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 Page 2 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 Page 3 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