BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 1889           Hearing Date:  6/28/2016   
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          |Author:   |Mullin                                                |
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          |Version:  |6/21/16                                               |
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          |Urgency:  |No                     |Fiscal:      |Yes             |
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          |Consultant|Manny Leon                                            |
          |:         |                                                      |
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          SUBJECT:  High-Speed Rail Authority: high-speed train operation


            DIGEST:  This bill provides that upon approval of a funding plan  
          for a specific   corridor or usable segment by the High-Speed Rail  
          Authority (HSRA), the project(s) identified in the funding plan  
          will be deemed suitable and ready for high-speed train  
          operation, as specified.  

          ANALYSIS:
          
          Existing law:
          
          1)Establishes the California High-Speed Rail Authority (HSRA)  
            and vests with it the responsibility to develop and implement  
            a high-speed rail system in California.  

          2)Enacts the Safe, Reliable High-Speed Passenger Train Bond Act  
            for the 21st Century (Prop 1A, 2008).  Prop 1A provides $9.95  
            billion in general obligation bond authority to fund the  
            planning and construction of a high-speed passenger train  
            system and complementary improvements to other specified rail  
            systems in the state.  


          3)Continuously appropriates 25% of the state's cap-and-trade  
            program funds for the high-speed rail project.


          4)Per SB 1029 (Budget Act of 2012), appropriated an estimated $8  







          AB 1889 (Mullin)                                   Page 2 of ?
          
          
            billion in federal and state funds to construct the first  
            high-speed rail segments in the Central Valley and fund 15  
            "bookend" and connectivity projects throughout California.  SB  
            1029 also enacted a number of reporting requirements,  
            including the issuance of a Project Update Report every two  
            years. 


          5)Requires HSRA to prepare a Project Update Report on March 1,  
            2017, and every two years thereafter that includes a number of  
            reporting requirements, as specified.
          6)Requires HSRA, prior to seeking an initial appropriation of  
            bond funds for a specific corridor or usable segment using  
            bond funds, to submit a detailed funding plan to the Director  
            of Finance, the HSRA Peer Review Group, and the Legislature on  
            the specific corridor or usable segment.

          7)Requires HSRA, prior to committing bond funds for construction  
            or real property/equipment acquisition for a specific corridor  
            or usable segment that has been appropriated, to obtain a  
            report or reports by one or more financial consulting firms  
            that includes an analysis on a number of elements, including  
            whether the corridor or usable segment will be suitable and  
            ready for high-speed train operation upon completion of  
            construction.

          8)Requires the state Director of Finance to approve the funding  
            plan, with the abovementioned reports included, prior to HSRA  
            entering any commitments to expend bond funds for a specific  
            corridor or usable segment.

          This bill: 

          1)Provides that upon approval of a funding plan that was  
            prepared to commit funds to a specific corridor or usable  
            segment by the HSRA, the project identified in the funding  
            plan will be deemed suitable and ready for high-speed train  
            operation. 

          2)Provides that approval by HSRA of a funding plan that  
            identifies the corridor or usable segment that would be  
            suitable and ready for high-speed train operation is  
            conclusive.

          COMMENTS:








          AB 1889 (Mullin)                                   Page 3 of ?
          
          

          1)Purpose.  The author asserts, "Prop 1A is unclear when it  
            comes to the initial investments that can be made in a  
            corridor while still allowing a plan to go forward that would  
            enable the [HSRA] to declare the investments as making the  
            corridor "suitable and ready" Therefore, AB 1889 would clarify  
            the Legislature's intent in appropriating these moneys: build  
            the early investments that facilitate longer-term high-speed  
            train operations that can be used by commuter/ intercity  
            services in the meantime."

          2)HSRA.  The California HSRA was established in 1996 to direct  
            development and implementation of intercity high-speed rail  
            service that is fully coordinated with other public  
            transportation services.  In 2008, HSRA responsibilities  
            increased as voters approved Prop 1A, authorizing $9.95  
            billion in general obligation bonds for the high-speed rail  
            project.  Prop 1A additionally included a number of reporting  
            requirements.  

          3)Funding Plans.  Amongst a variety of reporting requirements  
            specified in the bond act, Prop 1A required HSRA to develop  
            and submit a funding plan for a specific corridor or usable  
            segment prior to HSRA seeking its initial request for  
            appropriation of Prop 1A funds.  HSRA completed this funding  
            plan and submitted it to the Legislature, the peer review  
            group, and the state Director of Finance in late 2011.  

            Prop 1A further requires HSRA to prepare, approve, and submit  
            to the Director of Finance and to the Legislature a detailed  
            funding plan on a specific corridor or usable segment prior to  
            committing any proceeds from the appropriated funds.  This  
            funding plan must include a report(s) from independent  
            financial firm(s) indicating the particular segment can be  
            completed within budget, is suitable and ready for high-speed  
            train operation, will not require an operating subsidy, etc.   
            Thus, in order for HSRA to provide funding for bookend  
            projects in both the northern and southern regions of the  
            state, HSRA will have to provide a funding plan accordingly. 

          4)HSRA Project Update Report: SB 1029 (Budget Act of 2012)  
            appropriated almost $8 billion in federal and state funds to  
            construct the first high-speed rail segments in the Central  
            Valley and fund 15 bookend and connectivity projects  
            throughout California. SB 1029 further included extensive  








          AB 1889 (Mullin)                                   Page 4 of ?
          
          
            reporting requirements to increase legislative oversight over  
            the high-speed rail project. The Project Update Report is  
            required to include a number of elements, including, but not  
            limited to: 

          a) A summary of the progress on the project

          b)The baseline budget for all project phase costs by segment or  
            contract

          c)The current and projected budget for all project phase costs

          d)All expenditures to date for all project costs

          1)Alignment. This bill intends to provide clarification on the  
            approval process for funding plans HSRA is require to prepare  
            prior to committing bond funds for a specified corridor or  
            usable segment.  While Prop 1A required funding plans to be  
            submitted for both an initial appropriation of bond funds by  
            the Legislature and prior to the commitment of bond funds to  
            corridor-specific projects, Prop 1A is unclear on a number of  
            provisions specified in the funding plan requirements.  This  
            has created some ambiguity in how HSRA is to proceed with  
            submitting funding plans in order to commit bond funds for  
            projects.   For example, SB 1029 provided over $1 billion for  
            bookend projects that will make significant improvements to  
            local passenger rail systems in both northern and southern  
            California that will eventually allow for a "blended" system  
            comprised of both passenger rail and high-speed rail  
            operation.  However, these projects will also need to be  
            completed over a period of time in multiple phases.  Thus,  
            providing funding for bookend improvement projects that will  
            ultimately be suitable and ready for high-speed rail operation  
            could also provide immediate mobility benefits to a specific  
            corridor (i.e., Caltrain electrification) while other  
            high-speed rail improvements are made within the corridor.   
            This bill aims to remedy this ambiguity by allowing HSRA to  
            proceed with submitting funding plans to commit bond funds to  
            high-speed rail projects, while ensuring HSRA is compliance  
            with the provisions specified in Prop 1A.

          Assembly Votes:

            Prior votes not relevant
          








          AB 1889 (Mullin)                                   Page 5 of ?
          
          
          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  No


            
          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,
                          June 22, 2016.)
          
            SUPPORT:  

          None received

          OPPOSITION:

          None received



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