state-owned Bay Area bridge toll revenue and
expenditure, and the financing of the toll bridge seismic
retrofit and replacement program.
5)Sets forth requirements for the solicitation and evaluation of
bids and the awarding of contracts by public entities for the
erection, construction, alteration, repair, or improvement of any
public structure, building, road, or other public improvement.
AS PASSED BY THE ASSEMBLY , this bill declared legislative intent
regarding the 2005 Budget.
FISCAL EFFECT : This bill would result in the allocation of $630
million from various statewide transportation fund sources,
including $430 million from SHA ($300 million for East span
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demolition costs attributed to SHOPP and $130 million attributed to
Caltrans operational savings), $125 million from spillover funds
that are projected to be available for the Public Transportation
Account (PTA) or from SHA depending on fuel prices and/or actions
taken during the 2006-07 Budget deliberations, and an appropriation
of $75 million from MVA.
This bill identifies no less than $2.15 billion from an additional
"fourth $1" on state-owned toll bridges and $820 million from the
authorized consolidation and refinancing of tolls by BATA.
COMMENTS : As passed by the Assembly, this bill was authored by the
Assembly Budget Committee and contained provisions that would have
declared the Legislature's intent to enact statutory changes
relating to the Budget Act of 2005-06. This bill was amended later
and designated Assemblymember Hancock as the author, deleted the
prior contents and inserted new language regarding TBSRP that has
not been heard by the Assembly Transportation Committee.
This bill reflects a compromise agreement to provide funding and
project management, oversight and reporting reforms for the
completion of TBSRP. This bill includes three main elements: 1) a
plan to provide a financial solution to the current and potentially
ongoing funding problems of TBSRP; 2) new reporting requirements
aimed at reforming the current pattern of chronic cost escalations
and poor accountability by Caltrans; and, 3) consolidated control
of toll revenues by BATA and ongoing responsibility to fund
maintenance of state-owned toll bridges.
Following the October 17, 1989, Loma Prieta earthquake, the state
undertook an analysis and research effort to determine the
vulnerability of state-owned toll bridges and other transportation
structures to seismic activity. Caltrans entered into contracts
with private consulting firms, the University of California and
other research institutions to assess bridge and structure
vulnerabilities and produce action plans for addressing the
deficiencies. Governor George Deukmejian created a Board of
Inquiry to investigate the collapse of various bridge and highway
structures and the Legislature convened special hearings to examine
the earthquake's effects and develop solutions to avoid or mitigate
similar seismic damage to the transportation system in the future.
The various boards, inquiries, studies and analyses concluded that
the state needed to retrofit thousands of bridge structures
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throughout the state, both on highways and over water, including
retrofit strategies for state-owned toll bridges. A strong
emphasis was placed on completing the retrofit work at an
accelerated pace to reduce the prospects of future catastrophic
loss, both in human and economic terms. Work on highway bridges
proceeded relatively quickly but the retrofit of toll bridges
languished for numerous reasons, including the age and complexity
of bridge structures, securing adequate financing, environmental
issues, traffic, utilities, design, location and other concerns.
SB 60 (Kopp), Chapter 327, Statutes of 1997 and SB 226 (Kopp)
Chapter 328, Statutes of 1997):
The Legislature enacted SB 60 and SB 226 which established a plan
and the financing mechanisms for the seismic retrofit of
state-owned toll bridges. The plan consisted of the retrofit of
seven toll bridges (five in the Bay Area and two in southern
California) and the replacement of two bridges (the East span of
the Bay Bridge and the westbound Carquinez Bridge), the latter
funded from Bay Area Regional Measure 1 toll funds. The estimated
cost of the replacement and retrofit work at that time (1997),
developed by Caltrans, was $2.62 billion, as follows:
(1) Benicia Bridge: $101 million;
(2) Carquinez Bridge (Eastbound span): $83 million;
(3) Richmond-San Rafael Bridge: $329 million;
(4) San Mateo-Hayward Bridge: $127 million;
(5) San Pedro-Terminal Island (Vincent Thomas) Bridge: $45
million;
(6) San Diego-Coronado Bridge: $95 million;
(7) Bay Bridge (West span): $553 million; and,
(8) Bay Bridge (East span): $1,285 million.
SB 60 and SB 226 prescribe the funding sources and the amounts from
each source to pay for the bridge seismic work. The state's share
of funding included $790 million in seismic bond funds (Seismic
Retrofit Bond Fund of 1996-Proposition 192) and $875 million in
state transportation funds (SHA: $795 million and PTA: $80
million).
The regional/local share total was set at $955 million, of which
$907 million was to come from a $1 per vehicle toll surcharge
imposed by SB 60 for passage on the Bay Area toll bridges through
January 1, 2008, or until the $907 million was realized, whichever
occurred first. SB 60 authorized the collection of toll revenues
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beyond the $907 million to pay for the costs of "amenities"
approved by MTC. (The so-called amenities included a change in the
Bay Bridge design, the relocation or replacement of the transbay
bus terminal in San Francisco, or the addition of
bicycle/pedestrian access on the Bay Bridge replacement span).
SB 60 made MTC the responsible agency for selecting the design of
the Bay Bridge replacement span. SB 60 also required that if the
seismic retrofit costs were less than originally estimated, there
would be a proportional reduction in the funding provided by tolls
and state transportation account funds. If the actual costs of the
toll bridge work were determined by Caltrans to exceed its original
estimates, however, it was required to report the reasons for the
cost overruns to the Legislature within 60 days and propose a
financial plan to pay for that increase, with the Legislature
subsequently to adopt a financial plan to pay for the increase.
2001 Cost Overrun Determined:
SB 60 and SB 226 required Caltrans to report to the Legislature
within 60 days of any determination that the toll bridge retrofit
and replacement actual cost would exceed the codified cost estimate
of $2.62 billion. In April 2001, Caltrans reported that the bridge
seismic retrofit work would incur substantial cost overruns of
approximately $2.019 billion, including an increase of $1.315
billion on the Bay Bridge East span replacement alone, another $557
million for 6 other toll bridges, and $147 million for the Bay
Bridge West span retrofit, as indicated:
2001 Seismic Retrofit Cost Overruns
(Millions of $)
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| | |
|--------------------------------+--------------------------------|
|Bridge |Amount |
|--------------------------------+--------------------------------|
|Richmond-San Rafael |$ 336 |
|--------------------------------+--------------------------------|
|Benicia-Martinez |$ 89 |
|--------------------------------+--------------------------------|
|San Mateo-Hayward |$ 63 |
|--------------------------------+--------------------------------|
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|Carquinez |$ 42 |
|--------------------------------+--------------------------------|
|Vincent Thomas |$ 17 |
|--------------------------------+--------------------------------|
|San Diego-Coronado |$ 10 |
|--------------------------------+--------------------------------|
|Non-Bay Bridge subtotal |($557) |
|--------------------------------+--------------------------------|
| | |
|--------------------------------+--------------------------------|
|Bay Bridge - East Span |$1,315 |
|replacement | |
|--------------------------------+--------------------------------|
|West Span |$ 147 |
|--------------------------------+--------------------------------|
|Total Cost Overrun, All Bridges |$2,019 |
| | |
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The Caltrans report attributed the cost overruns to several
factors, including: 1) inadequate original (department) estimates
with unrefined environmental, engineering and planning support
costs and the omission of escalation (inflation) and project
contingency costs; 2) a significant rise in construction costs,
including an 18% increase in the federal construction cost index in
1999-2000 alone; 3) accelerated design work; 4) the MTC's choice of
bridge design; 5) a one-year delay in receiving United States Navy
permission to conduct sample drillings on Yerba Buena Island, and,
6) another year's delay in completing environmental analyses in
concert with federal highway, environmental and engineering
agencies. In addition, issues had arisen among local jurisdictions
and officials regarding the location of the Bay Bridge replacement
span and its final design elements.
The April 2001 report from Caltrans included a plan for resolving
the cost overruns on the six bridges other than the Bay Bridge,
proposing that $557 million from the state's share of federal HBRR
funds be used on those bridges. The report, however, did not
include a proposal to fund the $1.315 billion cost overrun for the
replacement of the eastern span of the Bay Bridge.
On August 15, 2001, Caltrans submitted a followup letter to the
Legislature outlining a proposal to fund all of the Bay Bridge and
other bridges' cost increases through an extension of the toll
surcharge and the use of the $557 million in federal bridge repair
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funds.
AB 1171 (Dutra), Chapter 1171, Statutes of 2001:
AB 1171 proposed a plan to finance the cost overruns reported by
Caltrans on state-owned toll bridges. After extensive
deliberations and hearings on the bill's original and alternate
proposals, the Legislature enacted a revised version of AB 1171 to
fund the financial shortages and modify the seismic retrofit
financing plan. AB 1171 did the following:
1)Authorized the extension of the $1 seismic retrofit toll
surcharge beyond its January 1, 2008 expiration and repeal date
until a total of $2.282 billion, plus interest, was collected
from the seismic retrofit surcharge.
2)Provided that if the projects' costs exceeded $4.637 billion,
Caltrans could program up to $448 million in contingency funds
from project savings or other available statewide resources from
the Interregional Transportation Improvement Plan (ITIP), SHOPP,
or the state's share of federal HBRR funds for that purpose.
3)Allocated a minimum of $642 million in state transportation funds
from the HBRR Program.
4)Provided that, if Caltrans determined that the actual retrofit
costs again exceeded projections, it was required to report to
the Legislature, within 90 days of the determination, the amount
of difference (overrun) and the reason for the cost increase.
5)Declared that AB 1171's provisions could not harm any project
that was programmed in STIP before January 1, 2002.
2004 Cost Estimates and Overruns:
On August 16, 2004, Caltrans submitted a Toll Bridge Seismic Safety
Retrofit Program Report and related material stating that total
seismic retrofit program costs had increased from $4.64 billion to
a projected $7.4 billion (and from $5.1 billion to $8.3 billion
when contingency costs were included). The report stated that
several factors and complications were responsible for the cost
increases, including the SAS design, time delays and construction
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complexities, insufficient initial analyses of cost, external
global cost escalation factors, including rising insurance,
financing and bonding costs, steel and construction costs, steel
industry consolidation and a significantly-lengthened construction
schedule (four additional years).
In addition the report provided a bridge-by-bridge comparison of
the new cost estimates versus those used in 1997 for SB 60 and in
2001 in enacting AB 1171, as follows:
2004 TOLL BRIDGE SEISMIC RETROFIT COST ESTIMATES
(dollars in millions)
-----------------------------------------------------------------
| Bridge | SB 60 | AB 1171 | August |
| | (1997) | (2001) |(2004) |
|---------------------+-------------+------------+----------------|
|Benicia-Martinez | $101 | $190 | $160 |
|Existing | | | |
|---------------------+-------------+------------+----------------|
|Carquinez | $83 | $125 | $115 |
|(eastbound) | | | |
|---------------------+-------------+------------+----------------|
|Richmond-San Rafael | $329 | $665 | $914 |
|---------------------+-------------+------------+----------------|
|San Mateo-Hayward | $95 | $190 | $165 |
|---------------------+-------------+------------+----------------|
|Vincent Thomas | $45 | $62 | $59 |
|---------------------+-------------+------------+----------------|
|Bay Bridge - West | $553 | $700 | $737 |
|Span | | | |
|---------------------+-------------+------------+----------------|
|Bay Bridge - New | $1,285 | $2,600 | $5130 |
|East Span | | | |
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|---------------------+-------------+------------+----------------|
|Total | $2,620 | $4,637 | $7,405 |
|---------------------+-------------+------------+----------------|
|Program Contingency | n/a | $448 | $900 |
|---------------------+-------------+------------+----------------|
| | | | |
|---------------------+-------------+------------+----------------|
|Grand Total | $2,620 | $5,085 |$8,305 |
| | | | |
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On May 26, 2004, Caltrans had received only one bid on the SAS
bridge (tower) contract. The bid contained two separate amounts,
depending on whether foreign steel or domestic steel was used for
the bridge. The $ 1.4 billion (foreign steel) and $1.8 billion
(domestic steel) bids both far exceeded Caltran's estimate of $740
million for the contract.
The August report stated that there was insufficient expenditure
authority remaining in the AB 1171 financing legislation to award
the tower contract and advised the Legislature and the Governor
that a revised funding solution needed to be enacted in order to
complete with the Bay Bridge replacement project.
The Schwarzenegger Administration proposed that the new cost
overruns should be financed through a diversion of the Regional
Measure 2 (RM2) toll funds (the "third $1") approved by the Bay
Area voters in March 2004 and that authority should be granted for
a subsequent toll increase to backfill redirected RM2 funds and
preserve the regional traffic relief plan associated with RM2.
A counter-proposal, AB 2366 (Dutra) of 2004, was developed to
provide interim supplemental financing for the bridge retrofit
program, but neither that bill nor the Administration's proposal
was enacted by the end of the legislative year.
The single bid for the SAS tower, which had been extended once, was
allowed to expire on September 30, 2004. The Administration stated
that in lieu of accepting the bid, it would explore alternatives to
re-bid the SAS design or consider reopening the bridge design
process. In December 2004, Caltrans completed its review of six
bridge alternatives, one of several review efforts undertaken from
September through December time period, and recommended
re-advertising the SAS design with several modifications and
enhancements to make the contract more biddable and buildable.
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Caltrans also recommended further consideration of the skyway
design proposal because of potential cost savings.
On December 10, 2004, the Secretary of Business, Transportation &
Housing announced that the administration was proposing a change in
the design of the east span bridge project by endorsing the skyway
option instead of the current SAS design specified in statute.
Later in December of 2004, the Bureau of State Audits issued a
report which concluded in part, that Caltrans's management of the
program has been inadequate and that it has failed to keep the
Legislature and others informed of developing problems in the
program, which now faces a $3.2 billion cost overrun, its second
major overrun in three years. The State Auditor found that
Caltrans neglected important aspects of generally accepted project
management standards, failed to establish a comprehensive risk
management plan, and lacked processes to identify and track risks.
Additionally, the Auditor concluded that capital and support costs
were not regularly updated and that Caltrans ignored numerous
indications that the toll bridge seismic retrofit program was in
trouble.
Legislation was introduced in the 2005-06 Regular Session to
reflect the administration's proposal and alternate proposals were
introduced to preserve the current design and provide funding
through a mix of increased toll funding and state contributions
from a general obligation bond. Both proposals, listed below, are
currently pending.
Related legislation:
SB 1024 (Perata), pending in the Senate, would authorize the sale
of $7.688 billion in general obligation bonds and allocate funding
for various categories of transportation expenditures, including
$1.363 billion for the toll bridge seismic retrofit program.
SB 172 (Torlakson), pending in the Assembly, would require Caltrans
to develop a comprehensive risk management plan for the toll bridge
seismic retrofit program and establish a time limit for submitting
quarterly seismic reports. The bill would also establish shared
oversight and project management responsibilities between Caltrans
and BATA for seismic retrofit and other toll related programs.
AB 1714 (Plescia), was held on the suspense file in the Assembly
Appropriations Committee. As introduced, this bill sought to
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provide a financing plan for the completion of TBSRP and authorize
a redesign of the East span of the Bay Bridge. The bill was later
amended to strike the original provisions and insert intent
language.
Questions/Clarifications:
1)This bill identifies $125 million in potential "spillover"
revenues as a contribution to the $630 million state share of the
cost overruns. This bill also specifies that if those funds are
not available, then the $125 million contribution may come from
operational savings, or "from other state transportation fund
accounts as determined by the director in consultation with the
commission (CTC)." It is not clear what types of state
transportation funds are captured under the term "other state
transportation fund accounts." If there is an opportunity to
enact clarifications to this bill, it may be preferable to revise
this provision by providing a more specific reference to the
particular transportation funds that would potentially make a
contribution in place of the spillover funds and to require
approval from the CTC rather than "consultation."
2)This bill would exempt the Oversight Committee from open meeting
requirements under the Bagley-Keene Act. The committee may wish
to seek clarification on why this is necessary.
3)This bill would authorize Caltrans to provide incentives and
disincentives to maximize the number of bidders and encourage
timely delivery and thorough completion of TBSRP contracts. This
bill also includes a requirement for Caltrans to summarize the
expenses that it incurs in providing these incentives and
disincentives. The committee may wish to consider whether this
reporting requirement should be expanded to require Caltrans to
provide more detailed accounting of the exact types and amounts
of incentives and disincentives that are provided.
Analysis Prepared by : Andrew Antwih / TRANS. / (916) 319-2093
FN: 0011632