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: 








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              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  








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          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  








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          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.