BILL ANALYSIS                                                                                                                                                                                                    


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                              UNFINISHED BUSINESS

          Bill No:  SB 1371
          Author:   Correa (D)
          Amended:  8/16/10
          Vote:     27 - Urgency

           ASSEMBLY FLOOR  :  Not available

           SUBJECT  :    Transportation:  bond funded projects:  letter  
          of no prejudice

           SOURCE  :     Author

           DIGEST  :    This bill authorizes letters of no prejudice 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.

           Assembly Amendments  delete the Senate version of the bill,  
          which dealt with Federal Stimulus Funding for  
          transportation, and instead add the current language.

           ANALYSIS  :    

           Existing law
          1. Makes available, in part, under the Safe, Reliable  
             High-Speed Passenger Train Bond Act (Bond Act) for the  
             21st Century, $950 million for capital improvements to  


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             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 California Transportation  
             Commission (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 improvements.  

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

                   Commuter rail
                   Light rail
                   Heavy rail
                   Cable car

          4. Authorizes letters of no prejudice (LONPs) for projects  
             to be funded under the Highway Safety, Traffic  
             Reduction, Air Quality, and Port Security Bond Act of  
             2006 that provided $20 billion in funds for  
             transportation capital improvements.  

          This bill:

          1. Authorizes eligible recipients of these bond dollars to  
             seek letters of LONPs, as defined, from the CTC.

          2. Authorizes the CTC to approve LONPs for projects that it  


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             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 apply:  

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

          5. Is an urgency bill allowing this bill to become  
             effective upon enactment.

          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,  


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          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 this bill 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  

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          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.

           SUPPORT  :   (Verified  8/26/10)

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

          JJA:do  8/27/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE


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