BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 557
                                                                  Page  1

          Date of Hearing:   August 14, 2013

                                  Mike Gatto, Chair

                      SB 557 (Hill) - As Amended:  May 2, 2013 

          Policy Committee:                               

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               


          This bill restates various provisions related to restrictions on  
          the use of bond funds appropriated for development of the  
          high-speed rail system in the San Francisco Bay Area.  
          Specifically, this bill:

          1)Makes funds available only for improvements consistent with  
            the Memorandum of Understanding (MOU) approved between the  
            California High-Speed Rail Authority (HSRA) and local Bay Area  
            partners prior to the appropriation.

          2)Prohibits funds dedicated to the San Francisco-to-San Jose  
            segment 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 that the requirement to use funds consistent with the  
            MOU and the prohibition on the use of funds for purposes other  
            than the San Francisco-to-San Jose segment remain in effect as  
            long as the appropriation for the "bookend" segments remains  
            available for encumbrance.

          4)Requires approval from all parties to the MOU to expand the  
            system beyond the "blended system" planned for the Peninsula  

           FISCAL EFFECT  

          Negligible fiscal impact, as this bill restates current  
          requirements for expenditure of the appropriated funds.


                                                                  SB 557
                                                                  Page  2


           1)Background  . SB 1029 (Committee on Budget and Fiscal  
            Review)/Chapter 152 of 2012 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. The bill 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  

           2)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 San Francisco  
            Peninsula.  Finally, the author contends this bill provides a  
            critical safeguard against expansion of the shared system by  
            requiring HSRA to obtain approval for any changes from all  
            nine entities that were party to the original MOU involving  
            the San Francisco Peninsula segment.  The author feels that  
            these protections are important to ensure that the HSRA  
            continues to honor existing agreements and funding  

            Despite the fact that this bill simply restates existing law  
            and highlights existing agreements, the author feels it is  
            important to explicitly outline existing agreements between  
            the HSRA and MOU signatory entities and conditions set forth  
            in the budget.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081