BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1353 (Patterson) - Highway rest areas: vending machines:
utility costs
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|Version: February 27, 2015 |Policy Vote: T. & H. 11 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: July 6, 2015 |Consultant: Mark McKenzie |
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This bill does not meet the criteria for referral to the
Suspense File.
Bill
Summary: AB 1353 would require the Department of Transportation
(Caltrans) to pay for all utility costs associated with vending
machines at roadside rest areas operating under the Business
Enterprise Program for the Blind (BEP).
Fiscal
Impact: Estimated increased costs of approximately $126,600
annually for Caltrans to pay BEP vending machine utility costs
at all roadside rest areas (State Highway Account).
AB 1353 (Patterson) Page 1 of
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Background: Existing law requires Caltrans to authorize the placement of
vending machines at roadside rest areas and to give preference
for vending facilities to vendors operating under the BEP.
Existing law requires vendors to reimburse Caltrans from vending
machine revenues for the costs of maintenance, operations,
design review, and other activities related to the operation of
the machines.
According to a 2014 Department of Rehabilitation (DOR) annual
report on the BEP, 17 blind vendors operated vending facilities
at 30 locations along interstate highways in California, selling
sell items such as refrigerated soft drinks, snacks, ice cream,
and hot beverages from these machines. The vending machine
receipts at these sights totaled over $1 million in 2014.
Proposed Law:
AB 1353 would prohibit Caltrans from being reimbursed for
utility costs incurred by vendors operating under the BEP and
instead require Caltrans to pay for those utility costs using
state funds. Utility costs include fees incurred for providing
electricity, water, sewage, and other similar services.
Related
Legislation: AB 1602 (Patterson) is an identical bill that was
held on this Committee's Suspense File last year.
Staff
Comments: The current interagency agreement between DOR and
Caltrans requires vendors to pay for utility costs at roadside
rest areas. Monthly utility costs depend primarily on the
number and type of vending machine, whether the machines require
refrigeration or heating, whether the machines are indoor or
outdoor, utility rates at each site, the season, and the climate
of the region in which the rest area is located. According to
the author, electricity costs can range from about $350 to $900
per month, depending on these factors. Caltrans indicates that
utility costs average $550 per month per site.
Caltrans has completed installation of electric meters at 13 of
the sites at a cost of about $214,000, and the vendors operating
at these locations pay utility costs directly to the electricity
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provider. At the remaining 17 sites, the current interagency
agreement requires vendors to pay $200 per month per vending
site for costs incurred by Caltrans for electricity costs. Plans
to convert all vending locations to independent meters are in
process.
Under this bill, Caltrans would be required to pay utility costs
associated with vending machines at all roadside rest areas.
These costs are estimated to be about $198,000 annually (average
costs of $550 per month at 30 sites). Caltrans is currently
paying an average of $350 per month ($550 per month less the
$200 reimbursed by vendors) at 17 sites that are not metered, or
approximately $71,400 annually. As such, the bill would result
in about $126,600 in net increased annual costs to Caltrans.
The $214,000 that Caltrans has spent on utility meters at 13
rest areas represent a sunk cost. The bill would result in a
substantial increase in profit for vendors, as a percentage of
sales, at the expense of the state.
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