BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   AB 798|
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                                 THIRD READING


          Bill No:  AB 798
          Author:   Nava (D)
          Amended:  6/24/09 in Senate
          Vote:     21

           
           SENATE TRANSPORTATION & HOUSING COMM  :  9-1, 7/7/09
          AYES:  Lowenthal, Huff, Ashburn, DeSaulnier, Harman, Kehoe,  
            Pavley, Simitian, Wolk
          NOES:  Hollingsworth
          NO VOTE RECORDED:  Oropeza

           SENATE APPROPRIATIONS COMMITTEE  :  10-3, 8/27/09
          AYES:  Kehoe, Cox, Corbett, Hancock, Leno, Price, Runner,  
            Wolk, Wyland, Yee
          NOES:  Denham, Oropeza, Walters

           ASSEMBLY FLOOR  :  51-25, 6/2/09 - See last page for vote


           SUBJECT  :    California Transportation Financing Authority

           SOURCE  :     State Treasurer Bill Lockyer


           DIGEST  :    This bill establishes the California  
          Transportation Financing Authority to assist transportation  
          agencies in obtaining financing, primarily through issuing  
          bonds backed by specified sources of revenue, to develop  
          transportation projects.  In doing so, this bill allows the  
          authority to permit agencies to impose tolls for use of  
          facilities constructed.

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           ANALYSIS  :    Existing law regarding the authority to impose  
          and collect tolls for the use of a highway contains a  
          hodgepodge of disparate authorities, all of which are  
          limited either in number, scope, duration, or geographic  
          area. Toll facilities authorized under existing law fall  
          under three categories:  publicly-operated toll roads and  
          bridges, privately-operated toll roads, and high-occupancy  
          toll (HOT) lanes.

           Publicly-operated toll roads

           Existing law allows the County of Orange or a city therein  
          to enter into a joint exercise of powers agreement with  
          other local agencies for the purpose of developing and  
          operating toll roads.  The result of that statute is two  
          joint powers authorities collectively known as the  
          Transportation Corridor Agencies, which operate four toll  
          roads on the state highway system in Orange County.

          Existing law also establishes the Bay Area Toll Authority  
          to operate seven state-owned bridges and the Golden Gate  
          Bridge, Highway and Transportation District to operate the  
          Golden Gate Bridge connecting the City and County of San  
          Francisco to Marin County.

           Privately-operated toll roads
           
          In 1989, AB 680 (Baker), Chapter 107, authorized the  
          California Department of Transportation (Caltrans) to enter  
          into up to four lease agreements with private entities for  
          the design, finance, construction, maintenance, or  
          operation of transportation projects (i.e., public-private  
          partnerships or PPPs).  Only two projects have been  
          constructed with this authority:  The State Highway Route  
          (SR) 91 Express Lanes in Orange County, the rights to which  
          the Orange County Transportation Authority subsequently  
          acquired, and SR 125 in San Diego County.  

          AB 1010 (Correa), Chapter 688, Statutes of 2002, reduced  
          the number of PPP agreements authorized under AB 680 from  
          four to two and prohibited Caltrans from entering into any  
          new agreements after January 1, 2003.  
          In 2006, AB 1467 (N??ez), Chapter 32, Statutes of 2006,  
          authorized up to four transportation facilities to be  

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          developed through PPPs with the condition that projects "be  
          primarily designed to improve goods movement."  This  
          authority was then expanded with the passage of SB 4xx  
          (Cogdill), Chapter 2, Statutes of 2009, Second  
          Extraordinary Session.  This measure allows regional  
          transportation agencies and Caltrans to enter into an  
          unlimited number of PPPs for highway, street, or rail  
          projects, subject to specified terms and conditions.  The  
          authority to enter into these PPPs sunsets on January 1,  
          2017. 

           HOT lanes
           
          HOT lanes are high-occupancy vehicle lanes located in the  
          median or adjacent to free lanes that single-occupant  
          vehicles may access for a fee. California's first HOT lane  
          was on Interstate 15 in San Diego, authorized by AB 713  
          (Goldsmith), Chapter 962, Statutes of 1993.  The project  
          was part of a federal demonstration program to assess the  
          application of congestion pricing and to increase revenues  
          for transit development in the I-15 corridor.

          In 2004, AB 2032 (Dutra), Chapter 418, authorized the Sunol  
          Smart Carpool Lane Joint Powers Authority, the Alameda  
          County Congestion Management Agency, the Santa Clara Valley  
          Transportation Authority, and SANDAG to develop and operate  
          HOT lane facilities using value or congestion pricing on a  
          specified number of transportation corridors within their  
          jurisdictions, subject to certain conditions.  AB 574  
          (Torrico), Chapter 498, Statutes of 2007, authorized those  
          agencies to issue bonds backed by projected toll revenues  
          in order to pay for the costs of developing the facilities.  


          AB 1467 (N??ez), Chapter 32, Statutes of 2006, allowed,  
          until January 1, 2012, regional transportation agencies, in  
          cooperation with Caltrans, to apply to the California  
          Transportation Commission (CTC) to develop and operate HOT  
          lanes, including the administration and operation of a  
          value pricing program and exclusive or preferential lane  
          facilities for public transit.  The number of projects that  
          may be approved is limited to four, two in Northern  
          California and two in Southern California, and are subject  
          to approval by the Legislature.

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          This bill establishes the California Transportation  
          Financing Authority (authority) to assist transportation  
          agencies in obtaining financing to construct transportation  
          projects.  In doing so, this bill allows the authority to  
          permit agencies, subject to specified conditions, to impose  
          tolls for use of facilities constructed through the  
          authority.  More specifically, this bill:

           1.   Establishes the authority within the Office of the  
               Treasurer and specifies the membership, as follows:

                  A.        The Treasurer, who shall serve as the  
                    chair of the authority
                  B.        The Director of Finance
                  C.        The Controller
                  D.        The Director of Transportation
                  E.        The executive director of the California  
                    Transportation Commission
                  F.        A local agency representative appointed  
                    by the Senate Committee on Rules
                  G.        A local agency representative appointed  
                    by the Speaker of the Assembly

           2.   States as the objective of the authority "to increase  
               the construction of new capacity or improvements for  
               the state transportation system in a manner that is  
               consistent with and will help meet the state's  
               greenhouse gas reduction goals, air quality  
               improvement goals, and natural resource conservation  
               goals, through the issuance of, or the approval of the  
               issuance of, bonds" that are backed, in whole or in  
               part, by specified transportation-related revenues.

           3.   Specifies the powers of the authority as they pertain  
               to accepting moneys; employing, contracting for, and  
               fixing compensation for professional services; making  
               loans; issuing debt; charging administrative fees;  
               obtaining insurance; entering into agreements; and  
               investing moneys.

           4.   Allows the authority to borrow moneys as necessary  
               for the purposes of initial organization.  Any moneys  
               borrowed, including interest, shall subsequently be  

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               charged to and apportioned among project sponsors in  
               an equitable manner.

           5.   Defines "project" to mean all or a portion of the  
               planning, design, development, finance, construction,  
               reconstruction, rehabilitation, improvement,  
               acquisition, lease, operation, or maintenance of  
               highway, public street, rail, bus, or related  
               facilities.

           6.   Defines "costs" to include items that are necessary  
               or incident to the construction, rehabilitation,  
               acquisition, or financing of any project.

           7.   Defines "project sponsor" to include Caltrans, a  
               regional transportation planning agency, county  
               transportation commission, any other local or regional  
               transportation entity designated in statute as a  
               regional transportation agency, a joint exercise of  
               powers authority, or an agency designated to provide  
               the county transportation plan in the Bay Area region.

           8.   Provides that all expenses incurred by the authority  
               for a project shall be payable solely from funds  
               received for the project.  Under no circumstances  
               shall the authority create any debt, liability, or  
               obligation on the part of the state.

           9.   Specifies the revenue sources that may be pledged as  
               security for revenue bonds issued by the authority,  
               including:  

                  A.        Local transportation funds, including,  
                    but not limited to, fuel taxes, Proposition 42  
                    moneys, local transportation sales taxes, state  
                    revenues approved for this purpose by the  
                    Legislature or by initiative, and developer fees.

                  B.        Tolls

           10.  Provides that revenues sources within the control of  
               a state agency may only be pledged with approval by  
               Caltrans or CTC.


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           11.  Specifies the requirements that a project must meet  
               in order to be financed or refinanced by the  
               authority, including:

                  A.        The project complies with all relevant  
                    statutes applicable to the planning, programming,  
                    and construction of transportation projects.

                  B.        The project is contained in the  
                    constrained portion of a conforming regional  
                    transportation plan that is consistent with the  
                    greenhouse gas reduction targets assigned by the  
                    Air Resources Board.

                  C.        For highway projects, the project sponsor  
                    has secured the support of Caltrans and is  
                    consistent with the needs and requirements of the  
                    state's highway system.

                  D.        The project is financially and  
                    technically feasible.

                  E.        The project meets or exceeds  
                    environmental requirements and has all necessary  
                    permits approved.

                  F.        Performance measures have been developed  
                    for the project to monitor its progress.

                  G.        The project has community support, which  
                    shall be demonstrated through a public review and  
                    comment process.

                  H.        For highway projects, the project sponsor  
                    submits to CTC a plan that demonstrates how  
                    transit service or alternative modes of  
                    transportation will be enhanced in the corridor  
                    concurrent with the operator of a toll facility.

           12.  Prohibits the authority from assuming any planning,  
               programming, or allocation authority possessed by  
               Caltrans or CTC.

           13.  Requires the authority to determine that the revenues  

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               and other moneys available for a project will be  
               sufficient to pay debt service on the bonds and to  
               operate and maintain the project over the life of the  
               bonds.

           14.  Allows a project sponsor to be the issuer of bonds if  
               the authority determines the revenues available for  
               the project will be sufficient to pay debt service on  
               the bonds and to operate and maintain the project over  
               the life of the bonds.

           15.  Allows the authority to authorize a project sponsor  
               to impose and collect tolls as one source of funding,  
               if the project meets the following requirements:

                  A.        The governing body of the project sponsor  
                    approves the imposition of tolls by a majority  
                    vote of the governing body, or if Caltrans is the  
                    sponsor by a majority vote of the CTC, or the  
                    majority of voters within the jurisdiction of the  
                    project sponsor has approved a ballot measure  
                    authorizing tolls.

                  B.        Each highway project for which tolls are  
                    imposed has nontolled alternative lanes available  
                    for public use in the same corridor as the toll  
                    project.  A project sponsor may not convert any  
                    existing nontolled lane into a tolled lane,  
                    except for the conversion of an HOV lane into a  
                    HOT lane.

                  C.        For highway projects, the project is on  
                    the state highway system.

                  D.        Tolls are set and maintained at a level  
                    expected to be sufficient to pay debt service,  
                    operations, and maintenance of the project over  
                    the life of the bonds.

                  E.        The project's financial pro forma  
                    incorporates life-cycle costs, including  
                    maintenance, operation, and rehabilitation.  

                  F.        Excess revenues from the project shall be  

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                    used exclusively in the corridor from which the  
                    revenue was generated to pay for the following  
                    expenditures:

                        (1)             Acquisition, construction,  
                          improvements, maintenance, or operation of  
                          high-occupancy vehicle facilities
                        (2)             Other transportation purposes
                        (3)             Transit service, including  
                          transit operations

                  G.        The project sponsor, in consultation with  
                    Caltrans, adopts an expenditure plan, updated  
                    annually, that describes the transportation  
                    improvements planned for the corridor, including  
                    the projected costs, use of toll revenues, and a  
                    proposed completion schedule.

                  H.        Tolls are not set to generate more  
                    revenue than is necessary to pay debt service,  
                    fund reserves, operate, maintain, repair, or  
                    rehabilitate the project, and provide funding for  
                    transportation improvements identified in the  
                    expenditure plan.

           16.  Allows a project sponsor to implement variable or  
               dynamic pricing to manage congestion on the tolled  
               facilities.

           17.  Requires the authority and CTC to develop a  
               cooperative process for approving projects such that a  
               project is approved by CTC and the project's financing  
               is approved by the authority at approximately the same  
               time.  Both CTC and the authority are required to work  
               with project sponsors to ensure that projects are  
               brought forward in a manner that is consistent with  
               the CTC's project requirements and the authority's  
               financing requirements.

           18.  Requires CTC and the authority to make available for  
               public review and comment a description of the project  
               and its financing plan.

           19.  Establishes provisions regarding the issuance and  

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               purchase of bonds, as well as the management of bond  
               sale proceeds and any net earnings the authority may  
               accrue.

           20.  Requires the authority to report to CTC, beginning  
               June 30, 2011 and annually thereafter, regarding  
               actions it has taken, to be included in the CTC's  
               annual report to the Legislature.

          This bill also deletes the requirement that HOT lane  
          projects authorized under AB 1467 be approved by the  
          Legislature.

           Related Legislation  
           
          AB 744 (Torrico) authorizes BATA to finance and develop a  
          region-wide system of HOT lanes referred to as the Bay Area  
          Express Lane Network.
          AB 1175 (Torlakson), among other provisions, adds the  
          Antioch and Dumbarton bridges to the state toll bridge  
          seismic retrofit program and allows BATA to increase bridge  
          toll rates for purposes of completing those projects. 

           Prior Legislation  
           
          This bill is nearly identical to the version of AB 3021  
          (Nava) that passed this committee last year on an 8 to 1  
          vote.  That bill was subject to the Governor's blanket veto  
          in which he applied this generic message:

               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.

           FISCAL EFFECT  :    Appropriation:  Yes   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee:

                          Fiscal Impact (in thousands)


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

          CTFA ongoing costs                           ongoing costs  
          offset by bond issuance                      Special**
                              fees 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.

           SUPPORT  :   (Verified  8/27/09)

          State Treasurer Bill Lockyer (source) 
          Associated General Contractors of California
          California Association of Councils of Governments
          California Labor Federation
          Los Angeles County Metropolitan Transportation Authority
          Riverside County Transportation Commission
          Santa Clara Valley Transportation Authority
          State Building and Construction Trades Council
          Transportation Agency for Monterey County
          Ventura County Transportation Commission


           ARGUMENTS IN SUPPORT  :    By establishing the California  
          Transportation Financing Authority, the author and sponsor,  
          the State Treasurer's Office, argue that this bill creates  
          a method for local, regional, and state agencies to finance  
          projects in the municipal bond market and to ensure that  
          projects and funding are consistent with state  
          transportation policy objectives and public finance  
          criteria that reflect "best practices."  The bill  
          recognizes the need for transportation funding and provides  
          a way for those willing and able to pay for new capacity to  
          build it.  Explaining why the bill is needed, the author  
          and sponsor state:


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               Capacity demands of transportation infrastructure in  
               our state combined with declining revenue streams for  
               transportation project financing have severely eroded  
               our transportation systems. Population increases of  
               the state have far outpaced transportation project  
               construction. The state gasoline excise tax, the major  
               state source of transportation construction funding,  
               has depreciated in value and remains unchanged since  
               1994 at 18 cents per gallon. New and creative funding  
               sources to meet our transportation funds must be  
               found.


           ASSEMBLY FLOOR  :
          AYES:  Ammiano, Arambula, Beall, Blumenfield, Brownley,  
            Buchanan, Caballero, Charles Calderon, Carter, Chesbro,  
            Coto, Davis, De La Torre, De Leon, Eng, Evans, Feuer,  
            Fong, Fuentes, Furutani, Galgiani, Hall, Hayashi, Hill,  
            Huber, Huffman, Jeffries, Jones, Krekorian, Lieu, Bonnie  
            Lowenthal, Ma, Mendoza, Monning, Nava, Nestande, Niello,  
            John A. Perez, V. Manuel Perez, Portantino, Price,  
            Ruskin, Salas, Saldana, Skinner, Solorio, Swanson,  
            Torlakson, Torres, Torrico, Yamada
          NOES:  Adams, Anderson, Bill Berryhill, Tom Berryhill,  
            Blakeslee, Conway, Cook, DeVore, Duvall, Emmerson,  
            Fletcher, Fuller, Gaines, Garrick, Gilmore, Hagman,  
            Knight, Logue, Miller, Nielsen, Silva, Smyth, Audra  
            Strickland, Tran, Villines
          NO VOTE RECORDED:  Block, Harkey, Hernandez, Bass


          JA:nl  8/28/09   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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