BILL ANALYSIS Ó AB 1143 Page 1 Date of Hearing: August 31, 2011 ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT Cameron Smyth, Chair AB 1143 (Dickinson) - As Amended: July 12, 2011 SUBJECT : Sacramento Regional Transit District: bonds. SUMMARY : Expands the Sacramento Regional Transit District's (RT) authority to issue revenue bonds. The Senate amendments delete the Assembly version of this bill, and instead: 1)Authorize RT to issue revenue bonds by a two-thirds vote of the governing board, thereby, deleting the provisions in statute that require a vote of the electorate. 2)Deem as revenue, for purposes of the Revenue Bond Law of 1941, any revenues or other income, receipts, or amounts made available to RT, including, but not limited to, the proceeds of a transactions and use tax imposed under specified provisions of existing law. 3)Allow RT to borrow money in accordance with provisions related to securitized limited obligation notes, short term loans, and grant anticipation notes. 4)Make other technical and clarifying changes. EXISTING LAW : 1)Establishes the "Sacramento Regional Transit District Act" which governs the powers and functions of RT, establishes RT's territory, board of directors, and planning duties, and authorizes RT to issue general obligation bonds and revenue bonds as specified. 2)Allows RT to issue revenue bonds, payable from revenue of any facility or enterprise to be acquired or constructed by RT, in the manner provided by the Revenue Bond Law of 1941, Chapter 6 (commencing with Section 54300), Part 1, Division 2, Title 5 of the Government Code, all of the provisions of which are applicable to the district. AB 1143 Page 2 3)Authorizes the district to temporarily borrow money in accordance with various provisions of the Government Code applicable to local agencies. AS PASSED BY THE ASSEMBLY , this bill authorized the Department of General Services, with the consent of the Board of Equalization (BOE), to enter into a lease to consolidate the BOE headquarters. FISCAL EFFECT : None COMMENTS : The Legislature authorized the creation of the Sacramento Regional Transit District in 1971 to operate a comprehensive public transportation system for the Sacramento region. Since then, the Legislature has made additional funding tools available to public transportation agencies, as well as providing greater flexibility in the use of their existing authorities. This bill seeks to update RT's enabling act to reflect the changes and full range of funding tools now available to public agencies. Currently, 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 Cosumnes River College, which RT estimates will cost $270 million. RT is also planning a light rail extension to the Sacramento International Airport, estimated to cost $856 million. RT wants to use revenue bonds for part of the funding for both projects. Existing law authorizes RT to issue revenue bonds under the Revenue Bond Law of 1941, which establishes uniform procedures for public agencies in California to use when issuing revenue bonds, including the requirement for a two-thirds vote of the electorate within the district's area of jurisdiction to issue bonds. This bill makes three changes to RT's enabling Act. First, it authorizes RT to issue revenue bonds with a two-thirds vote of their governing board, thereby, foregoing the need to have a AB 1143 Page 3 vote of the electorate, as is currently required. Second, the bill expands what can be deemed as "revenue" for purposes of the Revenue Bond Law of 1941, in order to include other revenues for income, receipts, or amounts made available to RT, including proceeds from a transactions and use tax. Third, the bill allows RT more flexibility in borrowing funds, including the use of securitized limited obligation notes, short term loans, and grant anticipation notes - additional funding tools that were added to statute after RT's creation. According to the sponsor, the Sacramento Regional Transit District, this bill will allow RT to save on both financing costs and much-needed time with the ability to directly issue revenue bonds for their upcoming expansions. The author notes that financing must be completed before construction contracts can be awarded and the success of the projects will depend on RT's ability to execute financing in order to meet the 2013 construction season. Additionally, the author believes that providing RT with useful alternative procedures for temporary borrowing will help RT withstand both federal and state grant fund timing, which will provide a substantial portion of RT's capital and operating cash. Support arguments: According to the sponsor, the additional flexibility for RT in this bill is consistent with the authority of several other transit districts in California. Supporters argue that the bill will help RT to arrange local financing to complement federal funding in order to meet construction deadlines Opposition arguments: While this bill gives additional flexibility to RT and RT's ability to issue revenue bonds, it does, however, remove the current requirement for the electorate, by a two-thirds vote, to approve the issuance of those bonds. REGISTERED SUPPORT / OPPOSITION : Support AB 1143 Page 4 Sacramento Regional Transit District ÝSPONSOR] Opposition None on file Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958