BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 783|
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UNFINISHED BUSINESS
Bill No: SB 783
Author: Ashburn (R),et al
Amended: 7/2/09
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE : 10-0, 4/28/09
AYES: Lowenthal, Huff, Ashburn, DeSaulnier, Harman,
Hollingsworth, Kehoe, Pavley, Simitian, Wolk
NO VOTE RECORDED: Oropeza
SENATE APPROPRIATIONS COMMITTEE : 12-1, 5/26/09
AYES: Kehoe, Cox, Corbett, Denham, DeSaulnier, Hancock,
Leno, Oropeza, Runner, Walters, Wolk, Yee
NOES: Wyland
SENATE FLOOR : 38-0, 6/1/09
AYES: Aanestad, Alquist, Ashburn, Benoit, Calderon,
Cedillo, Cogdill, Corbett, Correa, Cox, Denham,
DeSaulnier, Ducheny, Dutton, Florez, Hancock, Harman,
Hollingsworth, Huff, Kehoe, Leno, Liu, Lowenthal,
Maldonado, Oropeza, Padilla, Pavley, Romero, Runner,
Simitian, Steinberg, Strickland, Walters, Wiggins, Wolk,
Wright, Wyland, Yee
NO VOTE RECORDED: Negrete McLeod, Vacancy
ASSEMBLY FLOOR : 76-0, 8/17/09 (Consent) - See last page
for vote
SUBJECT : High-speed rail business plan
SOURCE : Author
CONTINUED
SB 783
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2
DIGEST : This bill requires the High-Speed Rail Authority
to prepare, publish, and adopt a business plan by January
1, 2012 and every two years thereafter.
Assembly Amendments (1) authorize the High-Speed Rail
Authority to use information that is has developed, in
compliance with High-Speed Rail Bond Act requirements, for
the preappropriation review process and the preexpenditure
review process, for the biennial business plan updates; (2)
specify that a draft of the business plan, when released,
shall be submitted to the Senate Committee on Budget and
Fiscal Review, and the Assembly Committee on Budget; and
(3) add "right of way acquisition" and "environmental
clearances" to the list of foreseeable risks for which the
business plan should address.
ANALYSIS :
Existing law:
1.Creates the California High-Speed Rail Authority (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. Proposition 1A, the Safe, Reliable
High-Speed Passenger Train Bond Act for the 21st Century,
approved by the voters last November, provides up to $9
billion for the development of the high-speed rail
system.
3.Limits the expenditure of bond revenues for the
construction of the high-speed rail system to not more
than 50 percent of the cost of building the system.
4.Requires that 90 days prior to submitting to the governor
an initial request for an appropriation of bond proceeds
SB 783
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for capital expenditures, the HSRA shall convene a peer
review committee to review the detailed funding plan for
the proposed project.
5.Prohibits state, local, or federal operating subsidies
for the high-speed rail service.
6.Authorizes, to the fullest extent possible, HSRA to use
information that it has developed, in compliance with
High-Speed Rail Bond Act requirements for the
preappropriation review process and the preexpenditure
review process, for the biennial business plan updates.
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.
This bill:
1.Requires the HSRA to adopt the business plan and submit
the plan to the Legislature by January 1, 2012 and every
two years thereafter. Sixty days prior to submitting the
plan to the Legislature, the HSRA must publish a draft
plan for public review and comment.
2.Requires the expanded business plan to include the most
recent patronage forecast to identify high, medium, and
low ridership scenarios and the corresponding levels of
service for Phase I.
3.Requires the HSRA to prepare alternative financial pro
formas for the different levels of service, identify the
break even point, and assume no operating subsidies.
4.Requires the HSRA to identify supplemental sources of
funding to augment bond revenues and its confidence in
the availability of supplemental funds.
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5.Requires the HSRA to identify written agreements with
public or private entities to fund components of the
high-speed rail stations and terminals.
6.Requires the HSRA to identify alternative public-private
development strategies for implementing Phase I.
7.Requires the HSRA hold at least one public hearing on the
business plan and adopt the planet a regularly scheduled
meeting. Requires HSRA take into consideration comments
from the public hearing and written comments that it
receives in that regard, and any hearings that the
Legislature may hold prior to adoption of the plan.
Comments
AB 3034 (Galgiani), Chapter 267, Statutes of 2008,
authorized the provisions of Proposition 1A, the Safe,
Reliable High-Speed Passenger Train Bond Act for the 21st
Century, which the voters approved last November. That bill
provides up to $9 billion in bond proceeds for high-speed
rail development. Among the provisions of AB 3034 was a
requirement that the HSRA prepare a single business plan by
September 1, 2008. The HSRA submitted the plan on November
7, 2008, three days after the election. The HSRA testified
at an oversight hearing of the Senate Transportation and
Housing Committee in October 2008 that the plan was going
to late because of the delay in the adoption of the 2008-09
state budget. 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? The
financial documents prepared by the HSRA do not discuss the
prohibition on the use of state, local, or federal
operating subsidies.
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Legislative Analyst comments on the HSRA's business plan .
In its review of the HSRA budget request for the 2009-10
fiscal year, the LAO summarized inadequacies it found in
the HSRA's November business plan, (see table below). This
endeavors to address the issues raised by the LAO as well
as other concerns.
-----------------------------------------------------------
| |
| Business Plan Fails to Provide Many Details |
| |
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|-----------------------------+-----------------------------|
|Statutory Requirements | Sample of Missing Details |
|-----------------------------+-----------------------------|
| | |
|-----------------------------+-----------------------------|
|Description of the |What are the expected |
|anticipated system |service levels? |
|-----------------------------+-----------------------------|
| |What is the assumed train |
| |capacity? |
|-----------------------------+-----------------------------|
| | |
|-----------------------------+-----------------------------|
|Forecast of patronage, |How are ridership estimates |
|operation & capital costs |projected? |
|-----------------------------+-----------------------------|
| |What is the operating |
| |break-even point? |
|-----------------------------+-----------------------------|
| |How will costs be |
| |distributed by segment |
| |route? |
|-----------------------------+-----------------------------|
| | |
|-----------------------------+-----------------------------|
|Estimate of necessary |How would funds be secured? |
|federal, state, and local | |
|funds | |
|-----------------------------+-----------------------------|
| |What level of confidence is |
| |there for receiving each |
| |type of funding? |
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|-----------------------------+-----------------------------|
| | |
|-----------------------------+-----------------------------|
|Proposed construction |What is the proposed |
|timeline for each segment |schedule, by segment, for |
| |completing |
| |design/environmental |
| |clearance? |
|-----------------------------+-----------------------------|
| |For beginning/completing |
| |construction |
|-----------------------------+-----------------------------|
| | |
|-----------------------------+-----------------------------|
|Discussion of risks and |How would each type of risk |
|mitigation strategies |impact the project? |
|-----------------------------+-----------------------------|
| |What specific mitigation |
| |strategies are planned to be |
| |deployed? |
| | |
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The LAO makes the following comment in its analysis of the
HSRA budget and the inadequacy of the business plan:
Lacking detailed information such as this, the Legislature
really has no better sense than prior to the plan's
submission as to how the authority plans to accomplish its
objective. As the authority continues to develop the
high-speed rail system, it is essential that the
Legislature have a clear understanding of how the state is
proceeding with the project and, most importantly, the
risks it may be assuming and how those risks would be
mitigated. So that the Legislature will have the necessary
information, we recommend that the Legislature requires the
authority to expand upon its business plan and submit
information to include specific elements missing from the
original document before appropriating any bond funding for
2009-10.
Although it is likely that there will be an appropriation
of bond revenue for continuing the environmental and
preliminary engineering work that is already underway, the
HSRA will not be seeking funding for a construction project
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for the 2009-10 fiscal year.
Related legislation
SB 455 (Lowenthal) provides the HSRA with certain property
management powers, requires the governor's appointee to the
governing to be confirmed by the Senate, establishes a
policy for prioritizing investments, and provides a process
for reporting on the progress of the high-speed rail
project to the Legislature.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee, minor
additional bond-funded costs, likely less than $100,000 in
2011 and biennially thereafter, to complete the modified
business plan.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Coto, Davis, De La Torre, De Leon,
DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi,
Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,
Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza,
Miller, Monning, Nava, Nestande, Niello, Nielsen, John A.
Perez, V. Manuel Perez, Portantino, Ruskin, Salas, Silva,
Skinner, Solorio, Audra Strickland, Swanson, Torlakson,
Torres, Torrico, Tran, Villines, Yamada, Bass
NO VOTE RECORDED: Cook, Saldana, Smyth, Vacancy
JJA:do 8/18/09 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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