BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1229 (Feuer)
Hearing Date: 08/15/2011 Amended: 06/21/2011
Consultant: Mark McKenzie Policy Vote: T&H 9-0
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BILL SUMMARY: AB 1229 would authorize the issuance of Grant
Anticipation Revenue Vehicle (GARVEE) bonds to accelerate
projects programmed by a regional transportation planning agency
(RTPA) using its share of federal regional surface
transportation program (RSTP) or congestion mitigation and air
quality (CMAQ) funds.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
GARVEE limits reduction in future state GARVEE bonding
Federal
capacity
Debt service potential exposure of state funds for
Special*
bond repayment (see staff comments)
Caltrans administrationapproximately $40 for each
issuanceSpecial*
Treasurer unknown costs for financial services,
paid Bond
by bond proceeds
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* State Highway Account
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
GARVEE bonds are tax-exempt debt issued by the State Treasurer,
and backed by federal transportation funds, to accelerate
eligible State Transportation Improvement Program (STIP) and
State Highway Operations and Protection Program (SHOPP)
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projects. The California Transportation Commission (CTC), with
approval from federal transportation officials, must approve the
use of GARVEE financing for projects that have finalized design
and environmental clearance. Eligible federally funded projects
must be designated for acceleration by CTC and increase
capacity, reduce travel time, or provide long-life
rehabilitation of transportation infrastructure in an
interregional corridor. The state has used GARVEE financing
twice since the program was established in 2000, and annual debt
service on outstanding bonds related to total issuances of $756
million is approximately $85 million.
The federal Intermodal Surface Transportation Efficiency Act of
1992 established both the RSTP and CMAQ programs. RSTP funds
are allocated by relative population for projects located within
the 11 urbanized areas in California with populations that
exceed 200,000 persons. CMAQ funds are distributed on the basis
of both population and severity of air quality classifications
to urbanized areas. All of the CMAQ funds and 40 percent of the
RSTP funds are "passed through" directly to the RSTPs.
California received $395.2 million in RSTP funds and $423.5
million in CMAQ funds in 2010-11 and will receive $395.2 million
in RSTP funds and $431.1 million in CMAQ funds in 2011-12.
Future allocations of RSTP and CMAQ funds are uncertain because
the federal government has yet to approve a new comprehensive
transportation funding act. The current federal authorization
expires on September 30, 2011.
Existing law specifies that debt service on all outstanding
GARVEE bonds may not exceed 15 percent of the total amount of
federal transportation funds on deposit in the State Highway
Account. Based upon current federal funding levels of about $2
billion for STIP and SHOPP projects, the maximum debt service is
approximately $300 million. The addition of RSTP and CMAQ
federal funds would expand the maximum debt service capacity to
approximately $420 million. AB 1229 would specify that no more
than 50 percent of this total GARVEE bonding capacity is
available for projects programmed using RSTP and CMAQ funds.
This would leave approximately $210 million in debt service
capacity available for RSTP and CMAQ projects, but only $125
million available for STIP and SHOPP projects, since $85 million
in debt service is committed for previous GARVEE issuances.
While there is currently an abundance of GARVEE bonding capacity
available, staff notes that the bill essentially reduces the
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capacity for the state to use GARVEE financing for STIP and
SHOPP projects in the future. The Committee may wish to
consider an amendment that would reduce the percentage of total
bonding capacity available for sponsors of RSTP and CMAQ
projects. The state's demand for GARVEE financing is likely to
increase as one-time Proposition 1B general obligation bonds and
federal stimulus funds are depleted.
AB 1229 would require the RTPA to commit to repaying the state
for debt service if that agency's share of RSTP or CMAQ funds is
insufficient to repay the GARVEE bonds or if a portion of the
project costs are not eligible for federal funding. As part of
the repayment, the bill authorizes the CTC to amend the funds
necessary for repayment into the STIP to be counted against the
county's share. Staff notes that county shares may include both
federal and state funds, so this bill could create state
exposure for GARVEE debt service on local projects. In
addition, since debt service obligations would take priority
over funding of STIP projects, this mechanism could delay other
projects.
Caltrans indicates that the department would incur approximately
$40,000 in fees and staff time related to each bond issuance.
All costs to the State Treasurer are paid from bond proceeds,
which adds a small increment to debt service payments. Staff
recommends an amendment to require the RTPA seeking GARVEE
bonding for acceleration of RSTP or CMAQ projects to reimburse
Caltrans and the Treasurer for issuance costs.