BILL ANALYSIS                                                                                                                                                                                                    Ó






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: SB 1298
          SENATOR MARK DESAULNIER, CHAIRMAN              AUTHOR:  Hernandez
                                                         VERSION: 2/21/14
          Analysis by:  Eric Thronson                    FISCAL:  yes
          Hearing date:  April 29, 2014



          SUBJECT:

          High-occupancy toll lanes

          DESCRIPTION:

          This bill makes changes to the state's high-occupancy toll (HOT)  
          lane program, and eliminates the sunset date on the HOT lane  
          demonstration project in Los Angeles County.

          ANALYSIS:

          Until 2012, existing law authorized regional transportation  
          agencies, in cooperation with the California Department of  
          Transportation (Caltrans), to apply to the California  
          Transportation Commission (CTC) to develop and operate HOT  
          lanes.  An agency operating a HOT lane essentially sells excess  
          capacity in under-subscribed high-occupancy vehicle lanes to  
          single-occupant vehicle drivers by charging a toll.  This  
          authority limited CTC to deeming up to four HOT lane projects  
          eligible for construction, two in Northern California and two in  
          Southern California.  CTC was also required to hold public  
          hearings on any eligible project.  The original legislation  
          required the Legislature to ultimately approve any HOT lane  
          projects deemed eligible by the CTC; subsequent legislation  
          eliminated the Legislative approval requirement, but failed to  
          identify the replacement entity ultimately responsible for  
          approving the project.

          HOT lanes typically employ a pricing method known as value  
          pricing or congestion pricing.  Under this scheme, the amount of  
          the toll varies in accordance with the level of congestion in  
          that particular lane, such that as congestion increases, so too  
          will the toll amount.  As the price to use the lane goes up,  
          fewer people presumably will choose to use it, thereby reducing  
          demand for the facility and maintaining free-flow travel  
          conditions.  With this mechanism, an agency can ensure that  
          operation of the toll facility does not undermine the intended  




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          benefits of promoting carpooling with access to the faster  
          high-occupancy vehicle lane.

          In 2008, following an eligibility review by the CTC, the  
          Legislature passed and the governor signed SB 1422  
          (Ridley-Thomas), Chapter 547, which allowed the Los Angeles  
          County Metropolitan Transportation Authority (LACMTA), in  
          cooperation with Caltrans, to operate a value-pricing and  
          transit development demonstration program.  Under this program,  
          which LACMTA refers to as "ExpressLanes," LACMTA converted the  
          high-occupancy vehicle lanes on portions of I-10 and I-110 in  
          Los Angeles County to HOT lanes.  

          SB 1422 established the conditions under which LACMTA could  
          implement the program, including the following:



           LACMTA could implement the program with Caltrans, and needed  
            Caltrans' consent to establish appropriate performance  
            measures for ensuring optimal use of the HOT lanes.



           LACMTA could not change the minimum vehicle occupancy standard  
            for free access to the HOT lane during the demonstration  
            period.



           Each proposed HOT lane must have non-tolled alternatives  
            available for public use in the same corridor.



           LACMTA could use toll revenues generated from the program for  
            the direct expenses related to the maintenance,  
            administration, and operation, including collection and  
            enforcement, of the demonstration program.  It could spend no  
            more than three percent of toll revenues on administration  
            expenses.



           LACMTA must adopt an expenditure plan in which all revenues in  
            excess of those necessary for the implementation of the  




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            program are spent in the corridor from which the revenue was  
            generated exclusively for preconstruction, construction, and  
            related costs of HOV facilities and the improvement of transit  
            service in the corridor.



          In addition, SB 1422 required LACMTA to conduct a public  
          outreach plan to solicit input in the development of the  
          demonstration program, and to identify the affected communities  
          and work with those communities to identify impacts and develop  
          measures to mitigate those impacts.



          Under existing law, LACMTA and Caltrans shall, by December 31,  
          2014, provide a report to the Legislature on, among other  
          things, the impact of the program on carpoolers and affected  
          communities, as well as how the program impacted transit service  
          or alternative modes of transportation.  The authority for  
          LACMTA to operate this HOT lane demonstration program expires  
          January 15, 2015.

           This bill  does two things:  

          1.In relation to the expired authority for regional  
            transportation agencies to apply to CTC for review of HOT lane  
            proposals, this bill eliminates the 2012 sunset date and the  
            limit of up to four total facilities in the state.  In this  
            way, the bill enables CTC to review and deem eligible any  
            number of HOT lane facilities in the state without  
            restriction.  This bill also eliminates the requirement that  
            the CTC conduct public hearings on each eligible proposal.

          2.This bill authorizes LACMTA to continue operating the  
            ExpressLanes HOT lane program on I-10 and I-110 indefinitely,  
            with the following changes to the program:

                 LACMTA no longer needs the consent of Caltrans to  
               establish appropriate performance measures for ensuring  
               optimal use of the HOT lanes.

                 LACMTA may now change the minimum vehicle occupancy  
               standard for free access to the HOT lane.

                 LACMTA is no longer required to provide a report to the  




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               Legislature on the impacts of the program.

          COMMENTS:

           1.Purpose  .  According to the author, the LACMTA ExpressLanes  
            demonstration project is considered a success by stakeholder  
            groups, cities, and local officials.  This bill is necessary  
            to make the project permanent.

           2.Funding and prioritizing transportation  .  Some suggest the way  
            California deals with funding transportation seems out of sync  
            with logic.  Generally speaking, there are traditional means  
            for raising transportation revenues (such as the excise tax on  
            fuels and weight fees for commercial vehicles), and there are  
            various alternative methods for funding transportation.   
            Historically, the state collected the traditional  
            transportation revenues and redistributed the funds in various  
            ways with some priority for projects that meet statewide  
            goals.  More recently, the state has relinquished much control  
            of these traditional revenues and now allows regions to make  
            most of the spending decisions with these funds based on  
            regional needs and priorities.

            With alternative methods of raising transportation revenues,  
            such as local sales taxes or tolls, the state has generally  
            authorized each method individually, with varying  
            restrictions, but allowed local or regional agencies to  
            collect the revenues and administer the program.  By doing so,  
            the state complicates the process and creates challenges for  
            local and regional entities to empower themselves and address  
            their unique transportation challenges through these  
            alternative revenue methods, even though they are primarily  
            locally determined efforts.

            This misalignment of transportation funding and  
            decision-making creates a number of problems.  First of all,  
            because regions determine a large portion of spending  
            decisions involving traditional funding mechanisms, the state  
            has relinquished its ability to affect transportation  
            policymaking in ways that could help achieve the state's  
            changing mobility and environmental goals.  Alternatively, the  
            state makes it more difficult for regions and locals to enlist  
            alternative funding methods to address their own unique  
            challenges and priorities.  It seems reasonable to begin  
            unwinding this tangled mess, and this bill is a step toward  
            that end.




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            HOT lanes are an alternative funding strategy that can empower  
            regional entities to begin addressing their own transportation  
            needs with locally-determined funding methods.  Existing state  
            law, however, makes this alternative exceedingly difficult for  
            regions to implement.  By enabling CTC to review and deem  
            eligible any number of HOT lane facilities in the state  
            without restriction, this bill begins to create easier access  
            for locals to this funding strategy.  The Legislature may wish  
            to make this tool available to regions without creating  
            unnecessary hoops that could discourage regional entities, but  
            existing law is still vague on what entity officially approves  
            these projects.  Therefore the committee may wish to amend the  
            bill to clarify that the CTC is approving eligible projects,  
            not just determining their eligibility.  

           3.Report to the Legislature .  According to LACMTA, the intent of  
            the ExpressLanes program is to test innovative strategies to  
            alleviate congestion, maximize freeway capacity, and enhance  
            transit alternatives in the I-10 and I-110 corridors.  In  
            addition to allowing single-occupant vehicles to use  
            high-occupancy vehicle lanes for a fee, LACMTA intends to  
            increase bus service that currently operates in those lanes as  
            well as make a variety of improvements to transit facilities  
            in the region.  The original authorization of the  
            demonstration program, SB 1422, required LACMTA to provide a  
            report to the Legislature on, among other things, the impact  
            of the program on carpoolers and affected communities, as well  
            as how the program impacted transit service or other  
            alternative modes of transportation.  This bill eliminates  
            that reporting requirement.  Given the unique nature of this  
            demonstration program, the report to the Legislature could  
            shed light on several potential lessons learned that could  
            inform future HOT lane programs of this type and, therefore,  
            could provide real value.  The committee may wish to amend the  
            bill to include the report requirement in existing law so that  
            the Legislature might apply lessons learned from the program  
            to future project requirements.

           4.To what should excess revenue go  ?  As of the publishing of  
            this analysis, the only letter of opposition sent to the  
            committee was from the Professional Engineers in California  
            Government (PECG), who oppose the bill unless it is amended to  
            provide a reasonable amount of HOT lane revenue to the state  
            for maintenance and operations of the state highway system.   
            This concern relates to a larger issue involving how excess  




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            revenues from alternative funding sources should be spent.  

            According to Caltrans and the CTC, the state is underfunding  
            the maintenance of its transportation system.  The Legislature  
            has been unwilling to increase transportation resources at the  
            state level, and therefore advocates for the system are  
            looking for any opportunity to identify new resources.  As  
            noted in a previous comment, however, the Legislature should  
            begin working to link the source of funds with the  
            decision-making authority of how those funds are spent.  Local  
            and regional entities authorizing new funding streams should  
            determine what those funds support, while the state should  
            more effectively administer statewide revenues.  

            It appears PECG is advocating for more than the cost of  
            maintaining the toll lane on the state's highway.  In some  
            ways it seems unfair, and counterproductive, to ask a local  
            entity to increase taxes or fees on its own constituents only  
            to redistribute the funds to be spent elsewhere in the state.   
            The Legislature should consider carefully what precedent this  
            might set, and whether doing so would simply discourage local  
            and regional entities from exploring future alternative  
            funding opportunities.  On the other hand, it seems very  
            reasonable for local entities to fund the ongoing maintenance  
            of any new facility on the state system, instead of expecting  
            the rest of the state to subsidize that maintenance cost.   
            This bill is currently unclear about who is to fund the  
            maintenance of the HOT lane.  To provide more clarity, the  
            committee may wish to amend the bill to require, in the  
            cooperative agreement between LACMTA and Caltrans, that toll  
            revenues fund the ongoing maintenance of the HOT lanes.

           5.Technical amendment  .

                 Page 2, line 4, delete "143" and add "6820 of Public  
               Contract Code".
                 Page 2, lines 14-16, reinstitute the CTC public hearing  
               requirements.
          





          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,                                             April 23,  




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          2014.)

               SUPPORT:  Avalon Church of Christ
                         Bethany Baptist Church of West Los Angeles
                         Bible Enrichment Fellowship International Church
                         Bryant Temple
                         Christ the Good Shepherd Episcopal Church
                         Christian's Community Center
                         City on the Hill
                         Congregational Church of Christian Fellowship
                         Divine Deliverance Ministries
                         Foothill Transit
                         Grace Temple Baptist Church
                         Greater True Light M.B.C., Inc.
                         Greater Zion Church Family
                         HNTB Corporation
                         LAX Coastal Chamber of Commerce
                         Los Angeles Area Chamber of Commerce
                         Los Angeles County Business Federation
                         Los Angeles World Airports
                         Macedonia Baptist Church
                         Mount Moriah Baptist Church of Los Angeles, Inc.
                         Mount Zion Missionary Baptist Church
                         The Music Center
                         New Shady Grove Missionary Baptist Church
                         Paradise Baptist Church
                         Saint Paul Baptist Church
                         San Bernardino Associated Governments
                         Southern California Association of Governments
                         St. Andrews Missionary Baptist Church
                         The True Friendship Missionary Baptist Church
                         True Vine Baptist Church
                         Weller Street Missionary Baptist Church

               OPPOSED:  Professional Engineers in California Government