BILL ANALYSIS Ó SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 1228 SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: hueso VERSION: 3/27/14 Analysis by: Erin Riches FISCAL: yes Hearing date: April 22, 2014 SUBJECT: Trade Corridors Improvement Fund DESCRIPTION: This bill continues the existence of the Trade Corridors Improvement Fund (TCIF) in order to receive revenues from new funding sources and governs the expenditure of those funds. ANALYSIS: SB 1266 (Perata), Chapter 25, Statutes of 2006, authorized the sale of nearly $20 billion in general obligation bonds for transportation projects, upon voter approval. In November 2006, voters approved Proposition 1B, the Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006. Proposition 1B authorized the issuance of $19.9 billion in general obligation bonds to fund transportation projects to relieve congestion, improve the movement of goods, improve air quality, and enhance the safety and security of the transportation system. Proposition 1B created the TCIF and funded it with $2 billion of the total bond proceeds. Proposition 1B directed the Legislature to appropriate these funds for infrastructure improvements along federally designated "Trade Corridors of National Significance" or other high-volume freight corridors in California as determined by the California Transportation Commission (CTC). Proposition 1B required the CTC, in determining project eligibility, to consult the state trade infrastructure and goods movement plan, the trade infrastructure and goods movement plans adopted by regional transportation planning agencies, regional transportation plans, and the statewide port master plan. Proposition 1B provided that eligible projects included, but were not limited to, improvements to highway capacity and operations, the freight rail system, ports, truck corridors, and border access, as well SB 1228 (HUESO) Page 2 as to surface transportation to facilitate goods movement to and from airports. Although the CTC has fully programmed the entire $2 billion of Proposition 1B funds in the TCIF, it has been able to program additional projects as savings have materialized. The CTC has extended the program by two years, to fiscal year 2015-16, to take advantage of any further contract savings that may occur. This bill continues the existence of the TCIF indefinitely in order to receive funds from non-Proposition 1B sources, and governs the distribution of non-Proposition 1B funds as follows: Requires the CTC to allocate non-Proposition 1B monies in the TCIF for infrastructure improvements along federally designated "Trade Corridors of National Significance" or other high-volume freight corridors in California, as determined by the CTC. Requires the CTC, in determining project eligibility, to consult the state trade infrastructure and goods movement plan, trade infrastructure and goods movement plans adopted by regional transportation planning agencies, regional transportation plans, and the statewide port master plan. Provides that eligible projects include, but are not limited to: o Improvements to highway capacity and operations to facilitate goods movement, particularly in relation to the state's land ports of entry and seaports, including inland waterways between ports, and to relieve traffic congestion along major trade or goods movement corridors. o Improvements to the freight rail system to increase efficiency and capacity and to enhance goods movement from land ports of entry and seaports to warehousing and distribution centers throughout the state, including projects to separate rail lines from highway or local road traffic, improve freight rail mobility through mountainous regions, and relocate rail switching yards. o Improvements to enhance the capacity and efficiency of land ports of entry and seaports. o Improvements to truck corridors, including dedicated truck facilities or truck toll facilities. SB 1228 (HUESO) Page 3 o Improvements to border access to enhance goods movement between California and Mexico and maximize the state's ability to access federal border infrastructure funds. Requires the CTC to allocate TCIF funds in a manner that addresses the state's most urgent needs, balances the demands of various land ports of entry and seaports, provides reasonable geographic balance among the state's regions, and prioritizes projects that improve trade corridor mobility while reducing emissions of diesel particulate and other pollutant emissions. Requires the CTC, when allocating TCIF funds, to consider the speed and volume of large cargo traveling through the distribution system, a reasonably consistent and predictable amount of time for cargo to travel from one point to another within the system, and a reduction in the recurrent daily hours of delay. Requires the CTC, when allocating any Greenhouse Gas Reduction Fund (commonly known as cap-and-trade) monies transferred to the TCIF, to require these projects to demonstrate how they will reduce emissions consistent with the goals and objectives of cap-and-trade. Requires the CTC to allocate any non-Proposition 1B funds in the TCIF to projects that have identified committed supplemental funding from local, federal, or private sources. The CTC must determine an appropriate match, but the match must be at least equal to the TCIF allocation, other than for border access improvements. The CTC may prioritize projects with higher levels of committed supplemental funds. SB 1228 (HUESO) Page 4 Requires the CTC to incorporate into its annual report to the Legislature a summary of its TCIF-related activities, including, at minimum, a description and location of the projects funded by TCIF, the status of each project, and a description of the mobility and air-quality improvements the program is achieving. COMMENTS: 1.Purpose . The author states that California's land and sea ports of entry serve as key international commercial gateways for the more than $500 billion in products entering and exiting the US each year. Long wait times at border ports of entry delay access to intermediary goods, lead to problems in the manufacturing chain, and create significant negative traffic congestion and air-quality impacts. The author states that in order to leverage fully California's trade-related economic opportunities, the state needs a modern, robust, and multimodal goods movement network. Investing in infrastructure improvements at sea ports of entry can help federally designated marine highways provide large reductions in greenhouse gas emissions and air pollutants, relieve traffic congestion and wear and tear on highways, and provide an influx of economic activity throughout the state. 2.Background . The Legislative Analyst's Office Analysis of the 2008-09 Budget Bill noted that prior to Proposition 1B, the state did not dedicate transportation funding specifically to trade corridor mobility; furthermore, the state had not traditionally provided state funds for projects such as freight rail improvements. The CTC decided to try to establish the TCIF as an ongoing program, rather than a one-time bond program. The CTC adopted the initial TCIF program of 79 projects, totaling $3.1 billion, in April 2008 - deliberately over-programming the TCIF in anticipation of additional revenue sources becoming available, including State Highway Account funds. Additional revenue did not materialize due to economic conditions, and the CTC ended up working with stakeholders to eliminate the over-programming. 3.Where will the money come from ? No uncommitted Proposition 1B monies remain in the TCIF, nor does this bill appropriate further funds to the TCIF. It does, however, cite cap-and-trade monies as a potential funding source. 4.No funding for airports . This bill essentially lifts all the SB 1228 (HUESO) Page 5 Proposition 1B language relating to TCIF project eligibility, allocations, and reporting, but, unlike Proposition 1B, it does not include projects relating to goods movement in and out of airports as TCIF-eligible. The author indicates a desire to focus scarce resources on land ports of entry and seaports that are key to trade with Mexico. 5.Double-referral . The Rules Committee has referred this bill to both this committee and the Environmental Quality Committee. SB 1228 (HUESO) Page 6 POSITIONS: (Communicated to the committee before noon on Wednesday, April 16, 2014.) SUPPORT: East Otay Mesa Property Owners Association Hamann Companies Murphy Development Company Otay Mesa Property Owners Association San Diego Regional Chamber of Commerce United Port of San Diego OPPOSED: None received.