BILL ANALYSIS Ó SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 730 SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: alejo VERSION: 4/1/2103 Analysis by: Eric Thronson FISCAL: no Hearing date: June 18, 2013 SUBJECT: Monterey-Salinas Transit District revenue bonds DESCRIPTION: This bill authorizes the Monterey-Salinas Transit District to approve with a two-thirds vote of its governing board the issuance of up to $50 million in revenue bonds. ANALYSIS: The Revenue Bond Law of 1941 (RBL) establishes uniform procedures for public agencies in California to use when issuing revenue bonds. The RBL specifies the various agencies that may issue revenue bonds, defines the terms of revenue bond covenants, and enumerates a variety of other conditions related to revenue bond issuance. In addition, the RBL establishes procedures for approving the issuance of revenue bonds, including requiring a majority vote of the governing board to place a measure on the ballot and a two-thirds vote of the electorate within a special district's area of jurisdiction. In 2009, AB 644 (Caballero), Chapter 460, dissolved the Monterey-Salinas Transit Agency and created the Monterey-Salinas Transit District (MST). Among the powers AB 644 granted to MST was the authority to issue revenue bonds under the RBL. In 2011, AB 1143 (Dickinson), Chapter 537, authorized Sacramento Regional Transit (RT) to issue revenue bonds without a two-thirds vote of the electorate and instead to issue revenue bonds with only a two-thirds vote of its governing board. This bill authorizes MST to approve with a two-thirds vote of its governing board the issuance of up to $50 million in revenue bonds, exempting MST from the RBL requirement of placing a bond measure on the ballot and garnering a two-thirds vote of the electorate. In addition, this bill restricts MST from using AB 730 (ALEJO) Page 2 these bond funds on any projects in the former Fort Ord area except for projects wholly within the State Highway 1 right-of-way or on the Monterey branch rail line. Finally, this bill includes the purchase of vehicles in the list of projects eligible for revenue bond funding. COMMENTS: 1.Purpose . According to the author, this bill allows MST to more easily and less expensively issue revenue bonds to fund improvements to its vehicles, equipment, and facilities. The author contends that MST has real capital needs, as one-third of MST's full-sized bus fleet is beyond its useful life, and MST's maintenance facilities are 35 years old and operating well beyond their original design capacities. Unlike other counties in the state, Monterey County does not have a local sales tax dedicated to transportation and therefore is more dependent upon state and federal revenue sources for support. The author believes this bill enables MST to issue bonds to meet their funding needs for safe and efficient operations and to provide service to their 4.5 million urban customers as well as regional connections between communities. 2.Other transit agencies have similar provisions . This bill is not establishing new precedent by allowing MST to issue revenue bonds with only a governing board vote instead of a vote of the people. Besides Sacramento's RT, 20 other transit districts in California have similar provisions, including the Bay Area Rapid Transit (BART), Orange County Transportation Authority (OCTA), and the Santa Clara Valley Transportation Authority (VTA). 3.Transit needs access to resources . The Legislature has clearly prioritized policies that reduce greenhouse gas emissions and improve air quality through the passage of bills like AB 32 (Nunez Pavley), Chapter 488, Statutes of 2006, and SB 375 (Steinberg), Chapter 728, Statutes of 2008. Many argue that public transit is a necessary and vital part of the state's efforts to reduce emissions. But while it works toward emission reductions, some suggest the Legislature is failing to provide the resources necessary to accomplish the desired air quality benefits. This bill gives a local transit district another tool to use to accomplish its public transportation aims by enabling it to more efficiently consider one of many funding mechanisms available to other districts. At some point the committee may wish to consider AB 730 (ALEJO) Page 3 granting this tool and others to transit districts statewide in order to help facilitate the Legislature's goals of cleaner air and more effective public transit. 4.Double-referral . The Rules Committee has referred this bill to both this committee and the Governance and Finance Committee. Therefore, if this bill passes this committee, it will be referred to the Committee on Governance and Finance. Assembly Votes: Floor: 49-23 LG: 6-2 Trans: 10-6 POSITIONS: (Communicated to the committee before noon on Wednesday, June 12, 2013.) SUPPORT: Monterey-Salinas Transit (sponsor) City of Salinas Fort Ord Reuse Authority Monterey County Board of Supervisors Transportation Agency for Monterey County OPPOSED: None received.