BILL ANALYSIS                                                                                                                                                                                                    Ó

                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 194            Hearing Date:    7/14/2015
          |Author:   |Frazier                                               |
          |Version:  |7/2/2015                                              |
          |Urgency:  |No                     |Fiscal:      |Yes             |
          |Consultant|Randy Chinn                                           |
          |:         |                                                      |

          SUBJECT:  High-occupancy toll lanes

            DIGEST:  This bill authorizes regional transportation agencies  
          and the California Department of Transportation (Caltrans) to  
          develop high-occupancy toll lanes and other toll facilities  
          without limitation.

          High-occupancy toll (HOT) lanes are lanes where carpools can  
          travel for free or at a reduced charge and other vehicles may  
          travel upon payment of a higher charge, which varies based on  
          congestion.  An agency operating a HOT lane essentially sells  
          excess capacity in undersubscribed high-occupancy vehicle lanes  
          to single-occupant vehicle drivers by charging a toll.  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 benefits of  
          promoting carpooling with access to the faster high-occupancy  
          vehicle lane.

          HOT lanes are increasingly being implemented in metropolitan  
          areas around the state and nation.  Transportation agencies have  


          AB 194 (Frazier)                                      PageB of?
          been hot for HOT lanes for years, viewing them as a way to more  
          efficiently use freeway capacity and to help fund expansion of  
          high-occupancy vehicle, or carpool, lanes and transit service.   
          The California Transportation Agency has established a goal of  
          expanding the use of HOT lanes<1>.  The counties of Los Angeles,  
          Orange, San Diego, Santa Clara, and Alameda all have existing  
          HOT lanes.

          Existing law limits the number of HOT lane projects to four, two  
          each in Northern and Southern California.

          This bill:

          1)Authorizes regional transportation agencies and Caltrans to  
            build and operate HOT lanes or other toll facilities without  
            limit, subject to review and approval by the California  
            Transportation Commission (CTC).

          2)Requires the CTC to hold at least one public hearing before  
            approving a toll facility.

          3)Requires the CTC to develop eligibility criteria, which  
            include a demonstration that the proposed facility will  
            improve the corridor's performance, that the proposed facility  
            is consistent with the regional transportation plan, and  
            evidence of cooperation between Caltrans and the regional  
            transportation authority.

          4)Requires the CTC to develop guidelines for the development and  
            operation of the toll facility, including that the applicant  

             a)   Develop and operate the facilities in cooperation with  
               Caltrans or the regional transportation agency, as  
               appropriate, and with the active participation of the  
               California Highway Patrol;
             b)   Be responsible for establishing, collecting and  
               administering tolls;
             c)   Be responsible for paying for the maintenance of the  
               facilities; and
             d)   Ensure that the revenues generated from the operation of  
               the facilities shall pay for the direct expense of  

          <1> California Transportation Infrastructure Priorities:  Vision  
          and Interim Recommendations, California State Transportation  
          Agency; February 5, 2014.


          AB 194 (Frazier)                                      PageC of?
               operating the facilities, limiting the administrative  
               expenses to 3%, and that all remaining revenue be used in  
               the corridor in which it is was generated.

          1)Authorizes regional transportation agencies to issue bonds to  
            finance the construction of toll facilities.

          1)Purpose.  According to the author, it is clear that California  
            is in the embryonic stage of a substantial build-out of HOT  
            lanes.  Regional transportation agencies, as well as Caltrans,  
            struggle with meeting the challenges of increasing traffic  
            congestion and decreasing transportation revenue.  Given the  
            success of multiple HOT lane demonstration programs to date,  
            it is appropriate now to provide an administrative process  
            whereby regional transportation agencies and Caltrans can work  
            together with the CTC to develop and operate HOT lane  

          2)No bill needed.  The primary purpose of this bill is to make  
            the decision of allowing a toll lane or toll road  
            administrative, through the CTC, rather than legislative.   
            Recent California legislative history has supported toll lanes  
            and roads (see related bill section below);  they are no  
            longer unique or unusual.  All of the bridges across San  
            Francisco Bay are toll bridges, five state routes in Southern  
            California are toll only, and HOT lanes are widespread  
            throughout the state.  

            As tolling becomes more widespread, questions about social  
            equity arise.  While there may well be economic justification  
            for allowing drivers to buy their way into the carpool lane,  
            resentment from those who can't afford to pay is  
            understandable, given that all drivers pay gas taxes,  
            registration fees, and vehicle license fees.  This bill does  
            not direct any of the toll revenue to improving public transit  
            service or assisting disadvantaged communities.  Those  
            decisions are left to the regional transportation agencies.

            Supporters argue that HOT lanes generate revenue that can be  
            used to benefit those who don't use the lanes.  In Los  
            Angeles, tolls from the HOT lanes on State Routes 10 and 110  
            have generated tens of millions of dollars for the Los Angeles  
            Metro, which has used that funding to increase bus service.  


          AB 194 (Frazier)                                      PageD of?

          3)Negotiations continue.  The author is working with the  
            administration on potential amendments to the bill.  Areas of  
            discussion include the role of Caltrans and the CTC in  
            projects proposed and funded by regional transportation  
            agencies, and the specifics of the reimbursements to the state  
            departments and agencies for the activities they perform in  
            the development and operation of the facility.  In general,  
            the principle underlying the bill is that the revenue  
            expenditures and tolling policies are the purview of the  
            agency, whether a regional transportation agency or Caltrans,  
            that is assuming the responsibility for the project  
            development and financing.

          Related Legislation:
          SB 983 (Hernández, 2014) - was similar to AB 194.  SB 983 was  
          held in the Assembly Appropriations Committee.

          SB 1298 (Hernández, Chapter 531, Statutes of 2014) - repealed  
          and recast specific authority for the Los Angeles County  
          Metropolitan Transportation Authority to operate a value-pricing  
          and transit-development program, including HOT lanes on State  
          Routes 10 and 110.  

          AB 2250 (Daly, Chapter 500, Statutes of 2014) - requires any  
          revenue generated in toll lanes to be used in the corridor in  
          which it was generated.

          AB 1467 (Núñez, Chapter 32, Statutes of 2005) - originally  
          granted authority to the CTC to review regional transportation  
          agencies' applications for HOT lanes, for up to four projects,  
          until January 1, 2012.  

          AB 2032 (Dutra, Chapter 418 of 2004) - authorized HOT lane  
          facilities in Alameda, San Diego, and Santa Clara counties.  

          AB 713 (Goldsmith, Chapter 962, Statutes of 1993) - authorized a  
          HOT lane facility in San Diego County.

          Assembly Votes:

            Floor:    62-17
            Appr:     11-3
            Trans:    14-1


          AB 194 (Frazier)                                      PageE of?
          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  No
          POSITIONS:  (Communicated to the committee before noon on  
                          July 8, 2015.)

          Self-Help Counties Coalition (sponsor)
          American Council of Engineering Companies of California
          American Society of Civil Engineers Region 9
          Bay Area Council
          California Asphalt Pavement Association
          California Association of Councils of Governments
          California Transportation Commission
          City/County Association of Governments of San Mateo County
          Metropolitan Transportation Commission
          Santa Clara Valley Transportation Authority

          None received

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