BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON GOVERNANCE AND FINANCE
                         Senator Robert M. Hertzberg, Chair
                                2015 - 2016  Regular 

                              
          
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          |Bill No:  |AB 1455                          |Hearing    |7/8/15   |
          |          |                                 |Date:      |         |
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          |Author:   |Rodriguez                        |Tax Levy:  |No       |
          |----------+---------------------------------+-----------+---------|
          |Version:  |6/30/15                          |Fiscal:    |No       |
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          |Consultant|Weinberger                                            |
          |:         |                                                      |
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                             ONTARIO INTERNATIONAL AIRPORT



          Allows the City of Ontario to issue revenue bonds to pay for  
          acquiring Ontario International Airport from the City of Los  
          Angeles.


           Background and Existing Law

           The City of Los Angeles's Board of Airport Commissioners,  
          referred to as Los Angeles World Airports (LAWA), owns and  
          operates Ontario International Airport (ONT), which is located  
          in the City of Ontario in San Bernardino County. ONT is about 35  
          miles east of downtown Los Angeles between Interstate 10 and  
          State Route 60, two significant regional highways. ONT was  
          established in 1929.  On October 18, 1967, Ontario and Los  
          Angeles entered into a joint powers agreement in which they  
          agreed that Los Angeles would operate ONT.  The agreement  
          required Los Angeles to use its best efforts to attract and  
          obtain additional regular scheduled airline service for ONT.  In  
          1985, the two cities agreed to transfer ownership of ONT from  
          Ontario to Los Angeles.

          In recent years, the Los Angeles World Airport Authority's  
          (LAWA's) continued operation of ONT has generated disputes  
          between the Ontario and Los Angeles.  Specifically, since 2013,  
          the City of Ontario has pursued legal claims against the City of  
          Los Angeles alleging that LAWA's financial and operational  







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          management of ONT has violated the terms of agreements between  
          the two cities and has harmed ONT's economic condition.  The  
          City of Los Angeles disputes these claims.  A trial date is set  
          for August 17 to hear the City of Ontario v. City of Los Angeles  
          case in Riverside County Superior Court.

          Aside from their ongoing legal dispute, the two cities are  
          engaging in discussions about transferring the ownership and  
          operations of ONT back to the City of Ontario.  In anticipation  
          of any agreement that might result from those discussions, City  
          of Ontario officials want the Legislature to provide the city  
          with revenue bond authority that will help to facilitate the  
          City's acquisition of ONT from Los Angeles.


           Proposed Law

           Assembly Bill 1455 allows the City of Ontario to issue revenue  
          bonds to finance the acquisition of the Ontario International  
          Airport from the City of Los Angeles.  AB 1455 requires that the  
          revenue bonds must be secured solely by future revenues and  
          charges from that airport.

          AB 1455 directs that the public agency that acquires the Ontario  
          International Airport from the City of Los Angeles must be known  
          as the successor agency and requires that:
                 The successor agency and successor contractors must hire  
               or retain incumbent workers who have been employed for the  
               preceding twelve months or longer by Los Angeles World  
               Airports or contractors at the Ontario International  
               Airport.

                 Incumbent workers must be retained for a period of at  
               least 90 days unless there is cause to terminate their  
               employment earlier.

                 Incumbent workers must be employed under the terms and  
               conditions established by the successor agency and  
               successor contractors, or as required by law.

                 The successor agency and successor contractors must  
               maintain a preferential hiring list of incumbent workers  
               who were not initially hired or retained.









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          The bill specifies that the requirements listed above do not  
          apply to:
                 A successor contractor that is a small business that  
               operates with less than ten employees.

                 Management positions.

                 Specialized skill positions.


           State Revenue Impact

           No estimate.


           Comments

           1.  Purpose of the bill  .  In the context of ongoing discussions  
          between Ontario and Los Angeles about transferring ownership of  
          ONT back to Ontario, AB 1455 is a vehicle to facilitate that  
          transfer.  The bill's proponents note that 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.  Because ONT has  
          the potential to handle far more passengers than any other  
          airport in Southern California except for Los Angeles  
          International Airport (LAX), its potential growth is virtually  
          limitless.  AB 1445 lays the groundwork for the City of Ontario  
          to regain control of ONT and restore one of Southern  
          California's most important economic and jobs engines.

          2.   Unnecessary  ?  It is unclear whether AB 1455 grants the City  
          of Ontario any revenue bond powers that are not already  
          available to the city under existing law.  The Revenue Bond Law  
          of 1941 gives cities full authority to issue revenue bonds for  
          the acquisition, construction, or improvement of any enterprise.  
           The Act defines the term enterprise to include any  
          revenue-producing improvement, building, system, plant, works,  
          facilities, or undertaking used for or useful for public  
          airports and appurtenant facilities.  Under this statutory  
          authority, with the approval of city voters granted at an  
          election on September 11, 1956, the City of Ontario issued $2  
          million in airport revenue bonds to help pay for terminal and  
          runway improvements at the airport, which was owned by the city  








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          at that time.  Furthermore, a joint powers agreement that the  
          City of Ontario entered into with the County of San Bernardino  
          in 2012 to form the Ontario International Airport Authority,  
          explicitly includes the issuance of airport revenue bonds as one  
          of the joint powers that the two governments can exercise  
          through that JPA.  This suggests that the City already has  
          sufficient statutory authority to issue airport revenue bonds,  
          making AB 1455's grant of airport revenue bond powers to the  
          City of Ontario seem redundant.

          3.   Ambiguous  ?  AB 1455 does not specifically cross-reference  
          the Revenue Bond Law of 1941, leaving state law ambiguous about  
          what statutes govern the bonds that would be issued by the City  
          of Ontario to acquire ONT from the City of Los Angeles.  If the  
          bill's purpose is to allow the City of Ontario to issue revenue  
          bonds under rules other than those specified in the Revenue Bond  
          Law of 1941, the Committee may wish to consider amending AB 1455  
          to specify exactly what rules will apply to the bonds issued by  
          Ontario.  In the absence of any specific statutory restrictions  
          on the bonds, AB 1455's grant of revenue bond authority could be  
          misinterpreted.  For example, without any specific guidance, it  
          is unclear whether AB 1455 could be interpreted to allow Ontario  
          to issue revenue bonds without the majority-voter approval that  
          is required by the Revenue Bond Law of 1941.

          4.   Definition  .  AB 1455 imposes specified worker retention  
          requirements on both the "successor agency," which the bill  
          defines as the public entity that assumes ownership of the  
          Ontario International Airport from the City of Los Angeles, and  
          "successor contractors."  The bill does not define a "successor  
          contractor," which is a phrase that is not used anywhere else in  
          the Public Utilities Code.  It is unclear whether a successor  
          contractor means any contractor that provides services to the  
          successor agency, regardless of whether the contractor provided  
          the same services under contract with the City of Los Angeles.   
          Or, successor contractor may only refer to those contractors  
          that the successor agency engages to provide services in the  
          place of an existing contractor.  To avoid any potential  
          ambiguity, the Committee may wish to consider amending AB 1455  
          to define the phrase "successor contractor."

          5.  Related legislation  .  SB 446 (Dutton, 2012) would have  
          established the Ontario International Airport Authority and  
          would have authorized the Authority to enter into an agreement  








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          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, but  
          died in the Assembly Local Government Committee without a  
          hearing.

          6.   Back to Rules  .  Other Senate policy committees may want to  
          review AB 1455.  If the Senate Governance & Finance Committee  
          approves the bill on July 8, the Senate Rules Committee has  
          directed this Committee to send the bill back to Rules for  
          further review and possible re-referral.


           Assembly Actions

           Assembly Local Government Committee  9-0
          Assembly Floor           75-0


           Support and  
          Opposition   (7/2/15)


           Support  :  Air Fair; Airport Working Group of Orange County;  
          Alliance for a Regional Solution to Airport Congestion; Brea  
          Chamber of Commerce; California Contract Cities; Cities of  
          Adelanto, Apple Valley, Azusa, Canyon Lake, Chino, Chino Hills,  
          Colton, Diamond Bar, Eastvale, Glendora, Grand Terrace,  
          Highland, Jurupa Valley, Lakewood, Montclair, Monterey Park,  
          Newport Beach, Norco, Ontario, Palmdale, Rancho Cucamonga,  
          Riverside, San Gabriel, Upland, Victorville, and Whittier;  
          Corona Chamber of Commerce; El Monte/South El Monte Chamber of  
          Commerce; Fullerton Chamber of Commerce; La Verne Chamber of  
          Commerce; Omnitrans; North Orange County Legislative Alliance;  
          Ontario International Airport Authority; 

















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          Ontario Professional Firefighters, Local 1430; Orange County  
          Council of Governments; Regional Chamber of Commerce of San  
          Gabriel Valley; San Bernardino County; San Gabriel Valley  
          Council of Governments; San Gabriel Valley Economic Partnership;  
          SEIU California; SEIU United Service Workers West; Southwest  
          California Legislative Council; Western Riverside Council of  
          Governments.

           Opposition  :  Unknown.



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