BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 965
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: desaulnier
VERSION: 4/7/10
Analysis by: Art Bauer FISCAL: yes
Hearing date: April 13, 2010
SUBJECT:
High-speed rail
DESCRIPTION:
This bill encourages the timely development of high-speed rail
to enhance job creation and establishes reporting requirements.
ANALYSIS:
Proposition 1A- the Safe, Reliable High-Speed Passenger Train
Bond Act for the 21st Century of 2008 (Proposition 1A)
identifies the Phase I corridor for high-speed rail as an
alignment from the San Francisco Transbay Terminal to the Los
Angeles Union State and Anaheim via the San Joaquin Valley. In
January 2010, the High-Speed Rail Authority (HSRA) received an
American Recovery and Reinvestment Act (ARRA) grant of $2.25
billion to aid in the development of the Phase I project. Of
that amount, $400 million is for constructing the basement of
the new Transbay Terminal in San Francisco to accommodate
high-speed trains. According to the Federal Railroad
Administration (FRA) announcement of its ARRA award, the
remaining $1.85 billion is for purchasing right-of-way,
constructing track, signaling systems, and stations, and
completing environmental reviews and engineering documents for
the Los Angeles/Anaheim segment, the San Francisco/San Jose
segment, the Fresno/Bakersfield segment, and the Merced/Fresno
segment.
Existing law relating to high-speed rail:
SB 965 (DESAULNIER) Page 2
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) Provides up to $9 billion in Proposition 1A bond funds
for the development of the high-speed rail system, but
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 and not more
than ten percent of bond proceeds to environmental studies,
planning, and preliminary engineering.
4) Creates an independent peer review committee for the
purpose of reviewing the planning, engineering, and
financing and issuing an analysis of the viability of the
HSRA's financing plan, including the funding for each
corridor.
5) Requires that 90 days prior to submitting to the
governor a request for an appropriation of bond proceeds
for capital expenditures, the HSRA shall convene the peer
review committee to review the detailed funding plan for
the proposed project.
6) Defines capital costs as the costs associated with the
acquisition of right-of-way and real property, construction
of tracks, structures, power systems, and stations,
acquisition of rolling stock, and the mitigation of direct
and indirect environmental impacts
7) Prohibits state, local, or federal operating subsidies
for the high-speed rail service.
8) Authorizes the HSRA to enter into contracts with private
or public entities for the design, construction, and
operation of high-speed trains.
This bill :
SB 965 (DESAULNIER) Page 3
1) Makes findings and declarations regarding the importance
of high-speed rail as a transportation facility to
California and as a potential source of jobs to the state.
2) Authorizes the HSRA to expend ARRA funds, upon
appropriation by the Legislature, for conducting
environmental studies, planning analyses, and preliminary
engineering activities.
3) Authorizes the HSRA to use ARRA funds for capital
expenditures, if matched by Proposition 1A bond funds,
consistent with the requirements for a peer review and
appropriation by the legislature.
4) Requires the HSRA to take actions that ensure federal
funds are obligated and expended in a manner that meets all
federal guidelines, maximizes job creation in the state,
expedites projects that improve rail-highway safety,
mobility, and performance, and makes the most efficient use
of Proposition 1A bond funds, including replacing bond
funds for project expenditures with federal funds where
feasible.
5) Requires the HSRA, within 60 days of the enactment of
this bill or finalizing a cooperative agreement with FRA
for the use of ARRA funds, which ever occurs later, to
submit to the Legislative Analyst Office (LAO) and the
fiscal committees and the policy committees of the
Legislature having jurisdiction over transportation issues
an adopted expenditure plan. The expenditure plan shall
include:
A description of the projects proposed for funding,
including a discussion of the projects' independent
utility, the projects' location, the amount of federal,
state, and private funds proposed to be committed to each
project.
A project schedule with milestones and project
completion dates for each project.
An estimate of the number of jobs the projects
create in the state.
1) Requires the HSRA on December 31st following the
preparation of the plan, and annually thereafter to submit
SB 965 (DESAULNIER) Page 4
to the LAO and the fiscal committees and the policy
committees of the Legislature having jurisdiction over
transportation issues an adopted progress report on the
status, budget and expenditures for each project.
2) Exempts the Transbay Terminal Joint Powers Agency from
the requirements of this bill if the ARRA funds for that
project flow through the HSRA.
COMMENTS:
1) Purpose . The purpose of this bill is to encourage the
HSRA to expedite the use of ARRA funds in order to take
advantage of the job creation potential of high-speed rail
projects and to improve the accountability of the HSRA's
project management responsibilities.
2) Jobs and the high-speed rail project . One of the
objectives of this bill is to encourage the HSRA to deliver
the high-speed rail project for purposes of job creation.
The HSRA estimates that the construction of both Phase I
and the remaining corridors to San Diego and Sacramento
will create 600,000 construction jobs. The synergies among
various sectors of the economy are estimated to result in
the creation of 450,000 permanent jobs.
3) HSRA and accountability . Another objective of this bill
is to ensure accountability of the HSRA to the Legislature
and the public with regard to spending the ARRA funds. This
committee has held two hearings HSRA business plans
prepared at the request of this committee, but to date the
HSRA has not produced a business plan that is acceptable to
the committee. This bill endeavors to impose accountability
at the project level through the creation of an expenditure
plan upon finalizing a cooperative agreement for expending
the ARRA funds. On the basis of the expenditure plan, the
bill requires the submittal to the Legislature on each
December 31st an adopted progress report on the status of
each project. In addition, the bill ensures that the peer
review process will be employed when projects are funded by
both ARRA and bond funds.
4) Facilitating transfer of ARRA funds to the Transbay
Terminal . The Transbay Terminal is a regional intermodal
transfer facility that includes office towers and housing
on a forty-two acre site in downtown San Francisco.
SB 965 (DESAULNIER) Page 5
Proposition 1A stipulates that the terminal is the Northern
California terminus for Phase I of the high-speed rail
service. The Transbay Terminal Joint Powers Agency, the
governing agency for the Transbay Terminal project,
submitted an application for ARRA funding and was awarded
$400 million, which FRA included in its $2.25 billion award
to the HSRA. The U.S. Department of Transportation is
endeavoring to find a means of transferring the grant
directly to the Transbay Terminal project, bypassing the
HSRA and the state. In the event, the FRA is unable to
by-pass the state and the HSRA is used as a conduit for
transferring the funds to Transbay, this bill then exempts
from its provisions any funds so awarded to Transbay.
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
April 7, 2010)
SUPPORT: None received.
OPPOSED: None received.