BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 2847 Hearing Date: 6/28/2016
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|Author: |Patterson |
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|Version: |5/23/2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Manny Leon |
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SUBJECT: High-Speed Rail Authority: reports
DIGEST: This bill adds additional reporting requirements for
inclusion in the California High-Speed Rail Authority's (HSRA)
Business Plan and Project Update Report.
ANALYSIS:
Existing law:
1)Establishes the 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 (High-Speed Rail Bond Act). The
High-Speed Rail Bond Act, approved as Proposition 1A in
November 2008, 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)Requires HSRA to prepare a business plan by March 1, 2014, and
every two years thereafter that includes specific reporting
requirements.
AB 2847 (Patterson) Page 2 of ?
5)Requires the HSRA to prepare a Project Update Report on March
1, 2017, and every two years thereafter that includes specific
reporting requirements.
This bill:
1)Requires the HSRA to include projected financing costs, for a
proposed segment or combination of segments, in the business
plan.
2)Requires the HSRA to identify any significant changes in scope
for segments identified in the previous business plan or
project update report, and provide an explanation of
adjustments in cost and schedule attributable to those
changes.
COMMENTS:
1)Purpose. The author notes that AB 2847 will improve the
quality of information reported to the Legislature so that
oversight can be provided in a meaningful way, including
tracking the accuracy and ability of HSRA to stay within a
budget over time. The author further notes that the bill
expands the type of costs that are reported to the Legislature
so that an accurate and complete picture of the costs to
construct the high-speed rail project can be better
understood, not only for policymakers, but for the people who
are paying for this project.
2)HSRA Business Plan. Beginning in 2012 and every two years
thereafter, HSRA is required to prepare and submit to the
Legislature a business plan outlining key elements of the
high-speed rail project. At minimum, the plan must include
project development information, including a description of
the type of service being developed, the timing and sequence
of project phases and segments, and estimated capital costs.
It must also include estimates and descriptions of the total
anticipated federal, state, local, and other funds that HSRA
intends to access to construct and operate the system,
forecasts of financial scenarios based on projected ridership
levels, and maintenance and operations costs. Additionally,
it must identify all reasonably foreseeable risks to the
project and outline HSRA's strategies for managing those
risks.
AB 2847 (Patterson) Page 3 of ?
On February 18, 2016, HSRA released its Draft 2016 Business
Plan, which signaled a major shift in its proposed planning
and construction of the high-speed rail system. Rather than
pursue a south-oriented Initial Operating Segment (IOS) from
the City of Merced in the Central Valley to the San Fernando
Valley in Los Angeles County, HSRA is now proposing a
north-oriented IOS, from the Central Valley to San Jose. The
Authority also updated its plans, cost estimates, and schedule
for the remainder of Phase I (San Francisco to Los
Angeles/Anaheim by 2029) and eventually Phase II (Sacramento
and San Diego).
3)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
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 project budget for all project phase
costs; and
d) All expenditures to date for all project costs.
1)LAO Report: On March 17, 2016, the Legislative Analyst
Office's (LAO) released its analysis of the 2016 business
plan. The LAO recommended additional items that could be added
to the business plan to better inform the Legislature and help
maintain oversight of the project. AB 2847 intends to
implement these recommendations. Specifically, AB 2847 will
add several new requirements for HSRA to include in both the
biennial business plan and project update report -
specifically, the projected financing costs for a proposed
segment or combination of segments are to be included in
future business plans, and HSRA will be required to identify
any significant changes in scope for segments identified in
the previous business plan or project update report and
AB 2847 (Patterson) Page 4 of ?
provide an explanation of said adjustments.
2)Accurate reporting? While sufficient oversight is a critical
element as this project moves forward, so is the need for
accurate reporting to carry out effective oversight. As the
LAO recommendations include additional HSRA reporting
requirements that will provide new information for the public
and legislature to review, providing accurate projected
financing costs may be difficult to report. Typically,
financing costs are calculated when an agency actually moves
forward with financing a project, and the financing rates and
terms are determined close to the time when bonds are issued -
which are affected by overall financial market conditions at
the time of financing. Requiring future financing costs to be
included in the biennial business plan could lead to HSRA
reporting inaccurate projections due to its inability to
predict future market conditions.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
Assembly Votes:
Floor: 78-0
Appr: 20-0
Trans: 15-0
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 22, 2016.)
SUPPORT:
Californians Advocating Responsible Rail Design
Citizens for California High-Speed Rail Accountability
Mel's Farms
Train Riders Association of California
OPPOSITION:
California Department of Finance
AB 2847 (Patterson) Page 5 of ?
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