BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2280


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          2280 (Ridley-Thomas)


          As Amended  August 15, 2016


          2/3 vote.  Urgency


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                 (vote not relevant)




          Original Committee Reference:  H.&C.D.


          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. 


          The Senate amendments delete the Assembly version of this bill,  
          and instead:


          1)Authorize 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  








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            terminals and those consolidated vehicle rental facilities,  
            and to acquire vehicles for use in that system.  Specify 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. 


          2)Provide 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.   
            Specify 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)Make legislative findings and declarations as to the necessity  
            of a special statute for the Los Angeles International  
            Airport.


          4)Specify 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)Declare that this bill shall take effect immediately as an  
            urgency statute.


          EXISTING LAW:  


          1)Sets forth general rules governing contracts between rental  








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            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 (CIV) 1936; subsequent  
            citations 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.  (CIV 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.  (CIV 1936 (a).) 


          FISCAL EFFECT:  None


          COMMENTS:  This bill replicates a provision that was contained  
          in AB 2051 ((O'Donnell), Chapter 183, Statutes of 2016), a bill  
          heard by the Judiciary Committee earlier this session.  AB 2051  
          sought to reorganize the statute (CIV 1936) that governs rental  
          car contracts, fees, disclosures, and advertisements.  The bill  
          also contained a number of substantive provisions, most 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.  The bill also 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  








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          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.  The bill, 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 Addresses Senate Committee Concerns:  After the LAX fee  
          authorization was deleted from AB 2051, its essential provisions  
          were placed into this bill.  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 the maximum term for  
          financing shall not exceed 35 years.  In short, the Judiciary  
          Committee 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, with the  
          exception that this bill appropriately adds a time limitation on  
          that fee authority. 


          Background:  In 1999, the Legislature passed and the Governor  
          signed SB 1228 ((Vasconcellos), 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  
          in order to ensure that the fees were reasonable and properly  








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          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, this 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.   


          Analysis Prepared by:                                             
                          Thomas Clark / JUD. / (916) 319-2334  FN:   
          0004977