BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 359|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 359
Author: Holden (D), et al.
Amended: 8/30/13 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 6-0, 7/2/13
AYES: Walters, Anderson, Corbett, Jackson, Leno, Monning
NO VOTE RECORDED: Evans
ASSEMBLY FLOOR : 69-0, 5/24/13 - See last page for vote
SUBJECT : Vehicle rental agreements: customer facility charge
SOURCE : California Airports Council
DIGEST : This bill provides guidelines regarding the scope of
a Customer Facility Charge (CFC) audit, and requires the audit
to be posted on an airport's Internet Web site. This bill
removes the requirement that an airport conduct the audit every
three years after the initial collection of the CFC, and instead
requires an airport to conduct an audit every three years after
the initial collection of the CFC only if the charge is used for
the purpose of operating a common-use transportation system or
to acquire vehicles for use in such a system. This bill also
provides that any audit of an airport's CFC may be included as a
part of a larger audit of the airport's finances.
Senate Floor Amendments of 8/30/13 clarify that an airport may
satisfy the audit requirements pertaining to CFC increases by
updating the information contained in its initial CFC audit, and
CONTINUED
AB 359
Page
2
that regularly conducted audits of airport finances produced in
accordance with the accounting principles of the Government
Accounting Standards Board may be used to satisfy the three-year
audit requirement. The amendments further clarify that an
airport's continuing obligation to audit CFC funds is not
subject to the automatic sunset provision in Section 10231.5 of
the Government Code, and require airports to post copies of all
audits required under this section on their Internet Web site
for a period of six years.
ANALYSIS :
Existing law:
1.Defines a "CFC" as any fee, including an alternative fee,
required by an airport to be collected by a rental company
from a renter for any of the following purposes:
A. To finance, design, and construct consolidated airport
car rental facilities.
B. To finance, design, construct, and operate common-use
transportation systems that move passengers between airport
terminals and those consolidated car rental facilities, and
acquire vehicles for use in that system.
C. To finance, design, and construct terminal modifications
solely to accommodate and provide customer access to
common-use transportation systems.
1.States that the aggregate amount of CFC revenue to be
collected shall not exceed the reasonable costs, as determined
by an independent audit paid for by the airport, to finance,
design, and construct these facilities.
2.Requires, in the case of a transportation system, the audit to
also consider the reasonable costs of providing the transit
system or busing network.
3.Requires copies of audits of CFC funds to be provided to the
Assembly and Senate Committees on Judiciary, the Assembly
Committee on Transportation, and the Senate Committee on
Transportation and Housing.
CONTINUED
AB 359
Page
3
4.Requires an airport to complete the independent audit required
by the above provision prior to the initial collection of the
CFC, prior to any increase, and every three years after
initial collection and any increase until such time as the fee
authorization becomes inoperative.
5.Prohibits fees designated as a CFC from being used to pay for
terminal expansion, gate expansion, runway expansion, changes
in hours of operation, or changes in the number of flights
arriving or departing from the airport.
This bill:
1.Provides that an auditor independently examine and
substantiate the necessity for and the amount of the CFC,
including whether the airport's actual or projected costs are
supported and justified, any steps the airport may take to
limit costs, potential alternatives for meeting the airport's
revenue needs other than the collection of the fee, and
whether and to what extent car rental companies or other
businesses or individuals using the facility or common-use
transportation system may pay for the costs associated with
these facilities and systems other than the fee from rental
customers, or whether the airport complied with existing law
governing the collection and use of CFC revenue.
2.Requires copies of CFC audits to be posted on an airport's
Internet Web site.
3.Specifies that any required CFC audit may be included as a
part of an audit of an airport's finances.
4.Specifies that an audit be completed every three years after
the initial collection of CFC funds only if the CFC is used
for the purpose of operating a common-use transportation
system or to acquire vehicles for use in such a system.
5.Clarifies that an airport may satisfy the audit requirement
pertaining to the CFC increases by updating the information
contained in its initial CFC audit, and that regularly
conducted audits of airport finances produced in accordance
with the accounting principles of the Government Accounting
Standards Board may be used to satisfy the three-year audit
requirement.
CONTINUED
AB 359
Page
4
6.Makes other clarifying changes.
Background
In recent years, many airports have adopted the practice of
locating rental car services in consolidated facilities that
house all car rental companies in one location. Common-use
transportation systems, including shuttle bus systems and
automated trains, are often used to transport rental car
customers to and from terminals and the consolidated rental car
facility. These facilities and their associated transport
systems are financed largely via CFCs collected from rental car
patrons who choose to rent a vehicle from a company housed in
the consolidated rental facility.
The authority to collect CFCs began in California in 1999 when
the Legislature passed and the governor signed SB 1228
(Vasconcellos, Chapter 760, Statutes of 1999) which permitted
San Jose International Airport to collect a CFC of $10.15 per
rental contract to finance and construct a consolidated rental
car facility. In 2001, AB 491 (Frommer, Chapter 661, Statutes
of 2001) authorized other public airports in California to
collect a $10 fee per contract to finance, design, and construct
consolidated rental car facilities. In 2007, SB 641 (Corbett,
Chapter 44, Statutes of 2007) repealed the special authorization
for San Jose International Airport and instead applied the more
general provisions enacted by AB 491 to San Jose International
Airport, thus permitting it to collect a $10 per contract CFC.
For approximately ten years, the allowable CFC fee was set at
$10 per rental contract, regardless of the duration of the car
rental. In 2010, the Legislature revised the CFC fee structure
in response to feedback from the airports that the existing $10
per contract fee was inadequate to fund some proposed
consolidated rental car facilities. SB 1192 (Oropeza, Chapter
642, Statutes of 2010) permitted airports to impose a CFC
calculated on an alternative basis, which, under existing law,
allows up to $6 per day for a maximum of five days per rental
contract to be collected. The new CFC fee structure allows an
airport to increase its daily CFC according to a statutory
schedule which would permit the collection of up to $45 over the
length of a rental contract by January 1, 2017. SB 1192 also
expanded the range of uses for which CFC revenue could be spent,
CONTINUED
AB 359
Page
5
including purchasing vehicles for a common-use transport system
that would shuttle passengers between the consolidated rental
facility and the airport terminals, and for terminal
modifications undertaken to provide access to a common-use
transport system.
In order to protect customers and ensure that the CFC charged by
an airport was appropriately and necessarily spent on
consolidated rental facilities and associated common-use
transport systems, SB 1192 also imposed an audit requirement,
directing airports to complete independent audits of CFC funded
projects prior to the initial charge of a CFC, prior to any
increase in the CFC, and every three years after its initial
collection or any increase. SB 1192 initially required the
State Controller's Office to review these audits, but SB 1006
(Senate Budget and Fiscal Review Committee, Chapter 32, Statutes
of 2012) eliminated this requirement. SB 1006, a Budget Trailer
Bill, also struck language in existing law that set out
guidelines regarding the scope of a CFC audit and the standards
for determining whether an airport's chosen CFC rate was
necessary and justified based on how the funds were being spent.
Since the new CFC fee structure went into effect, airports have
found that the independent audit requirements are or will cause
them to have to complete separate audits of CFC funded projects
despite the fact that these projects and the expenditure of CFC
funds are already analyzed under other required audits.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 8/31/13)
California Airports Council (source)
City of San Jose
Fresno Yosemite International Airport
ARGUMENTS IN SUPPORT : The author writes, "AB 359 clarifies
the existing law regarding independent audits, paid for by
airports, to determine reasonable costs of CFCs used to finance,
design, construct, and operate consolidated airport rental car
facilities. This bill permits airports to provide the
legislature the CFC information as a subset of the broader,
annual, Audit of Airport Finances. This bill limits the audit
to every increase in the CFC and those ongoing CFC costs related
CONTINUED
AB 359
Page
6
to a transportation system. This bill is anticipated to save
airports, and their associated local taxpayers, hundreds of
thousands of dollars by limiting duplicative audits."
ASSEMBLY FLOOR : 69-0, 5/24/13
AYES: Achadjian, Alejo, Allen, Bigelow, Bloom, Blumenfield,
Bocanegra, Bonilla, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dahle, Daly,
Dickinson, Donnelly, Fong, Fox, Frazier, Beth Gaines, Garcia,
Gatto, Gomez, Gordon, Gorell, Gray, Hagman, Hall, Harkey,
Roger Hernández, Jones, Jones-Sawyer, Levine, Linder, Logue,
Lowenthal, Maienschein, Mansoor, Medina, Melendez, Mitchell,
Morrell, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan,
Patterson, Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon,
Salas, Stone, Ting, Wagner, Weber, Wieckowski, Williams,
Yamada, John A. Pérez
NO VOTE RECORDED: Ammiano, Atkins, Bonta, Eggman, Grove,
Holden, Skinner, Waldron, Wilk, Vacancy, Vacancy
AL:ej 8/31/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED