BILL ANALYSIS Ó AB 2250 Page 1 Date of Hearing: April 21, 2014 ASSEMBLY COMMITTEE ON TRANSPORTATION Bonnie Lowenthal, Chair AB 2250 (Daly) - As Amended: April 24, 2014 SUBJECT : California Department of Transportation: managed lanes SUMMARY : Requires any revenue generated in managed lanes to be used in the corridor in which it was generated. Specifically, this bill : 1)Directs the California Department of Transportation (Caltrans), when entering into a cooperative agreement with a local agency for managed lanes on the state highway system, to ensure that any revenue generated by the lanes is expended within the corridor in which the lanes are located. 2)Defines "managed lanes" to include high-occupancy vehicle lanes (HOV), high-occupancy toll lanes (HOT), and express toll lanes, each as further defined. EXISTING LAW : 1)Authorizes HOT lane facilities in Alameda, San Diego, and Santa Clara counties. 2)Until January 1, 2012, authorized any regional transportation agency to apply to the California Transportation Commission (CTC) to establish HOT lanes. The CTC found HOT lane facilities in the San Francisco Bay Area, Los Angeles County, and Riverside County eligible under this provision. 3)Authorizes a network of toll roads in Orange County (State Routes 73, 133, 241, and 261), financed by revenue bonds. 4)Authorizes Caltrans and regional transportation agencies, until January 1, 2017, to enter into comprehensive development lease agreements with public and private entities for transportation projects that may charge users of those projects tolls. FISCAL EFFECT : Unknown AB 2250 Page 2 COMMENTS : Managed lanes-particularly HOT lanes-are increasingly being implemented in metropolitan areas around the state and the nation. HOT lanes allow single-occupant or lower-occupant vehicles to use an HOV lane for a fee, while maintaining free or reduced travel to qualifying HOVs. The purported benefits of HOT lanes include enhanced mobility and travel options in congested corridors and better usage of underutilized HOV lanes. California is currently in the embryonic stage of what is sure to be a substantial build out of HOT lanes around the state in the very near future. The Metropolitan Transportation Commission, for example, is in the midst of developing a regional HOT lane network that will extend for hundreds of miles from Sonoma County in the north to Gilroy in the south. How these lanes are managed and operated will likely depend on efforts currently underway within the Administration to develop managed lane policies. One of these efforts began last year as part of the Governor's proposed budget. In it, he directed the California State Transportation Agency (CalSTA) to convene a workgroup consisting of state and local transportation stakeholders to refine the transportation infrastructure needs assessment; explore long-term, pay-as-you-go funding options, and evaluate the most appropriate level of government to deliver high-priority investments to meet the state's infrastructure needs. Toward this end, CalSTA released in February of this year its vision and interim recommendations in a report entitled California Transportation Infrastructure Priorities: Vision and Interim Recommendations. Two of the recommendations were: 1)Support efforts to maintain and expand the availability of local funds dedicated to transportation improvements, albeit with conditions; and, 2)Work with the Legislature to expand the department's use of pricing and express lanes to better manage congestion and the operation of the state highway system while generating new revenues for preservation and other corridor improvements. Discussions with stakeholders during development of this report raised concerns that regional transportation agencies may be called upon by the Administration to contribute funding for the state's underfunded highway maintenance program using, in part, AB 2250 Page 3 revenue generated from managed lanes. Indeed, the state's highway maintenance program is underfunded. Funding to pay for most maintenance and repair on the state highway system comes from taxes on gasoline and diesel fuel. Revenue from these taxes is declining because of reduced fuel consumption and funding shortfalls in the Federal Highway Trust Fund. The projected funding available for the preservation of state highway infrastructure is estimated at $1.8 billion annually. However, the need for the rehabilitation and reconstruction of the state highway system is about $7 billion annually. Regional transportation agencies have been much more successful in funding transportation improvements, primarily from self-imposed sales taxes for transportation. These self-help counties contribute over $3 billion annually in sales tax revenue to California's transportation systems. Increasingly, these agencies are using, or plan to use, sales tax revenues to fund development of managed lanes to improve the performance of major highway corridors. Revenue generated by managed lanes is used to cover costs associated with debt service, operations, maintenance, and law enforcement of the managed lanes. Any excess revenue is typically returned to the corridor from which it is generated by way of increased transit service or highway improvements. Existing law does not currently provide specific additional authority to develop HOT lanes (although there is limited authority to develop tolled facilities under provisions authorizing public-private partnerships). However, as the Administration is currently looking to develop a broader managed lane program, the author introduced this bill to ensure that the state's managed lane policies and practices strike an appropriate balance between the roles of Caltrans and local agencies, including the need to ensure revenue generated by managed lanes stays in the transportation corridor from which it was generated. This policy is consistent with the Legislature's previous specific HOT lane authorizations. Furthermore, managed lanes are designed primarily to improve overall corridor performance through enhanced throughput and any excess revenue should be used to that end. Excess revenue from managed lanes should not be used to maintain the state highway system beyond the managed lanes. If this is allowed, it would AB 2250 Page 4 likely have a chilling effect on regional transportation agencies' willingness to assume financial risk associated with financing construction and operation of managed lanes, to the detriment of overall corridor management. Instead, revenue should be used to further improve corridor performance, either through transit, technology, or operational improvements. Writing in support of this bill, the Self-Help Counties Coalition (SHCC) asserts that its member agencies-local county transportation agencies charged with delivering voter-approved transportation sales tax measures-develop managed lanes to help address the state's transportation needs. SHCC contends that decisions over revenue allocation and tolling policies need to rest with the agency assuming the project development, construction, and financing risk and should remain available for expenditure by the local agency in the respective corridor. REGISTERED SUPPORT / OPPOSITION : Support American Council of Engineering Companies California Asphalt Pavement Association Self-Help Counties Coalition Opposition None on file Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093