BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 1496
Author: Assembly Budget Committee
Amended: 7/5/12 in Senate
Vote: 21
SENATE VOTES NOT RELEVANT
ASSEMBLY FLOOR : Not relevant
SUBJECT : Budget Act of 2012: High-Speed Rail
SOURCE : Author
DIGEST : This is the 2012 High-Speed Rail Trailer Bill
for the 2012 Budget Act. This bill makes certain
appropriations necessary for the enactment of the Budget
Act.
Senate Floor Amendments of 7/5/12 delete the prior version
of the bill, which contained statutory and technical
changes to implement the human services provisions of the
Budget Act of 2012, and instead add the current language.
ANALYSIS : The California High-Speed Rail Authority
(Authority) was created by Chapter 796, Statutes of 1996,
to direct development and implementation of inter-city
high-speed rail service that is fully coordinated with
other public transportation services. Voters approved
Proposition 1A (Prop 1A) in 2008, authorizing $9.950
billion in general obligation bonds for the project. Bond
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funds must be appropriated by the Legislature for
expenditure and the bond act lays out other requirements
for reporting and expenditure of bond funds. The project
received additional funding in 2009 when the federal
American Recovery and Reinvestment Act allocated $8 billion
nationally for high-speed and intercity rail.
Of total Prop 1A bond funds, $950 million is set aside for
capital improvements to intercity, urban, and commuter rail
that provide direct connectivity to high speed rail, $9.0
billion is set aside specifically for the high-speed rail
project. Up to $450 million is available for general
administration and up to $675 million is available for
initial construction activities such as environmental
studies and preliminary engineering. The remaining roughly
$8 billion is available for construction; however, a
non-bond match of at least 50% is required for each
corridor or segment.
The Authority released its Final 2012 Business Plan on
April 2012, which is the key document for review of the
Administration's Budget proposals. The Governor's plan to
implement high speed rail, based on the revised 2012-13
Budget proposal would: (1) appropriate $5.9 billion ($3.24
billion federal funds, $2.61 billion Prop 1A bond funds) to
construct an initial segment for the high-speed rail
project in the Central Valley; (2) appropriate $253 million
($48 million federal funds, $204 million Prop 1A bond
funds) for completion of environmental work and preliminary
design work for various rail segments in the high-speed
rail system; and (3) appropriate $819 million (Prop 1A
connectivity bond funds) for Department of Transportation
(Caltrans) and local rail operators to improve existing
rail operations to improve connectivity to the future
high-speed rail system. The Legislature also proposes to
include in the package $1.1 billion in bond funds for
investment in the bookends in northern and southern
California regions. The operating costs of the Authority
were included in AB 1497 (Assembly Budget Committee),
Chapter 29, Statutes of 2012, approved by the Legislature,
and signed by the Governor.
This bill appropriates amounts for the acquisition and
construction of initial portions of the high-speed rail
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project. It also requires extensive reporting by the
Authority. The components funded under this request are
the following items for the Authority as well as Caltrans
components related to the high-speed rail project:
1. Appropriations for Initial Construction Segment (Items
2665-306-0890 and 2665-304-6043) . This bill
appropriates to the Authority $3.24 billion from the
Federal Trust Fund and $2.61 billion from the High Speed
Passenger Train Bond Fund for the construction and
acquisition of a portion of the initial operating
segment. This initial construction segment constitutes
the segment running for 130 miles between Madera and
Bakersfield. This component was a request of the
Administration in the spring in order to begin the
initial construction phase of the project.
2. Appropriations for Bookend Investments (Item
2665-104-6043) . This appropriation to the Authority
would provide $1.1 billion of Prop 1A funding as a match
for two memorandums of understanding (MOUs) agreed to by
the Authority and the Southern California Association of
Governments (SCAG) for $500 million and the Metropolitan
Transportation Commission (MTC) for $600 million. The
MOU with MTC would primarily fund the electrification of
the Caltrain corridor between San Francisco and San
Jose. The MOU with SCAG would fund projects on the
Metrolink Antelope Valley line between Palmdale and the
San Fernando Valley necessary to improve travel times
for Metrolink trains providing service for high-speed
rail as part of the blended system, as well as lay the
foundation for future, dedicated high-speed rail service
on the southern end of the Initial Operating Segment.
The projects that make up the SCAG MOU have not been
finalized. This funding was not part of the Governor's
Budget request.
3. Appropriations for Environmental Work (Items
2665-304-0890 and 2665-304-6043) . This appropriation to
the Authority would provide a total of $152.4 million
Prop 1A and federal funding to complete environmental
review for each of the 10 segments comprising the
High-Speed Rail System. This stage of the project
includes the draft and final Environmental Impact
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Reports and Environmental Impact Statements (EIR/EIS) as
well as the environmental certification process required
by the California Environmental Quality Act and the
National Environmental Policy Act. Specific components
within the EIR/EIS include the preferred route alignment
and associated appraisal map identifying the affected
parcels. These components were funded last year and
included in the Governor's Budget request but removed by
the Assembly Budget Committee.
4. Appropriations for System Design Work (Items
2665-305-0890 and 2665-305-6043) . This appropriation to
the Authority would provide a total of $100.2 million
Prop 1A and federal funding to fund full preliminary
design for the Merced to Fresno and Fresno to
Bakersfield and partial preliminary design for the
remaining segments. In order to complete the EIR/EIS,
some design is necessary to determine the environmental
effects of the projects which can then be used to select
the most efficient path among different possible routes.
In order to develop documents necessary to bid the
contract, preliminary design needs to be complete to
properly define the parameters of the design-build
contract. These components were funded last year and
included in the Governor's Budget request but removed by
the Assembly Budget Committee.
5. Appropriations for Connectivity Investments-Local
Transit (Item 2660-104-6043) . This appropriation to
Caltrans would provide $713.3 million for nine local
transit projects, as well as future projects, which will
provide direct benefits to the high-speed rail system by
way of on-system improvements and capacity enhancements
to existing local transit systems that directly link to
the future high-speed rail system. Some examples of the
proposed projects are Positive Train Control on the
Caltrain/high-speed rail blended corridor between San
Francisco and San Jose, extending San Francisco
Municipal Railway service linking high-speed rail with
additional areas of downtown San Francisco, building a
multi-line connection to Union Station on the Metro
system in Los Angeles, and upgrading Bay Area Rapid
Transit's rolling stock to provide additional feeder
service capacity and reliability. This component was
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part of the Governor's Budget request.
6. Appropriations for Connectivity Investments-Intercity
Rail (Item 2660-304-6043) . This appropriation to
Caltrans would provide $106 million for three intercity
rail projects on the Capitol and San Joaquin Corridors
that will serve as components of the Northern California
Unified Service and provide direct benefits to the
high-speed rail system by providing additional feeder
service. Specifically, two projects would provide
additional double track in the Central Valley and Bay
Area allowing trains to run at higher speeds and
additional frequencies, allowing for more passengers on
the Northern California Unified Service. Additionally,
this funding will be used to increase Capitol Corridor
train frequencies to Roseville, bringing more riders to
the Northern California Unified Service and the future
high-speed rail system. This component was part of the
Governor's Budget request.
7. Reporting and other Budget Bill Language . This bill
includes various language that restricts expenditures or
requires reporting to control entities or to the
Legislature. The control language stipulates that:
connectivity and bookends funding are to be used for the
blended system and not to expand the blended system to a
four track system; environmental and design work are
subject to review by the Public Works Board (PWB) and
reporting to Department of Finance and the Joint
Legislative Budget Committee, and other legislative
committees; the Authority is to fill, 60 days prior to
contracts scheduled to be awarded December 2012, the
positions of chief executive officer, risk manager,
chief program manager, and chief financial officer; and,
capital expenditures for the connectivity, bookends, and
Central Valley construction segment are tied.
With respect to the Bookends, this investment: is
subject to prior environmental clearances; requires the
submission of an accountability plan; is subject to
audit; and, requires a project management and funding
agreement with the project component sponsors.
Capital funding from federal and bond funds is subject
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to review by the PWB and requires the following
documentation to be provided to the Legislature after
review and approval by the Secretary of Business,
Transportation, and Housing (or its successor) at the
designated times:
A. Project Update Report biannually on March 15 and
November 15, which includes: summary of progress;
baseline budget for project phase costs; current and
projected budget; expenditures by date; comparison of
current and projected work; summary of milestones in
prior and current year; issues in the prior year and
actions taken; and, discussion of various identified
risks.
B. Staff Management Report by October 1, 2012 (and
prior to contracts awarded in September 2013, October
2013, and March 2017) that includes: an
organizational chart; detailed description of
functions and responsibilities; summary of staffing
changes in the preceding year; strategy for filling
vacancies; staffing plans for 2012-13, management
with respect to number, skill level, position,
hiring, retention, of staff and consultants; and
proposed steps and procedures to ensure adequate
oversight.
C. Contract Report prior to the awarding of any
contract that certifies that the amount awarded under
the contract is within the budgeted funding and is
consistent with existing completion schedule
deadlines.
D. Risk Assessment Report prior to the contracts
scheduled to be awarded December 2013, including:
comprehensive risk management plan that defines roles
and responsibilities for risk management, addresses
the process for risk identification, implement and
address response, and monitor and control risks;
qualification in financial terms of risks identified;
provide documentation for risk identification and
mitigation; plans for regularly updating capital and
support costs; and plans for reserve assessment and
reassessment.
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E. Business Plan components by January 1, 2014, that
includes, based on recommendations of the Peer Review
Panel and advice from domestic and international rail
community and academic review: a proposed approach
for improving demand projects, operations and
maintenance cost models, and benefit cost analysis
for future project decision; and, a copy of the study
by the Union Internationale des Chemins de Fer
(international union of railways) examining the
Authority's operating costs and those of other
railways.
F. Greenhouse Gas Report by June 30, 2013, providing
analysis of the net impact of the high-speed rail
program on the state's greenhouse gas emissions.
G. MOU within 10 days of its execution with regional
transportation agencies relative to the Northern
California Unified Service.
Comments
This bill is the first significant commitment of funds for
construction and acquisition of the high-speed rail
project. The appropriations include funding for the
initial construction segment as well as improvements that
would link existing rail lines to high-speed rail.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
According to the Senate Budget and Fiscal Review Committee,
this bill appropriates approximately $4.7 billion in state
bond funds and $3.3 billion in federal trust funds for the
high speed rail project. Annual debt service would be
approximately $80 million per $1 billion debt issued for
the state
bond portion, but dependent on capital market conditions
that prevail when the bonds are issued.
JJA:k 7/6/12 Senate Floor Analyses
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SUPPORT/OPPOSITION: NONE RECEIVED
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