BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1192| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 1192 Author: Oropeza (D) Amended: 6/2/10 Vote: 27 SENATE JUDICIARY COMMITTEE : 4-0, 5/4/10 AYES: Corbett, Harman, Hancock, Leno NO VOTE RECORDED: Walters SENATE LOCAL GOVERNMENT COMMITTEE : 5-0, 5/5/10 AYES: Cox, Aanestad, Kehoe, DeSaulnier, Price SENATE APPROPRIATIONS COMMITTEE : 7-2, 5/27/10 AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee NOES: Denham, Wyland NO VOTE RECORDED: Cox, Walters SUBJECT : Airports: rental car facility fees SOURCE : City of Los Angeles DIGEST : This bill expands the definition of customer facility charge to include a fee that is required by an airport to be collected from the purposes of financing, designing, and constructing terminal modifications to accommodate and provide customer access to common use transportation systems. This bill requires the Bob Hope Airport, Fresno-Yosemite International Airport, the Los Angeles International Airport and the San Diego International Airport to provide reports on an annual basis CONTINUED SB 1192 Page 2 to the Senate and Assembly Committees on Judiciary detailing the total amount of the customer facility charge collected, how the funds are being spent, and whether certain airport concession fees have been increased since the prior report, if any. This bill also requires the above noted airports to complete an independent audit upon initial collection of the customer facility charge and every three years thereafter. This bill requires the Bureau of State Audits to review those audits and independently examine the collection of the customer facility charge, as necessary, and to report to the Legislature on its conclusions. ANALYSIS : Existing law governs contracts between rental car companies and their customers. Existing law authorizes a company that rents passenger vehicles to the public to collect a customer facility charge, which means a fee that is required by an airport to be collected for certain purposes, if specified circumstances apply, including, but not limited to, the collection of the fee is required by an airport operated by a city, a county, a city and county, a joint powers district, or a special district, the fee is calculated on a per contract basis, the fee is a user fee and not a tax, as specified, and the fee is $10 per contract, except as specified. This bill expands the definition of customer facility charge to include a fee that is required by an airport to be collected for the purpose of financing, designing, and constructing terminal modifications to accommodate and provide customer access to common-use transportation systems, as specified. Existing law provides that a statute that imposes a requirement that a state agency submit a periodic report to the Legislature is inoperative on a date four years after the date the first report is due. The bill, notwithstanding that requirement, also requires the Bob Hope Airport, Fresno-Yosemite International Airport, and the Los Angeles International Airport and the San Diego International Airport to provide reports on an annual basis to the Senate and Assembly Committees on Judiciary detailing the total amount of the customer CONTINUED SB 1192 Page 3 facility charge collected, how the funds are being spent, and whether certain airport concession fees have increased since the prior report, if any. The bill also requires the airport to complete a specified independent audit beginning one year after the initial collection of customer facility charge and every three years thereafter. The bill requires the Bureau of State Audits to review those audits and independently examine the collection of the customer facility charge, as necessary, with costs to be reimbursed by the individual airport being audited, and to report to the Legislature on its conclusions. This bill appropriates the sum of $550,000 from the General Fund to the bureau of State Audits for expenditure in the 2012-13 fiscal year to carry out the duties imposed upon the bureau pursuant ot the provisions of this bill. This bill makes legislative findings and declarations as to the necessity of a special statute for Los Angeles International Airport. Background In recent years, many airports have located rental car facilities off-site, often in consolidated facilities that house all car rental companies in one location. Common-use transportation systems, including bus shuttle systems, transport rental car customers to and from terminals and the consolidated rental car facility. In 1999, the Legislature passed and the governor signed SB 1228 (Vasconcellos), Chapter 760, Statutes of 1999, which permitted San Jose International Airport to collect a customer facility charge of $10.15 to finance and construct these consolidated rental car facilities and common-use transportation systems, subject to certain conditions. San Francisco and San Diego were also permitted similar statutory authority. AB 491 (Frommer), Chapter 661, Statutes of 2001) authorized other public airports to collect a $10 fee per contract to finance, design, and construct consolidated rental car facilities and common-use transportation systems. In 2007, SB 641 (Corbett), Chapter 44, Statutes of 2007, repealed the special authorization for San Jose International Airport and instead applied the CONTINUED SB 1192 Page 4 more general provisions enacted by AB 491 to San Jose International Airport, thus permitting it to collect a $10 per contract customer facility charge (CFC). In Los Angeles, the Los Angeles International Airport (LAX) plans to build a consolidated rental car facility. A recent Los Angeles Times article noted the following about the project: Los Angeles International Airport officials are drafting plans to build a terminal that will house many of the area's rental car companies, providing space for 33,000 vehicles while helping untangle the airport's notorious congestion and cutting pollution. The terminal, which could cost as much as $800 million, is also expected to make it easier for people to find their rental agencies or switch from one to another if the line is too long or it doesn't have the right car. LAX has collected $47 million for the project since 2007 by charging a flat $10 fee on rentals from the 10 companies whose vans circle the airport looking for customers. But the fee is not bringing in enough money, said Mark Adams, chief government affairs representative for Los Angeles World Airports, which operates LAX. In order to raise more funds, the airport is hoping to boost the surcharge through a daily fee rather than the current flat fee on rentals. The airport is still several years from beginning construction of the terminal. . . . Although airport traffic is down substantially since 9/11, rental agency vans make about 800,000 trips a year into the main airport, according to airport statistics, often with just one or two passengers. With a consolidated rental facility, buses would shuttle passengers between it and airline terminals, dropping the number of trips to 437,000 annually. Trips would be cut even further if a planned light-rail system with stops at the rental car terminal is built. Adams said the rental terminal is "considered the most significant air quality mitigation" effort in the airport's master CONTINUED SB 1192 Page 5 plan. ("LAX plans a consolidated car rental facility," Los Angeles Times, February 26, 2010.) FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee analysis: Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Bureau of State Audits $550* Review *Costs on a triennial basis ($100 to $175 per audit times four); cost reimbursed SUPPORT : (Verified 6/1/10) Alliance for a Regional Solution to Airport congestion Bob Hope International Airport California Airports Council California Chamber of Commerce Fresno-Yosemite International Airport Inglewood-Airport Area Chamber of Commerce Los Angeles County Major's Office Los Angeles World Airports San Francisco International Airport ARGUMENTS IN SUPPORT : The author's office states, "Construction of consolidated rental-car outlets at California commercial airports is now a fairly common practice. These centralized rental locations aggregate the operations of the on-airport rental car companies into one large site and house rental offices such as service centers and ready/return parking lots. Consolidated rental-car outlets are a vital step toward alleviating airport traffic congestion and air pollution. Consumer choice at many airports is also limited or non-existent by the many separate rental-car outlets and use of dedicated shuttles, vans and buses. "Airports currently use Consumer Facility Charges (CFCs) to CONTINUED SB 1192 Page 6 finance the insurance of long-term debt to pay for the design, construction and operations of these rental offices and the operation of the common-use transportation systems at airport terminals. With limited exceptions, existing state statute passed in 2001 only allows collection of the CFC at a fixed rate of $10 per rental-car transaction. This one-size-fits-all approach is failing to provide sufficient revenues to: 1) issue or service existing bonds to finance the construction of these car-rental offices; 2) cover ongoing operational costs of the offices and their common-use transportation systems. The current transaction fee does not offer an airport authority the flexibility to tailor its fee to local market conditions. In addition, when new car-rental outlets planned in California airports cannot be sufficiently funded under the current $10 per contract fee without airport subsidies, other vital airport services are effected." This bill is sponsored by the City of Los Angeles which argues that the bill would "provide California's airports with the funding mechanism they need to construct essential consolidated rental car facilities. These facilities reduce traffic congestion and air pollution and increase consumer choice. It is for these reasons our city is proposing to construct such a facility at Los Angeles International Airport (LAX). However our state's airports are currently locked into a fixed $10 per contract Customer Facility Charge (CFC) first set in 1999 that is often insufficient to fully fund construction of these facilities or to pay for the ones that have already been built." RJG:do 6/2/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED