BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Dave Cox, Chair
BILL NO: SB 1192 HEARING: 5/5/10
AUTHOR: Oropeza FISCAL: No
VERSION: 3/22/10 CONSULTANT: Detwiler
RENTAL CAR USER FEES
Background and Existing Law
The California Constitution requires voter approval of
local taxes. Benefit assessments and property-related fees
need property owner approval. Local officials can impose
user fees and regulatory fees without voter or property
owner approval provided that the fees don't exceed the
reasonable costs of the services or regulations.
At 10 California airports, local officials require car
rental companies to collect a "customer facility charge" of
$10 per contract. The fee revenues can pay to (1) finance,
design, and construct consolidated airport car rental
facilities, or (2) finance, design, construct, and provide
common-use transportation systems to move passengers
between airport terminals and the consolidated care rental
facilities. The aggregate amount of fees can't exceed the
reasonable costs to finance, design, and construct those
facilities. The airports must pay for independent audits
and send copies to legislative committees.
These customer facility charges can't pay for expanding
airport terminals, gates, and runways and changes in
operating hours or the number of flights. Except for a
special provision that applies to Oakland International
Airport, the customer facility charge becomes inoperative
once the bonds are paid off. These fees don't apply to
airports where the fees are governed by laws that apply to
the City and County of San Francisco and the San Diego
Unified Port District. Existing law declares that this fee
is a user fee, not a tax on real property or property
ownership under Proposition 218 (AB 491, Frommer, 2001).
In addition, San Francisco airport officials require car
rental companies to collect customer fees to use an
airport-mandated common busing system or light rail transit
system to move passengers between terminals and a
consolidated on-airport car rental facility. The fee
SB 1192 -- 3/22/10 -- Page 2
revenues can't exceed the reasonable costs of providing the
busing and transit service. The statute declares that the
fee is a user fee, not a tax (SB 1907, Burton, 1998).
The San Diego Unified Port District, which used to own and
operate the San Diego International Airport, may require
transportation vendors to impose a transaction fee to pay
for a parking structure adjacent to a convention center.
The statute declares that the fee is a transaction fee, not
a tax (SB 1907, Burton, 1998). The San Diego County
Regional Airport Authority now owns and operates Lindbergh
Field and the Authority imposes a $10 customer facility
charge under the statewide legislation.
Airport officials want to continue the trend of
consolidating rental car operations to cut traffic
congestion and air pollution. For example, near Los
Angeles International Airport, officials want to build a
consolidated rental car facility that could cost between
$600 and $800 million. Instead of imposing a statutorily
set fee of $10 per contract, airport officials want more
flexibility to set local fees that would generate enough
money to pay for new revenue bonds.
Proposed Law
Senate Bill 1192 adds a third purpose for which revenues
from a customer facility charge on rental car contracts may
be spent. SB 1192 allows those revenues to finance,
design, and construct terminal modifications to accommodate
access to common-use transportation systems. The bill
permits airport officials to require car rental companies
to collect an alternative customer facility fee on either a
per contract or a per day basis. The revenues from this
alternative fee can't exceed the reasonable costs of
financing, designing, constructing, improving, or operating
the facility or transportation services. SB 1192 declares
that the alternative fee is a user fee, not a tax on real
property or property ownership under Proposition 218.
The authority for these alternative fees doesn't apply to
airports where the fees are governed by laws that apply to
the City and County of San Francisco and the San Diego
Unified Port District.
SB 1192 -- 3/22/10 -- Page 3
SB 1192 permits the San Francisco International Airport to
require rental car companies to collect an alternative fee
on either a per contract or a per day basis. The revenues
from this alternative fee to pay for the use of an
airport-mandated common use busing system or light rail
system to move passengers between the terminal and a
consolidated on-airport rental car facility or for
financing, designing, construction, and improving
consolidated airport car rental facilities. The revenues
from this alternative fee can't exceed the reasonable costs
of providing busing and light rail transit service, or
financing, designing, constructing, improving, or operating
the facility or transportation services. SB 1192 declares
that the alternative fee is a user fee, not a tax.
Comments
1. User pays . A dozen years ago, the Legislature began to
allow individual airports to impose rental car charges to
pay for consolidated facilities and parking structures.
Since 2001, a statewide law has allowed all airports to
charge consumer facility charges, but statutorily caps them
at $10 per rental car contract. The alternative fee
authorized by SB 1192 gives local airport officials more
flexibility by allowing them to charge fees either per
contract or per day, and by replacing the statutory caps
with the constitutional formula for fees. Instead of
having to follow artificial limits written in Sacramento,
the bill lets local officials set their own fees within
constitutional requirements. Local control and home rule
mean that legislators send local officials back home to set
the rules. Using these fees wisely also means that the
passengers who use an airport's rental car facilities pay
for them, not the host community's taxpayers.
2. Focus on the nexus . Besides giving local airport
officials more flexibility in how they set their user fees,
SB 1192 also expands how they can spend the resulting
revenues. The bill lets them spend their new money to
modify airport terminals to accommodate access to
transportation services (page 3, lines 4-6). However,
terminal modifications benefit all passengers, not just
those who use the consolidated rental car facilities. This
expanded purpose strays from the existing nexus that
justifies imposing user fees on rental car customers. The
SB 1192 -- 3/22/10 -- Page 4
Committee may wish to consider an amendment that deletes
this new third purpose.
3. Transparency and accountability . Neither current law
nor SB 1192 spells out the procedures that airport
officials use to set customer facility charges. Although
current law requires airport officials to pay for an
independent audit to assure that the revenues don't exceed
the costs, there's no requirement for regular audits. To
reassure the public that the current and alternative fees
are fair and reasonable, the Committee may wish to consider
amendments that require local elected officials (not just
the appointed airport commissioners) to set the user fees.
Further, the Committee may wish to consider amendments that
require regular independent audits of the fees and their
uses.
4. Almost a dozen . San Francisco airport officials charge
user fees under the special 1998 Burton legislation. In
addition, 10 other airports use the statewide statute to
impose customer facility charges: Burbank Bob Hope Airport,
Fresno Yosemite Airport, Los Angeles International Airport,
Norman Y. Mineta-San Jos? International Airport, Oakland
International Airport, LA/Ontario International Airport,
Palm Springs International Airport, San Diego International
Airport, San Luis Obispo County Airport, and Santa Barbara
Municipal Airport.
5. Legislative history . Because the earlier bills on
consumer facility charges went to both the Senate Judiciary
Committee and the Senate Local Government Committee, the
Senate Rules Committee ordered the double-referral of SB
1192. The Senate Judiciary Committee will hear the bill on
Tuesday afternoon, May 4. If the bill passes, the Senate
Local Government Committee will take up SB 1192 on
Wednesday morning, May 5. Because of the short time
between committee hearings, it will be impossible for the
Senate Judiciary Committee to amend the bill and still meet
the legislative deadlines. Amendments would have to occur
at the Senate Local Government Committee's hearing.
6. Clarifying amendments . The bill's language that allows
alternative fees is similar to the language in existing
law. That parallel drafting repeats a problem that affects
San Diego's Lindbergh Field and omits language that would
benefit San Francisco International Airport. Existing law
SB 1192 -- 3/22/10 -- Page 5
(page 12, lines 21-23) and proposed law (page 13, lines
4-6) say that the statewide statutes don't apply to
airports where the fees are governed by the special laws
that apply to the San Francisco International Airport and
the San Diego Unified Port District. Because the Port
District no longer owns Lindbergh Field, the Committee may
wish to consider amendments that clarify that the statewide
law doesn't apply to the Port District's rental car fees.
Further, the legislative declarations regarding San
Francisco's fees doesn't mention Proposition 218 (page 19,
lines 5 and 27), while the statewide language specifically
references that constitutional amendment (page 12, lines
1-3 and lines 32-34). The Committee may wish to consider
amendments that conform the legislative declarations for
San Francisco to the declarations in the statewide statute.
7. Two technical amendments needed . The Committee should
adopt two technical amendments:
(a) On page 2, line 18, strike out "either" and insert
"any" because the bill refers to three purposes, not just
two. This technical amendment will not be needed if other
amendments delete the third purpose (see Comment #2).
(b) On page 12, line 36, "airport operators" should be
singular.
Support and Opposition (4/29/10)
Support : City of Los Angeles, California Airports Council,
Bob Hope Airport, California Chamber of Commerce, County of
Sacramento, Inglewood/Airport Chamber of Commerce, LAX
Coastal Chamber of Commerce, Los Angeles World Airports,
San Francisco International Airport, Los Angeles City
Council Member Bob Rosendahl.
Opposition : Unknown.