BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
798 (Nava)
Hearing Date: 08/27/2009 Amended: 06/24/2009
Consultant: Mark McKenzie Policy Vote: T&H 9-1
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BILL SUMMARY: AB 798 would establish the California
Transportation Financing Authority (CTFA) to assist
transportation agencies in obtaining financing, primarily
through issuing bonds backed by specified sources of revenue, to
construct transportation projects. In doing so, this bill
allows the authority to permit agencies to impose tolls for use
of facilities constructed. Among other things, this bill would:
Establish the CTFA within the Office of the Treasurer and
specifies the membership of the seven-member Authority.
Specify CTFA's objective is to increase the construction of
new transportation capacity or improvements in a manner that
is consistent with the state's greenhouse gas reduction goals,
air quality improvement goals, and natural resource
conservation goals, through the issuance of bonds that are
backed by specified transportation-related revenues.
Require the Chair of the CTFA to appoint an executive
director, and authorize CTFA to fix compensation of bond
counsel, consultants, and advisors, and charge administrative
costs and expenses incurred by CTFA to project sponsors.
Authorize CTFA to borrow money for purposes of meeting
necessary expenses of initial organization until the date that
CTFA derives a reliable funding source. Borrowed funds would
be paid back with interest from participating project
sponsors.
Require CTFA, beginning June 30, 2011 and annually thereafter,
to report on its activities to the California Transportation
Commission (CTC). This information would be incorporated into
CTC's annual report to the Legislature.
Authorize project sponsors to apply to CTFA for bond financing
or refinancing of transportation projects, as specified,
collect tolls to pay debt service and operate the project, and
implement variable pricing to manage congestion on the tolled
facilities.
Prohibit the conversion of existing lanes, except existing HOV
lanes, into toll lanes.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
CTFA startup costs initial costs in the range of $150-$300
per Special*
year, repaid by project sponsors in
future years
CTFA ongoing costs ongoing costs offset by bond issuance
fees Special**
paid by participating agencies
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* Various special funds within the STO, possibly General Fund to
the extent special funds are unavailable for startup cost loans
** California Transportation Finance Authority Fund, a
continuously appropriated fund created by this bill.
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STAFF COMMENTS: SUSPENSE FILE.
Page 2
AB 798 (Nava)
In light of the diminishing value of transportation funding
resources, this bill is intended to create a method for local
and regional entities to finance projects in the municipal bond
markets, and ensure that projects and funding are consistent
with state transportation policy objectives and financing
criteria that reflect "best practices." SB 798 would also
provide an alternative approach for agencies to develop toll
roads with oversight provided by the CTFA to ensure that
anticipated toll revenues would be adequate to pay for capital,
operation, maintenance, and rehabilitation costs of the proposed
project.
AB 798 specifies that ongoing 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 (STO)
and paid back with interest once there is sufficient demand for
CTFA financing. 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 $300,000 for the Executive Director position, and the
addition of one Administrative staff, and one CEA position. 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.
Staff notes that this bill would establish the California
Transportation Financing Authority Fund, a continuously
appropriated fund, to be administered by CTFA. All moneys
accruing to the Authority would be deposited into this fund, and
revenues would be used to secure bond financing and "as
necessary and convenient to the accomplishment of any other
purpose of the authority." Absent the oversight associated with
a legislative appropriation, staff recommends an amendment to
sunset the authority to finance additional transportation
projects on January 1, 2016 to provide the Legislature with the
opportunity to extend or repeal the authority provided by this
bill.
Staff notes that this bill is nearly identical to AB 3021
(Nava), which the Governor vetoed last year due to the delay in
the passage of the 2009-10 Budget Act. The following is an
excerpt from the generic veto message that was applied to
numerous bills:
The historic delay in passing the 2008-2009 State Budget
has forced me to prioritize the bills sent to my desk at
the end of the year's legislative session. Given the
delay, I am only signing bills that are the highest
priority for California. This bill does not meet that
standard and I cannot sign it at this time.