BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1192|
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THIRD READING
Bill No: SB 1192
Author: Oropeza (D)
Amended: 6/2/10
Vote: 27
SENATE JUDICIARY COMMITTEE : 4-0, 5/4/10
AYES: Corbett, Harman, Hancock, Leno
NO VOTE RECORDED: Walters
SENATE LOCAL GOVERNMENT COMMITTEE : 5-0, 5/5/10
AYES: Cox, Aanestad, Kehoe, DeSaulnier, Price
SENATE APPROPRIATIONS COMMITTEE : 7-2, 5/27/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
NOES: Denham, Wyland
NO VOTE RECORDED: Cox, Walters
SUBJECT : Airports: rental car facility fees
SOURCE : City of Los Angeles
DIGEST : This bill expands the definition of customer
facility charge to include a fee that is required by an
airport to be collected from the purposes of financing,
designing, and constructing terminal modifications to
accommodate and provide customer access to common use
transportation systems. This bill requires the Bob Hope
Airport, Fresno-Yosemite International Airport, the Los
Angeles International Airport and the San Diego
International Airport to provide reports on an annual basis
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to the Senate and Assembly Committees on Judiciary
detailing the total amount of the customer facility charge
collected, how the funds are being spent, and whether
certain airport concession fees have been increased since
the prior report, if any. This bill also requires the
above noted airports to complete an independent audit upon
initial collection of the customer facility charge and
every three years thereafter. This bill requires the
Bureau of State Audits to review those audits and
independently examine the collection of the customer
facility charge, as necessary, and to report to the
Legislature on its conclusions.
ANALYSIS : Existing law governs contracts between rental
car companies and their customers. Existing law authorizes
a company that rents passenger vehicles to the public to
collect a customer facility charge, which means a fee that
is required by an airport to be collected for certain
purposes, if specified circumstances apply, including, but
not limited to, the collection of the fee is required by an
airport operated by a city, a county, a city and county, a
joint powers district, or a special district, the fee is
calculated on a per contract basis, the fee is a user fee
and not a tax, as specified, and the fee is $10 per
contract, except as specified.
This bill expands the definition of customer facility
charge to include a fee that is required by an airport to
be collected for the purpose of financing, designing, and
constructing terminal modifications to accommodate and
provide customer access to common-use transportation
systems, as specified.
Existing law provides that a statute that imposes a
requirement that a state agency submit a periodic report to
the Legislature is inoperative on a date four years after
the date the first report is due.
The bill, notwithstanding that requirement, also requires
the Bob Hope Airport, Fresno-Yosemite International
Airport, and the Los Angeles International Airport and the
San Diego International Airport to provide reports on an
annual basis to the Senate and Assembly Committees on
Judiciary detailing the total amount of the customer
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facility charge collected, how the funds are being spent,
and whether certain airport concession fees have increased
since the prior report, if any. The bill also requires the
airport to complete a specified independent audit beginning
one year after the initial collection of customer facility
charge and every three years thereafter. The bill requires
the Bureau of State Audits to review those audits and
independently examine the collection of the customer
facility charge, as necessary, with costs to be reimbursed
by the individual airport being audited, and to report to
the Legislature on its conclusions.
This bill appropriates the sum of $550,000 from the General
Fund to the bureau of State Audits for expenditure in the
2012-13 fiscal year to carry out the duties imposed upon
the bureau pursuant ot the provisions of this bill.
This bill makes legislative findings and declarations as to
the necessity of a special statute for Los Angeles
International Airport.
Background
In recent years, many airports have located rental car
facilities off-site, often in consolidated facilities that
house all car rental companies in one location. Common-use
transportation systems, including bus shuttle systems,
transport rental car customers to and from terminals and
the consolidated rental car facility.
In 1999, the Legislature passed and the governor signed SB
1228 (Vasconcellos), Chapter 760, Statutes of 1999, which
permitted San Jose International Airport to collect a
customer facility charge of $10.15 to finance and construct
these consolidated rental car facilities and common-use
transportation systems, subject to certain conditions. San
Francisco and San Diego were also permitted similar
statutory authority. AB 491 (Frommer), Chapter 661,
Statutes of 2001) authorized other public airports to
collect a $10 fee per contract to finance, design, and
construct consolidated rental car facilities and common-use
transportation systems. In 2007, SB 641 (Corbett), Chapter
44, Statutes of 2007, repealed the special authorization
for San Jose International Airport and instead applied the
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more general provisions enacted by AB 491 to San Jose
International Airport, thus permitting it to collect a $10
per contract customer facility charge (CFC).
In Los Angeles, the Los Angeles International Airport (LAX)
plans to build a consolidated rental car facility. A
recent Los Angeles Times article noted the following about
the project:
Los Angeles International Airport officials are
drafting plans to build a terminal that will house
many of the area's rental car companies, providing
space for 33,000 vehicles while helping untangle the
airport's notorious congestion and cutting pollution.
The terminal, which could cost as much as $800
million, is also expected to make it easier for
people to find their rental agencies or switch from
one to another if the line is too long or it doesn't
have the right car. LAX has collected $47 million
for the project since 2007 by charging a flat $10 fee
on rentals from the 10 companies whose vans circle
the airport looking for customers.
But the fee is not bringing in enough money, said
Mark Adams, chief government affairs representative
for Los Angeles World Airports, which operates LAX.
In order to raise more funds, the airport is hoping
to boost the surcharge through a daily fee rather
than the current flat fee on rentals. The airport is
still several years from beginning construction of
the terminal.
. . . Although airport traffic is down substantially
since 9/11, rental agency vans make about 800,000
trips a year into the main airport, according to
airport statistics, often with just one or two
passengers. With a consolidated rental facility,
buses would shuttle passengers between it and airline
terminals, dropping the number of trips to 437,000
annually. Trips would be cut even further if a
planned light-rail system with stops at the rental
car terminal is built. Adams said the rental
terminal is "considered the most significant air
quality mitigation" effort in the airport's master
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plan. ("LAX plans a consolidated car rental
facility," Los Angeles Times, February 26, 2010.)
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee analysis:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Bureau of State Audits $550*
Review
*Costs on a triennial basis ($100 to $175 per audit times
four); cost reimbursed
SUPPORT : (Verified 6/1/10)
Alliance for a Regional Solution to Airport congestion
Bob Hope International Airport
California Airports Council
California Chamber of Commerce
Fresno-Yosemite International Airport
Inglewood-Airport Area Chamber of Commerce
Los Angeles County Major's Office
Los Angeles World Airports
San Francisco International Airport
ARGUMENTS IN SUPPORT : The author's office states,
"Construction of consolidated rental-car outlets at
California commercial airports is now a fairly common
practice. These centralized rental locations aggregate the
operations of the on-airport rental car companies into one
large site and house rental offices such as service centers
and ready/return parking lots. Consolidated rental-car
outlets are a vital step toward alleviating airport traffic
congestion and air pollution. Consumer choice at many
airports is also limited or non-existent by the many
separate rental-car outlets and use of dedicated shuttles,
vans and buses.
"Airports currently use Consumer Facility Charges (CFCs) to
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finance the insurance of long-term debt to pay for the
design, construction and operations of these rental offices
and the operation of the common-use transportation systems
at airport terminals. With limited exceptions, existing
state statute passed in 2001 only allows collection of the
CFC at a fixed rate of $10 per rental-car transaction.
This one-size-fits-all approach is failing to provide
sufficient revenues to: 1) issue or service existing bonds
to finance the construction of these car-rental offices; 2)
cover ongoing operational costs of the offices and their
common-use transportation systems. The current transaction
fee does not offer an airport authority the flexibility to
tailor its fee to local market conditions. In addition,
when new car-rental outlets planned in California airports
cannot be sufficiently funded under the current $10 per
contract fee without airport subsidies, other vital airport
services are effected."
This bill is sponsored by the City of Los Angeles which
argues that the bill would "provide California's airports
with the funding mechanism they need to construct essential
consolidated rental car facilities. These facilities
reduce traffic congestion and air pollution and increase
consumer choice. It is for these reasons our city is
proposing to construct such a facility at Los
Angeles International Airport (LAX). However our state's
airports are currently locked into a fixed $10 per contract
Customer Facility Charge (CFC) first set in 1999 that is
often insufficient to fully fund construction of these
facilities or to pay for the ones that have already been
built."
RJG:do 6/3/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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