BILL ANALYSIS Ó SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 613 SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: desaulnier VERSION: 4/23/13 Analysis by: Eric Thronson FISCAL: no Hearing date: April 30, 2013 SUBJECT: Restricting the use of Bay Area toll bridge revenues DESCRIPTION: This bill restricts the use of toll revenues in the San Francisco Bay Area. ANALYSIS: The Metropolitan Transportation Commission (MTC) is the transportation planning, coordinating and financing agency for the nine-county San Francisco Bay Area. MTC is governed by a 19-member policy board primarily comprised of local elected officials. The Bay Area Toll Authority (BATA) is an independent legal entity governed by the board of MTC. BATA manages and invests revenues from all tolls levied on the state-owned toll bridges in the Bay Area. As part of these activities, BATA funds the administration of day-to-day operations and maintenance, as well as the long-term capital improvement and rehabilitation of the bridges. Existing law authorizes BATA to do all acts necessary for the exercise of its power, including, but not limited to: Entering into contracts; Employing agents or employees; Acquiring, constructing, leasing or operating any public facility or improvements; Suing or being sued in its own name; Issuing bonds or other obligations of debt; Receiving funds from federal or state agencies; and Investing any money not immediately required to fulfill its duties. SB 613 (DESAULNIER) Page 2 Further, existing law authorizes BATA to make contributions to MTC without limit to support BATA in its fulfillment of its responsibilities. This bill restricts BATA's use of toll revenues. Specifically, this bill: Restricts BATA from purchasing or otherwise acquiring any office space in addition to the facilities located at 390 Main Street in San Francisco. Restricts BATA's contributions to MTC to no more than one percent of the gross annual bridge revenues. Allows BATA to loan up to an additional one percent of the gross annual bridge revenues beyond its contribution to MTC, to be repaid with interest. COMMENTS: 1.Purpose . According to the author, this bill is necessary to clear up the purpose of toll revenues and ensure that these revenues are not used in the future to purchase property that is not "solely for the management of state-owned toll bridges." With the recent use of toll revenues to purchase a building much larger than the amount of office space necessary to house MTC and BATA, the author questions why MTC is entering the real estate business and becoming a commercial landlord. This bill enacts the following recommendation from the State Auditor: "If the Legislature believes state law provides the toll authority with too much discretion over its use of toll revenues, it should consider amending state law to more narrowly define how toll revenues that are not immediately needed for bridge maintenance or debt service may be spent or invested." 2.The building controversy . In 2011, MTC and BATA formed a joint powers agency for the purposes of acquiring an office building in San Francisco to create a joint regional government co-location facility. The building is initially to serve as a regional headquarters for MTC, the Bay Area Air Quality Management District, and the Bay Conservation and Development Commission. It may later house the Association of Bay Area Governments. In spring of 2012, in response to legislative concerns regarding the use of toll revenues for the planned relocation, SB 613 (DESAULNIER) Page 3 the Joint Legislative Audit Committee requested that the State Auditor investigate the purchase of the building and specifically the use of toll revenues to fund the proposed move. The Auditor concluded that MTC's decision to acquire a new headquarters building likely was legally permissible. At the same time, upon request of the author of this bill, Legislative Counsel opined that the information regarding the purchase of the building could serve as a basis for judicial determination that the use of the bridge toll revenues to fund the purchase of the new building was not authorized by law. Legislative Counsel based this opinion, at least in part, on the fact that MTC and BATA plan to occupy less than half of the planned office space and, instead, use the building primarily for operation of a regional governance co-location facility. As MTC and BATA do not have legislative authority to provide a regional governance co-location facility, Legislative Counsel believes the purchase of the building using toll revenues may be an impermissible use of those revenues. This bill removes the ambiguity of existing law and restricts the future use of toll revenues in an effort to resolve this controversy. While enacting this bill will not affect the purchase of the new MTC/BATA headquarters, it will limit the use of toll revenues for the purchase of future office facilities. POSITIONS: (Communicated to the committee before noon on Wednesday, April 24, 2013.) SUPPORT: None received. OPPOSED: None received.