BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           798 (Nava)
          
          Hearing Date:  08/27/2009           Amended: 06/24/2009
          Consultant: Mark McKenzie       Policy Vote: T&H 9-1
          _________________________________________________________________ 
          ____
          BILL SUMMARY:   AB 798 would establish the California  
          Transportation Financing Authority (CTFA) to assist  
          transportation agencies in obtaining financing, primarily  
          through issuing bonds backed by specified sources of revenue, to  
          construct transportation projects.  In doing so, this bill  
          allows the authority to permit agencies to impose tolls for use  
          of facilities constructed.  Among other things, this bill would:
           Establish the CTFA within the Office of the Treasurer and  
            specifies the membership of the seven-member Authority.
           Specify CTFA's objective is to increase the construction of  
            new transportation capacity or improvements in a manner that  
            is consistent with the state's greenhouse gas reduction goals,  
            air quality improvement goals, and natural resource  
            conservation goals, through the issuance of bonds that are  
            backed by specified transportation-related revenues.
           Require the Chair of the CTFA to appoint an executive  
            director, and authorize CTFA to fix compensation of bond  
            counsel, consultants, and advisors, and charge administrative  
            costs and expenses incurred by CTFA to project sponsors.
           Authorize CTFA to borrow money for purposes of meeting  
            necessary expenses of initial organization until the date that  
            CTFA derives a reliable funding source.  Borrowed funds would  
            be paid back with interest from participating project  
            sponsors.
           Require CTFA, beginning June 30, 2011 and annually thereafter,  
            to report on its activities to the California Transportation  
            Commission (CTC).  This information would be incorporated into  
            CTC's annual report to the Legislature.
           Authorize project sponsors to apply to CTFA for bond financing  
            or refinancing of transportation projects, as specified,  
            collect tolls to pay debt service and operate the project, and  
            implement variable pricing to manage congestion on the tolled  
            facilities.
           Prohibit the conversion of existing lanes, except existing HOV  
            lanes, into toll lanes.
          _________________________________________________________________ 
          ____










                            Fiscal Impact (in thousands)

           Major Provisions         2009-10      2010-11       2011-12     Fund
           CTFA startup costs     initial costs in the range of $150-$300  
          per                    Special*
                                 year, repaid by project sponsors in  
          future years

          CTFA ongoing costs     ongoing costs offset by bond issuance  
          fees                   Special**
                                 paid by participating agencies
          ____________
          * Various special funds within the STO, possibly General Fund to  
          the extent special funds are unavailable for startup cost loans
          ** California Transportation Finance Authority Fund, a  
          continuously appropriated fund created by this bill.
          _________________________________________________________________ 
          ____
          STAFF COMMENTS:  SUSPENSE FILE.
          Page 2
          AB 798 (Nava)

          In light of the diminishing value of transportation funding  
          resources, this bill is intended to create a method for local  
          and regional entities to finance projects in the municipal bond  
          markets, and ensure that projects and funding are consistent  
          with state transportation policy objectives and financing  
          criteria that reflect "best practices."  SB 798 would also  
          provide an alternative approach for agencies to develop toll  
          roads with oversight provided by the CTFA to ensure that  
          anticipated toll revenues would be adequate to pay for capital,  
          operation, maintenance, and rehabilitation costs of the proposed  
          project.

          AB 798 specifies that ongoing administrative costs and expenses  
          incurred by CTFA would be charged to participating project  
          sponsors.  However, it is not known how much demand there will  
          be for the financing tools offered by CTFA, and when sufficient  
          revenues will be realized to fully cover the administrative  
          costs of the Authority.  Initial costs are to be borrowed from  
          available resources within the State Treasurer's Office (STO)  
          and paid back with interest once there is sufficient demand for  
          CTFA financing.  Initial workload is also dependent upon demand,  
          but the bill requires the chair of the Authority to appoint an  
          executive director and authorizes employment of bond counsel and  
          other consultants, as necessary.  Staff estimates that annual  










          costs to develop and establish the Authority, including overhead  
          and operating expenses would likely be in the range of $150,000  
          to $300,000 for the Executive Director position, and the  
          addition of one Administrative staff, and one CEA position.  If  
          special fund resources are not sufficient to cover initial costs  
          of the Authority, there may be some General Fund impact.  All  
          borrowed funds would be paid back with interest, and ongoing  
          expenses would be covered by project sponsors.

          Staff notes that this bill would establish the California  
          Transportation Financing Authority Fund, a continuously  
          appropriated fund, to be administered by CTFA.  All moneys  
          accruing to the Authority would be deposited into this fund, and  
          revenues would be used to secure bond financing and "as  
          necessary and convenient to the accomplishment of any other  
          purpose of the authority."  Absent the oversight associated with  
          a legislative appropriation, staff recommends an amendment to  
          sunset the authority to finance additional transportation  
          projects on January 1, 2016 to provide the Legislature with the  
          opportunity to extend or repeal the authority provided by this  
          bill.

          Staff notes that this bill is nearly identical to AB 3021  
          (Nava), which the Governor vetoed last year due to the delay in  
          the passage of the 2009-10 Budget Act.  The following is an  
          excerpt from the generic veto message that was applied to  
          numerous bills:

               The historic delay in passing the 2008-2009 State Budget  
               has forced me to prioritize the bills sent to my desk at  
               the end of the year's legislative session.  Given the  
               delay, I am only signing bills that are the highest  
               priority for California.  This bill does not meet that  
               standard and I cannot sign it at this time.