BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 516

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          Date of Hearing:  May 20, 2015


                                 Jimmy Gomez, Chair

          516 (Mullin) - As Amended April 20, 2015

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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   


          Requires vehicles sold or leased without a permanent license  
          plate to be affixed with a temporary license plate (TLP).   
          Specifically, this bill:  


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          1)Requires the DMV, by January 1, 2017, to develop or contract  
            with a private industry partner to develop a TLP system to be  
            used by the DMV, dealers, and first-line service providers, as  
            of that date, to issue TLP's at the time a vehicle is sold.

          2)Permits a vehicle to operate with TLPs until either (a) the  
            permanent license plates and registration card are received by  
            the vehicle owner, or, (b) 90 days have lapsed from the  
            vehicle's selling date, whichever occurs first.

          3)Authorizes a first-line service provider to charge a two  
            dollar ($2) transaction fee to cover the cost of processing  
            TLPs for a vehicle, and authorizes a dealer to charge the TLP  
            transaction fee to a customer or lessee of the vehicle. 

          4)Increases the document processing charge a dealer under the  
            Business Automation Program (BPA) may charge a customer from  
            $80 to $95.  

          5)Requires BPA motor vehicle dealers to affix, at the time of  
            sale, a TLP to a motor vehicle sold without a permanent  
            license plate.  

          6)Extends the existing felony penalty-punishable by up to 16  
            months, two years, or three years in state prison or up to one  
            year in county jail-for counterfeit or forgery of licenses, to  


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            include such actions with regard to TLPs,

          7)Requires TLPs to be affixed to the front and rear of the  
            vehicle and requires the owner to remove TLPs upon receipt of  
            permanent plates.


          FISCAL EFFECT:

          The DMV estimates first-year costs of $1.75 million and ongoing  
          costs of $309,000. The department indicates this is related to  
          design and development to create the TLP process, modification  
          of the vehicle registration database, programming the  
          identification and authentication process, and creating an  
          interface between the database and the department.  There will  
          also be staff time associated with developing and coordinating  
          programming requests, developing business rules, developing  
          privacy threshold and impact assessments, and updating memos,  
          manuals, brochures, and other related departmental publications  
          referencing vehicle registration information. Ongoing costs are  
          associated with maintenance of the TLP database, data center  
          costs, and staff time.

          It should be noted that these cost are several times higher than  
          the department's cost estimate for a similar bill last year  
          (about $300,000), which assumed a first-line business partner  
          would develop the system under contract to DMV.


          1)Background. At the time of retail sale, the vehicle dealer is  
            responsible for applying to DMV for the registration of a new  


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            vehicle and the transfer of registration for a used vehicle.   
            SB 46 (Polanco)/Chapter 127, Statutes of 2001, established the  
            electronic vehicle registration (EVR) program, whereby motor  
            vehicle dealers may enter into contracts to act as DMV  
            business partners for vehicle registration and titling  
            purposes.  A business partner dealer communicates  
            electronically with DMV, either directly or through a  
            "first-line service provider", to register a vehicle it has  
            sold and then mails license plates, registration cards, and  
            registration stickers to the buyer.

            AB 1215 (Blumenfield), Chapter 329, Statutes of 2011,  
            implemented significant changes to the vehicle registration  
            process including, requiring new car dealers to participate in  
            the EVR program, reducing the period a vehicle may operate a  
            vehicle with a report-of-sale notice to 90 days, and requiring  
            license plates to be attached upon receipt by the vehicle  
            owner. The implementation of AB 1215 has resulted in industry  
            stakeholders indicating that vehicle owners are now receiving  
            permanent license plates between 14 to 30 days on average.

          2)Purpose. This bill proposes to develop a statewide TLP system  
            to ensure purchased vehicles are identifiable to law  
            enforcement and toll operators during the period between the  
            point of sale and when permanent license plates are received  
            by the purchaser. Proponents argue that a TLP system will  
            assist law enforcement and also help toll agencies mitigate  
            deliberate toll evaders.  For example, in fiscal year 2013-14,  
            the Bay Area Toll Authority generated approximately $690  
            million in toll revenues however experienced a $7 million loss  
            in revenue tied to vehicles with no license plate.  The author  
            asserts that this legislation will "improve public safety by  
            enabling law enforcement to identify vehicles involved in  
            traffic violations, hit-and-run accidents, and other criminal  

            In support, the California New Car Dealers Association, which  


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            was opposed to last year's version of this bill (see below),  
            believes that the $2 increase provided in the document  
            processing charge is sufficient to compensate dealers for the  
            added burden on dealers to comply with the TLP requirements.

          3)Opposition. Consumers for Auto Reliability and Safety (CARS)  
            argues the bill will penalize buyers who, through no fault of  
            their own, do not receive their permanent license within 90  
            days, which CARS asserts still happens due to dealers going  
            out of business or dealer or DMV errors. CARS also objects to  
            the increased processing charge

          4)Prior Legislation. AB 2197 (Mullin) of 2014, which was similar  
            to this bill, was held on this committee's Suspense file.

          Analysis Prepared by:Chuck Nicol / APPR. / (916)