BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 798
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 798 (Nava)
          As Amended  June 24, 2009
          Majority vote
           
           ----------------------------------------------------------------- 
          |ASSEMBLY:  |51-25|(June 2, 2009)  |SENATE: |29-4 |(September 3,  |
          |           |     |                |        |     |2009)          |
           ----------------------------------------------------------------- 
            
           Original Committee Reference:   TRANS  .

           SUMMARY  :  Creates the California Transportation Financing  
          Authority (CTFA) to provide for increased construction of new  
          capacity or improvements for transportation systems through the  
          issuance of revenue bonds.  

           The Senate amendments  add "bus" to the list of transportation  
          projects that would be eligible under this bill.  

           EXISTING LAW:  

           1)Authorizes local governmental agencies to enter into  
            agreements with private entities for the study, planning,  
            design, developing, financing, construction, maintenance,  
            rebuilding, improvement, repair, or operation, or any  
            combination thereof, by, and lease to or ownership by, that  
            entity of a revenue-generating infrastructure project, as  
            specified.  Requires agreements entered into under these  
            provisions to include adequate financial resources for the  
            project and allows for terms of up to 35 years, after which  
            the project would revert to the local governmental agency.   
            Broadly prohibits the use of this authority for state  
            highways.  

          2)Establishes the 13-member California Transportation Commission  
            (CTC) to advise and assist the Secretary of the Business,  
            Transportation and Housing Agency and the Legislature in  
            formulating and evaluating state policies and plans for  
            transportation programs in the state.  

          3)Authorizes regional transportation agencies or the Department  
            of Transportation (Caltrans) to enter into an unlimited number  
            of comprehensive development lease agreement with public or  
            private entities for transportation projects, under the  








                                                                  AB 798
                                                                  Page  2

            following key conditions:   

              a)   Projects must be primarily designed to achieve improved  
               mobility, improved operations or safety, and quantifiable  
               air quality benefits;  

             b)   At least 60 days prior to executing a final lease  
               agreement, the project sponsor (i.e., Caltrans or a  
               regional transportation agency) must secure approval by the  
               CTC then submit the agreement to the Legislature and to the  
               Public Infrastructure Advisory Committee (PIAC) for review;  
                

             c)   Prior to submitting a proposal to the Legislature and  
               PIAC, the project sponsor would have to conduct a least one  
               public hearing;

             d)   Existing non-toll or non-user-fee lanes cannot be  
               converted to toll lanes except that high occupancy vehicle  
               (HOV) lanes can be converted to high occupancy toll (HOT)  
               lanes for vehicles not otherwise meeting the occupancy  
               level requirements for those lanes; and,  

             e)   No lease agreements can be entered into after January 1,  
               2017.  

          4)Authorizes a regional transportation agency, in cooperation  
            with Caltrans, to apply to the CTC to develop and operate HOT  
            lanes, including the administration and operation of a  
            congestion-pricing program, using the following process:  

             a)   CTC is to review each application for HOT lane  
               development;  

             b)   For each project, CTC is required to conduct a least one  
               public hearing in northern California and one in southern  
               California;  

             c)   Following the hearings, CTC is to submit the  
               application, including any public comments made at the  
               hearings, to the Legislature for rejection or approval;  

             d)   Approval by the Legislature must be by statute;  

             e)   The number of projects under this authority is limited  








                                                                  AB 798
                                                                  Page  3

               to four, two in northern California and two in southern  
               California;  

             f)   CTC, in cooperation with the Legislative Analyst, must  
               annually report to the Legislature on the progress of the  
               development and operation of HOT lanes; and,  

             g)   No application may be approved under this authority  
               after January 1, 2012.

           AS PASSED BY THE ASSEMBLY  , this bill was substantially similar  
          to the version passed in the Senate.  

           FISCAL EFFECT  :  According to the Senate Appropriations  
          Committee:

          1)Though the CTFA's administrative costs would be charged to  
            participating project sponsors, it is not known how much  
            demand there will be for the financing tools offered by CTFA  
            and when sufficient revenues would be realized to fully cover  
            the administrative costs.  Initial costs are to be borrowed  
            from available resources within the State Treasurer's Office  
            and paid back with interest once there is sufficient demand  
            for CTFA financing.  

          2)Initial workload is dependent upon demand, but this bill  
            requires the chair of CTFA to appoint an executive director  
            and authorizes employment of bond counsel and other  
            consultants, as necessary.  Based on the cost of other  
            financing authorities under the State Treasurer's purview,  
            annual costs for CTFA would likely be in the range of $150,000  
            to $300,000.  

           COMMENTS  :  This bill would provide for what has become known as  
          "public-public partnerships" wherein government agencies partner  
          to finance public infrastructure.  The process provided for in  
          this bill is permissive.  State, regional, and local  
          transportation agencies may, if they choose, sponsor projects  
          using CTFA's authority to approve financing and tolls.  However,  
          these agencies will not be required to use CTFA's services.    
          Furthermore, this bill provides flexibility in the issuance of  
          bonds.  Transportation agencies may request CTFA to issue bonds  
          or they may request approval to issue bonds themselves.  

          This bill is nearly identical to AB 3021 (Nava) of 2008, which  








                                                                  AB 798
                                                                  Page  4

          passed the Legislature with broad support and no opposition but  
          was vetoed by Governor Schwarzenegger who cited that, because of  
          budget delays, he could not sign the bill (or dozens of other  
          bills) at that time.  

          Ironically, supporters of AB 798 argue that budget woes are  
          exactly why this bill is needed.  
          According to this bill's sponsor, State Treasurer Bill Lockyer  
          (Treasurer), this bill will help increase transportation  
          capacity in our state by providing transportation entities with  
          the resources needed to meet growing transportation needs.  The  
          Treasurer believes that this bill will "enable local and 
          regional entities to contribute more to the funding of  
          transportation projects, create a method for them to finance  
          projects in the municipal bond market, and ensure that projects  
          and funding are consistent with state transportation policy  
          objectives and "best practices" public finance  criteria."  

          Additionally, the California Labor Federation supports AB 798  
          stating, "Critical state and local infrastructure needs have  
          gone unmet for too long and in these hard economic times, we  
          should look beyond traditional revenue streams."  

          Related legislation:  SB 4 X2 (Cogdill), Chapter 2, Statutes of  
          2009, among other things, authorized Caltrans and regional  
          transportation agencies, until January 1, 2017, to enter into an  
          unlimited number of comprehensive development lease agreements  
          with public or private entities, or consortia thereof, for  
          transportation projects.  SB 4 X2 provides the Legislature an  
          opportunity to submit written comments about a proposed  
          agreement to Caltrans or a regional transportation agency, but  
          vests the ultimate discretion for executing the final lease  
          agreement with Caltrans or the regional transportation agency.  

           
          Analysis Prepared by  :   Janet Dawson / TRANS. / (916) 319-2093 


                                                               FN: 0002607