BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1215
                                                                  Page  1

          Date of Hearing:   May 18, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                  AB 1215 (Blumenfield) - As Amended:  May 10, 2011 

          Policy Committee:                              
          TransportationVote:14-0
                        Judiciary                             9-0

          Urgency:     No                   State Mandated Local Program: 
          Yes    Reimbursable:              No

           SUMMARY  

          This bill makes changes to new vehicle registration procedures, 
          the timeframe within which a vehicle purchaser must affix a 
          license plate, and vehicle sale documentation fees.  
          Specifically, this bill: 

          1)Requires a dealer of new motor vehicles to register 
            electronically with the Department of Motor Vehicles (DMV)) a 
            vehicle sold by the dealer, for which the dealer may charge 
            the purchaser a fee equal to the dealer's electronic 
            registration costs, not to exceed $29.  Currently, use of such 
            electronic registration is at the dealer's discretion.

          2)Reduces, from six months to 90 days, the time following a 
            vehicle sale during which the vehicle may be driven without 
            license plates.

          3)Changes, to amounts unspecified, the current document 
            preparation fee a dealer is authorized to charge for new car 
            purchases ($55) and leases ($45).

          4)Prohibits a dealer from selling a new motor vehicle, as of 
            July 1, 2012, unless the dealer is a private industry partner 
            of the DMV. 

           FISCAL EFFECT  

          1)One-time costs to DMV in 2011-12 to register approximately 600 
            new private industry partners in the Business Partner 
            Automation Program.  (Special fund.)  These costs would be 








                                                                  AB 1215
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            fully covered by fees paid by those registering with the 
            program.

          2)Unknown savings to DMV, potentially in the millions of 
            dollars, as resources are freed from having to manually 
            process new motor vehicle transactions.  (Special fund.)

          3)Potential costs to consumers of an unknown amount, but 
            collectively in the millions of dollars, depending upon the 
            amount of the document preparation fee, which the bill has yet 
            to specify.

           COMMENTS  

           1)Rationale  .  The author contends that increasing electronic 
            vehicle registration will streamline and improve DMV 
            operations by reducing paperwork and automating processes and 
            decreasing the time it takes for a vehicle purchaser to 
            receive license plates.  This quicker plate delivery time, the 
            author adds, enables the bill's provision requiring attachment 
            of plates within 90 days of sale, which will assist law 
            enforcement and reduce toll evasion.

           2)Background.
                 
               a)   DMV's Business Partner Program.   Statute authorized DMV 
               to enter into contracts with qualified private industry 
               partners for the purpose of processing vehicle registration 
               and titling transactions. In response, DMV established the 
               Business Partner Automation (BPA) Program. Statute 1685 
               required the Department to establish regulations necessary 
               to support the BPA Program, in which business partners are 
               authorized to process and issue validated registration 
               cards, full year registration stickers and automobile and 
               commercial vehicle license plates.  

             b)   Electronic Vehicle Registration  .  In 2001, DMV 
               established the Electronic Vehicle Registration (EVR) 
               program, which allows a new auto dealer who is a DMV 
               business partner to, at the dealer's discretion, register 
               electronically with DMV new auto sales. Industry 
               representatives estimate that more than half of auto 
               dealers participate in the program and only about 40% of 
               new cars are registered electronically.  DMV regulations 
               allow dealers participating in the EVR program to levy an 








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               optional consumer charge of up to $29 per registration.   
                
              c)   License Plates and Toll Evasion  .  Allows newly sold 
               vehicles to be operated without license plates until the 
               plates are received or until the end of a six-month period 
               after the date of sale, whichever occurs first.  Some toll 
               operators report millions of dollars in lost toll revenue 
               from vehicles without license plates blowing through tolls 
               without paying.   
                 
               d)   Document Preparation Fees.  Currently law allows dealers 
               to charge a document preparation fee of $55 for new cars 
               and $45 for lease vehicles.  The fee is to cover costs the 
               dealer entails in complying with state laws. Such fees have 
               been raised numerous times over the years and are 
               controversial because some feel the state should not build 
               a business expense into a government-sanctioned fee.  
                 
                Previous versions of this bill increased the document 
               preparation fee to $75. However, the latest version of the 
               bill deleted the specific dollar amount and inserted blanks 
               in their place, reflection contentions between the bill's 
               proponents and opponents of the documentation fee increase 
               component of the bill.
                
            3)Support.   This bill is supported by the California New Car 
            Dealers Association and CarMax Auto Stores.  

          4)Opposition.   The bill is opposed by Consumers for Auto 
            Reliability and Safety, who contest the bill's documentation 
            fee increase.  

            Analysis Prepared by  :    Jay Dickenson / APPR. / (916) 319-2081