BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          SB 1298 (Hernandez) - High occupancy toll lanes.
          
          Amended: May 7, 2014            Policy Vote: T&H 11-0
          Urgency: No                     Mandate: No
          Hearing Date: May 23, 2014      Consultant: Mark McKenzie
          
          SUSPENSE FILE.
          
          
          Bill Summary: SB 1298 would remove specified limitations on the  
          state high-occupancy toll (HOT) lane program, thereby  
          authorizing any regional transportation agency to apply to the  
          California Transportation Commission (CTC) to develop and  
          operate HOT lanes.  The bill would also delete the January 15,  
          2015 sunset on the authority for the Los Angeles County  
          Metropolitan Transportation Authority (MTA) to operate HOT lanes  
          on State Highway Routes (SR) 10 and 110 in Los Angeles County,  
          and revise and recast those provisions.

          Fiscal Impact: 
              CTC costs of approximately $200,000 per application for due  
              diligence reviews and approvals of HOT lane proposals.   
              (State Highway Account)  It is unlikely that more than one  
              or two proposals would be submitted for approval in a single  
              year.

              Caltrans costs for ongoing maintenance and California  
              Highway Patrol (CHP) costs for ongoing enforcement of new  
              HOT lane facilities would be fully recovered from toll  
              revenues, pursuant to required agreements with local  
              agencies.

              Unknown costs and revenue gains for local transportation  
              agencies to develop and operate HOT lanes.  For illustrative  
              purposes, HOT lanes administered by MTA generate  
              approximately $17 million annually.

          Background: HOT lanes allow single-occupancy vehicles to use  
          designated HOV lanes at certain times of the day for a fee.   
          They are designed to accomplish four main goals: (1) increase  
          the use of HOV lanes; (2) relieve traffic congestion in other  
          lanes; (3) fund new transportation projects; and (4) test the  








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          concept of "value pricing programs," whereby the toll varies  
          depending on the time of day and level of congestion.

          Existing law, as enacted by AB 1467 (Nunez), Chap. 32/2006,  
          established the HOT lane program, authorizing regional  
          transportation entities to submit applications to the CTC until  
          January 1, 2012 for the development and operation of HOT lanes.   
          AB 1467 required the Legislature to select HOT lane projects by  
          enacting legislation, and limited the authorization to four  
          projects, two each in southern and northern California.  The  
          CTC's role is limited to establishing eligibility criteria,  
          determining whether a particular project is eligible, holding  
          public hearings in both northern and southern California on each  
          eligible application, and submitting eligible applications to  
          the Legislature for approval or rejection.

          Subsequently, the Legislature approved and the Governor signed  
          AB 1954 (Jeffries), Chap. 421/2008, authorizing the Riverside  
          County Transportation Commission to operate HOT lanes on SR 15  
          in Riverside County, and AB 1422 (Ridley-Thomas), Chap.  
          547/2008, authorizing MTA, in cooperation with Caltrans, to  
          operate a value-pricing and transit development demonstration  
          program on SR 10 and 110 in Los Angeles County.  The authority  
          to operate HOT lanes on SR 10 and 110 are subject to specified  
          parameters, limits, and conditions.  Existing law requires MTA  
          and Caltrans to report specified information on the HOT lane  
          demonstration program to the Legislature by December 31, 2014,  
          and sunsets the authority for MTA to operate HOT lanes on SR 10  
          and 110 on January 15, 2015.

          Proposed Law: Regarding the state HOT lane program, SB 1298  
          would:
                 Delete the 2012 deadline for regional transportation  
               agencies to submit HOT lane applications to the CTC, and  
               delete the limit on the number of facilities that may be  
               approved by the CTC.
                 Subject HOT lane proposals to CTC review and approval.
                 Require the Governor to include resources for the CTC to  
               fulfill the bill's requirements in the proposed annual  
               budget.

          Regarding MTA's authority to operate HOT lanes on SR 10 and 110,  
          SB 1298 would delete the authorizing statute and recast it by  
          making the following changes:








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                 Deleting the sunset date, thereby authorizing MTA to  
               operate the HOT lanes indefinitely.
                 Deleting a prohibition against MTA issuing bonds for the  
               demonstration program.
                 Deleting a requirement that MTA get the consent of  
               Caltrans to establish performance measures ensuring optimal  
               use of the HOT lanes.
                 Authorizing MTA to change the vehicle occupancy  
               requirement for access to the HOT lanes.
                 Deleting specified conditions under which MTA may  
               implement a demonstration program.
                 Requiring agreements between MTA, Caltrans, and CHP to  
               identify obligations, liabilities, and responsibilities of  
               each party, and to explicitly provide reimbursement of  
               state agencies for costs related to implementation and  
               operation of the program and maintenance of the state  
               highway system in connection with the program.
                 Delaying the deadline for a report to the Legislature by  
               one month. 

          Staff Comments: The statute that enacted the state HOT lane  
          program required CTC to establish eligibility criteria, review  
          applications to determine eligibility, and holding public  
          hearings on the HOT lane proposals.  SB 1298 would impose the  
          additional duty of approving applications for new HOT lanes,  
          which would require CTC to update program guidelines.  As part  
          of the approval process, CTC would need to analyze revenue and  
          operational analyses submitted by applicants.  CTC indicates  
          that staffing responsibilities to administer the program could  
          be absorbed, but the bill would likely require contracting with  
          financial and technical consultants to conduct a robust review  
          of proposals at a cost of approximately $200,000 per  
          application.