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 |
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|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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