BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1143
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: Dickinson
VERSION:
6/21/2011
Analysis by: Art Bauer FISCAL: NO
Hearing date: July 5, 2011
SUBJECT:
Sacramento Regional Transit District: bonds
DESCRIPTION:
This bill authorizes the Sacramento Regional Transit District
(RT) to issue revenue bonds.
ANALYSIS:
RT is embarking on an extensive program to expand its light rail
system. The first project in this expansion will be a 4.3-mile
extension of the Blue Line in the State Route 99 corridor from
its current terminus at Meadowview Road to Consumnes River
College, which RT estimates will cost $270 million. RT will
learn in 2012 whether the Federal Transit Administration will
fund 50 percent of this cost. RT is contemplating the use of
revenue bonds to raise part of the funds that will make up the
remaining 50 percent. RT is also planning a light rail
extension to Sacramento International Airport, which RT
estimates will cost $856 million. RT anticipates revenue bonds
being part of the funding package for this extension too.
Existing law authorizes RT to issue revenue bonds under the
provisions of the Revenue Bond Law of 1941, which establishes
uniform procedures for public agencies in California to use when
issuing revenue bonds. It defines the terms of the covenants,
defines the various agencies that may issue revenue bonds,
establishes procedure for imposing revenues, and enumerates a
variety of other conditions necessary to issue bonds, including
requiring a majority vote of the governing board to place a
measure on the ballot and a two-thirds vote of the electorate
within a special district's area of jurisdiction to issue the
bonds. Bonds issued by local agencies, including RT, have a 12
percent cap on the interest rate.
AB 1143 (DICKINSON) Page 2
RT, according to specified statutory procedures, may issue
short-term notes, grant anticipation notes, and otherwise
temporarily borrow funds.
This bill :
1. Authorizes RT to issue revenue bonds by a two-thirds
vote of the governing board but does not require a vote of
the electorate.
2. Exempts revenue bonds issued by RT from the 12 percent
statutory cap on the bond's interest rate.
3. Deems as revenue for purposes of the Revenue Bond Law of
1941farebox revenue, sales tax revenue, or other revenues
that may be available to RT.
4. Requires RT to follow various procedures stipulated in
existing law for issuing bonds.
COMMENTS:
1. Purpose . According to the author, the ability to issue
revenue bonds directly for up- coming light rail projects
will save time and be more efficient. Because of the
Federal Transit Administration requirements for grant
approval, RT needs to have its local share of the
construction financing for its light rail expansion in
place before May 2012. By arranging the local financing to
complement the federal financing decision timeline, this
bill will enable RT to meet its earliest possible date to
commence construction, which would be 2013.
2. Change in state transportation financing environment .
When RT originally conceived its light rail expansion
projects, it based a substantial portion of the local match
on prior state funding commitments from the Transportation
Congestion Relief Program, Proposition 1B, and the State
Local Partnership Program. Due to the lack of funding
availability in these transportation infrastructure
programs, RT must now raise a significant portion of local
funding by financing 50 percent of the project's cost on
its own. This bill establishes a framework for RT to
leverage local revenues to match the federal funds and
provides RT with the tools to maximize local funds.
AB 1143 (DICKINSON) Page 3
3. Other transit agencies have similar provisions . This
bill is not establishing new precedent. Several other
transit districts have similar provisions, including BART,
San Diego County Regional Transportation Commission, San
Mateo County Transit District, and the Santa Clara Valley
Transportation Authority among others.
4. Proposed amendment . This bill exempts RT from the
statutory 12 percent cap on interest on local bonds. It is
difficult to understand the sponsor's reason for this
language. Revenue bonds are tax exempt, and the municipal
bond market is not requiring interest rates even close to
that level. In fact, should there be a need to adjust the
12 percent cap, local agencies from throughout the state
would be seeking to raise it. The committee may wish to
amend the bill to delete the exemption from the 12 percent
cap on the interest on local bonds.
Assembly votes are not relevant
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
July 29, 2011)
SUPPORT: Sacramento Regional Transit District
OPPOSED: None received.