California Legislature—2013–14 Regular Session

Assembly BillNo. 164


Introduced by Assembly Member Wieckowski

January 23, 2013


An act to amend Section 5956.6 of the Government Code, relating to infrastructure financing.

LEGISLATIVE COUNSEL’S DIGEST

AB 164, as introduced, Wieckowski. Infrastructure financing.

Existing law permits a governmental agency to solicit proposals and enter into agreements with private entities for the design, construction, or reconstruction by, and may lease to, private entities, for specified types of fee-producing infrastructure projects. Existing law requires certain provisions to be included in the lease agreement between a governmental agency undertaking an infrastructure project and a private entity, as specified.

This bill would require a lease agreement between a governmental agency undertaking an infrastructure project and a private entity to include performance bonds as security to ensure the completion of the construction of the facility and payment bonds to secure the payment of claims of laborers, mechanics, and materialmen employed on the work under contract.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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SECTION 1.  

Section 5956.6 of the Government Code is
2amended to read:

P2    1

5956.6.  

(a) For purposes of facilitating projects, the agreements
2specified in Section 5956.4 may include provisions for the lease
3of rights-of-way in, and airspace over, property owned by a
4governmental agency, for the granting of necessary easements,
5and for the issuance of permits or other authorizations to enable
6the private entity to construct infrastructure facilities supplemental
7to existing government-owned facilities. Infrastructure constructed
8by a private entity pursuant to this chapter shall, at all times, be
9owned by a governmental agency, unless the governmental agency,
10in its discretion, elects to provide for ownership of the facility by
11the private entity during the term of the agreement. The agreement
12shall provide for the lease of those facilities to, or ownership by,
13the private entity for up to 35 years. In consideration therefor, the
14agreement shall provide for complete reversion of the privately
15constructed facility to the governmental agency at the expiration
16of the lease at no charge to the governmental agency. Subsequent
17to the expiration of the lease or ownership period, the governmental
18agency may continue to charge fees for use of the infrastructure
19facility. If, after the expiration of the lease or ownership period,
20the governmental agency continues to lease airspace rights to the
21private entity, it shall do so at fair market value.

22(b) The agreement between the governmental agency and the
23private entity shall include, but need not be limited to, provisions
24to ensure the following:

25(1) Compliance with the California Environmental Quality Act
26(Division 13 (commencing with Section 21000) of the Public
27Resources Code). Neither the act of selecting a proposed project
28or a private entity, nor the execution of an agreement with a private
29entity, shall require prior compliance with the act. However,
30appropriate compliance with the act shall thereafter occur before
31project development commences.

32(2) begin deleteSecurity for the construction of the facility end deletebegin insertPerformance end insert
33begin insertbonds as securityend insertbegin insert end insertto ensurebegin delete itsend delete completionbegin delete,end deletebegin insert of the construction of end insert
34begin insertthe facilityend insert and contractual provisions that are necessary to protect
35the revenue streams of the project.

36(3) Adequate financial resources of the private entity to design,
37build, and operate the facility, after the date of the agreement.

38(4) Authority for the governmental agency to impose user fees
39for use of the facility in an amount sufficient to protect the revenue
40streams necessary for projects or facilities undertaken pursuant to
P3    1this chapter. User fee revenues shall be dedicated exclusively to
2payment of the private entity’s direct and indirect capital outlay
3costs for the project, direct and indirect costs associated with
4operations, direct and indirect user fee collection costs, direct and
5indirect costs of administration of the facility, reimbursement for
6the direct and indirect costs of maintenance, and a negotiated
7reasonable return on investment to the private entity.

8(5) As a precondition to the imposition or increase of a user fee,
9the governmental agency shall conduct at least one public hearing
10at which public testimony will be received regarding a proposed
11user fee revenue or increase in user fee revenues. The public
12hearing shall precede the action by the governmental agency to
13actually impose a user fee or to increase an existing user fee. The
14governmental agency shall consider the public testimony prior to
15imposing a new or increased user fee. The governmental agency
16shall provide the following notices and utilize the following
17procedures:

18(A) Notice of the date, time, and place of the meeting, including
19a general explanation of the matter to be considered, shall be mailed
20at least 14 days prior to the meeting to any interested party who
21files a written request with the governmental agency for mailed
22notice of the meeting on new or increased fees or service charges.
23Any written request for mailed notices shall be valid for one year
24from the date on which it is filed unless a renewal request is filed
25prior to the expiration of the one-year period for which the written
26request was filed. The legislative body may establish a reasonable
27annual charge for sending notices based on the estimated cost of
28providing the service.

29(B) At least 10 days prior to the meeting, the governmental
30agency shall make available to the public data that supports the
31amount of the fee or the increase in the fee.

32(C) (i) At least 10 days prior to the meeting, the governmental
33agency shall publish a notice in a newspaper of general circulation
34in that agency’s jurisdiction stating the date, time, and place of the
35meeting, including a general explanation of the matter to be
36considered.

37(ii) Any costs incurred by the governmental agency in
38conducting the meeting or meetings required by this section may
39be recovered from fees charged for the services that are the subject
40of the fee.

P4    1(iii) For transportation projects specifically authorized by this
2chapter, at least 10 days prior to the meeting, the governmental
3agency shall publish for four consecutive times, a notice in the
4newspaper of general circulation in the affected area stating in no
5smaller that 10-point type a notice specifying the subject of the
6hearing, the date, time, and place of the meeting, and in at least
78-point type a general explanation of the matter to be considered.

8(D) No local agency shall levy a new fee or service charge or
9increase an existing fee or service charge to an amount that exceeds
10the estimated amount required to provide the service for which the
11fee or service charge is levied and a reasonable rate of return on
12investment, pursuant to paragraph (4). Any action by a local agency
13to levy a new fee or service charge or to approve an increase in an
14existing fee or service charge pursuant to this chapter shall be taken
15only by ordinance or resolution. The legislative body of a local
16agency shall not delegate the authority to adopt a new fee or service
17charge, or to increase a fee or service charge.

18(6) Require that if the legislative body of the governmental
19agency determines that fees or service charges create revenues in
20excess of the actual cost for which the user fee revenues are
21dedicated and a reasonable rate of return on investment, pursuant
22to paragraph (4), those revenues shall either be applied to any
23indebtedness incurred by the private entity with respect to the
24project, be paid into a reserve account in order to offset future
25operation costs, be paid into the appropriate government account,
26be used to reduce the user fee or service charge creating the excess,
27or a combination of these sources.

28(7) Require the private entity to maintain the facility in good
29operating condition at all times, including the time the facility
30reverts to the governmental agency.

31(8) Preparation by the private entity of an annual audited report
32accounting for the income received and expenses to operate the
33facility. The private entity shall make that report available to any
34member of the public for a cost not to exceed the cost of
35reproduction of the report.

36(9) Provision for a buyout of the private entity by the
37governmental entity in the event of termination or default before
38the end of the lease term.

39(10) Provision for appropriate indemnity promises between the
40governmental agency and the private entity.

P5    1(11) Provision requiring the private entity to maintain insurance
2with those coverages and in those amounts that the governmental
3agency deems appropriate.

4(12) In the event of a dispute between the governmental agency
5and the private entity, both parties shall be entitled to all available
6legal or equitable remedies.

begin insert

7(13) Payment bonds to secure the payment of claims of laborers,
8mechanics, and materialmen employed on the work under the
9contract. Payment bonds required under this subdivision shall
10conform to the requirements of Sections 3247 to 3252, inclusive,
11of the Civil Code.

end insert


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