BILL ANALYSIS Ó
AB 1455
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Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Brian Maienschein, Chair
AB 1455
(Rodriguez and Gomez) - As Introduced February 27, 2015
SUBJECT: Ontario International Airport.
SUMMARY: Allows the City of Ontario to issue revenue bonds for
the purpose of financing the acquisition of the Ontario
International Airport from the City of Los Angeles, and
specifies that the revenue bonds shall be secured solely by
future revenues and charges from that airport.
EXISTING LAW:
1)Allows local agencies to issue bonds for the acquisition,
construction, or improvement of any enterprise pursuant to the
Revenue Bond Law of 1941.
2)Defines "local agency" to mean any city, county, city and
county, or any municipal or public corporation or district,
which is authorized to acquire, construct, own, or operate any
enterprise, as defined in the Revenue Bond Law of 1941.
3)Defines "enterprise" to mean a revenue-producing improvement,
building, system, plant, works, facilities, or undertaking
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used for or useful for any of the following purposes:
a) The obtaining, conserving, treating and supplying of
water for domestic use, irrigation, sanitation, industrial
use, fire protection, recreation, or any other public or
private uses;
b) The collection, treatment or disposal of garbage or
refuse matter;
c) The collection, treatment or disposal of sewage, waste
or storm water, including drainage;
d) The providing of public parking lots, garages, or other
automotive or vehicular parking facilities, including any
and all public offstreet vehicular parking facilities;
e) The providing of public transportation by means of a
ferry or ferry system;
f) The providing of public airports and facilities
appurtenant thereto;
g) The providing of harbors, including without limitation
public small boat harbors, and facilities and improvements
in connection therewith;
h) The providing of hospitals and facilities appurtenant
thereto;
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i) The providing of public golf courses, and facilities and
improvements in connection therewith; and,
j) The generation, production, or transmission of electric
energy for lighting, hearing, and power for public or
private uses.
FISCAL EFFECT: None
COMMENTS:
1)Bill Summary. This bill allows the City of Ontario to issue
revenue bonds for the purpose
of financing the acquisition of the Ontario International
Airport from the City of Los Angeles, and specifies that the
revenue bonds must be secured solely by future revenues and
charges from that airport.
This bill is sponsored by the City of Ontario and the Ontario
International Airport Authority.
2)Background. In 1929, the City of Ontario purchased a 30-acre
tract in the southwest corner of the present airport for
$12,000 and ran an airfield known as the Ontario Municipal
Airport. In 1941, the City of Ontario purchased 470 acres
surrounding the airport and approved construction of new
runways. In 1949, commercial service began at Ontario
International Airport and in 1951, a 10,880-square-foot
terminal building was constructed. In 1967, the Los Angeles
City Department of Airports co-signed a joint powers agreement
with the City of Ontario and the airport became part of the
Los Angeles' regional airport system. Over the years, the
airport continued to purchase more land and expand terminal
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space; by 1978 the passage volume was two million. In 1985,
the official transfer of title from City of Ontario to the
City of Los Angeles occurred. By 1998, a new terminal was in
construction and passage volume was over six million. In
2005, passenger volume at the airport peaked at seven million,
but by 2010, passage volume had declined and stabilized to
about 4.8 million passengers annually traveling through the
LA/Ontario International Airport (ONT).
3)Author's Statement. According to the author, "AB 1455 was
introduced to transfer ONT from the City of Los Angeles back
to the City of Ontario. Ontario and Los Angeles have been in
discussions about transferring the sponsorship of the airport
back to Ontario.
AB 1445 is the vehicle to facilitate that transfer.
"[ONT] is the only unconstrained commercial service airport in
Southern California. Other airports in the region are
constrained by noise, passenger caps or by facility and/or
access constraints. It has the potential to handle far more
passengers than any other airport in Southern California
except for Los Angeles International Airport (LAX). As such,
its potential growth is virtually limitless.
"In 1967, the City of Los Angeles and the City of Ontario
entered into a Joint Powers Agreement (JPA), that allowed Los
Angeles to become the airport operator. An Acquisition
Agreement was signed by the cities in 1985, and Los Angeles
paid $58,329 for the transfer.
"When the Ontario Airport was transferred to LA, the passenger
traffic count was 3.7 million. In 1999, the first year that
the new terminals were open, passenger traffic was 6.6
million, peaking in 2007 to 7.2 million. Since that time,
passenger service has decreased to less than 4 million.
Ontario and Los Angeles are in negotiations to transfer the
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airport back. In 2012, the City of Ontario and the County of
San Bernardino created the Ontario International Airport
Authority to receive and manage the operations of the Ontario
Airport."
4)Revenue Bonds. According to the California Debt Investment
and Advisory Commission's (CDIAC) Debt Primer, revenue bonds
are long-term debt instruments retired by specific dedicated
revenues, often revenues generated by a project funded out of
bond proceeds. Revenue bonds are designed to be
self-supporting through user fees or other special earmarked
receipts; the general taxing powers of the jurisdiction are
not pledged. The debt created through the issuance of revenue
bonds is to be repaid by the earnings from the operations of a
revenue-producing enterprise (an enterprise revenue bond),
from special taxes (a special revenue bond), or from contract
leases or rental agreements (a lease revenue bond).
5)Previous Legislation. SB 446 (Dutton) of 2012 would have
established the Ontario International Airport Authority and
would have authorized the Authority to enter into an agreement
with the City of Los Angeles to facilitate the transfer of
management and operational control of ONT from the City of Los
Angeles to the Authority. SB 446 passed out of the Senate,
and was referred to the Assembly Local Government Committee,
but was never heard.
6)Policy Considerations. The Committee may wish to consider the
following:
a) Bond Issuance Process. The bill does not specify any
details about how the City of Ontario will issue revenue
bonds or the public process in order to do so.
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b) Revenue Bond Law of 1941. The Revenue Bond Law of 1941
(Chapter 6, of Part 1, of Division 2, of Title 5 of the
Government Code) allows specified local agencies to issue
revenue bonds for the acquisition, construction, or
improvement of any enterprise pursuant to the procedures
specified in that Chapter. For purposes of the Revenue
Bond Law, local agency is defined as a "city, county, city
and county, or any municipal or public corporation or
district which is authorized to acquire, construct, own, or
operate any "enterprise,"" as defined). "Enterprise" is
defined to mean a revenue-producing improvement, building,
system, plant, works, facilities, or undertaking used for
or useful for specified purposes, including "the providing
of public airports and facilities appurtenant thereto."
The Committee may wish to consider whether the existing
Revenue Bond Law of 1941 would allow the City of Ontario to
issue bonds without the need for legislation.
c) Local Fight. The transfer of the Ontario Airport is an
issue that has yet to be solved locally, although
discussions are ongoing. The Committee may wish to ask the
author for an update on where those negotiations stand, and
whether a better approach might be to let those
negotiations continue, and if legislation is necessary in
the future to implement an agreement, getting the
Legislature involved then, rather than the Legislature
picking winners and losers in what is a local, regional
fight.
7)Arguments in Support. Supporters argue that this bill would
establish local control for Ontario International Airport and
restore one of Southern California's most important economic
and jobs engines.
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8)Arguments in Opposition. None on file.
REGISTERED SUPPORT / OPPOSITION:
Support
City of Ontario [CO-SPONSOR]
Ontario International Airport Authority [CO-SPONSOR]
Air Fair
Airport Working Group of Orange County
Alliance for a Regional Solution to Airport Congestion
Brea Chamber of Commerce
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California Contract Cities
Cities of: Adelanto, Canyon Lake, Chino, Chino Hills, Colton,
Diamond Bar, Eastvale, Fontana, Glendora, Grand Terrace,
Highland, Jurupa Valley, Lakewood, Montclair, Monterey Park,
Newport Beach, Norco, Palmdale, Rancho Cucamonga, Riverside, San
Gabriel, Upland, Victorville, and Whittier
Corona Chamber of Commerce
County of San Bernardino (In Concept)
El Monte / South El Monte Chamber of Commerce
Fullerton Chamber of Commerce
LaVerne Chamber of Commerce
North Orange County Legislative Alliance
OmniTrans
Ontario Professional Firefighters, Local #1430
Orange County Council of Governments
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San Bernardino County
San Gabriel Valley Council of Governments
San Gabriel Valley Economic Partnership
San Gabriel Valley Regional Chamber of Commerce
Service Employees International Union - United Service Workers
West
Southwest California Legislative Council
Town of Apple Valley
Western Riverside Council of Governments
Opposition
None on file
Analysis Prepared by:Debbie Michel / L. GOV. / (916) 319-3958
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