BILL ANALYSIS                                                                                                                                                                                                    

                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 194 (Frazier) - High-occupancy toll lanes
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          |Version: July 2, 2015           |Policy Vote: T. & H. 10 - 0     |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 17, 2015   |Consultant: Mark McKenzie       |
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          This bill meets the criteria for referral to the Suspense File. 

          Summary:  AB 194 would authorize the Department of  
          Transportation (Caltrans) and regional transportation agencies  
          to apply to the California Transportation Commission (CTC) to  
          develop and operate high-occupancy toll (HOT) lanes or other  
          toll facilities, as specified.

           CTC costs of approximately $200,000 per application for due  
            diligence reviews and approvals of project proposals.  Costs  
            to review proposals submitted by regional transportation  
            agencies will be reimbursed by the applicant, but CTC would  
            need additional resources for each proposal submitted by  


          AB 194 (Frazier)                                       Page 1 of  
            Caltrans. (State Highway Account)

           Minor and absorbable CTC costs to revise guidelines and  
            administer the program. (State Highway Account)

           Unknown costs to Caltrans and regional transportation agencies  
            to develop and operate HOT lanes.  The bill authorizes  
            Caltrans and regional transportation agencies to retain up to  
            three percent of toll revenues for administrative expenses  
            related to the operation of the facilities.

           Unknown toll revenue gains for Caltrans and regional  
            transportation agencies related to the operation of HOT lanes  
            and other toll facilities.  For illustrative purposes, HOT  
            lanes administered by MTA generate approximately $17 million  
            annually.  Excess revenues must be used within the corridor  
            from which it was generated.

          Background:  HOT lanes allow single-occupancy vehicles to use designated  
          High-Occupancy Vehicle (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 concept of "value pricing programs," whereby the toll varies  
          depending on the time of day and level of congestion.  Another  
          value-pricing model is express lanes, which are toll roads that  
          may allow high-occupancy vehicles to access the lanes for free  
          or at a reduced toll.

          Existing law authorizes the San Diego Association of  
          Governments, the Santa Clara Valley Transportation Authority,  
          and the Alameda County Transportation Commission to construct  
          and operate HOT lanes.   AB 1467 (Nunez), Ch. 32/2006,  
          established a HOT lane demonstration program that authorized  
          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 in the demonstration program was 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,  


          AB 194 (Frazier)                                       Page 2 of  
          and submitting eligible applications to the Legislature for  
          approval or rejection.  The CTC subsequently approved HOT lane  
          facilities in the San Francisco Bay Area, Los Angeles County,  
          and Riverside County.  

          Existing law requires toll revenues generated from HOT lanes and  
          express toll lanes to be expended within the corridor of the  
          managed lanes.

          Proposed Law:  
            AB 194 provides general authority for Caltrans and regional  
          transportation agencies to develop and operate HOT lanes or  
          other toll facilities, including value pricing programs and  
          exclusive or preferential lane facilities for public transit or  
          freight, subject to review and approval by CTC.  Specifically,  
          this bill would:
           Require CTC to review and approve each application for toll  
            facilities, and conduct at least one public hearing at or near  
            the proposed facility.
           Require CTC to establish eligibility criteria to include, at a  
            minimum, all of the following:
               o      Demonstration that the proposed facility will  
                 improve the corridor's performance, as specified.
               o      A requirement that the facility is contained in a  
                 regional transportation plan, regional transportation  
                 improvement program, or interregional transportation  
                 improvement program, as specified.
               o      Evidence of cooperation between Caltrans and the  
                 relevant regional transportation agency.
               o      A discussion of how the proposed facility meets  
                 statutory requirements.
               o      A requirement that the proposed facility has  
                 received environmental clearance.
           Require CTC to establish guidelines for the development and  
            operation of toll facilities with the following minimum  
               o      The development and operation of facilities must be  
                 a cooperative effort between Caltrans and the appropriate  
                 regional transportation agency, with the active  
                 participation of the California Highway Patrol, pursuant  


          AB 194 (Frazier)                                       Page 3 of  
                 to agreements.
               o      The applicant entity is responsible for  
                 establishing, collecting, and administering tolls, and  
                 for paying for the maintenance of facilities from net  
                 toll revenue, as specified.
               o      Toll revenues will be available to the applicant for  
                 direct expenses related to the maintenance,  
                 administration, and operation of the facilities,  
                 including toll collection and enforcement.   
                 Administrative expenses to operate facilities are limited  
                 to three percent of toll revenues, and excess revenues  
                 are to be used in the corridor from which it was  
                 generated, pursuant to an expenditure plan.
               o      Authority to operate toll facilities does not  
                 preclude the construction of competing facilities, and  
                 the applicant is not entitled to compensation for a  
                 competing facility's adverse impact on toll revenue.
           Require a regional transportation agency applicant, but not  
            Caltrans, to reimburse CTC for all costs and expenses incurred  
            in processing the application.
           Authorize a regional transportation agency to issue bonds  
            payable from toll revenues. 
           Require a regional transportation agency to consult with  
            relevant local transportation authorities and congestion  
            management agencies and provide the opportunity to enter into  
            an agreement related to the toll facility, prior to submitting  
            an application.
           Specify that the authority to develop and operate toll  
            facilities neither prohibits nor authorizes the conversion of  
            any existing non-tolled lanes into tolled lanes, except that a  
            high-occupancy vehicle lane may be converted to a HOT lane.

          Legislation:  AB 914 (Brown) would authorize the San Bernardino  
          County Transportation Commission to conduct, administer, and  
          operate a value-pricing program on Interstate 10 and Interstate  
          15 in San Bernardino County.  AB 914 was approved by this  
          Committee on July 13, 2015, and is currently pending on the  
          Senate Floor.
          SB 983 (Hernandez), which was held on the Assembly  
          Appropriations Committee's Suspense File in 2014, would also  
          have authorized Caltrans or any regional transportation agency  
          to apply to the CTC to develop and operate HOT lanes.  Although  


          AB 194 (Frazier)                                       Page 4 of  
          that version of SB 983 was not heard by this Committee, the  
          language was previously included in SB 1298 (Hernandez), which  
          was approved by this Committee on May 23, 2014.

          Comments:  The existing statutes governing the state HOT lane  
          demonstration program require CTC to establish eligibility  
          criteria, review applications to determine eligibility, and hold  
          public hearings on the HOT lane proposals.  AB 194 would specify  
          the minimum eligibility criteria and 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 update guidelines and to generally  
          administer the program could be absorbed, but the Commission  
          would need to contract with financial and technical consultants  
          to conduct a robust review of proposals prior to approval at a  
          cost of approximately $200,000 per application.  The bill  
          requires regional transportation agencies to reimburse CTC for  
          all costs and expenses incurred in the processing of an  
          application, but these costs would be borne by the State Highway  
          Account for proposals submitted by Caltrans. 

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