BILL ANALYSIS Ó
AB 1229
Page 1
Date of Hearing: May 2, 2011
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 1229 (Feuer) - As Amended: April 11, 2011
SUBJECT : Grant anticipation revenue notes
SUMMARY : Increases the limit on the use of federal grant
anticipation revenue notes (GARVEEs). Specifically, this bill :
1)Increases the limit on the use of GARVEE notes from 15% to 25%
of the total amount of federal transportation funds deposited
in the State Highway Account annually.
2)Reserves 40% of the amount available for the use of GARVEEs
for projects proposed by transportation planning agencies to
be repaid from federal regional surface transportation program
(RSTP) funds or congestion mitigation and air quality (CMAQ)
funds.
3)Limits a regional transportation planning agency from
committing more than 50% of its share of RSTP and CMAQ
apportionments for GARVEE debt service.
4)Requires the California Transportation Commission (CTC) to
approve the use of GARVEEs, after consultation with the
California Department of Transportation (Caltrans) that debt
service for any additional GARVEE notes will not exceed
statutory limits.
EXISTING LAW:
1)Sets forth legislative findings and declarations that the use
of GARVEEs to finance federal transportation dollars can
accelerate projects and result in significant cost savings to
the state.
2)Defines "eligible project" for the use of GARVEEs to mean the
federally funded portion of any highway or other
transportation project that has been designated for
accelerated construction by the CTC, and that increases the
capacity, reduces the travel time, or provides long-life
rehabilitation of the key bridges and roadways of a corridor
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or gateway for interregional travel and movement of goods;
these project may include toll bridge seismic retrofit
projects, projects under the Traffic Congestion Relief Act of
2000, and projects programmed in the State Transportation
Improvement Program (STIP) and the State Highway and
Operations Program (SHOPP).
3)Authorizes CTC to approve the use of GARVEE notes for federal
projects upon approval of the Federal Highway Administration
(FHWA) and the regional transportation planning agency and
upon completion of the environmental clearance and design of
the project.
4)Prior to April 1 of each year, requires the CTC, in
conjunction with the Treasurer's office, to prepare an annual
analysis of the bonding capacity of federal transportation
funds.
5)Requires CTC, in cooperation with Caltrans and regional
transportation planning agencies, to establish guidelines for
the use of GARVEE notes.
6)Prohibits the Treasurer from authorizing the issuance of
GARVEE notes if the annual repayment obligations of all
outstanding notes in any fiscal year would exceed 15% of the
total amount of federal transportation funds deposited in the
State Highway Account.
7)Provides that the debt service on GARVEE notes used for a STIP
project under this chapter are counted against the
interregional improvement program share, in the case of a
project in the interregional improvement program, and the
county share for the county in which the project is located,
in the case of a project in a regional improvement program.
8)Before GARVEEs notes are issued, requires the CTC to compare
the use of GARVEE versus other funding mechanisms to achieve
maximum efficiency from the state federal allocation of
transportation funds.
9)Requires CTC, on or before October 1 of each year, to report
to the Governor, the Department of Finance, the Legislative
Analyst, and the chairs of the transportation committees in
the Assembly and the Senate on the amount of notes that the
commission intends to issue for the subsequent fiscal year.
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10) Provides for the subvention of federal RSTP and
CMAQ funds to regional transportation agencies, apportioned
according to federal law.
11) Requires federal RSTP funds to be obligated on
projects that are located within the 11 urbanized areas of
California with populations greater than 200,000 people; the
apportionment and distribution for such obligation is
calculated based on relative population.
12) Provides federal CMAQ funds to state departments of
transportation and metropolitan planning organizations in
areas that are challenged with attaining or maintaining clean
air quality standards; funds are distributed to states via
statutory formulas based on population and air quality
classifications.
FISCAL EFFECT : Unknown
COMMENTS: GARVEE notes are tax-exempt debt instrument financing
mechanisms that are backed by annual federal appropriations for
federal-aid transportation projects. Proceeds from the
financing can be used for the costs of right of way and/or
construction of highway or other transportation projects that
are eligible under federal law and that meet all federal
requirements. Additionally, projects must have environmental
clearance and completed project design, be designated for GARVEE
financing by the CTC and be eligible through FHWA for advance
construction using GARVEE financing. GARVEE financing relies
solely on future federal-aid funding for debt repayment.
Author's amendments: The author plans on taking amendments in
committee to recast the bill's provisions to authorize a
transportation planning agency to use federal RSTP funds and
CMAQ funds to GARVEE for federal projects, with the following
limitations:
1)That a transportation planning agency may commit no more than
half of its share of federal RSTP funds and CMAQ funds for
debt service to fund projects using GARVEE notes, consistent
with the overall limit of 15% on the use of GARVEE.
2)That a transportation planning agency that elects to use
GARVEE notes for an RSTP or CMAQ project inform Caltrans, the
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CTC, and the Treasurer.
California annually receives about $2.8 billion in federal
deposits. Existing law caps the repayment obligations of all
outstanding GARVEE notes in any fiscal year to no more than 15%
of the total amount of federal transportation funds received.
This equates to an annual debt service capacity of about $419
million.
California has used GARVEE financing twice since the program was
established. Currently the annual debt service of these
outstanding bonds is about $85 million, leaving ample bonding
capacity within the existing limit. In fact, in his 2011
"Analyses of GARVEE Bond Capacity," the State Treasurer
estimates that the current bonding capacity for GARVEE ranges
from approximately $1.8 billion to $3.3 billion, depending upon
varying market conditions and amortization periods.
To date, the use of GARVEE bonds has been limited to federal
projects in the STIP and SHOPP, which together equals about $2
billion of the federal funds received annually. Federal funds
for RSTP and CMAQ equal roughly $800 million annually. Allowing
these funds also to be used for GARVEEs would enable regions to
leverage over $1 billion and still be within the overall 15%
limit.
REGISTERED SUPPORT / OPPOSITION :
Support
Los Angeles County Metropolitan Transportation Authority
(sponsor)
State Building and Construction Trades Council
Opposition
None on file
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093