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