BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair AB 615 (Lowenthal) Hearing Date: 08/25/2011 Amended: 07/13/2011 Consultant: Mark McKenzie Policy Vote: T&H 6-2 _________________________________________________________________ ____ BILL SUMMARY: AB 615 would provide the High-Speed Rail Authority (HSRA) with independent authority over property acquisition and management of lands for the high-speed rail project through contracts with the Department of Transportation (Caltrans). Specifically, this bill would: Exempt HSRA from various statutory provisions related to the acquisition and disposal of property, rights-of-way, and easements that otherwise require approval of the Department of General Services, the State Public Works Board, or the Department of Finance. These provisions provide the HSRA with similar statutory authority granted to Caltrans and several other state agencies in property matters. Provide HSRA with authority over disposal, leasing, rental, and management of property, and specify that any revenues derived from these activities would be deposited with the HSRA for use on the high-speed rail system. Require HSRA to contract with Caltrans for all of the independent powers and duties provided in the bill. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund HSRA independence Potential cost savings as a result of stream- Bond* lined property-related administrative procedures Caltrans contracts Potential loss of 100s of millions in federal Federal and local funds to the extent that use of resources on HSRA projects delays Caltrans projects ____________ * High-Speed Passenger Train Bond Fund AB 615 (Lowenthal) Page 1 _________________________________________________________________ ____ STAFF COMMENTS: SUSPENSE FILE. AB 615 would provide the HSRA with certain authority related to the acquisition and disposal of property, rights-of way, and easements. Under current law, these activities generally require the involvement and approval of the Department of General Services (DGS), the State Public Works Board (SPWB), or the Department of Finance (DOF) in order to take certain actions regarding property or the contracting of professional and construction services. Caltrans, the University of California, the Department of Water Resources and other large agencies that manage their own larger scale construction projects are exempt from this body of law and follow other procedures. This bill would essentially provide the HSRA with the same exemptions that are provided to these other agencies, but would require HSRA's independent activities to be conducted through a contract with Caltrans. Staff notes that HSRA would need to contract with Caltrans for legal and right-of-way (ROW) staff for activities related to the acquisition, management, and disposal of property rather than conducting activities with oversight from DGS, SPWD, or DOF. There would likely be corresponding savings, however, to the extent that other state agencies would be relieved of oversight and administrative responsibilities. Staff estimates the provisions related to property management may result in overall project savings to the extent that procedures are more streamlined than the current process that requires approvals from DGS, SPWD, or DOF. The HSRA and the Federal Railroad Administration jointly selected a segment from near Fresno to near Bakersfield as the first construction segment of the high-speed rail system. Between federal funds and state bond funds, the HSRA has committed about $5.7 billion for this Central Valley project. As a condition of the $1.85 billion in ARRA grants for the project, the HSRA must complete construction by September 30, 2017. The HSRA has identified the need to acquire 1100 right of way parcels in the Central Valley over the next two years. This AB 615 (Lowenthal) Page 2 workload is equivalent to the average number of acquisitions that Caltrans completes in a year for its projects. Caltrans does not have capacity in the right-of-way function to assist the HSRA without severe impacts to project delivery commitments for 2011-12. Caltrans would be required to redirect existing staff to meet the anticipated HSRA needs. Since the right of way function is currently understaffed and environmental analysis, design, construction, and legal services have no capacity to assist HSRA, the additional workload would result in delays to highway projects. This impact on delivery could jeopardize the state's ability to use all available Federal Highway Administration funding for transportation projects and impact the use of local measure funding from local agency partners. Caltrans is unable to contract out right-of-way activities so any movement of staff to HSRA projects could not be replaced through the use of Caltrans consultant resources. Caltrans indicates that this bill could result in the loss of over a hundred million dollars in federal and local measure funding for state highway projects, to the extent that redirecting resources to HSRA projects significantly delays highway projects. Staff notes that the bill currently specifies that funds derived from leases and other payments related to access to high-speed rail rights-of-way would be "deposited with the authority for use in the development, improvement, and maintenance of the high-speed rail system." Staff recommends an amendment to require that these funds be deposited into a new or existing fund in the Treasury, and make use of those funds contingent upon an appropriation by the Legislature to ensure proper oversight.