BILL NUMBER: AB 289 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 28, 2010
AMENDED IN SENATE APRIL 21, 2010
AMENDED IN SENATE JANUARY 25, 2010
AMENDED IN SENATE AUGUST 17, 2009
AMENDED IN ASSEMBLY APRIL 14, 2009
INTRODUCED BY Assembly Member Galgiani
FEBRUARY 13, 2009
An act to amend Sections 185024 and 185033 of, and to add
Section 185036.5 to 185037 of, and to repeal Sections
185033 and 185035 of , the Public Utilities Code, and to
add Chapter 20.1 (commencing with Section 2704.25) to Division 3 of
the Streets and Highways Code, relating to high-speed rail,
making an appropriation therefor, and declaring
the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 289, as amended, Galgiani. High-speed rail.
Existing law, the California High-Speed Rail Act, creates the
High-Speed Rail Authority to develop and implement a high-speed rail
system in the state, with specified powers and duties. Existing law,
pursuant to the Safe, Reliable High-Speed Passenger Train Bond Act
for the 21st Century, approved by the voters as Proposition 1A at the
November 4, 2008, general election, provides for the issuance of
$9.95 billion in general obligation bonds for high-speed rail and
related purposes. Existing law provides for appointment of
an executive director by the authority, who is exempt from civil
service and serves at the pleasure of the authority.
The federal American Recovery and Re investment Act of
2009 (ARRA) provides funding for allocation nationally to high-speed
rail projects.
This bill would authorize the Governor to appoint up to 5 deputy
directors exempt from civil service who would serve at the pleasure
of the executive director.
The federal American Recovery and Reinvestment Act of 2009 (ARRA)
provides funding for allocation nationally to high-speed rail
projects.
This bill would appropriate $2.25 billion to the
authority from federal ARRA funds awarded to the state for high-speed
rail purposes and would identify the corridors eligible for those
funds. The bill would require the authority to take those actions
necessary to ensure that the federal funds are used and expended in a
manner that meets all applicable federal guidelines, make the most
efficient use of available state bond funds, and are expended and
used consistent with current state law. The bill would require the
authority to report to the Director of Finance and the Legislature
relative to the expenditure plan for ARRA funds. The bill would
require the authority to include in its business plan an estimate of
jobs created in each corridor. The bill would state the intent of the
Legislature to establish an inspector general to oversee the fiscal
functions of the authority state the intent of the
Legislature to appropriate $230,500,000 to the authority from the
bond act in the Budget Act of 2010-11, to be used to provide a
dollar-for-dollar match for federal ARRA funds received by the state
for high-speed rail purposes. The bill would identify the
corridors eligible for ARRA funds, upon appropriation by the
Legislature, and require the authority to work with the Federal
Railroad Administration to create a plan for expenditure of the
federal funds. The bill would set forth the dates for obligation and
expenditure of the federal funds and dates for completion of various
tasks in that regard. These provisions would not apply to the portion
of ARRA funds awarded to the Transbay Terminal project in San
Francisco .
This bill would revise and recast provisions governing the
authority's business plan for high-speed rail development and for the
peer review process applicable to the funding plan for each
high-speed rail corridor or usable segment under the preappropriation
review process. The bill would provide that the preappropriation
review process and the preexpenditure review process required for
expenditure of bond funds also apply to expenditure of federal funds.
The bill would enact other related provisions.
Existing law provides for appointment of an executive director by
the authority, who is exempt from civil service and serves at the
pleasure of the authority.
This bill, for purposes of overseeing the ongoing work of the
authority in implementing the high-speed rail project, would
authorize the Governor to appoint up to 5 additional executive staff
exempt from civil service who would serve at the pleasure of the
executive director.
The bill would create the Office for Project Controls and Risk
Management in the authority and would provide for appointment of an
inspector general by the Governor to oversee the fiscal functions of
the authority. The inspector general would be required to report
annually to the authority and Legislature. The bill would also
require the State Auditor to perform periodic audits of the authority'
s use of ARRA funds.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: yes no .
Fiscal committee: yes. State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) With the enactment of the federal American Recovery and
Reinvestment Act (ARRA) (Public Law 111-5) on February 17, 2009, the
federal government made available a grant program in which states
could apply for up to $8 billion in federal funds for the development
of high-speed rail throughout the nation.
(b) On October 2, 2009, the High-Speed Rail Authority (HSRA)
submitted to the Federal Railroad Administration (FRA) of the United
States Department of Transportation an application for $4.73 billion
in federal funds to further the development of high-speed rail in
California.
(c) On January 28, 2010, the federal government awarded the HSRA
$2.25 billion to advance the development of a high-speed rail system
in this state.
(d) (1) The HSRA's application was approved for preliminary
engineering, project-level environmental work, mitigation, final
design, and construction for the following four corridors:
(A) San Francisco to San Jose.
(B) Merced to Fresno.
(C) Fresno to Bakersfield.
(D) Los Angeles to Anaheim.
(2) In accordance with FRA guidelines, these corridors are
required to complete environmental review by September 2011 and to
start construction by September 2012, with construction completion by
September 2017.
(e) The HSRA's application was approved for preliminary
engineering, and project-level environmental work for the following
five corridors:
(1) Los Angeles to San Diego.
(2) Los Angeles to Palmdale.
(3) Palmdale to Bakersfield.
(4) Merced to San Jose.
(5) Sacramento to Merced.
(f)
(d) The HSRA estimates that 60,277
90,000 jobs will be created or maintained by the
investment of these ARRA funds , along with matching state bond
funds, in the dozens of construction projects along the
eligible corridors throughout California.
(g)
(e) It is necessary to provide the HSRA with
unambiguous statutory authority to receive and expend federal funds
awarded to the HSRA for the purposes described in its application of
October 2, 2009, and consistent with the award of those federal
funds.
(h)
(f) Moreover, it is in the state's interest to obligate
and expend awarded funds as expeditiously as possible and in a
manner consistent with the voters' expectations when they approved
the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st
Century (Chapter 20 (commencing with Section 2704) of Division 3 of
the Streets and Highways Code) in November 2008, in order to expand
job creation and to complete vital infrastructure improvements as
soon as possible.
SEC. 2. The High Speed Rail Authority shall, to
the extent possible, use the proceed of bonds described in paragraph
(1) of subdivision (b) of Section 2704.04 of the Streets and
Highways Code to match federal funds made available from the American
Recovery and Reinvestment Act of 2009 (Public Law 111-5).
SEC. 3. SEC. 2. Section 185024 of
the Public Utilities Code is amended to read:
185024. (a) The authority shall appoint an executive director,
exempt from civil service, who shall serve at the pleasure
of the authority, to administer the affairs of the authority as
directed by the authority.
(b) The executive director is exempt from civil service and shall
be paid a salary established by the authority and approved by the
Department of Personnel Administration.
(c) The executive director may, as authorized by the authority,
appoint necessary staff to carry out the provisions of this part.
(d) The
(b) For purposes of overseeing the
ongoing work of the authority in implementing the high-speed train
project, the Governor may appoint up to five additional
employees, exempt from civil service, as deputy
directors of the authority, who, together with the
executive director, shall constitute the executive staff of the
authority, and who shall serve at the pleasure of the executive
director.
(c) The compensation of the executive director and the additional
employees authorized by subdivision (b) shall be established by the
authority in an amount that is reasonably necessary, in the
discretion of the authority, to attract and hold a person of superior
qualifications. To determine the compensation for the positions
under this subdivision, the authority shall cause to be conducted,
through the use of independent outside advisers, salary surveys of
both of the following:
(1) Other state, regional, and local transportation agencies that
are most comparable to the authority and its responsibilities.
(2) Other relevant labor pools.
The compensation set by the authority shall not exceed the highest
comparable compensation for a position of that type, as determined
by the survey. The Department of Personnel Administration shall
review the methodology used in the salary survey.
(d) The executive director may, as authorized by the authority,
appoint necessary staff to carry out the provisions of this part.
(e) Any action to be taken under this section by the authority
shall require a vote of the board of the authority.
SEC. 4. Section 185033 of the Public Utilities
Code is amended to read:
185033. (a) The authority shall prepare, publish, adopt, and
submit to the Legislature, not later than January 1, 2012, and every
two years thereafter, a business plan. At least 60 days prior to the
publication of the plan, the authority shall publish a draft business
plan for public review and comment. The draft plan shall also be
submitted to the Senate Committee on Transportation and Housing, the
Assembly Committee on Transportation, the Senate Committee on Budget
and Fiscal Review, and the Assembly Committee on Budget. The business
plan shall identify all of the following: the type of service the
authority anticipates it will develop, such as local, express,
commuter, regional, or interregional; a description of the primary
benefits the system will provide; a forecast of the anticipated
patronage, operating and maintenance costs, and capital costs for the
system; an estimate and description of the total anticipated
federal, state, local, and other funds the authority intends to
access to fund the construction and operation of the system; and the
proposed chronology for the construction of the eligible corridors of
the statewide high-speed train system. The business plan shall also
include a discussion of all reasonably foreseeable risks the project
may encounter, including, but not limited to, risks associated with
the project's finances, patronage, right-of-way acquisition,
environmental clearances, construction, equipment, and technology,
and other risks associated with the project's development. The plan
shall describe the authority's strategies, processes, or other
actions it intends to utilize to manage those risks.
(b) (1) In addition to the requirements of subdivision (a), the
business plan shall include, but need not be limited to, all of the
following elements:
(A) Using the most recent patronage forecast for the system,
develop a forecast of the expected patronage and service levels for
the Phase 1 corridor as identified in paragraph (2) of subdivision
(b) of Section 2704.04 of the Streets and Highways Code and by each
segment or combination of segments for which a project level
environmental analysis is being prepared for Phase 1. The forecast
shall assume a high, medium, and low level of patronage and a
realistic operating planning scenario for each level of service.
Alternative fare structures shall be considered when determining the
level of patronage.
(B) Based on the patronage forecast in subparagraph (A), develop
alternative financial pro formas for the different levels of service,
and identify the operating break-even points for each alternative.
Each pro forma shall assume the terms of subparagraph (J) of
paragraph (2) of subdivision (c) of Section 2704.08 of the Streets
and Highways Code.
(C) Identify the expected schedule for completing environmental
review, and initiating and completing construction for each segment
of Phase 1.
(D) Identify the source of federal, state, and local funds
available for the project that will augment funds from the bond act
and the level of confidence for obtaining each type of funding.
(E) Identify written agreements with public or private entities to
fund components of the high-speed rail system, including stations
and terminals, any impediments to the completion of the system, such
as the inability to gain access to existing railroad rights-of-way.
(F) Identify alternative public-private development strategies for
the implementation of Phase 1.
(G) Identify the number of jobs each corridor is estimated to
create in this state.
(2) To the extent feasible, the business plan should draw upon
information and material developed according to other requirements,
including, but not limited to, the preappropriation review process
and the preexpenditure review process in the Safe, Reliable
High-Speed Passenger Train Bond Act for the 21st Century pursuant to
Section 2704.08 of the Streets and Highways Code. The authority shall
hold at least one public hearing on the business plan and shall
adopt the plan at a regularly scheduled meeting. When adopting the
plan, the authority shall take into consideration comments from the
public hearing and written comments that it receives in that regard,
and any hearings that the Legislature may hold prior to adoption of
the plan.
SEC. 5. Section 185036.5 is added to the Public
Utilities Code, to read:
185036.5. (a) The Legislature hereby appropriates to the
authority the sum of two billion two hundred fifty million dollars
($2,250,000,000) made available to the state for high-speed rail
purposes pursuant to Title XII of Division A of the American Recovery
and Reinvestment Act of 2009 (ARRA). The authority may expend these
funds for the purposes of developing a project or projects on the
high-speed rail network consistent with this section.
(b) The federal funds appropriated in subdivision (a) shall be
available for obligation and expenditure by the dates specified in
the federal requirements implementing the federal act. The authority
shall take those actions necessary to ensure the federal funds
awarded to it (1) are expended and used in a manner that meets all
applicable federal guidelines, (2) make the most efficient use of
available state bond funds, including replacing bond funds for
project expenditure with available federal funds where feasible, and
(3) are expended and used consistent with state law.
(c) The authority shall consider actions that (1) maximize job
creation in California at the earliest feasible time and (2) expedite
the completion of vital infrastructure projects that improve rail
safety, mobility, and performance.
(d) (1) The ARRA funds appropriated in subdivision (a) are
available for preliminary engineering, project-level environmental
work, mitigation, final design, and construction for the following
corridors that were approved by the Federal Railroad Administration
(FRA), without reference to any individual corridor or corridors:
(A) San Francisco to San Jose.
(B) Merced to Fresno.
(C) Fresno to Bakersfield.
(D) Los Angeles to Anaheim.
(2) The ARRA funds appropriated in subdivision (a) are also
available for preliminary engineering and project-level environmental
work for the following five corridors, without reference to any
individual corridor or corridors:
(A) Los Angeles to San Diego.
(B) Los Angeles to Palmdale.
(C) Palmdale to Bakersfield.
(D) Merced to San Jose.
(E) Sacramento to Merced.
(e) (1) The authority shall work with the FRA to establish
priorities among the four corridor programs in paragraph (1) of
subdivision (d) and, if applicable, for the five corridor programs in
paragraph (2) of subdivision (d), and to create a plan for
expenditure of ARRA funds appropriated in subdivision (a).
(2) No later than 30 days following the submittal of the initial
plan for expenditure of ARRA funds to the FRA, the authority shall
submit a copy of the plan to the Director of Finance and to the
policy committees with jurisdiction over transportation matters and
the fiscal committees in both houses of the Legislature.
(3) All funds appropriated pursuant to subdivision (a) shall be
expended in a manner that is consistent with and subject to the
requirements of Section 2704.08 of the Streets and Highways Code
applicable to bond proceeds, to the extent those requirements are
consistent with the federal conditions applicable to expenditure of
the funds.
(f) It is the intent of the Legislature to establish an inspector
general to oversee the fiscal functions of the authority to ensure
public confidence and private investor confidence in the fiscal
management and construction of the project. The inspector general
would report to the authority and Legislature annually.
SEC. 3. Section 185033 of the Public
Utilities Code is repealed.
185033. (a) The authority shall prepare, publish, adopt, and
submit to the Legislature, not later than January 1, 2012, and every
two years thereafter, a business plan. At least 60 days prior to the
publication of the plan, the authority shall publish a draft business
plan for public review and comment. The draft plan shall also be
submitted to the Senate Committee on Transportation and Housing, the
Assembly Committee on Transportation, the Senate Committee on Budget
and Fiscal Review, and the Assembly Committee on Budget. The business
plan shall identify all of the following: the type of service the
authority anticipates it will develop, such as local, express,
commuter, regional, or interregional; a description of the primary
benefits the system will provide; a forecast of the anticipated
patronage, operating and maintenance costs, and capital costs for the
system; an estimate and description of the total anticipated
federal, state, local, and other funds the authority intends to
access to fund the construction and operation of the system; and the
proposed chronology for the construction of the eligible corridors of
the statewide high-speed train system. The business plan shall also
include a discussion of all reasonably foreseeable risks the project
may encounter, including, but not limited to, risks associated with
the project's finances, patronage, right-of-way acquisition,
environmental clearances, construction, equipment, and technology,
and other risks associated with the project's development. The plan
shall describe the authority's strategies, processes, or other
actions it intends to utilize to manage those risks.
(b) (1) In addition to the requirements of subdivision (a), the
business plan shall include, but need not be limited to, all of the
following elements:
(A) Using the most recent patronage forecast for the system,
develop a forecast of the expected patronage and service levels for
the Phase 1 corridor as identified in paragraph (2) of subdivision
(b) of Section 2704.04 of the Streets and Highways Code and by each
segment or combination of segments for which a project level
environmental analysis is being prepared for Phase 1. The forecast
shall assume a high, medium, and low level of patronage and a
realistic operating planning scenario for each level of service.
Alternative fare structures shall be considered when determining the
level of patronage.
(B) Based on the patronage forecast in subparagraph (A), develop
alternative financial pro formas for the different levels of service,
and identify the operating break-even points for each alternative.
Each pro forma shall assume the terms of subparagraph (J) of
paragraph (2) of subdivision (c) of Section 2704.08 of the Streets
and Highways Code.
(C) Identify the expected schedule for completing environmental
review, and initiating and completing construction for each segment
of Phase 1.
(D) Identify the source of federal, state, and local funds
available for the project that will augment funds from the bond act
and the level of confidence for obtaining each type of funding.
(E) Identify written agreements with public or private entities to
fund components of the high-speed rail system, including stations
and terminals, any impediments to the completion of the system, such
as the inability to gain access to existing railroad rights-of-way.
(F) Identify alternative public-private development strategies for
the implementation of Phase 1.
(2) To the extent feasible, the business plan should draw upon
information and material developed according to other requirements,
including, but not limited to, the preappropriation review process
and the preexpenditure review process in the Safe, Reliable
High-Speed Passenger Train Bond Act for the 21st Century pursuant to
Section 2704.08 of the Streets and Highways Code. The authority shall
hold at least one public hearing on the business plan and shall
adopt the plan at a regularly scheduled meeting. When adopting the
plan, the authority shall take into consideration comments from the
public hearing and written comments that it receives in that regard,
and any hearings that the Legislature may hold prior to adoption of
the plan.
SEC. 4. Section 185035 of the Public
Utilities Code is repealed.
185035. (a) The authority shall establish an independent peer
review group for the purpose of reviewing the planning, engineering,
financing, and other elements of the authority's plans and issuing an
analysis of appropriateness and accuracy of the authority's
assumptions and an analysis of the viability of the authority's
financing plan, including the funding plan for each corridor required
pursuant to subdivision (b) of Section 2704.08 of the Streets and
Highways Code.
(b) The peer review group shall include all of the following:
(1) Two individuals with experience in the construction or
operation of high-speed trains in Europe, Asia, or both, designated
by the Treasurer.
(2) Two individuals, one with experience in engineering and
construction of high-speed trains and one with experience in project
finance, designated by the Controller.
(3) One representative from a financial services or financial
consulting firm who shall not have been a contractor or subcontractor
of the authority for the previous three years, designated by the
Director of Finance.
(4) One representative with experience in environmental planning,
designated by the Secretary of Business, Transportation and Housing.
(5) Two expert representatives from agencies providing intercity
or commuter passenger train services in California, designated by the
Secretary of Business, Transportation and Housing.
(c) The peer review group shall evaluate the authority's funding
plans and prepare its independent judgment as to the feasibility and
reasonableness of the plans, appropriateness of assumptions,
analyses, and estimates, and any other observations or evaluations it
deems necessary.
(d) The authority shall provide the peer review group any and all
information that the peer review group may request to carry out its
responsibilities.
(e) The peer review group shall report its findings and
conclusions to the Legislature no later than 60 days after receiving
the plans.
SEC. 5. Section 185037 of the Public
Utilities Code is amended to read:
185037. (a) Notwithstanding any other provision of law, for any
project along the high-speed rail network, the authority may contract
with the department to perform project design and engineering
services, including construction inspection services.
(b) The Department of Finance, the department, and the authority
may enter into agreements, execute documents, manage accounts and
deposits, and take any other action that may be appropriate, in
accordance with federal law and rules and regulations, to further
this section.
(b)
(c) For purposes of this section, "project design and
engineering services, including construction inspection services"
means preliminary engineering, planning, prebid services,
right-of-way acquisition, preparation of environmental documents,
preparation of plans, specifications, and estimates, construction
inspection including surveying and materials testing, quality control
inspection including highway and utility relocation, and grade
separations.
SEC. 6. Chapter 20.1 (commencing with Section
2704.25) is added to Division 3 of the Streets and
Highways Code , to read:
CHAPTER 20.1. HIGH-SPEED RAIL IMPLEMENTATION AND OVERSIGHT
Article 1. General Provisions
2704.25. As used in this chapter, the following terms have the
following meanings:
(a) "ARRA" means the federal American Recovery and Reinvestment
Act of 2009 (Public Law 111-5).
(b) "Authority" means the High-Speed Rail Authority created
pursuant to Section 185020 of the Public Utilities Code, or its
successor.
(c) "Bond act" means the Safe, Reliable High-Speed Passenger Train
Bond Act for the 21st Century (Chapter 20 (commencing with Section
2704).
(d) "Preappropriation review process" means the process, set forth
in subdivision (c) of Section 2704.08, to submit a funding plan for
bond proceeds for eligible capital costs prior to appropriation.
(e) "Preexpenditure review process" means the process, set forth
in subdivision (d) of Section 2704.08, to commit appropriated bond
proceeds to expenditure on eligible capital costs.
Article 2. Implementation of the Safe, Reliable High-Speed
Passenger Train Bond Act for the 21st Century
2704.30. It is the intent of the Legislature to appropriate, in
the 2010-11 Budget Act, the sum of two hundred thirty million five
hundred thousand dollars ($230,500,000) in state bond funds from the
High-Speed Passenger Train Bond Fund to the authority. The state bond
funds shall be used to provide a dollar-for-dollar match for federal
funds received by the state as provided in Section 2704.50. As these
state bond funds are expended by the authority, an equivalent amount
of federal high-speed rail funds received on a reimbursement basis
from the federal government shall be deposited in the High-Speed
Passenger Train Bond Fund to replace the expended state bond funds.
The deposited federal funds shall be used, upon appropriation, for
high-speed rail purposes consistent with federal law and regulations.
Not more than 30 days after replacing the expended state bond funds
with federal funds, the Director of Finance shall notify, in writing,
the chair of the committees in each house of the Legislature that
consider appropriations and the chair of the Joint Legislative Budget
Committee of this action.
2704.31. (a) In identifying the estimated full cost of
constructing a corridor or usable segment thereof for purposes of
subparagraph (C) of paragraph (2) of subdivision (c) of, and
subdivision (d) of, Section 2704.08, the amounts identified shall be
adjusted in year-of-expenditure dollars for the year in which
construction will actually occur.
(b) The preappropriation review process for a corridor or usable
segment thereof for eligible capital costs shall apply to the initial
request for each corridor or usable segment to be funded. The
process shall also apply to appropriations of federal ARRA funds for
capital costs. This subdivision does not, however, require submission
of subsequent funding plans for future year appropriations to fund
projects of a corridor or usable segment that previously was the
subject of a funding plan under
the preappropriation review process.
(c) The funding plan required under the preappropriation review
process, in addition to including the items required by subparagraphs
(A) to (K), inclusive, of paragraph (2) of subdivision (c) of
Section 2704.08, shall additionally include a summary of milestones
achieved and any issues identified in that regard, and any actions
taken to address those issues.
Article 3. Federal High-Speed Rail Funds
2704.50. The sum of two billion two hundred fifty million dollars
($2,250,000,000) in federal funds made available to the state for
high-speed rail purposes pursuant to Title XII of Division A of the
American Recovery and Reinvestment Act of 2009 (ARRA) shall, upon
appropriation by the Legislature, be used for (a) planning and
engineering for the high-speed train system and (b) capital costs,
consistent with federal guidelines, rules, and regulations, and
consistent with the bond act and this chapter.
2704.51. The authority shall take those actions necessary to
ensure that federal ARRA funds awarded to the state for high-speed
rail purposes are expended and used in a manner that meets all
applicable federal guidelines, rules, and regulations.
2704.52. (a) The ARRA funds to be appropriated pursuant to
Section 2704.50 shall be available for preliminary engineering,
project-level environmental work, mitigation, final design, and
construction for the following corridors that were approved by the
Federal Railroad Administration, without reference to any individual
corridor or corridors:
(1) San Francisco to San Jose.
(2) Merced to Fresno.
(3) Fresno to Bakersfield.
(4) Los Angeles to Anaheim.
(b) The ARRA funds to be appropriated pursuant to Section 2704.50
shall also be available for planning and engineering for any of the
following corridors, without reference to any individual corridor or
corridors:
(1) Sacramento to Stockton to Fresno.
(2) San Francisco Transbay Terminal to San Jose to Fresno.
(3) Oakland to San Jose.
(4) Fresno to Bakersfield to Palmdale to Los Angeles Union
Station.
(5) Los Angeles Union Station to Riverside to San Diego.
(6) Los Angeles Union Station to Anaheim to Irvine.
(7) Merced to Stockton to Oakland and San Francisco via the
Altamont Corridor.
2704.53. (a) The authority shall work with the Federal Railroad
Administration to establish priorities among the four corridors
specified in subdivision (a) of Section 2704.52 and to create a plan
for expenditure of ARRA funds to be appropriated pursuant to Section
2704.50. Upon finalizing the expenditure plan, the authority shall
submit a copy of the plan to the Director of Finance and to the
policy committees with jurisdiction over transportation matters and
to the fiscal committees in both houses of the Legislature.
(b) The federal funds to be appropriated pursuant to Section
2704.50 shall be available for obligation and expenditure by the
following dates specified in ARRA and its implementing guidelines,
rules, and regulations:
(1) Completion of environmental review by September 2011.
(2) Obligation of funds by September 2012.
(3) Completion of construction by September 2017.
2704.54. This article shall not apply to ARRA high-speed rail
funds awarded to the Transbay Joint Powers Authority for purposes of
constructing the Transbay Terminal in San Francisco.
Article 4. High-Speed Rail Accountability and Oversight
2704.70. (a) The authority shall prepare, publish, adopt, and
submit to the Legislature, not later than January 1, 2012, and every
two years thereafter, a business plan. At least 60 days prior to the
publication of the plan, the authority shall publish a draft business
plan for public review and comment. The draft plan shall also be
submitted to the Senate Committee on Transportation and Housing, the
Assembly Committee on Transportation, the Senate Committee on Budget
and Fiscal Review, and the Assembly Committee on Budget.
(b) The business plan shall identify or include, but need not be
limited to, all of the following:
(1) The type of service the authority anticipates it will develop,
such as local, express, commuter, regional, or interregional, and a
description of the primary benefits the system will provide.
(2) A forecast of the infrastructure capital costs, in
year-of-expenditure dollars, by segment, for the system and an
estimate of capital costs by year of expenditure by major cost
category.
(3) A forecast of the anticipated operating and maintenance costs
by the following categories:
(A) Train drivers and crew members.
(B) Station services and security.
(C) Control center operations.
(D) Administration.
(E) Power and energy.
(F) Track and system maintenance.
(G) Trainset maintenance.
(H) Infrastructure replacement funding, including trainsets.
(4) An estimate and description of the total anticipated federal,
state, local, and other funds the authority intends to access to fund
the construction and operation of the system. The estimate shall
include alternative funding scenarios that reflect the possibility of
reduced or delayed funding from planned sources. These scenarios
should detail the implications for construction timelines and for
bringing revenue-based passenger service on line.
(5) The proposed chronology for the construction of the eligible
corridors of the statewide high-speed train system.
(6) A discussion of all reasonably foreseeable risks the project
may encounter, including, but not limited to, risks associated with
the project's finances, patronage, right-of-way acquisition,
environmental clearances, construction, equipment, and technology,
and other risks associated with the project's development along with
a description of the authority's strategies, processes, or other
actions it intends to utilize to manage those risks.
(7) Using the most recent patronage forecast for the system, a
forecast of the expected patronage and service levels for the Phase 1
corridor as identified in paragraph (2) of subdivision (b) of
Section 2704.04 and by each segment or combination of segments for
which a project level environmental analysis is being prepared for
Phase 1. The forecast shall assume a high, medium, and low level of
patronage and a realistic operating planning scenario for each level
of service. Alternative fare structures shall be considered when
determining the level of patronage.
(8) Based on the patronage forecast in paragraph (7), alternative
financial pro formas for the different levels of service, and the
operating break-even points for each alternative. Each pro forma
shall assume the terms of subparagraph (J) of paragraph (2) of
subdivision (c) of Section 2704.08.
(9) The expected schedule for completing environmental review and
initiating and completing construction for each segment of Phase 1.
(10) The source of federal, state, and local funds available for
the project that will augment funds from the bond act and the level
of confidence for obtaining each type of funding.
(11) A description of written agreements with public or private
entities to fund components of the high-speed rail system, including
stations and terminals, and any impediments to the completion of the
system, such as the inability to gain access to existing railroad
rights-of-way.
(12) A description of alternative public-private development
strategies for the implementation of Phase 1.
(13) An estimate of costs for trainsets and an anticipated
replacement schedule.
(14) An estimate of potential costs of a minimum revenue guarantee
and potential payment sources.
(15) A long-term spending plan for preconstruction activities.
(16) All ARRA requirements and actions taken to ensure compliance
with federal law, guidelines, rules, and regulations.
(17) The number of jobs each corridor is estimated to create in
this state.
(c) To the extent feasible, the business plan should draw upon
information and material developed according to other requirements,
including, but not limited to, the preappropriation review process
and the preexpenditure review process in the bond act, set forth in
Sections 2704.08 and 2704.31. The authority shall hold at least one
public hearing on the business plan and shall adopt the plan at a
regularly scheduled meeting. When adopting the plan, the authority
shall take into consideration comments from the public hearing and
written comments that it receives in that regard, and any hearings
that the Legislature may hold prior to adoption of the plan.
2704.71. (a) The authority shall establish an independent peer
review group for the purpose of reviewing the planning, engineering,
financing, and other elements of the authority's plans and issuing an
analysis of appropriateness and accuracy of the authority's
assumptions and an analysis of the viability of the authority's
financing plan, including the funding plan for each corridor required
under the preappropriation review process pursuant to Sections
2704.08 and 2704.31.
(b) The peer review group shall include all of the following:
(1) Two individuals with experience in the construction or
operation of high-speed trains in Europe, Asia, or both, designated
by the Treasurer.
(2) Two individuals, one with experience in engineering and
construction of high-speed trains and one with experience in project
finance, designated by the Controller.
(3) One representative from a financial services or financial
consulting firm who shall not have been a contractor or subcontractor
of the authority for the previous three years, designated by the
Director of Finance.
(4) One representative with experience in environmental planning,
designated by the Secretary of Business, Transportation and Housing.
(5) Two expert representatives from agencies providing intercity
or commuter passenger train services in California, designated by the
Secretary of Business, Transportation and Housing.
(c) The peer review group shall evaluate the authority's funding
plans and prepare its independent judgment as to the feasibility and
reasonableness of the plans, appropriateness of assumptions,
analyses, and estimates, and any other observations or evaluations it
deems necessary.
(d) The authority shall provide the peer review group any and all
information that the peer review group may request to carry out its
responsibilities.
(e) The peer review group shall report its findings and
conclusions to the Legislature no later than 60 days after receiving
the plans.
(f) The reference in subdivision (c) of Section 2704.08 to Section
185035 of the Public Utilities Code shall be deemed to refer to this
section.
(g) The peer review group is not a state body as that term is
defined in Article 9 (commencing with Section 11120) of Chapter 1 of
Part 1 of Division 3 of Title 2 of the Government Code or a local
agency as that term is defined in the Ralph M. Brown Act (Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title 5 of
the Government Code).
2704.72. The Legislature shall exercise oversight over the
expenditure of funds available for high-speed rail implementation and
construction through the preappropriation review process and the
preexpenditure review process, as set forth in Sections 2704.08 and
2704.31.
2704.73. The Office for Project Controls and Risk Management is
hereby created in the authority and shall report directly to the
chief executive director of the authority.
2704.74. (a) An inspector general shall be appointed by the
Governor to oversee the fiscal functions of the authority to ensure
public confidence and private investor confidence in the fiscal
management and construction of the high-speed train project.
(b) The inspector general shall report annually to the authority
and the Legislature. The report shall be submitted in compliance with
Section 9795 of the Government Code. This subdivision shall be
inoperative on January 1, 2016, pursuant to Section 10231.5 of the
Government Code.
2704.75. The requirement pursuant to subdivision (e) of Section
2704.04 for the State Auditor to perform periodic audits of the
authority's use of bond proceeds shall also apply to the authority's
use of proceeds of federal ARRA funds received by the state for
high-speed rail purposes. Nothing in this section shall limit the
authority of the State Auditor to perform audits of expenditures
associated with any corridor or usable segment of the high-speed
train system. Audits conducted by the State Auditor shall be
independent of any audit conducted internally by the authority.
SEC. 6. SEC. 7. This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to ensure that California may secure the maximum amount
of funds available for high-speed rail development and to provide for
necessary staff in that regard as quickly as possible, it is
necessary that this act take effect immediately.