BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1143| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1143 Author: Dickinson (D) Amended: 7/12/11 in Senate Vote: 21 SENATE TRANSPORTATION & HOUSING COMMITTEE : 7-2, 7/5/11 AYES: DeSaulnier, Gaines, Kehoe, Lowenthal, Pavley, Rubio, Simitian NOES: Harman, Huff ASSEMBLY FLOOR : Not relevant SUBJECT : Sacramento Regional Transit District: bonds SOURCE : Author DIGEST : This bill authorizes the Sacramento Regional Transit District to issue revenue bonds. ANALYSIS : Sacramento Regional Transit District (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 CONTINUED AB 1143 Page 2 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. 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. 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. 3. Requires RT to follow various procedures stipulated in existing law for issuing bonds. Comments 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 AB 1143 Page 3 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. 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. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 7/12/11) Sacramento Regional Transit District ARGUMENTS IN SUPPORT : According to the author's office, 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. JJA:kc 7/12/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****