BILL ANALYSIS
AB 798
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Date of Hearing: April 13, 2009
ASSEMBLY COMMITTEE ON TRANSPORTATION
Mike Eng, Chair
AB 798 (Nava) - As Introduced: February 26, 2009
SUBJECT : California Transportation Financing Authority Act
SUMMARY : Creates the California Transportation Financing
Authority (CTFA) to provide for increased construction of new
capacity or improvements for transportation systems through the
issuance of revenue bonds. Specifically, this bill :
1)Defines key terms, most notably "project" to include all or a
portion of planning, design, development, finance,
construction, reconstruction, rehabilitation, improvement,
acquisition, lease, operation, or maintenance of a highway,
public street, rail, or related facility.
2)Defines "project sponsor" to mean either the California
Department of Transportation (Caltrans); a regional
transportation planning agency; a county transportation
commission, as defined; any other local or regional
transportation entity that is designated by statute as a
regional transportation agency; a joint exercise of powers
authority, as defined; or, an agency designated to submit a
county transportation plan.
3)Defines CTFA membership to include:
a) The State Treasurer, who will serve as CTFA chair;
b) The Director of the Department of Finance;
c) The State Controller;
d) Caltrans Director;
e) Executive Director of the California Transportation
Commission (CTC);
f) A local agency representative appointed by the Senate
Committee on Rules; and,
g) A local agency representative appointed by the Speaker
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of the Assembly.
4)Authorizes the CTFA chair to appoint an executive director and
stipulates that CTFA offices will be located in the Office of
the Treasurer.
5)Provides that CTFA may delegate to one or more of its members
or executive director the power to enter into contracts on
behalf of the authority and vests CTFA with all powers
reasonably necessary to carry out the responsibilities granted
or imposed in this bill.
6)Explicitly states that the objective of CTFA is to increase
the construction of new capacity or improvements for the state
transportation system in a manner that is consistent with the
state's greenhouse gas reduction goals, air quality
improvement goals, and natural resources conservation goals,
through the issuance of revenue bonds.
7)Provides that the Attorney General will be the legal counsel
for CTFA and that the Treasurer will be the treasurer.
8)Grants CTFA broad authorities to secure project financing and
provides that all its expenses will be payable solely from
funds provided for in this bill.
9)Provides that project sponsors may pledge the following
revenue sources as security for revenue bonds issued by CTFA:
local transportation funds, fuel taxes, Article XIX B fuel
sales taxes, local transportation sales taxes, developer fees,
tolls, and other state revenues approved for these purposes by
the Legislature or by initiative.
10)Ensures that the California Department of Transportation
(Caltrans) and the California Transportation Commission (CTC)
approve the use of any state funds a local transportation
agency pledges to a project.
11)Authorizes project sponsors to apply to CTFA for bond
financing for approved transportation projects and requires
CTFA to ensure the following specific requirements have been
met, to the extent these requirements have not already been
met through approval of the project by CTC:
a) The project complies with all relevant statutes
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applicable to planning, programming, and construction of
transportation improvement projects and is contained in the
constrained portion of a regional transportation plan;
b) The project sponsor has secured Caltrans support for the
project;
c) The project conforms to design standards and
environmental requirements and has all necessary permits to
enable its construction;
d) The project is financially feasible;
e) Project performance measures have been developed;
f) The project has community support, demonstrated in part
by public notice and a public review period; and,
g) The project sponsor of a highway project has
demonstrated how transit service or alternative modes of
transportation will be enhanced by the project.
12)Explicitly provides that CTFA will not have the power to plan
or approve projects, other than project financing, as provided
for in this bill.
13)Requires the CTC to report annually on the status of projects
funded using the authority granted by this bill.
14)Grants CTFA authority to authorize a project sponsor to
collect tolls if a project meets the following criteria:
a) The imposition of tolls will be voted on or approved by
either the appropriate governing body or a majority of the
voters within the jurisdiction of the project;
b) Each highway project for which tolls are imposed will
have non-tolled alternative lanes available for public use
in the same corridor;
c) For highway projects, the road segment is on the state
highway system;
d) Project financing is expected to be sufficient to pay
debt service, operations, and maintenance over the life of
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the bonds and any excess revenues will be used exclusively
within the corridor to fund high-occupancy vehicle (HOV)
facilities, other transportation activities, or transit
service pursuant to an expenditure plan developed by
project sponsors; and,
e) Tolls are set to provide no more than the cost of paying
debt service on the bonds, operating and maintaining the
project, and providing improvements in the corridor, except
to the extent that higher tolls are necessary to implement
congestion management mechanisms.
15)Excludes from the authority granted in this bill the
conversion of any existing non-tolled or non-user-fee lanes
into tolled or use-fee lanes, except for the conversion of
high-occupancy vehicle lanes to high-occupancy toll lanes.
16)Authorizes a project sponsor to incorporate congestion
management mechanisms to regulate usage of a tolled facility
and to increase mobility, accessibility, and environmental
benefits.
17)Directs CTFA and CTC to develop a cooperative, timely
approval process.
18)Enacts technical provisions to govern the sale of bonds.
19)Provides that provisions of this bill do not conflict with
the authority granted in earlier legislation, AB 2032 (Dutra),
Chapter 418, Statutes of 2004, to specific agencies to develop
high occupancy toll (HOT) lanes and do not limit the ability
of any agency that has existing authority to issue bonds.
20)Creates the California Transportation Financing Authority
Fund (Fund) and directs all moneys in the Fund to be
continuously appropriated.
21)Repeals provisions of existing law that require legislative
approval of a project application for one of four authorized
high-occupancy-toll lane projects.
EXISTING LAW:
1)Authorizes local governmental agencies to enter into
agreements with private entities for the study, planning,
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design, developing, financing, construction, maintenance,
rebuilding, improvement, repair, or operation, or any
combination thereof, by, and lease to or ownership by, that
entity of a revenue-generating infrastructure project, as
specified. Requires agreements entered into under these
provisions to include adequate financial resources for the
project and allowed for terms of up to 35 years, after which
the project would revert to the local governmental agency.
Broadly prohibits the use of this authority for state
highways.
2)Establishes the 13-member CTC to advise and assist the
Secretary of the Business, Transportation and Housing Agency
and the Legislature in formulating and evaluating state
policies and plans for transportation programs in the state.
3)Authorizes regional transportation agencies or Caltrans to
enter into an unlimited number of comprehensive development
lease agreement with public or private entities for
transportation projects, under the following key conditions:
a) Projects must be primarily designed achieve improved
mobility, improved operations or safety, and quantifiable
air quality benefits;
b) At least 60 days prior to executing a final lease
agreement, the project sponsor (i.e., Caltrans or a
regional transportation agency) must submit the agreement
to the Legislature and to the Public Infrastructure
Advisory Committee for review;
c) Prior to submitting a proposal, the project sponsor
would have to conduct a least one public hearing;
d) Existing non-toll or non-user-fee lanes cannot be
converted to toll lanes except that high occupancy vehicle
(HOV) lanes can be converted to high occupancy toll (HOT)
lanes for vehicles not otherwise meeting the occupancy
level requirements for those lanes; and,
e) No lease agreements can be entered into after January 1,
2017.
4)Authorizes a regional transportation agency, in cooperation
with Caltrans, to apply to the CTC to develop and operate HOT
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lanes, including the administration and operation of a
congestion-pricing program, using the following process:
a) CTC is to review each application for HOT lane
development;
b) For each project, CTC is required to conduct a least one
public hearing in northern California and one in southern
California;
c) Following the hearings, CTC is to submit the
application, including any public comments made at the
hearings, to the Legislature for rejection or approval;
d) Approval by the Legislature must be by statute;
e) The number of projects under this authority is limited
to four, two in northern California and two in southern
California;
f) CTC, in cooperation with the Legislative Analyst, must
annually report to the Legislature on the progress of the
development and operation of HOT lanes; and,
g) No application may be approved under this authority
after January 1, 2012.
FISCAL EFFECT : According to the Senate Appropriations
Committee's analysis of last year's identical AB 3021 (Nava):
1)Administrative costs and expenses incurred by CTFA would be
charged to participating project sponsors. However, it is not
known how much demand there will be for the financing tools
offered by CTFA and when sufficient revenues will be realized
to fully cover the administrative costs of the Authority.
Initial costs are to be borrowed from available resources
within the State Treasurer's Office and paid back with
interest once there is sufficient demand for CTFA financing.
2)Initial workload is also dependent upon demand, but the bill
requires the chair of the Authority to appoint an executive
director and authorizes employment of bond counsel and other
consultants, as necessary. Staff estimates that annual costs
to develop and establish the Authority, including overhead and
operating expenses would likely be in the range of $150,000 to
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$300,000 for the Executive Director position, and the addition
of one administrative staff.
3)If special fund resources are not sufficient to cover initial
costs of the Authority, there may be some General Fund impact.
All borrowed funds would be paid back with interest, and
ongoing expenses would be covered by project sponsors.
Also, the Assembly Appropriations Committee, in its analysis of
last year's AB 3021, reported:
1)Significant increase in the volume of revenue bonds and other
bonded indebtedness secured by transportation revenue sources,
if CTFA is effective in accelerating transportation project
financing and construction by enhancing the use of
revenue-secured indebtedness.
2)Potentially significant toll revenue resulting if CTFA
authorizes transportation project sponsors or Caltrans to
impose and collect tolls as a source of bond repayment and to
implement congestion management mechanisms.
COMMENTS : This bill would provide for what has become known as
"public-public partnerships" wherein government agencies partner
to finance public infrastructure. The process provided for in
this bill is permissive. State, regional, and local
transportation agencies may, if they choose, sponsor projects
using CTFA's authority to approve financing and tolls. However,
these agencies will not be required to use CTFA's services.
Furthermore, this bill provides flexibility in the issuance of
bonds. Transportation agencies may request CTFA to issue bonds
or they may request approval to issue bonds themselves.
This bill is identical to AB 3021 (Nava) of 2008, which passed
the Legislature with broad support and no opposition but was
vetoed by the Governor who cited that, because of budget delays,
he could not sign the bill (or dozens of other bills) at that
time.
Ironically, supporters of AB 798 argue that budget woes are
exactly why this bill is needed.
According to this bill's sponsor, State Treasurer Bill Lockyer,
this bill will help increase transportation capacity in our
state by providing transportation entities with the resources
needed to meet growing transportation needs. The Treasurer
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believes that this bill will "enable local and
regional entities to contribute more to the funding of
transportation projects, create a method for them to finance
projects in the municipal bond market, and ensure that projects
and funding are consistent with state transportation policy
objectives and "best practices" public finance criteria."
Additionally, the California Labor Federation supports AB 798
stating, "Critical state and local infrastructure needs have
gone unmet for too long and in these hard economic times, we
should look beyond traditional revenue streams."
Related legislation : SB 3x 4 (Cogdill), Chapter 2, Statutes of
2009, among other things, authorizes Caltrans and regional
transportation agencies, until January 1, 2017, to enter into an
unlimited number of comprehensive development lease agreements
with public or private entities, or consortia thereof, for
transportation projects. SB 3x 4 provides the Legislature an
opportunity to submit written comments about a proposed
agreement to Caltrans or a regional transportation agency, but
vests the ultimate discretion for executing the final lease
agreement with Caltrans or the regional transportation agency.
REGISTERED SUPPORT / OPPOSITION :
Support
State Treasurer Bill Lockyer (sponsor)
Associated General Contractors of California
California Labor Federation
California Association of Council of Governments
State Building and Construction Trades Council of California
Opposition
None on file
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093