BILL ANALYSIS                                                                                                                                                                                                    






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: sb 557
          SENATOR MARK DESAULNIER, CHAIRMAN              AUTHOR:  hill
                                                         VERSION: 2/22/13
          Analysis by:  Eric Thronson                    FISCAL:  yes
          Hearing date:  April 23, 2013


          SUBJECT:

          San Francisco Bay Area high-speed rail expenditures

          DESCRIPTION:

          This bill reiterates a number of restrictions contained in  
          existing law related to bond funds that the Legislature  
          appropriated for the development of high-speed rail in the San  
          Francisco Bay Area.

          ANALYSIS:

          Existing law created the California High-Speed Rail Authority  
          (HSRA) in 1996 to direct development and implementation of  
          inter-city high-speed rail service that is fully coordinated  
          with other public transportation services.  In 2008, voters  
          approved Proposition 1A (Prop 1A) authorizing $9.95 billion in  
          general obligation bonds for the project.  The Legislature  
          appropriates bond funds for expenditure and the bond act  
          includes requirements for reporting and expenditure of bond  
          funds.  

          Prop 1A set aside $950 million in bond funds for capital  
          improvements to intercity, urban, and commuter rail that provide  
          direct connectivity to high-speed rail, while Prop 1A dedicates  
          the remaining $9 billion specifically to high-speed rail  
          projects.  

          In 2012, the Legislature passed SB 1029 (Committee on Budget and  
          Fiscal Review), Chapter 152, which appropriated the state bond  
          and federal funds necessary to award the design-build  
          construction contracts for the first segment of the high-speed  
          rail project.  SB 1029 also appropriated $1.1 billion in bond  
          funds for investment in the "bookend" segments of the system  
          located in the northern and southern California regions.  SB  
          1029 included extensive reporting requirements and expenditure  
          restrictions.  With respect to the appropriation for projects in  
          the "bookend" segments, SB 1029 contains a number of  




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          restrictions, including:

           Making funds available only for improvements consistent with  
            the memorandums of understanding (MOUs) approved prior to the  
            appropriation between HSRA and the local partners.
           Prohibiting funds dedicated to the San Francisco-to-San Jose  
            Peninsula corridor from being used to expand the project  
            beyond the agreed-upon "blended system" with existing commuter  
            rail service or to build a four-track system.
           Requiring HSRA to enter into a project management and funding  
            agreement with the local sponsor of the project.
           Subjecting expenditures to audits to affirm HSRA spent them in  
            accordance with established criteria and existing agreements.
                 Making funds available for encumbrance or liquidation  
               until June 30, 2018.
           This bill  reiterates a number of restrictions contained in  
          existing law related to bond funds that the Legislature  
          appropriated for the development of high-speed rail in the San  
          Francisco Bay Area.  Specifically, restrictions in this bill  
          include:

           Making funds available only for improvements consistent with  
            the memorandums of understanding (MOUs) approved prior to the  
            appropriation between HSRA and the local partners.
           Prohibiting funds dedicated to the San Francisco-to-San Jose  
            Peninsula corridor from being used to expand the project  
            beyond the agreed-upon "blended system" with existing commuter  
            rail service or to build a four-track system.
           Requiring approval from all nine parties of the Bay Area MOU  
            to expand beyond the blended system planned for the Peninsula  
            corridor.

          COMMENTS:

           1.Purpose  .  According to the author, this bill closes potential  
            loopholes to make sure that funds cannot be transferred from  
            the San Francisco Peninsula segment to other segments of the  
            high-speed rail system.  In addition, the bill clarifies that  
            appropriated funds will be used solely to implement the  
            negotiated two-track blended system on the Peninsula.   
            Finally, the author contends this bill provides a critical  
            safeguard against expansion of the shared system by requiring  
            HSRA to obtain approval of any changes from all nine entities  
            that were party to the original MOU involving the Peninsula  
            segment.  These protections are important because of the level  
            of mistrust of HSRA that exists with Bay Area Peninsula  




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            residents and communities.

           2.What does this bill accomplish  ?  All of the protections in  
            this bill already either explicitly exist or are implied in  
            current law.  Provisions connected to state budget  
            appropriations remain attached to the funds as long as the  
            funds are available for expenditure and cannot be changed or  
            adjusted without new legislation.  Therefore, the restrictions  
            contained in          SB 1029 will govern the high-speed rail  
            funds provided to the "bookend" segments unless the  
            Legislature passes and the governor signs a bill stating  
            otherwise.  It is unclear what this bill accomplishes, except  
            reiterating current restrictions on appropriated funds.

           3.Sunset date  .  As noted above, the funds appropriated in SB  
            1029 for the "bookend" projects are available until June 30,  
            2018.  The committee may wish to amend this bill to add a  
            sunset date so this language does not remain in statute beyond  
            its applicability.

          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,                                             April 17,  
          2013.)

               SUPPORT:  City of San Carlos
                         City of Palo Alto 
                         Mayor of Redwood City
                         Peninsula Corridor Joint Powers Authority  
          (Caltrain)
                         San Mateo Transit District
                         San Mateo Transportation Authority

               OPPOSED:  None received.