BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                       AB 906


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          ASSEMBLY THIRD READING


          AB  
          906 (Cooper)


          As Introduced  February 26, 2015


          Majority vote


           ------------------------------------------------------------------- 
          |Committee       |Votes |Ayes                |Noes                  |
          |                |      |                    |                      |
          |                |      |                    |                      |
          |----------------+------+--------------------+----------------------|
          |Local           |6-3   |Maienschein,        |Cooley, Gordon,       |
          |Government      |      |Gonzalez, Alejo,    |Waldron               |
          |                |      |Chiu, Holden,       |                      |
          |                |      |Linder              |                      |
          |                |      |                    |                      |
          |                |      |                    |                      |
           ------------------------------------------------------------------- 


          SUMMARY:  Makes changes to the proportionate share payment in  
          existing law that the City of Elk Grove must fulfill to maintain  
          an appointment of a director to Sacramento Regional Transit  
          District's (RT) Board of Directors.  Specifically, this bill:  


          1)Makes changes to the proportionate share payment in existing law  
            that the City of Elk Grove must fulfill to become a  
            participating entity and maintain a seat on RT's governing body.  
             










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          2)Requires the proportionate share for the City of Elk Grove to be  
            deemed fully satisfied through RT's receipt from the Sacramento  
            Transportation Authority of transaction and use tax revenues  
            from Measure A, as approved by the voters in November 2004, and  
            effective as of April 2009.  


          3)Repeals existing law, which requires the City of Elk Grove's  
            proportionate share to be determined in the manner provided in  
            First Amendment, Section 4B(2) to Interim Agreement for Elk  
            Grove Bus Service, dated March 17, 2004, between RT and Elk  
            Grove.  


          4)Provides that no further agreement between the City of Elk Grove  
            and RT is required. 


          EXISTING LAW:   


          1)Establishes the Sacramento Regional Transit District Act which  
            governs the powers and functions of RT, and establishes RT's  
            territory and board of directors (Board).  


          2)Authorizes RT to comprise of the Cities of Citrus Heights, Elk  
            Grove, Davis, Folsom, Rancho Cordova, Roseville, Sacramento,  
            West Sacramento, and Woodland, and specified territory in  
            Sacramento and Yolo Counties to the extent they are not included  
            in the above-mentioned cities.  


          3)Provides any city or county may annex to and become part of RT,  
            upon approval by the Board, following a written request by that  
            city or county and approval of the Sacramento Area Council of  
            Governments.  










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          4)Authorizes a city or county that is not annexed to RT to become  
            a participating entity entitled to make at least one appointment  
            to the Board, if the participating entity enters into an  
            agreement with RT that provides for all of the following:


             a)   The participating entity agrees to pay its proportionate  
               share of RT's cost to provide rail or other districtwide  
               transit services;  


             b)   RT agrees to maintain a specified level of rail or other  
               districtwide transit services; and,


             c)   RT is not obligated to provide transit services to any  
               particular location or along any particular route.  


          5)Requires the City of Elk Grove's proportionate share, for the  
            purposes of 4) above, to be determined in the manner provided in  
            First Amendment, Section 4B(2) to Interim Agreement for Elk  
            Grove Bus Service, dated March 17, 2004, between RT and Elk  
            Grove.  


          6)Provides that a participating entity's seat on the Board shall  
            terminate upon termination or cancellation of the agreement in  
            4), above.  


          7)Establishes a weighted voting procedure for RT's Board.  


          8)Defines a member entity to mean a city or county that is annexed  
            to RT pursuant to 2), and 3), above.  


          9)Defines a participating entity to mean a city or county that is  








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            not annexed to RT, but has entered into a specified agreement  
            pursuant to 4), above.  


          FISCAL EFFECT:  None


          COMMENTS:   


          1)RT.  The Legislature authorized the creation of the Sacramento  
            Regional Transit District in 1971 to operate a comprehensive  
            public transportation system for the Sacramento region.  RT  
            serves an area encompassing 418 square miles and 1.4 million  
            people; it operates 67 bus routes and 38.6 miles of light rail  
            service.  RT is governed by an 11-member Board of Directors  
            comprised of eight directors that are appointed by the annexed  
            jurisdictions, which are "member entities," including Sacramento  
            County, and the Cities of Sacramento and Rancho Cordova.   
            Additionally, three directors are appointed by non-annexed  
            jurisdictions, which are "participating entities," including the  
            Cities of Citrus Heights, Elk Grove, and Folsom.  


          2)City of Elk Grove.  The City of Elk Grove incorporated as a city  
            in 2001; prior to that time, RT provided transit services to  
            areas within Sacramento County that were included within Elk  
            Grove's boundaries.  Following incorporation, Elk Grove opted to  
            not activate membership as an annexed part of RT, and instead,  
            entered into a service agreement, from 2001 to 2004, so that RT  
            would continue providing transit services.  Upon further study,  
            Elk Grove decided to operate its own bus service within the city  
            and to contract with RT for regional transit services.  


            RT's enabling act did not allow Elk Grove to have a seat on the  
            Board, therefore, SB 466 (Steinberg), Chapter 620, Statutes of  
            2004, made several changes to RT's governance structure.  SB 466  
            enabled Elk Grove to have a seat on the Board to vote on  








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            regional matters and allowed RT to recover operating costs from  
            providing regional transit services to Elk Grove.  SB 466  
            required that the City of Elk Grove's proportionate share be  
            determined by First Amendment, Section 4B (2) to Interim  
            Agreement for Elk Grove Bus Service, dated March 17, 2004, an  
            agreement that RT and Elk Grove entered into.  An analysis of SB  
            466, which listed both RT and Elk Grove in support, stated,  
            "Proponents state that the bill represents a consensus among RT,  
            Elk Grove, and transit labor representatives."  


            AB 2137 (Niello), Chapter 227, Statutes of 2008, created a  
            weighted voting system for RT based on membership status and  
            each voting entity's financial contribution.  AB 2137 was also  
            supported by RT, Elk Grove, and several other cities, including  
            both member and participating entities.  


          3)Bill Summary.  Current law allows a city or county that is not  
            annexed to RT to have a seat on RT's Board, if they enter into a  
            specified agreement with RT to pay their proportional share of  
            RT's costs to provide rail or other districtwide transit  
            services.  Additionally, existing law requires that Elk Grove's  
            proportionate share is determined in the manner provided by an  
            Interim Agreement between the City of Elk Grove and RT.  This  
            bill deletes the reference to the interim agreement, and  
            instead, deems that the City of Elk Grove's proportionate share  
            is satisfied through RT's receipt of transactions and use tax  
            revenues generated from Measure A (2004) and provides that no  
            further agreement between the City of Elk Grove and RT is  
            required.  


            Measure A was approved by over two-thirds of the voters in  
            Sacramento County to extend an existing transactions and use  
            tax.  RT receives Measure A revenue for operation and  
            maintenance of transit capital and rail transit improvements, as  
            specified in the expenditure plan.  Revenue generated by Measure  
            A also provides funding for things like pedestrian and bike  








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            facilities, traffic control and safety programs, and city street  
            road maintenance programs, which are distributed proportionality  
            to cities, including the City of Elk Grove.  Since RT is already  
            in receipt of Measure A revenues, this bill would not result in  
            an additional allocation of funding for RT. 


            This bill is sponsored by the City of Elk Grove.  


          4)Author's Statement.  According to the author, "This bill updates  
            the city of Elk Grove's proportionate share payment to RT to  
            reflect changes since Elk Grove incorporated as a city in 2000.   
            Currently, Elk Grove's proportionate share payment is based on  
            outdated state law and does not take into account Measure A  
            contributions by Elk Grove residents.  


            "The proportionate share payment Elk Grove pays to RT reflects a  
            time when the city did not operate its own transit service and  
            is not equitable to the city and its residents.  Outdated state  
            law requires Elk Grove to pay twice in order to have one seat on  
            the RT Board.  The proportionate share payment paid by Elk Grove  
            is determined solely by RT.  However, RT also receives nearly  
            $35 million in annual Measure A revenues dedicated for transit  
            purposes from STA while Elk Grove receives none of the Measure A  
            revenues dedicated for transit because Measure A was enacted  
            before Elk Grove incorporated in (2000) and before the city  
            assumed local control over transit services (2010).  Since  
            approximately 10% of all Measure A revenues come from Elk Grove  
            generated taxes, Elk Grove is already contributing 10% of the  
            annual $35 million (approximately $3.5 million annually) to RT  
            for transit services.  This $3.5 million annual contribution  
            from Elk Grove to RT through the STA Measure is in addition to  
            the fair share payment to RT to participate on the Board in the  
            amount of $797,000 in Fiscal Year 2015-16.  No other city in the  
            region pays twice for its regional transit use.  In spite of  
            this double payment of $4.3 million dollars to RT, Elk Grove  
            residents still pay regular fare when boarding RT buses and  








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            light rail."  


          5)Policy Considerations.  The Legislature may wish to consider the  
            following:


             a)   No Regional Consensus.  The Legislature has supported  
               prior bills that revised RT's board membership to allow  
               non-annexed cities to have a seat on the Board and created  
               weighted voting, all of which were brought forward with  
               consensus.  Without consensus, this bill creates winners and  
               losers in a district-specific issue.  


             b)   Measure A.  This bill allows Elk Grove to maintain their  
               seat on RT's Board at no cost to the City, except what their  
               residents are already contributing via countywide  
               transactions and use tax.  Proponents argue that RT already  
               receives a large contribution from Elk Grove in annual  
               Measure A revenues that are dedicated for transit purposes,  
               while Elk Grove receives none of that revenue.  If the core  
               policy issue is with the allocation of Measure A funds for  
               transit in Sacramento County, which was established in an  
               expenditure plan and passed by the voters in 2004, then the  
               Legislature may wish to consider if this bill is an  
               appropriate avenue to address those concerns.  


             c)   Who Will Pay?  The Legislature may wish to consider,  
               absent a proportionate share payment from Elk Grove, what the  
               potential impacts on services will be.  Proponents argue that  
               the City may have to reduce its own bus services due to lack  
               of funding.  However, this bill may require RT to reduce  
               services to other cities and counties that do fulfill their  
               payments to RTs.  Additionally, the Legislature may wish to  
               consider if those who will be impacted the most are  
               individuals that may not have other resources and rely on  
               public transportation.  








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          6)Arguments in Support.  Elk Grove argues, "Existing law requires  
            the City of Elk Grove to pay twice in order to have one seat on  
            the RT Board by having the City pay a proportionate share  
            payment determined solely by RT.  Currently, RT receives nearly  
            $35 million in annual Measure A revenues (Elk Grove's  
            contribution is 10% to these revenue funds which equate to $3.5  
            million annually) dedicated for transit purposes from the  
            Sacramento Transportation Authority while the city of Elk Grove  
            receives none."  


          7)Arguments in Opposition.  RT argues, "This bill would relieve  
            the City from its contractual proportionate share obligation  
            under our joint agreement for the services provided by deeming  
            the obligation satisfied by revenues already available to RT in  
            the form of tax revenues under Sacramento County Measure A.  The  
            practical effect of this would be to reallocate the City's  
            proportionate costs for regional transit services provided by RT  
            among the other participating entities or RT and result in  
            reduced services to full member entities of RT."  




          Analysis Prepared by:                                               
                          Misa Lennox / L. GOV. / (916) 319-3958  FN:  
          0000346


















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