Amended in Assembly May 13, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 164


Introduced by Assembly Member Wieckowski

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(Coauthor: Assembly Member Gorell)

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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 amended, 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:

P2    1

SECTION 1.  

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

3

5956.6.  

(a) For purposes of facilitating projects, the agreements
4specified in Section 5956.4 may include provisions for the lease
5of rights-of-way in, and airspace over, property owned by a
6governmental agency, for the granting of necessary easements,
7and for the issuance of permits or other authorizations to enable
8the private entity to construct infrastructure facilities supplemental
9to existing government-owned facilities. Infrastructure constructed
10by a private entity pursuant to this chapter shall, at all times, be
11owned by a governmental agency, unless the governmental agency,
12in its discretion, elects to provide for ownership of the facility by
13the private entity during the term of the agreement. The agreement
14shall provide for the lease of those facilities to, or ownership by,
15the private entity for up to 35 years. In consideration therefor, the
16agreement shall provide for complete reversion of the privately
17constructed facility to the governmental agency at the expiration
18of the lease at no charge to the governmental agency. Subsequent
19to the expiration of the lease or ownership period, the governmental
20agency may continue to charge fees for use of the infrastructure
21facility. If, after the expiration of the lease or ownership period,
22the governmental agency continues to lease airspace rights to the
23private entity, it shall do so at fair market value.

24(b) The agreement between the governmental agency and the
25private entity shall include, but need not be limited to, provisions
26to ensure the following:

27(1) Compliance with the California Environmental Quality Act
28(Division 13 (commencing with Section 21000) of the Public
29Resources Code). Neither the act of selecting a proposed project
30or a private entity, nor the execution of an agreement with a private
31entity, shall require prior compliance with the act. However,
32appropriate compliance with the act shall thereafter occur before
33project development commences.

34(2) Performance bonds as security to ensure completion of the
35construction of the facility and contractual provisions that are
36necessary to protect the revenue streams of the project.

37(3) Adequate financial resources of the private entity to design,
38build, and operate the facility, after the date of the agreement.

P3    1(4) Authority for the governmental agency to impose user fees
2for use of the facility in an amount sufficient to protect the revenue
3streams necessary for projects or facilities undertaken pursuant to
4this chapter. User fee revenues shall be dedicated exclusively to
5payment of the private entity’s direct and indirect capital outlay
6costs for the project, direct and indirect costs associated with
7operations, direct and indirect user fee collection costs, direct and
8indirect costs of administration of the facility, reimbursement for
9the direct and indirect costs of maintenance, and a negotiated
10reasonable return on investment to the private entity.

11(5) As a precondition to the imposition or increase of a user fee,
12the governmental agency shall conduct at least one public hearing
13at which public testimony will be received regarding a proposed
14 user fee revenue or increase in user fee revenues. The public
15hearing shall precede the action by the governmental agency to
16actually impose a user fee or to increase an existing user fee. The
17governmental agency shall consider the public testimony prior to
18imposing a new or increased user fee. The governmental agency
19shall provide the following notices and utilize the following
20procedures:

21(A) Notice of the date, time, and place of the meeting, including
22a general explanation of the matter to be considered, shall be mailed
23at least 14 days prior to the meeting to any interested party who
24files a written request with the governmental agency for mailed
25notice of the meeting on new or increased fees or service charges.
26Any written request for mailed notices shall be valid for one year
27from the date on which it is filed unless a renewal request is filed
28prior to the expiration of the one-year period for which the written
29request was filed. The legislative body may establish a reasonable
30annual charge for sending notices based on the estimated cost of
31providing the service.

32(B) At least 10 days prior to the meeting, the governmental
33agency shall make available to the public data that supports the
34amount of the fee or the increase in the fee.

35(C) (i) At least 10 days prior to the meeting, the governmental
36agency shall publish a notice in a newspaper of general circulation
37in that agency’s jurisdiction stating the date, time, and place of the
38meeting, including a general explanation of the matter to be
39considered.

P4    1(ii) Any costs incurred by the governmental agency in
2conducting the meeting or meetings required by this section may
3be recovered from fees charged for the services that are the subject
4of the fee.

5(iii) For transportation projects specifically authorized by this
6chapter, at least 10 days prior to the meeting, the governmental
7agency shall publish for four consecutive times, a notice in the
8newspaper of general circulation in the affected area stating in no
9smaller that 10-point type a notice specifying the subject of the
10hearing, the date, time, and place of the meeting, andbegin insert,end insert in at least
118-point typebegin insert,end insert a general explanation of the matter to be considered.

12(D) No local agency shall levy a new fee or service charge or
13increase an existing fee or service charge to an amount that exceeds
14the estimated amount required to provide the service for which the
15fee or service charge is levied and a reasonable rate of return on
16investment, pursuant to paragraph (4). Any action by a local agency
17to levy a new fee or service charge or to approve an increase in an
18existing fee or service charge pursuant to this chapter shall be taken
19only by ordinance or resolution. The legislative body of a local
20agency shall not delegate the authority to adopt a new fee or service
21charge, or to increase a fee or service charge.

22(6) Require that if the legislative body of the governmental
23agency determines that fees or service charges create revenues in
24excess of the actual cost for which the user fee revenues are
25dedicated and a reasonable rate of return on investment, pursuant
26to paragraph (4), those revenues shall either be applied to any
27indebtedness incurred by the private entity with respect to the
28project, be paid into a reserve account in order to offset future
29operation costs, be paid into the appropriate government account,
30be used to reduce the user fee or service charge creating the excess,
31or a combination of these sources.

32(7) Require the private entity to maintain the facility in good
33operating condition at all times, including the time the facility
34reverts to the governmental agency.

35(8) Preparation by the private entity of an annual audited report
36accounting for the income received and expenses to operate the
37facility. The private entity shall make that report available to any
38member of the public for a cost not to exceed the cost of
39reproduction of the report.

P5    1(9) Provision for a buyout of the private entity by the
2governmental entity in the event of termination or default before
3the end of the lease term.

4(10) Provision for appropriate indemnity promises between the
5governmental agency and the private entity.

6(11) Provision requiring the private entity to maintain insurance
7with those coverages and in those amounts that the governmental
8agency deems appropriate.

9(12) In the event of a dispute between the governmental agency
10and the private entity, both parties shall be entitled to all available
11legal or equitable remedies.

12(13) Payment bonds to secure the payment of claims of laborers,
13mechanics, and materialmen employed on the work under the
14contract. Payment bonds required under this subdivision shall
15conform to the requirements of Sectionsbegin delete 3247end deletebegin insert 9550end insert tobegin delete 3252end deletebegin insert 9566end insert,
16inclusive, of the Civil Code.



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