BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1192
                                                                  Page  1

          Date of Hearing:   August 4, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   SB 1192 (Oropeza) - As Amended:  August 2, 2010 

          Policy Committee:                              JudiciaryVote:7-2

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill provides for a new method of calculating and  
          controlling consumer facility charges (CFCs) for specific  
          airport consolidated rental car facilities.  Specifically, this  
          bill:

          1)Authorizes the Bob Hope (Burbank) Airport, Fresno Yosemite  
            International Airport, Los Angeles International Airport, and  
            San Diego International Airport to use an alternative  
            mechanism for collecting a CFC based on the number of days a  
            vehicle is rented, up to a maximum of five days, rather than a  
            flat rate per contract, and specifies limits for this fee  
            graduated over time.

          2)Requires the four airports, in order to use the alternative  
            CFC authority provided in (1) to follow a specified process,  
            complete an independent audit required at specified times, and  
            provide annual reports to the Assembly and Senate Judiciary  
            Committees.

          3)Requires the State Controller to review the audits in (2) and  
            independently examine and substantiate the need for and amount  
            of the CFC, and to report its findings to the Legislature. The  
            Controller's costs are to be reimbursed by the airports.

          4)Requires the airports wishing to exercise the above authority  
            to do so before January 1, 2018.

          5)Expands the purposes to which a customer facility charge (CFC)  
            can be used to include a fee to finance, design, and construct  
            terminal modifications to accommodate and provide customer  
            access to common-use transportation systems, as well as to  








                                                                  SB 1192
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            acquire vehicles for a common-use transportation system.

           FISCAL EFFECT  

          1)All costs to the Controller will be reimbursed by any of the  
            specified airports that seek to assess the alternative CFC.  
            If, at most, two audit reviews were required within a year and  
            required one auditor, the reimbursed cost to the Controller's  
            Office would be less than $100,000.

          2)The state, which incurs around 220,000 car rental days per  
            year, could experience unknown increased costs for multi-day  
            rentals at the specified airports. (These increased costs  
            could be partially offset by reduced costs for single-day  
            rentals at these airports.) Regardless, any increased costs  
            would be allocated among a multitude of fund sources, thus the  
            impact on any single fund would likely be minor. 
           COMMENTS  

           1)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.  These  
            facilities may be served by common-use transportation systems,  
            including bus shuttle systems, which transport rental car  
            customers to and from terminals and the consolidated rental  
            car facility. These facilities and systems are made possible  
            by statutorily authorized rental car user fees for customers  
            who choose to rent from an on-airport rental car company.

           2)Purpose  . This bill permits the four covered airport operators  
            to collect an alternative fee based on an amount per day  
            during the rental period (capped at a maximum of five days),  
            rather than the current $10 rate per-contract. Supporters  
            argue, "[The current] 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  
            affected."









                                                                  SB 1192
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           3)Enhanced Oversight  . This bill would permit the alternative  
            customer facility charge to be collected after a review and  
            approval process, beginning with a public hearing at the  
            airport and subject to a further review by the State  
            Controller to substantiate the need for and amount of the fee  
            request. According to a survey by the sponsor (City of Los  
            Angeles), six airports are currently collecting a CFC, but  
            none of the six have completed the audit required by existing  
            law.  The new review and approval process is designed to  
            ensure that there is better oversight and accountability.

           4)What's Good for the Goose?  This bill authorizes an alternative  
            CFC for four airports only. Given the deliberative process and  
            enhanced oversight attached to enacting such a fee, it is  
            unclear why only the four specified airports should be  
            authorized to avail themselves to this alternative. The bill  
            should be amended to allow any airport to enact an alternative  
            CFC pursuant to these provisions.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081