BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 153
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: Ma
VERSION: 1/23/09
Analysis by: Art Bauer FISCAL: yes
Hearing date: June 23, 2009
SUBJECT:
High-Speed Rail Authority
DESCRIPTION:
This bill clarifies the California High-Speed Rail Authority's
(HSRA's) ability to exercise eminent domain power, authorizes
the HSRA to employ its own legal staff or to contract with other
state agencies for legal services, and makes changes to the
HSRA's authority governing project development.
ANALYSIS:
Existing law:
1. Creates the HSRA with a nine member governing board,
including five members appointed by the governor, two
members appointed by the Senate Rules Committee, and two
members appointed by the Speaker of the Assembly.
2. Authorizes the HSRA to develop a high-speed rail system
extending from San Diego to Sacramento with Phase I being
between Anaheim-Los Angeles Union
Station-Bakersfield-Fresno-San Jose-San Francisco Transbay
Terminal.
3. Authorizes from the proceeds of Proposition 1A, the
Safe, Reliable High-Speed Passenger Train Bond Act for the
21st Century, approved by the voters last November, of up
to $9 billion for high-speed rail development. Of the $9
billion up to ten percent ($900 million) may be used for
planning, environmental review, and engineering associated
with the development of the high-speed rail system. Another
2.5 percent ($225 million) may be used for administrative
costs.
AB 153 (MA) Page 2
4. Limits the expenditure of Proposition 1A bond revenues
for the construction of the high-speed rail system to not
more than 50 percent of the cost of building the high-speed
rail system.
5. Requires that 90 days prior to submitting to the
governor an initial request for an appropriation of bond
proceeds for capital expenditures, the HSRA shall convene a
peer review committee to review the detailed funding plan
for the proposed project.
6. Prohibits state, local, or federal operating subsidies
for the high-speed rail service.
7. Requires the HSRA to have prepared a business plan by
September 1, 2008 that includes the types of services it
expects to develop, a description of the system's benefits,
a patronage forecast, the sources of funds to construct and
operate the project, the chronology for construction of the
corridors in which it will operate, the risk associated
with construction, technology, financing, and other aspects
of the project, and the HSRA's strategy for managing the
risks.
8. Prohibits a state agency from employing legal counsel
other than the Attorney General, unless specifically
authorized by law to do so.
9. Authorizes the HSRA to acquire rights-of-way through
purchase or eminent domain.
10. Prohibits a public entity from commencing an
eminent domain proceeding until its governing body has
adopted a resolution of necessity.
11. Designates the Public Works Board as the only
state agency that may exercise the power of eminent domain
to acquire property needed by any state agency, with
certain exceptions, including the California Transportation
Commission (CTC) for the Department of Transportation
(Caltrans)
12. Authorizes the HSRA to enter into contracts with
public or private entities for the design, construction,
operation, and maintenance of high-speed trains. The
AB 153 (MA) Page 3
contracts may be for design-build method of project
delivery.
This bill :
1. Designates the HSRA as the governing board for adopting
a resolution of necessity in order to exercise eminent
domain.
2. Authorizes the HSRA to acquire property in the name of
the state.
3. Authorizes the HSRA to exercise the power of eminent
domain.
4. Authorizes the HSRA to employee its own legal staff,
contract with other state agencies for legal services, or
both.
5. Deletes unneeded references that related to conditions
existing prior to the passage of Proposition 1A, the Safe,
Reliable High-Speed Passenger Train Bond Act for the 21st
Century.
6. Expands the HSRA's authorization for entering into
contracts to include financing and maintenance of
high-speed trains and to use a
design-finance-build-operate-maintenance contract for
project delivery.
COMMENTS:
1. Purpose . According to the author, this purpose of this
bill is to delete obsolete language, eliminate ambiguities
in the construction of existing law pertaining to the HSRA,
and provide the authority granted to large state agencies,
such as Caltrans, the Department of Water Resources, and
other similar agencies relative to the exercise of eminent
domain.
2. Background . AB 3034 (Galgiani), Chapter 267, Statutes of
2008, authorized the provisions of Proposition 1A, the
AB 153 (MA) Page 4
Safe, Reliable High-Speed Passenger Train Bond Act for the
21st Century, which the voters approved last November. That
measure provides up to $9 billion in bond proceeds for
high-speed rail development. With the passage of
Proposition 1A, the HSRA is endeavoring to transform itself
from a planning and promotional organization into a project
development entity. It is for this reason the HSRA, which
is the sponsor of this bill, is seeking language to clarify
its authority to exercise the power of eminent domain and
relieve it from using the State Public Works Board to
initiate eminent domain proceedings. This statutory
exclusion is enjoyed by several other large state agencies.
The HSRA currently shares a deputy Attorney General with
the CTC. Presumably, as the HSRA begins active
project development it will need the full time services of
an attorney. In addition, because of the unique technology
and the likely reliance on international suppliers, the
in-house attorney over time would develop specialized
knowledge and expertise related to the project.
The committee or author may wish to amend the bill to
provide that outside counsel retained by the HSRA has not
been engaged by a current or potential supplier of services
or equipment for the previous five years.
3. Is the expansion of the strategies for project
development premature ? The Senate Transportation and
Housing Committee held four oversight hearings on the
performance of the HSRA. The committee has been seeking an
acceptable business plan since January 2008. The business
plan is important because the HSRA is proposing that the
state and federal government each share in one-third of the
project's cost with the final one-third coming from the
private sector. The project will be completed as a
public-private partnership. The HSRA has never discussed
the type of arrangement it expects the public-private
venture to be. For example, is a private consortium
expected to design, build, finance, and operate the system?
Or is it expected only to operate and maintain the system?
Would the consortium buy the rolling stock or would the
state? HSRA's financial documents prepared do not discuss
the prohibition on the use of state, local, or federal
operating subsidies.
AB 153 (MA) Page 5
In this bill, the HSRA is expanding its authority for
entering into contracts for financing and maintaining of
high-speed trains and to use
design-finance-build-operate-maintenance contract for
project delivery. AB 3034 mandated a business plan by
September 1, 2008, but the HSRA did not deliver the plan
until November 7, 2008, three days after the Proposition 1A
election. After reviewing the business plan, the
Legislative Analyst Office (LAO) wrote in its discussion of
the HSRA's 2009-10 budget request the following:
Our review shows that, while the document
includes, to some degree, each of the statutorily
required elements, the information provided is
very general and does not provide specifics that
are included in typical business plans. In fact,
the plan claims to be only "an outline of the
most recent economic and financial studies that,
taken together, constitute the most current
update."
Lacking detailed information. . . the
Legislature really has no better sense than prior
to the plan's submission as to how the authority
plans to accomplish its objective.
The Budget Conference Committee appropriated only half
of the HSRA's budget with the remaining amount
contingent upon a satisfactory business plan being
submitted by the HSRA, partly in response to the LAO's
comments.
The committee or the author may wish to delete Section
6 of the bill, which expands the HSRA's authorization
for entering into contracts to include financing and
maintenance of high-speed trains and to use
design-finance-build-operate-maintenance contract for
project delivery.
Because the budget bill language adopted by the
Conference Committee addresses these topics, the
committee may consider the inclusion of this new
language in the HSRA's enabling legislation to be
premature.
4. Clarification amendment . The bill does not clearly
AB 153 (MA) Page 6
distinguish between the HSRA agency and its governing
board actions related to acquiring property. The
committee or the author may wish to amend the bill and
specify that it is the board that takes those actions.
RELATED LEGISLATION
SB 409 (Ducheny) creates a Department of Railroads,
transfers the functions of the HSRA to a division of
high-speed rail, and designates the director of the
department as the chair of the HSRA's governing board.
This bill is in Senate Appropriations Committee.
SB 455 (Lowenthal) establishes legislative priorities
for investments and creates reporting requirements to
ensure accountability by the HSRA in the performance of its
functions and activities. This bill is in the Assembly
Transportation Committee
SB 783 (Ashburn) requires the HSRA to prepare an
expanded business plan, with the plan being submitted to
the Legislature by January 1, 2012 and every two years
thereafter. The draft business plan must be circulated for
public comment. The bill is in the Assembly Transportation
Committee.
AB 733 (Galgiani) authorizes the HSRA to consider, to
the extent permitted by federal law and all other
applicable provisions of state law, the creation of jobs in
California when awarding major contracts or purchasing
high-speed trains and related equipment and supplies. This
bill is in the Senate Transportation and Housing Committee.
AB 1375 (Galgiani) creates a Department of High-Speed
Trains. This bill is in the Assembly Transportation
Committee.
Assembly Votes:
Floor: 53-16
Appr: 11-5
Judic: 7-2
Trans: 9-0
POSITIONS: (Communicated to the Committee before noon on
AB 153 (MA) Page 7
Wednesday,
June 17, 2009)
SUPPORT: California High-Speed Rail Authority (sponsor)
California State Association of Counties
State Building and Construction Trades Council
OPPOSED: None received.