BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 1770 HEARING: 7/3/12
AUTHOR: Lowenthal FISCAL: Yes
VERSION: 2/17/12 TAX LEVY: No
CONSULTANT: Grinnell
CALIFORNIA TRANSPORTATION FINANCING AUTHORITY
Expands projects eligible for California Transportation
Financing Authority assistance
Background and Existing Law
The Legislature created the California Transportation
Financing Authority (CTFA) to assist transportation
agencies in obtaining financing for transportation projects
(AB 798, Nava, 2009). CTFA is housed within the State
Treasurer's Office, similar to other authorities that
provide financial assistance through bonds and other
financial assistance, such as the California Alternative
Energy and Alternative Transportation Financing Authority
and the California Industrial Development Financing
Advisory Commission. CTFA is governed by a board composed
of the State Treasurer, the State Controller, the Director
of the Department of Finance, the Director of the
California Department of Transportation, the Executive
Director of the California Transportation Commission, and
local agency representatives selected by the Senate Rules
Committee and the Speaker of the Assembly.
State law allows CTFA to provide various forms of financial
assistance, including issuing revenue bonds repaid by local
transportation funds or tolls, to increase new capacity in
the state transportation system in a manner consistent with
the state's greenhouse gas reduction, air quality
improvement, and natural resource conservation goals. CTFA
must determine that revenues will be sufficient to repay
the bonds prior to providing assistance, and can issue
conduit bonds on behalf of project sponsors, or grant
authority for the sponsor to issue bonds directly. CTFA
sells a conduit bond in its name with its credit rating,
and sends the bond proceeds to the project sponsor, which
levies tolls to repay the bond.
AB 1770 - 2/17/12 -- Page 2
State law limits project sponsors to the California
Department of Transportation, a regional transportation
planning agency, a county transportation commission, any
other local or regional transportation entity designated in
statute as a regional transportation agency, or a joint
powers authority. The law further limits projects to a
defined list: highways, public streets, rail, bus, or
related facilities that are supplemental to or improve upon
existing facilities. Projects must be currently owned and
operated by the project sponsors to qualify for assistance.
Proposed Law
Assembly Bill 1770 expands the list of projects CTFA can
fund to include rail projects that consist of rolling
stock, like rail transit cars. The measure also deletes
the requirement that projects sponsors both own and operate
the project to be eligible for financial assistance.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the author, "the
California Transportation Financing Authority was created
to provide an alternative financing mechanism for regional
transportation agencies to increase new capacity or make
improvements on the state transportation system through the
issuance of revenue bonds backed by various revenue streams
including tolls. AB 1770 will eliminate any confusion or
uncertainty as to whether the word "rail" in the "project"
definition includes rolling stock. Though rolling stock
may be included the definition of rail in a different
statute, it is not explicit in CTFA's statute. Making this
clarification will clear up any uncertainty as to whether
CTFA can finance projects that include rolling stock.
Adding "or" provides flexibility in how a project sponsor
structures the implementation of their project.
Transportation projects are complex and may involve
AB 1770 - 2/17/12 -- Page 3
multiple entities in the maintenance and operation of a
project. This change would allow for greater flexibility in
how the project sponsor may partner up with other entities
to implement project operation."
2. Small words, big changes . AB 1770 changes only a few
words in CTFA's statutes, but the changes are significant.
First, the bill allows CTFA to accept projects with rolling
stock, allowing transit agencies that operate trains to
transport people to finance through CTFA, such as Bay Area
Rapid Transit. Second, by changing an "and" to an "or,"
the measure allows public agencies that apply for financial
assistance to use private firms to operate CTFA-funded
projects, which is currently precluded by the dual
requirement that a public agency both own and operate the
facility. As such, the measure grants project applicants
have greater freedom to structure projects.
Assembly Actions
Assembly Transportation Committee: 14-0
Assembly Appropriations Committee:13-4
Assembly Floor: 69-4
Support and Opposition (6/28/12)
Support : State Treasurer Bill Lockyer (sponsor), Santa
Clara Valley Transportation Authority, California Transit
Association
Opposition : Unknown.