BILL ANALYSIS                                                                                                                                                                                                    



                                                                            



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                                    THIRD READING


          Bill No:  SB 557
          Author:   Hill (D), et al.
          Amended:  5/2/13
          Vote:     21


           SENATE TRANSPORTATION & HOUSING COMMITTEE  :  9-1, 4/30/13  
           AYES:  DeSaulnier, Beall, Cannella, Galgiani, Hueso, Lara, Liu,  
            Pavley, Wyland
          NOES:  Roth
          NO VOTE RECORDED:  Gaines
           
          SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8  
           

           SUBJECT  :    San Francisco Bay Area high-speed rail expenditures

           SOURCE  :     Author


           DIGEST  :    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  
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          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 includes extensive reporting requirements and expenditure  
          restrictions.  With respect to the appropriation for projects in  
          the "bookend" segments, SB 1029 contains a number of  
          restrictions, including:

          1.Making funds available only for improvements consistent with  
            the memorandums of understanding (MOUs) approved prior to the  
            appropriation between HSRA and the local partners.

          2.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.

          3.Requiring HSRA to enter into a project management and funding  
            agreement with the local sponsor of the project.

          4.Subjecting expenditures to audits to affirm HSRA spent them in  
            accordance with established criteria and existing agreements.

          5.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:


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          1.Making funds available only for improvements consistent with  
            the MOUs approved prior to the appropriation between HSRA and  
            the local partners.

          2.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.

          3.Provides items #1 and #2 above remain in effect as long as the  
            appropriation contained in SB 1029 for the "bookend" segments  
            remains available for encumbrance or liquidation.

          4.Requiring approval from all nine parties of the Bay Area MOU  
            to expand beyond the "blended system" planned for the  
            Peninsula corridor.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  5/20/13)

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

           ARGUMENTS IN SUPPORT  :    According to the author's office, 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's office 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 residents and communities.



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          JA:ej  5/21/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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