BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 730 HEARING: 7/3/13
AUTHOR: Alejo FISCAL: No
VERSION: 4/1/13 TAX LEVY: No
CONSULTANT: Austin
MONTEREY-SALINAS TRANSIT DISTRICT'S REVENUE BONDS
Authorizes the Monterey-Salinas Transit District to issue
Revenue Bonds by a 2/3 vote of the governing board instead
of a majority vote of the public.
Background and Existing Law
The Revenue Bond Law of 1941 (RBL) establishes uniform
procedures for public agencies in California to use when
issuing revenue bonds. Revenue bonds are backed by the
revenue generated from the specific projects being
financed. The RBL specifies the various agencies that may
issue revenue bonds, defines the terms of revenue bond
covenants, and sets other conditions. 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 majority vote of the
electorate to authorize the bonds.
In 2009, AB 644 (Caballero), dissolved the Monterey-Salinas
Transit Agency and created the Monterey-Salinas Transit
District (MST). Current members of the district are the
cities of Carmel, Del Rey Oaks, Gonzales, Greenfield, King
City, Marina, Monterey, Pacific Grove, Salinas, Sand City,
Seaside, Soledad, and the County of Monterey. Its 13
member board of directors includes a representative from
each local agency. The board appoints its general manager.
AB 644 granted the MST the authority to issue revenue bonds
under the RBL. The MST is authorized to issue revenue
bonds backed by revenues other than fares.
In 2011, AB 1143 (Dickinson), authorized Sacramento
Regional Transit (RT) to issue revenue bonds with a
two-thirds approval of its governing board, repealing a
requirement that it get approval from a majority of voters.
AB 730 -- 4/1/13 -- Page 2
In addition to Sacramento RT, 20 other transit districts
have similar provisions, making Sacramento RT the 21st,
including the Bay Area Rapid Transit (BART), Orange County
Transportation Authority (OCTA), and the Santa Clara Valley
Transportation Authority (VTA).
MST is seeking a similar authorization.
Proposed Law
Assembly Bill 644 allows the Monterey-Salinas Transit
District to issue revenue bonds with 2/3 approval of the
governing board.
Specifically, AB 644:
Authorizes the Monterey-Salinas Transit District
(MST) to issue revenue bonds by a two-thirds vote of
the governing board and deletes provisions requiring a
vote of the majority of the electorate.
Changes the definition of "enterprise" to include
transit equipment, including vehicles.
Deems as revenue, for the purposes of the Revenue
Bond Law of 1941, any revenues or other income,
receipts, or amounts made available to MST, including,
but not limited to, the proceeds of a transactions and
use tax imposed under specified provisions of existing
law.
Limits the bond issuance to $50,000,000, payable in
whole or in part from revenues of any enterprise
acquired, constructed, or completed, or to be
acquired, constructed, or completed by MST.
Limits the use of revenue bonds to a project or
projects not located on or adjacent to the former Fort
Ord, with the exception of a project or projects
located entirely within the existing right of way of
State Highway Route 1 owned by the Department of
Transportation (Caltrans) or within the existing right
of way of the Monterey branch rail line, owned by the
Monterey County Transportation Agency.
State Revenue Impact
No estimate.
Comments
AB 730 -- 4/1/13 -- Page 3
1. Purpose of the bill . This bill enables the
Monterey-Salinas Transit District to issue bonds, by a 2/3
vote of its governing board. AB 730 will allow MST to
meet its funding requirements for safe and efficient
operations that provide service to 4.5 million customers.
One third of MST's bus fleet of 80 vehicles are operating
beyond their federally-designated "useful life" resulting
in higher maintenance costs, lower fuel efficiency, and
decreased reliability. MST's maintenance facilities are 35
years old and are over 50% of their original design
capacities and in need of upgrade or replacement to meet
growing demands for services. MST estimates that it loses
$1 million dollars per year in extra fuel and labor costs
because of excessive maintenance expense. Unlike other
counties, Monterey County does not have a local sales tax
dedicated to public transit. As a result, MST receives far
less local tax support and is more dependent upon state and
federal sources than other transit districts. AB 730 gives
MST the same authority that state law grants to 21 other
transit agencies. AB 730 limits the amount of revenue bond
debt that can be generated to $50 million to ensure larger
capital infrastructure projects go to the voters.
2. Voter approval for long-term debt? Once an agency
issues a bond, it's irreversibly committed to pay principal
and interest according to schedule until the bond is
redeemed. AB 730 would eliminate the two-step approval
process of a majority vote of the governing board and then
majority vote of the public. Instead AB 730 replaces that
process with a one-step process of a 2/3 vote of the
governing board. Because revenue bonds are backed by a
special fund, and not the general fund or taxing power of
that agency the Constitution doesn't require voter
approval. The Committee may wish to consider whether voter
approval should be required for revenue bond issuance, to
ensure public involvement in agencies long-term investment
decisions.
3. Good for all ? The Legislature has decided to allow
some other transit agencies governing board to issue
revenue bonds with a 2/3 vote. AB 730 gives another
transit district this authority. The Committee may wish to
consider amendments to extending the same authority to all
transit districts.
AB 730 -- 4/1/13 -- Page 4
4. Double-referred. AB 730 was double-referred to the
Transportation and Housing Committee and Governance and
Finance. AB 730 was heard in Transportation and Housing on
June 18, 2013 and passed out with an 8-2 vote.
Assembly Actions
Assembly Transportation 10-6
Assembly Local Government 6-2
Assembly Floor 49-23
Senate Transportation and Housing 8-2
Support and Opposition (6/27/13)
Support : Monterey-Salinas Transit; City of Salinas; Fort
Ord Reuse Authority; Monterey County Board of Supervisors;
Monterey County Transportation Agency
Opposition : Unknown.