BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1192
                                                                  Page  1

          SENATE THIRD READING
          SB 1192 (Oropeza)
          As Amended  August 20, 2010
          Majority vote 

           SENATE VOTE  :32-1  
          
           JUDICIARY           7-2         APPROPRIATIONS      12-5        
           
           ----------------------------------------------------------------- 
          |Ayes:|Feuer, Brownley, Evans,   |Ayes:|Fuentes, Bradford,        |
          |     |Huffman, Jones, Monning,  |     |Charles Calderon, Coto,   |
          |     |Saldana                   |     |Davis, De Leon, Gatto,    |
          |     |                          |     |Hall, Skinner, Solorio,   |
          |     |                          |     |Torlakson, Torrico        |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Tran, Hagman              |Nays:|Conway, Harkey, Miller,   |
          |     |                          |     |Nielsen, Norby            |
           ----------------------------------------------------------------- 

           SUMMARY  :  Provides for a new method of calculating and  
          controlling consumer fees for covered airport consolidated  
          rental car facilities, and new uses for those fees.   
          Specifically,  this bill  :

          1)Provides an alternative method for calculating a customer  
            facility charge (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, if an airport subject to the bill demonstrates  
            the need to do so.

          2)Requires that any airport wishing to exercise this authority  
            must do so before January 1, 2018.

          3)Expands the purposes to which a 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 acquire vehicles for a  
            common-use transportation system.

          4)Requires additional auditing and reports to demonstrate the  
            need for and purposes to which CFCs are put, including new  
            oversight by the State Controller.









                                                                  SB 1192
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           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee analysis:

          1)Costs to the State Controller will be about $45,000 for each  
            audit and will be fully reimbursed by any airport that seeks  
            to assess the alternative CFC.

          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  :  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 rental car  
          user fees for customers who choose to rent from an on-airport  
          rental car company.  The authority to collect these fees began  
          in 1999 when the Legislature passed and the Governor signed SB  
          1228, which permitted San Jose International Airport to collect  
          a customer facility charge of $10.15 to finance and construct a  
          consolidated rental car facility and common-use transportation  
          systems, subject to certain conditions.  San Francisco and San  
          Diego were also permitted similar statutory authority.  

          In 2001, 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 more general provisions enacted by AB 491 to  
          San Jose International Airport, thus permitting it to collect a  
          $10 per-contract CFC. 

          According to the author, consolidated rental-car outlets at  
          California commercial airports are now a fairly common practice.  








                                                                  SB 1192
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           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. 

          This bill would permit any covered airport operator to collect a  
          CFC calculated on an alternative basis - a varying amount per  
          day during each day of the rental period, rather than the  
          current $10 rate per-contract.  This new authority would be  
          capped at a maximum of five days per rental.  This is a new  
          method for calculating the CFC for airports that wish to invoke  
          it, but this alternative computation does not affect the  
          existing limitations and protections regarding CFCs.  As with  
          the existing method of computation, CFC collection authority  
          terminates when the bonds used for financing are paid or author,  
          except as otherwise specified.

          According to the sponsor the amount of CFC charged in other  
          large hub U.S. airports for consolidated rental car facilities  
          ranges from $2.50 per day (Orlando, FL) to $6.20 per day (New  
          Orleans, LA).  Of the 12 non-California airports surveyed, the  
          majority (five airports) were in the $2.50 to $4 range.  Two  
          airports charged fees in the $4.01 to $5 range; four airports in  
          the $5 to $6 range; and one airport was above $6. 

          This bill would allow the CFC to be increased at the covered  
          airports over a period of time, starting at $6 and potentially  
          increasing to $9 if circumstances warrant.  The City of Los  
          Angeles states that average car rental terms at LAX are a little  
          over four days.  Under this bill, the CFC charge could go from  
          $10 to approximately $36.  Supporters, including the California  
          Chamber of Commerce, believe increased fees are appropriate.

           This bill would permit the alternatively-calculated 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, six airports are currently  
          collecting a CFC, but none of the six has completed the audit  








                                                                  SB 1192
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          required by existing law, apparently without consequence.  They  
          would be required to comply with this existing requirement as a  
          condition of exercising any new authority.  The new review and  
          approval process is designed to ensure that there is better  
          oversight and accountability.

          The bill also expands the uses of CFC revenue to allow for the  
          acquisition of vehicles to be used for the transportation of  
          customers in a common-use transportation system, and to allow  
          for terminal modifications for the purpose of accommodating and  
          providing access to a common-use transportation system.  The  
          bill also clarifies existing law by using consistent terminology  
          and authorizing the use of CFC funds for the operation of  
          common-use transportation systems, but not for the operation of  
          consolidated airport rental facilities.

          Existing law distinguishes between consumers at on-airport  
          rental car facilities and those who use off-airport facilities  
          in order to avoid imposing a user-fee on off-airport consumers  
          unless they are required to use the common-use transportation  
          system.  The fee must be proportionate to the costs of the  
          common-use transportation system only.  This bill further  
          clarifies that any fee for a consolidated rental car facility  
          shall be collected only from customers of on-airport rental car  
          companies.


           Analysis Prepared by  :    Kevin G. Baker / JUD. / (916) 319-2334 


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