BILL ANALYSIS Ó
AB 1229
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Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1229 (Feuer) - As Amended: May 4, 2011
Policy Committee:
TransportationVote:14-0 (Consent)
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill authorizes any transportation planning agency to
commit up to one-half its share of federal regional surface
transportation program (RSTP) funds and congestion mitigation
and air quality (CMAQ) funds for debt service in order to fund
projects using GARVEE (Grant Anticipation Revenue Vehicles)
notes.
FISCAL EFFECT
According to Caltrans, from a federal perspective, repayment of
GARVEE bonds is ultimately a state obligation, thus to the
extent local agencies would be allowed to commit a significant
portion of their RSTP and CMAQ funds for GARVEE repayment, and
there is any uncertainty in those funding streams, there is
increased risk that a portion of the repayment obligation could
fall on the state.
(It should be noted that Fitch, one of the major bond-rating
agencies, recently revised its outlook on GARVEE bonds to
negative, reflecting a "growing uncertainty in federal
transportation policy, less predictable funding levels, and a
pending expiration of a majority of federal motor fuel taxes".)
COMMENTS
1)Background . GARVEE notes are tax-exempt debt instruments
solely backed by annual federal appropriations for federal-aid
transportation projects. Proceeds from this financing can be
used for the costs of right of way and/or construction of
highway or other transportation projects that are eligible
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under federal law. Projects must have environmental clearance
and completed project design, and be designated for GARVEE
financing by the California Transportation Commission (CTC).
Current 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. To
date, the use of GARVEE bonds has been limited, per CTC
guidelines, to federal projects in the State Transportation
Improvement Program (STIP) and State Highway Operation and
Protection Program (SHOPP), which together equal about $2
billion of the state's annual federal funding. Based on this
federal funding level, the annual GARVEE debt service capacity
totals about $300 million. The state has used GARVEE
financing twice since the program was established, and annual
debt service on these outstanding bonds is about $85 million,
leaving ample bonding capacity within the statutory limit.
2)Purpose . Federal funds for RSTP and CMAQ equal about $800
million annually, thus the authorization in this bill allowing
these funds to also to be used for GARVEEs would increase the
statewide GARVEE debt capacity to $420 million annually, and
enable regions to leverage over $1 billion and still be within
the statewide 15% limit.
RSTP funds are for projects located within the 11 urbanized
areas of California with populations greater than 200,000
people. These funds are apportioned based on relative
population.
CMAQ funds are directed to state departments of transportation
and metropolitan planning organizations in areas challenged
with attaining or maintaining clean air quality standards.
Funds are distributed to states via formulas based on
population and air quality classifications.
3)Amendments . So that statewide use of GARVEEs can be monitored
and equitably allocated, the bill should be amended to require
CTC approval prior to local agencies using GARVEEs as
proposed.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081
AB 1229
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