BILL ANALYSIS Ó
AB 1229
Page 1
ASSEMBLY THIRD READING
AB 1229 (Feuer)
As Amended May 27, 2011
Majority vote
TRANSPORTATION 14-0 APPROPRIATIONS 12-0
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|Ayes:|Bonnie Lowenthal, |Ayes:|Fuentes, Blumenfield, |
| |Jeffries, Achadjian, | |Bradford, Charles |
| |Blumenfield, Bonilla, | |Calderon, Campos, Davis, |
| |Buchanan, Eng, Furutani, | |Gatto, Hall, Hill, Lara, |
| |Galgiani, Logue, Miller, | |Mitchell, Solorio |
| |Norby, Portantino, | | |
| |Solorio | | |
| | | | |
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SUMMARY : Provides that a transportation planning agency may
commit up to half of its share of federal regional surface
transportation program (RSTP) funds and congestion mitigation
and air quality (CMAQ) funds for funding projects using federal
grant anticipation revenue notes (GARVEE notes), consistent with
statutory limits on the use of GARVEE and upon approval of the
California Transportation Commission (CTC) and notice to the
California Department of Transportation (Caltrans) and the State
Treasurer.
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
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
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Improvement Program (STIP) and the State Highway and
Operations Program (SHOPP).
3)Authorizes the 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)Requires, prior to April 1 of each year, the CTC, in
conjunction with the State Treasurer's office, to prepare an
annual analysis of the bonding capacity of federal
transportation funds.
5)Requires the CTC, in cooperation with Caltrans and regional
transportation planning agencies, to establish guidelines for
the use of GARVEE notes.
6)Prohibits the State 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)Requires, before GARVEEs notes are issued, 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 the 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.
10) Provides for the subvention of federal RSTP and
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CMAQ funds to regional transportation agencies, apportioned
according to federal law.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)According to Caltrans, the federal government views repayment
of GARVEE bonds as a state obligation ultimately; thus to the
extent the CTC allows local agencies 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.
2)Fitch, one of the major bond-rating agencies, recently revised
its outlook on the 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 : 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.
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
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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.
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093
FN: 0000969