BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 481 (Lowenthal) - High-Speed Rail Authority: property management. Amended: June 12, 2013 Policy Vote: T&H 8-2 Urgency: No Mandate: No Hearing Date: July 1, 2013 Consultant: Mark McKenzie This bill does not meet the criteria for referral to the Suspense File. Bill Summary: AB 481 would provide the High-Speed Rail Authority (HSRA) with independent authority to manage property acquired for high-speed rail purposes, similar to the independent authority provided to the Department of Transportation (Caltrans), rather than performing these functions through the Department of General Services (DGS). Specifically, this bill would: Specify that the high-speed rail project is under the control of the HSRA rather than Caltrans. Authorize HSRA to acquire, grant access to, and quitclaim easements and rights-of-way (ROW) on property owned or being acquired by the state. Authorize HSRA to sell property no longer needed for high-speed rail purposes at fair market value to an adjacent property owner, a local agency, or former owner, as specified. The property could also be exchanged for other property needed for high-speed rail purposes. Authorize HSRA to lease non-operating ROW to local agencies for public purposes, or lease areas above or below operating and non-operating ROW to public or private entities, as specified. Authorize HSRA to secure fire insurance for property leased back to a former owner for commercial or business uses, as specified. Require any revenues derived from granting access to ROW, selling property, and leasing ROW to public and private entities to be deposited into a new High-Speed Rail Property Fund, and available to HSRA, upon appropriation by the Legislature, for use on the high-speed rail system, as specified. Fiscal Impact: AB 481 (Lowenthal) Page 1 Potential overall high-speed rail project savings, to the extent that DGS would be relieved of administrative oversight duties related to HSRA property management functions (High-Speed Passenger Train Bond Fund). While the bill would increase costs to HSRA staff to handle property management duties, these costs would likely be more than offset by savings related to removing these additional administrative requirements, and the revenue gains noted below. Unknown revenue gains related to the authority granted to HSRA to sell, exchange, and lease specified property to public and private entities (High-Speed Rail Property Fund). These funds would be used for future development, improvement, and maintenance of the high-speed rail system. Background: Existing law, the Property Acquisition Law, provides DGS with general authority over all property acquisition and management duties and responsibilities on behalf of state agencies. This includes negotiation of leases and granting of easements, access, and ROW on state-owned property, as well as disposing of surplus property. Caltrans, the University of California, the Department of Water Resources and other large agencies that manage their own larger scale construction projects are exempt from this body of law and follow other procedures. Caltrans, for example, has broad authority over property acquisition and management of state lands for highway purposes. On the property management side, Caltrans has independent authority to grant access to its own ROW, dispose of excess property no longer needed for state highway purposes, lease property to public agencies, and lease areas above or below the ROW to public or private entities. All revenues derived from the management of Caltrans property is deposited into the State Highway Account. Existing law created the HSRA in 1996 to direct development and implementation of intercity high-speed rail service that is fully coordinated with other public transportation services. In 2008, voters approved Proposition 1A (Prop 1A) authorizing the sale of $9.95 billion in general obligation bonds for the high-speed rail project. Prop 1A authorizes HSRA to use bond funds for, among other things, acquisition of interests in real property and rights-of-way. Prop 1A also authorizes HSRA to either contract with Caltrans for right-of-way activities or AB 481 (Lowenthal) Page 2 otherwise use DGS processes for right-of-way acquisition pursuant to the state's public acquisition law. The HSRA and the Federal Railroad Administration jointly selected a segment from Madera , north of Fresno, to near Bakersfield as the first construction segment of the high-speed rail system. Between federal funds and state bond funds, the HSRA has committed about $5.9 billion for the initial 130 mile corridor is Central Valley project. As a condition of the $3.5 billion in ARRA grants for the project, the HSRA must complete construction on the initial segment by September 30, 2017. HSRA has received bids for the first of five construction packages in the corridor and expects to award a contract for the rail line between Madera and downtown Fresno this summer. The remaining four construction packages are expected to be awarded in 2014. Related Legislation: This bill is similar to provisions that were contained in AB 615 (Lowenthal), as it was passed by this Committee on August 25, 2011. That bill provided much broader authority to HSRA, however, by exempting the authority from the Property Acquisition Law and Public Works Board Oversight. The provisions providing the HSRA with independent authority over land acquisition and property management were later amended out of that bill prior to a vote on the Senate Floor. Staff Comments: AB 481 would provide the HSRA with certain authority related to the management and disposal of property, rights-of way, and easements. Under current law, these activities generally require the involvement and approval of DGS, the State Public Works Board (SPWB), or the Department of Finance (DOF) in order to take certain actions regarding property or the contracting of professional and construction services. Caltrans, the University of California, the Department of Water Resources and other large agencies that manage their own larger scale construction projects are exempt from this body of law and follow other procedures. This bill would provide the HSRA with a limited set of the exemptions that are provided to these other agencies, specifically those related to the management and disposition of property, but not those related to the acquisition of that property. Those functions related to property acquisition, including any eminent domain proceedings, would be retained by DGS and the SPWB. HSRA indicates that any new property management duties related AB 481 (Lowenthal) Page 3 to the bill could be managed by their existing right-of-way staff. In addition to six PY of existing staff dedicated to property services, HSRA was recently granted an additional five PY to support right-of-way acquisition and preservation activities. In the absence of this bill, these HSRA staff would work through DGS for any property management activities. To the extent that this bill relieves DGS of oversight and administrative responsibilities related to property management responsibilities, there would be corresponding savings. AB 481 specifies that funds derived from the sale, lease, or grant of interest in HSRA property would be deposited in the High-Speed Rail Property Fund for use in the development, improvement, and maintenance of the high-speed rail system, upon appropriation by the Legislature. The amount of revenue that could be deposited into the fund is unknown at this time, but would include any revenues from the sale or exchange of property that is no longer necessary for the project, sale or lease of excess parcels to local agencies for public purposes, lease of nonoperating right-of-way to local agencies for public purposes, and lease of areas above or below operating rights-of-way to public agencies or private entities or individuals, as specified.