BILL ANALYSIS
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THIRD READING
Bill No: AB 798
Author: Nava (D)
Amended: 6/24/09 in Senate
Vote: 21
SENATE TRANSPORTATION & HOUSING COMM : 9-1, 7/7/09
AYES: Lowenthal, Huff, Ashburn, DeSaulnier, Harman, Kehoe,
Pavley, Simitian, Wolk
NOES: Hollingsworth
NO VOTE RECORDED: Oropeza
SENATE APPROPRIATIONS COMMITTEE : 10-3, 8/27/09
AYES: Kehoe, Cox, Corbett, Hancock, Leno, Price, Runner,
Wolk, Wyland, Yee
NOES: Denham, Oropeza, Walters
ASSEMBLY FLOOR : 51-25, 6/2/09 - See last page for vote
SUBJECT : California Transportation Financing Authority
SOURCE : State Treasurer Bill Lockyer
DIGEST : This bill establishes the California
Transportation Financing Authority to assist transportation
agencies in obtaining financing, primarily through issuing
bonds backed by specified sources of revenue, to develop
transportation projects. In doing so, this bill allows the
authority to permit agencies to impose tolls for use of
facilities constructed.
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ANALYSIS : Existing law regarding the authority to impose
and collect tolls for the use of a highway contains a
hodgepodge of disparate authorities, all of which are
limited either in number, scope, duration, or geographic
area. Toll facilities authorized under existing law fall
under three categories: publicly-operated toll roads and
bridges, privately-operated toll roads, and high-occupancy
toll (HOT) lanes.
Publicly-operated toll roads
Existing law allows the County of Orange or a city therein
to enter into a joint exercise of powers agreement with
other local agencies for the purpose of developing and
operating toll roads. The result of that statute is two
joint powers authorities collectively known as the
Transportation Corridor Agencies, which operate four toll
roads on the state highway system in Orange County.
Existing law also establishes the Bay Area Toll Authority
to operate seven state-owned bridges and the Golden Gate
Bridge, Highway and Transportation District to operate the
Golden Gate Bridge connecting the City and County of San
Francisco to Marin County.
Privately-operated toll roads
In 1989, AB 680 (Baker), Chapter 107, authorized the
California Department of Transportation (Caltrans) to enter
into up to four lease agreements with private entities for
the design, finance, construction, maintenance, or
operation of transportation projects (i.e., public-private
partnerships or PPPs). Only two projects have been
constructed with this authority: The State Highway Route
(SR) 91 Express Lanes in Orange County, the rights to which
the Orange County Transportation Authority subsequently
acquired, and SR 125 in San Diego County.
AB 1010 (Correa), Chapter 688, Statutes of 2002, reduced
the number of PPP agreements authorized under AB 680 from
four to two and prohibited Caltrans from entering into any
new agreements after January 1, 2003.
In 2006, AB 1467 (N??ez), Chapter 32, Statutes of 2006,
authorized up to four transportation facilities to be
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developed through PPPs with the condition that projects "be
primarily designed to improve goods movement." This
authority was then expanded with the passage of SB 4xx
(Cogdill), Chapter 2, Statutes of 2009, Second
Extraordinary Session. This measure allows regional
transportation agencies and Caltrans to enter into an
unlimited number of PPPs for highway, street, or rail
projects, subject to specified terms and conditions. The
authority to enter into these PPPs sunsets on January 1,
2017.
HOT lanes
HOT lanes are high-occupancy vehicle lanes located in the
median or adjacent to free lanes that single-occupant
vehicles may access for a fee. California's first HOT lane
was on Interstate 15 in San Diego, authorized by AB 713
(Goldsmith), Chapter 962, Statutes of 1993. The project
was part of a federal demonstration program to assess the
application of congestion pricing and to increase revenues
for transit development in the I-15 corridor.
In 2004, AB 2032 (Dutra), Chapter 418, authorized the Sunol
Smart Carpool Lane Joint Powers Authority, the Alameda
County Congestion Management Agency, the Santa Clara Valley
Transportation Authority, and SANDAG to develop and operate
HOT lane facilities using value or congestion pricing on a
specified number of transportation corridors within their
jurisdictions, subject to certain conditions. AB 574
(Torrico), Chapter 498, Statutes of 2007, authorized those
agencies to issue bonds backed by projected toll revenues
in order to pay for the costs of developing the facilities.
AB 1467 (N??ez), Chapter 32, Statutes of 2006, allowed,
until January 1, 2012, regional transportation agencies, in
cooperation with Caltrans, to apply to the California
Transportation Commission (CTC) to develop and operate HOT
lanes, including the administration and operation of a
value pricing program and exclusive or preferential lane
facilities for public transit. The number of projects that
may be approved is limited to four, two in Northern
California and two in Southern California, and are subject
to approval by the Legislature.
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This bill establishes the California Transportation
Financing Authority (authority) to assist transportation
agencies in obtaining financing to construct transportation
projects. In doing so, this bill allows the authority to
permit agencies, subject to specified conditions, to impose
tolls for use of facilities constructed through the
authority. More specifically, this bill:
1. Establishes the authority within the Office of the
Treasurer and specifies the membership, as follows:
A. The Treasurer, who shall serve as the
chair of the authority
B. The Director of Finance
C. The Controller
D. The Director of Transportation
E. The executive director of the California
Transportation Commission
F. A local agency representative appointed
by the Senate Committee on Rules
G. A local agency representative appointed
by the Speaker of the Assembly
2. States as the objective of the authority "to increase
the construction of new capacity or improvements for
the state transportation system in a manner that is
consistent with and will help meet the state's
greenhouse gas reduction goals, air quality
improvement goals, and natural resource conservation
goals, through the issuance of, or the approval of the
issuance of, bonds" that are backed, in whole or in
part, by specified transportation-related revenues.
3. Specifies the powers of the authority as they pertain
to accepting moneys; employing, contracting for, and
fixing compensation for professional services; making
loans; issuing debt; charging administrative fees;
obtaining insurance; entering into agreements; and
investing moneys.
4. Allows the authority to borrow moneys as necessary
for the purposes of initial organization. Any moneys
borrowed, including interest, shall subsequently be
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charged to and apportioned among project sponsors in
an equitable manner.
5. Defines "project" to mean all or a portion of the
planning, design, development, finance, construction,
reconstruction, rehabilitation, improvement,
acquisition, lease, operation, or maintenance of
highway, public street, rail, bus, or related
facilities.
6. Defines "costs" to include items that are necessary
or incident to the construction, rehabilitation,
acquisition, or financing of any project.
7. Defines "project sponsor" to include Caltrans, a
regional transportation planning agency, county
transportation commission, any other local or regional
transportation entity designated in statute as a
regional transportation agency, a joint exercise of
powers authority, or an agency designated to provide
the county transportation plan in the Bay Area region.
8. Provides that all expenses incurred by the authority
for a project shall be payable solely from funds
received for the project. Under no circumstances
shall the authority create any debt, liability, or
obligation on the part of the state.
9. Specifies the revenue sources that may be pledged as
security for revenue bonds issued by the authority,
including:
A. Local transportation funds, including,
but not limited to, fuel taxes, Proposition 42
moneys, local transportation sales taxes, state
revenues approved for this purpose by the
Legislature or by initiative, and developer fees.
B. Tolls
10. Provides that revenues sources within the control of
a state agency may only be pledged with approval by
Caltrans or CTC.
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11. Specifies the requirements that a project must meet
in order to be financed or refinanced by the
authority, including:
A. The project complies with all relevant
statutes applicable to the planning, programming,
and construction of transportation projects.
B. The project is contained in the
constrained portion of a conforming regional
transportation plan that is consistent with the
greenhouse gas reduction targets assigned by the
Air Resources Board.
C. For highway projects, the project sponsor
has secured the support of Caltrans and is
consistent with the needs and requirements of the
state's highway system.
D. The project is financially and
technically feasible.
E. The project meets or exceeds
environmental requirements and has all necessary
permits approved.
F. Performance measures have been developed
for the project to monitor its progress.
G. The project has community support, which
shall be demonstrated through a public review and
comment process.
H. For highway projects, the project sponsor
submits to CTC a plan that demonstrates how
transit service or alternative modes of
transportation will be enhanced in the corridor
concurrent with the operator of a toll facility.
12. Prohibits the authority from assuming any planning,
programming, or allocation authority possessed by
Caltrans or CTC.
13. Requires the authority to determine that the revenues
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and other moneys available for a project will be
sufficient to pay debt service on the bonds and to
operate and maintain the project over the life of the
bonds.
14. Allows a project sponsor to be the issuer of bonds if
the authority determines the revenues available for
the project will be sufficient to pay debt service on
the bonds and to operate and maintain the project over
the life of the bonds.
15. Allows the authority to authorize a project sponsor
to impose and collect tolls as one source of funding,
if the project meets the following requirements:
A. The governing body of the project sponsor
approves the imposition of tolls by a majority
vote of the governing body, or if Caltrans is the
sponsor by a majority vote of the CTC, or the
majority of voters within the jurisdiction of the
project sponsor has approved a ballot measure
authorizing tolls.
B. Each highway project for which tolls are
imposed has nontolled alternative lanes available
for public use in the same corridor as the toll
project. A project sponsor may not convert any
existing nontolled lane into a tolled lane,
except for the conversion of an HOV lane into a
HOT lane.
C. For highway projects, the project is on
the state highway system.
D. Tolls are set and maintained at a level
expected to be sufficient to pay debt service,
operations, and maintenance of the project over
the life of the bonds.
E. The project's financial pro forma
incorporates life-cycle costs, including
maintenance, operation, and rehabilitation.
F. Excess revenues from the project shall be
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used exclusively in the corridor from which the
revenue was generated to pay for the following
expenditures:
(1) Acquisition, construction,
improvements, maintenance, or operation of
high-occupancy vehicle facilities
(2) Other transportation purposes
(3) Transit service, including
transit operations
G. The project sponsor, in consultation with
Caltrans, adopts an expenditure plan, updated
annually, that describes the transportation
improvements planned for the corridor, including
the projected costs, use of toll revenues, and a
proposed completion schedule.
H. Tolls are not set to generate more
revenue than is necessary to pay debt service,
fund reserves, operate, maintain, repair, or
rehabilitate the project, and provide funding for
transportation improvements identified in the
expenditure plan.
16. Allows a project sponsor to implement variable or
dynamic pricing to manage congestion on the tolled
facilities.
17. Requires the authority and CTC to develop a
cooperative process for approving projects such that a
project is approved by CTC and the project's financing
is approved by the authority at approximately the same
time. Both CTC and the authority are required to work
with project sponsors to ensure that projects are
brought forward in a manner that is consistent with
the CTC's project requirements and the authority's
financing requirements.
18. Requires CTC and the authority to make available for
public review and comment a description of the project
and its financing plan.
19. Establishes provisions regarding the issuance and
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purchase of bonds, as well as the management of bond
sale proceeds and any net earnings the authority may
accrue.
20. Requires the authority to report to CTC, beginning
June 30, 2011 and annually thereafter, regarding
actions it has taken, to be included in the CTC's
annual report to the Legislature.
This bill also deletes the requirement that HOT lane
projects authorized under AB 1467 be approved by the
Legislature.
Related Legislation
AB 744 (Torrico) authorizes BATA to finance and develop a
region-wide system of HOT lanes referred to as the Bay Area
Express Lane Network.
AB 1175 (Torlakson), among other provisions, adds the
Antioch and Dumbarton bridges to the state toll bridge
seismic retrofit program and allows BATA to increase bridge
toll rates for purposes of completing those projects.
Prior Legislation
This bill is nearly identical to the version of AB 3021
(Nava) that passed this committee last year on an 8 to 1
vote. That bill was subject to the Governor's blanket veto
in which he applied this generic message:
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.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
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Major Provisions 2009-10 2010-11
2011-12 Fund
CTFA startup costs initial
costs in the range of $150-$300 Special*
per year, repaid by project sponsors in
future years
CTFA ongoing costs ongoing costs
offset by bond issuance Special**
fees paid by participating agencies
* 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.
SUPPORT : (Verified 8/27/09)
State Treasurer Bill Lockyer (source)
Associated General Contractors of California
California Association of Councils of Governments
California Labor Federation
Los Angeles County Metropolitan Transportation Authority
Riverside County Transportation Commission
Santa Clara Valley Transportation Authority
State Building and Construction Trades Council
Transportation Agency for Monterey County
Ventura County Transportation Commission
ARGUMENTS IN SUPPORT : By establishing the California
Transportation Financing Authority, the author and sponsor,
the State Treasurer's Office, argue that this bill creates
a method for local, regional, and state agencies to finance
projects in the municipal bond market and to ensure that
projects and funding are consistent with state
transportation policy objectives and public finance
criteria that reflect "best practices." The bill
recognizes the need for transportation funding and provides
a way for those willing and able to pay for new capacity to
build it. Explaining why the bill is needed, the author
and sponsor state:
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Capacity demands of transportation infrastructure in
our state combined with declining revenue streams for
transportation project financing have severely eroded
our transportation systems. Population increases of
the state have far outpaced transportation project
construction. The state gasoline excise tax, the major
state source of transportation construction funding,
has depreciated in value and remains unchanged since
1994 at 18 cents per gallon. New and creative funding
sources to meet our transportation funds must be
found.
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Beall, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Coto, Davis, De La Torre, De Leon, Eng, Evans, Feuer,
Fong, Fuentes, Furutani, Galgiani, Hall, Hayashi, Hill,
Huber, Huffman, Jeffries, Jones, Krekorian, Lieu, Bonnie
Lowenthal, Ma, Mendoza, Monning, Nava, Nestande, Niello,
John A. Perez, V. Manuel Perez, Portantino, Price,
Ruskin, Salas, Saldana, Skinner, Solorio, Swanson,
Torlakson, Torres, Torrico, Yamada
NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,
Blakeslee, Conway, Cook, DeVore, Duvall, Emmerson,
Fletcher, Fuller, Gaines, Garrick, Gilmore, Hagman,
Knight, Logue, Miller, Nielsen, Silva, Smyth, Audra
Strickland, Tran, Villines
NO VOTE RECORDED: Block, Harkey, Hernandez, Bass
JA:nl 8/28/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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