BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
783 (Ashburn)
Hearing Date: 05/26/2009 Amended: 04/30/2009
Consultant: Mark McKenzie Policy Vote: T&H 10-0
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BILL SUMMARY: SB 783 would require the High Speed Rail
Authority (HSRA) to prepare, publish, and adopt a business plan
by March 1, 2010 and every two years thereafter.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Business plan adoption $200 $100-$150 $100-150 Bond*
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* High-Speed Passenger Train Bond Fund
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Proposition 1A, the Safe, Reliable High-Speed Passenger Train
Bond Act for the 21st Century, approved by the voters last
November, provides up to $9 billion for the development of the
high-speed rail system. Existing law requires the HSRA to
prepare a business plan by September 1, 2008 that includes the
types of services it expects to develop, a description of the
system's benefits, a patronage forecast, the sources of funds to
construct and operate the project, the chronology for
construction of the corridors in which it will operate, the risk
associated with construction, technology, financing and other
aspects of the project, and the HSRA's strategy for managing
risks.
SB 783 would require the HSRA to prepare an expanded business
plan, submit a draft of the plan for public review and to the
Legislature 60 days prior to publication, and adopt the final
plan and submit it to the Legislature by March 1, 2010 and every
two years thereafter. The expanded business plan would include
the following information:
The most recent patronage forecast to identify high, medium,
and low ridership scenarios and the corresponding levels of
service for Phase I of the project.
Alternative financial pro formas based on the patronage
forecast for each level of service, and the operating
break-even points for each alternative without operating
subsidies.
The expected schedule for completion of environmental review,
and initiation and completion of each segment of Phase 1.
The supplemental sources of any federal, state, and local
funding that is available to augment bond funds, and the level
of confidence for obtaining each type of funding.
Any written agreements with public or private entities to fund
components of the high-speed rail stations and terminals.
Alternative public-private development strategies for
implementing Phase I.
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SB 783 (Ashburn)
The HSRA indicates that each update to the business plan, as
specified in this bill, would result in costs in the range of
several hundred thousand dollars per update. Costs to produce
the initial business plan were in the range of $200,000 to
$300,000. Staff estimates that the costs related to this bill
would be of a similar magnitude.
The proposed HSRA budget request for 2009-10 is $139.2 million
in Proposition 1A bond funds for purposes including
project-level design and environmental review, program
management services, financial planning and public-private
partnership program, and new ridership and revenue forecasts.
The Legislative Analyst raised several concerns about the level
of detail provided in the HSRA business plan that was released
in November 2008, including: lack of specifics in the service
and ridership estimates, level of confidence in receiving each
type of funding, and the need for more detail in project
schedules and risk mitigation strategies. In light of these
concerns, Senate Budget Subcommittee 2 approved the funding
request, but also adopted budget bill language to require only
half of the funding be provided initially for preliminary
engineering and environmental review; the second half of the
funding would be contingent upon submittal of a revised and
expanded business plan by January 1, 2010, as specified. The
amount of total funding was also reduced by $709,000 related to
ridership and revenue forecasting, the necessity for which must
be addressed in the revised business plan.
Staff notes that many of the requirements in SB 783 related to
the adoption of an expanded business plan mirror the
requirements approved by the Senate Budget Subcommittee as a
contingency for HSRA to receive the remainder of their funding
for the 2009-10 fiscal year. If the actions of the Subcommittee
are adopted in the final Budget Act revision, the requirement in
this bill that HSRA adopt an updated and expanded business plan
by March 1, 2010 would be duplicative and unnecessary. Absent
the adoption of the Subcommittee action, however, the HSRA would
not be able to comply with the requirements of the bill and meet
the March 1, deadline. For example, the bill requires the
expanded business plan to be prepared and circulated for review
60 days prior to the adoption deadline. Since the bill does not
contain an urgency clause, the requirements would not become law
until January 1, 2010, thereby establishing a schedule that is
impossible to achieve. Staff recommends that the bill be
amended to provide adequate time for the HSRA to comply with the
deadlines.
Staff assumes funding related to ridership and revenue
forecasting will be addressed in future actions of the budget
committee as it becomes necessary for HSRA to provide investment
grade information to potential investors in proposals to attract
public-private partnership funding. For purposes of the
patronage forecasting required in SB 783, HSRA has indicated
that they will continue to use existing modeling information
provided in partnership with the Metropolitan Transportation
Commission. Any costs related to building a new modeling system
for ridership and revenue projections are not included in the
fiscal impact of this analysis.