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 ----------------------------------------------------------------- |Author: |Mullin | |----------+------------------------------------------------------| |Version: |6/21/16 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Manny Leon | |: | | ----------------------------------------------------------------- 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 -- END --