BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 1371
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          Date of Hearing:  August 23, 2010

                               Bonnie Lowenthal, Chair
                   SB 1371 (Correa) - As Amended:  August 16, 2010

           SENATE VOTE  :  Not relevant
          SUBJECT  :  High-speed Passenger Train Bond Funds:  letters of no  

           SUMMARY  :  Authorizes letters of no prejudice (LONP) for the $950  
          million in high-speed passenger train bond funds intended for  
          capital improvements to intercity and commuter rail lines and  
          urban rail systems.  Specifically,  this bill  :  

          1)Authorizes eligible recipients of these bond dollars to seek  
            LONPs, as defined, from the California Transportation  
            Commission (CTC).  

          2)Authorizes the CTC to approve LONPs for projects that it has  
            programmed or otherwise approved, regardless of whether bond  
            funding has been previously appropriated for the project.  

          3)Provides that expenditures for projects with approved LONPs  
            may be reimbursed with bond dollars if all of the following  

             a)   The project has commenced and expenditures have been  
               incurred by the eligible recipient.  

             b)   The expenses are eligible for reimbursement according to  
               state and federal laws and procedures.  

             c)   The eligible recipient complies with all legal  
               requirements of the project, including compliance with the  
               California Environmental Quality Act.  

             d)   The expenditures were incurred after the project was  
               programmed or otherwise approved by the CTC.  

             e)   Sufficient bond dollars are available.  

          4)Authorizes the CTC to develop guidelines to implement LONPs  
            for the $950 million in high-speed passenger train bond funds  


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            intended for intercity and commuter rail, using guidelines  
            already developed for similar bond programs to the extent  

          5) Is an urgency measure.  

           EXISTING LAW:   

          1)The Safe, Reliable High-Speed Passenger Train Bond Act (Bond  
            Act) for the 21st Century, makes available, in part, $950  
            million for capital improvements to intercity and commuter  
            rail lines and urban rail systems that provide direct  
            connectivity to the high-speed passenger train system.  Of the  
            $950 million, $190 million is allocated to The Department of  
            Transportation for state-supported intercity rail lines that  
            provide regularly scheduled service and that use public funds  
            for operation and maintenance.  (A minimum of $47.5 million  
            must be allocated to each of the state's three intercity rail  
            corridors.)  The remaining funds, $760 million, are allocated  
            by the CTC to eligible recipients by formula related to a  
            recipient's proportional share of the statewide number of  
            track miles, annual vehicle miles, and annual passenger trips.  

          2)Provides that allocations from this money may be used for  
            capital improvements that provide direct connectivity to the  
            high-speed passenger train system, are part of the  
            construction of the system, or that provide capacity  
            enhancements, modernization, rehabilitation, or safety  

          3)Makes public agencies and joint powers authorities that  
            operate regularly scheduled passenger rail service in the  
            following categories eligible recipients of the bond dollars:   

             a)   Commuter rail;

             b)   Light rail;

             c)   Heavy rail; and,

             d)   Cable car.  

          4)Authorizes LONPs for projects to be funded under the Highway  


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            Safety, Traffic Reduction, Air Quality, and Port Security Bond  
            Act of 2006 that provided $20 billion in funds for  
            transportation capital improvements.  

           FISCAL EFFECT  :  Unknown; however, according to the Assembly  
          Appropriations Committee analysis of last year's AB 672 (Bass),  
          Chapter 462, Statutes of 2009 that similarly authorized LONPs:  

          1)Minor additional costs to the CTC to approve and issue LONPs  
            and to track compliance with bond act requirements for  
            projects receiving LONPs.  

          2)Potential significant savings in aggregate state and local  
            transportation funds to the extent the issuance of LONPs  
            allows projects to remain on schedule and thus reduces total  
            project costs.  

           COMMENTS  :  Under current law, CTC and other administering  
          agencies have established LONP programs for various funding  
          categories under Proposition 1B, the Highway Safety, Traffic  
          Reduction, Air Quality, and Port Security Act of 2006.  LONPs  
          are essentially agreements between a local or regional  
          transportation agency and the agency responsible for  
          administering a specific category of state bond funds.  LONP  
          agreements allow a local or regional agency that wants to expend  
          their own local funds to begin or continue a project and then be  
          reimbursed later from state bond funds, when the bond funds  
          become available.  The timing and amount of reimbursement form  
          state bond funds is not guaranteed so local agencies, not the  
          state, assume the risk of choosing to use the LONP process to  
          advance funding for a project.  

          The Los Angeles County Metropolitan Transportation Authority  
          supports SB 1371 because it will allow the Southern California  
          Regional Rail Authority (SCRRA) to move forward with a $200  
          million rail safety program to implement positive train control  
          throughout the Metrolink system.  SCRRA intends to implement  
          positive train control by 2012.  

          Other projects will also be eligible for LONPs under this bill.   

           Related legislation:  AB 2703 (John A. Perez) is similar to this  
          bill and is currently pending in Senate Rules Committee.  


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          Altamont Commuter Express/ San Joaquin Regional Rail Commission
          California Transit Association
          Los Angeles County Metropolitan Transportation Authority
          Orange County Business Council
          Southern California Regional Rail Authority
          Ventura County Transportation Commission

          None on file

          Analysis Prepared by  :    Janet Dawson / TRANS. / (916) 319-2093