BILL ANALYSIS Ó
AB 2280
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Date of Hearing: August 31, 2016
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
AB 2280
(Ridley-Thomas) - As Amended August 15, 2016
FOR CONCURRENCE
SUBJECT: Rental companies: customer facility charge
KEY ISSUE: should the los angeles international airport be
authorized to require rental car companies to charge customer
facility fees to finance consolidated rental car facilities?
SYNOPSIS
This bill authorizes the Los Angeles International Airport (LAX)
to require rental car companies to charge a customer facility
charge (CFC) for the purpose of financing, constructing,
designing, and improving consolidated rental car facilities, an
authority the Legislature has granted to other airports
beginning in 1999. Language granting this authorization to LAX
was originally in AB 2051, a bill that dealt with various
aspects of the statute that regulates rental car contracts and
various fees imposed by government or other entities which this
Committee passed on consent. However, AB 2051 was amended in
the Senate to remove the CFC authorization for LAX.
Subsequently, the fee authorization provision removed from AB
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2051 was placed in a gutted AB 2280, the bill presently before
this Committee. There is, however, one significant difference
between AB 2051 and AB 2280. AB 2051 did not contain any time
limitation on the fee authority, whereas this bill specifies
that the fee authority becomes inoperative once the bonds or
other financing mechanisms are reimbursed and specifies that the
authority shall not exceed 35 years. Additionally, unlike AB
2051, which amended the Civil Code statute regulating rental car
contracts, this bill adds a provision to a part of the
Government Code that authorizes an airport to require a rental
car company to charge a fee to support an airport-mandated
common use busing system or light rail transit system operated
for the movement of passengers between the terminal and an
airport rental car facility. The bill is supported by the City
of Los Angeles, the State Building and Construction Trades
Council, the California Conference of Carpenters, and the
Service Employees International Union. There is no registered
opposition to this bill.
SUMMARY: Authorizes the Los Angeles International Airport to
require rental companies to charge customer facility fees for
specified purposes, subject to an independent audit and time
limitation. Specifically, this bill:
1)Authorizes the Los Angeles International Airport to impose a
customer facility charge for the purpose of financing,
constructing, designing, or otherwise improving consolidated
airport vehicle rental facilities and common-use
transportation systems that move passengers between airport
terminals and those consolidated vehicle rental facilities,
and to acquire vehicles for use in that system. Specifies
that this authority shall become inoperative when bonds,
capital contributions, availability payment contracts, lease
agreements, or other forms for financing are paid or
reimbursed, and that the maximum term for financing shall not
exceed 35 years.
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2)Provides that the aggregate amount to be collected shall not
exceed the reasonable costs, as determined by an audit by an
independent auditor paid for by the airport, to finance,
design, construct, operate, maintain, or otherwise improve, as
applicable, those facilities, systems, and modifications.
Specifies that the auditor shall independently examine and
substantiate the necessity for, and the amount of, the
customer facility charge and that a copy of the audit shall be
provided to the Assembly and Senate Committees on Judiciary,
the Assembly Committee on Transportation, and the Senate
Committee on Transportation and Housing and shall be posted on
the airport's Internet Web site.
3)Makes legislative findings and declarations as to the
necessity of a special statute for the Los Angeles
International Airport.
4)Specifies that the provisions of this bill shall not apply to
any fee, including an alternative fee, required by an airport
other than the Los Angeles International Airport to be
collected by a rental company from a renter.
5)Declares that this bill shall take effect immediately as an
urgency statute.
EXISTING LAW:
1)Sets forth general rules governing contracts between rental
car companies and their customers on a variety of matters,
including, but not limited to, the authority of airports to
require rental car companies to charge customers a fee to
construct and operate consolidated rental car facilities at
the airport. (Civil Code Section 1936; subsequent citations
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refer to the Civil Code unless otherwise indicated.)
2)Permits a rental car company to collect an authorized customer
facility charge at specified airports if certain conditions
are met and the fees are used for purposes of maintaining a
consolidated rental car facility and a common-use
transportation system, and requires the airport to conduct
audits as specified. (Section 1936 (l).)
3)Defines a "customer facility charge" (CFC) to mean any fee
required by an airport to be collected by a rental car company
from a renter to finance, design, and construct consolidated
airport car rental facilities and to operate common-use
transportation systems that move passengers between airport
terminals and those consolidated car rental facilities, and to
acquire vehicles for use in that system. (Section 1936 (a).)
4)Authorizes an airport operated by a city and county to require
a rental car company to collect a fee from its customers on
behalf of the airport for the use of an airport-mandated
common use busing system or light rail transit system operated
for the movement of passengers between the terminal and a
consolidated on-airport rental car facility, subject to
certain conditions. (Government Code Section 50474.1.)
FISCAL EFFECT: As currently in print this bill is keyed
non-fiscal.
COMMENTS: This bill replicates a provision that was contained
in AB 2051 (O'Donnell, Chapter 183, Statutes of 2016), a bill
heard by this Committee earlier this session. AB 2051 sought to
reorganize the statute that governs rental car contracts, fees,
disclosures, and advertisements: Civil Code Section 1936. AB
2051 also contained a number of substantive provisions, most
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notably provisions relating waiver of liability notices and the
ability of rental car companies to use a rental vehicle's GPS
technology to locate lost vehicles. Finally, AB 2051 contained
a provision that authorized Los Angeles International Airport
(LAX) to require rental car companies to charge a "customer
facility charge" (CFC) to help finance the design, construction,
and improvement of consolidated rental car facilities and the
transportation systems that move passengers from those
facilities to the airport terminal. Generally speaking,
consolidated rental car facilities are economically and
environmentally preferable, not to mention more convenient, than
having rental car companies scattered at different points around
the periphery of the airport. AB 2051, including the provision
authorizing LAX to impose a CFC, passed out of the Judiciary
Committee on consent. However, the bill was amended in the
Senate to remove the LAX fee authorization. Apparently, this
provision was removed from AB 2051 in light of questions raised
in the Senate Judiciary Committee analysis about the lack of any
limitation on the duration of the authority and the possibility
that the fee authority could be used as an unending source of
revenue for LAX.
Bill Appears to Address Senate Committee Concern: After the LAX
fee authorization was deleted from AB 2051 in the Senate, it was
placed into the bill presently before this Committee, AB 2280.
There is, however, one important difference between this bill
and the provision that was deleted from AB 2051. In order to
address the concerns about the lack of any time limitation on
the fee authority, the current bill specifies that the CFC
authority shall become inoperative once the bonds, capital
contributions, or other forms for financing are paid or
reimbursed and, in any event, for a term not to exceed 35 years.
This bill also differs from AB 2051 in one more way. Whereas AB
2051 amended the Civil Code statute regulating rental car
contracts, this bill adds a provision to a part of the
Government Code that authorizes an airport to require a rental
car company to charge a fee to support an airport-mandated
common use busing system or light rail transit system operated
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for the movement of passengers between the terminal and an
airport rental car facility. These differences notwithstanding,
this committee has already passed the essential provisions of
this bill - granting LAX authority to require a CFC to finance
consolidated car rental facilities - when it passed AB 2051.
Background: In 1999, the Legislature passed and the Governor
signed SB 1288 (Chapter 760, Statutes of 1999), which gave the
San Jose International Airport the authority to require rental
car companies to charge customers a customer facility fee for
the purpose of financing a consolidated rental car facility. In
subsequent years, additional airports were granted such
authority so long as specified conditions were met, including a
requirement that the airport conduct an audit to ensure that the
fees were reasonable and properly used. Since the initial
legislation was enacted, airport authorities have used this tool
to reap the many benefits of having rental car facilities in a
single location serviced by a common transportation system, as
opposed to having rental car companies spread out in various
places around the periphery of the airport. Not only do
consolidated rental car facilities move passengers more
efficiently and conveniently to their respective destinations,
but they also have economic and environmental advantages.
This bill would authorize LAX - one the busiest airports in the
world - to impose a CFC in order to design, construct, operate,
and improve a consolidated car rental facility and a common
transportation system to service the consolidated facility.
Consistent with past authorizations, this bill would require an
audit and report to the Legislature in order to ensure that fees
are reasonably related to costs. Finally, the bill provides
that the CFC authority shall become inoperative once the bonds
or other financing mechanism are paid or reimbursed, and in any
event the authority shall not exceed 35 years.
ARGUMENTS IN SUPPORT: According to the author:
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Section 1936 of the California Civil Code defines
"customer facility charge." Section 50474.1 of California
Government Code authorizes an airport operated by a city
and county to "require a rental car company, in writing,
to collect a fee from its customers on behalf of the
airport for the use of an airport-mandated common use
busing system or light rail transit system operated for
the movement of passengers between the terminal and a
consolidated on-airport rental car facility."
AB 2280, as amended, will add Section 50474.22 to the
California Government Code to expand the types of
financing arrangements that customer facility charge (CFC)
revenue collected at LAX can cover to include bonds,
capital contributions, availability payment contracts,
lease agreements, or other forms for financing, and would
specify that the authorization to collect CFC revenue
shall become inoperative when the financing is paid or
reimbursed. AB 2280 would also clarify that CFC revenue
collected at LAX fund consolidated airport vehicle rental
facilities, common-use transportation systems, and
authorized terminal modifications.
This bill is needed due to the unique circumstances and
operations of the Los Angeles International Airport.
Further, this bill will address pressing public safety
concerns at LAX by providing necessary financing tools.
REGISTERED SUPPORT / OPPOSITION:
Support
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California Conference of Carpenters
California State Building and Construction Trades Council
Los Angeles World Airports Authority of the City of Los Angeles
Service Employees International Union, California
Opposition
None on file
Analysis Prepared by:Thomas Clark / JUD. / (916) 319-2334