BILL ANALYSIS
SB 1192
Page 1
Date of Hearing: June 29, 2010
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 1192 (Oropeza) - As Amended: June 2, 2010
As Proposed to be Amended
SENATE VOTE : 32-1
SUBJECT : AIRPORTS: RENTAL CAR FACILITY FEES
KEY ISSUE : SHOULD SPECIFIED AIRPORTS RECEIVE NEW AUTHORITY TO
REQUIRE THE COLLECTION OF HIGHER RENTAL CAR FEES FROM CONSUMERS
FOR THE PURPOSE OF BUILDING CONSOLIDATED CAR RENTAL FACILITIES,
WITH APPROPRIATE NEW SAFEGUARDS, WHEN THE EXISTING FEE AUTHORITY
IS SHOWN TO BE INADEQUATE TO MEET REVENUE NEEDS?
FISCAL EFFECT : As currently in print this bill is currently
keyed fiscal.
SYNOPSIS
This bill provides that a covered airport operator may impose a
customer facility charge (CFC) on a rental car customer in a
scheduled amount per day, phased in over time, rather than at
the flat rate of $10 per contract allowed under existing law.
The CFC is currently authorized to provide for the finance,
design, and construction of consolidated airport car rental
facilities and the finance, design, construction and operation
of common-use transportation systems that move passengers
between airport terminals and the car rental facility. In
addition to allowing a higher fee, this bill expands the
purposes to which a CFC can be used, to include terminal
modifications to accommodate and provide customer access to
common-use transportation systems, as well as to acquire
vehicles for a common-use transportation system. Supporters
argue that the existing contract rate is insufficient to
generate sufficient revenue to allow for these purposes. In
order to ensure that this new authority is used prudently, the
bill provides for new transparency and oversight. There is no
known opposition.
SUMMARY : Provides for a new method of calculating and
controlling consumer fees for covered airport consolidated
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rental car facilities. Specifically, this bill :
1)Provides an alternative mechanism for collecting a CFC based
on the number of days a vehicle is rented, up to a maximum of
five days, rather than a flat rate per contract, if an airport
subject to the bill demonstrates the need to do so.
2)Requires that any covered airport wishing to exercise this
authority must do so before January 1, 2018.
3)Expands the purposes to which a customer facility charge (CFC)
can be used to include a fee to finance, design, and construct
terminal modifications to accommodate and provide customer
access to common-use transportation systems, as well as to
acquire vehicles for a common-use transportation system.
4)Requires additional auditing and reports to demonstrate the
need for and purposes to which CFCs are put, including new
oversight by the State Controller.
EXISTING LAW :
1)Permits a customer facility charge to be imposed on a rental
car renter and defines "customer facility charge" as a fee
required by an airport to be collected from a renter for
either: (1) financing, designing, and constructing
consolidated airport car rental facilities; or (2) financing,
designing, constructing, and providing common-use
transportation systems that move passengers between airport
terminals and the car rental facilities. (Civ. Code Sec.
1936(a).)
2)Requires rental car companies to "bundle," or include the
entire amount in any rental rate that is advertised, quoted,
and charged to rental car customers, but permits certain other
specified fees, such as CFCs to be unbundled and advertised,
quoted, and charged separately. (Civ. Code Sec. 1936(n)(1).)
3)Provides that a CFC may be collected by a rental car company
if collection of the fee is required by an airport, as
specified, and the fee is calculated on a per-contract basis.
Existing law provides that the fee shall be $10 per contract
for customers of on-airport rental car companies if the fee is
imposed for both a consolidated rental car facility and a
common-use transportation system. For customers of
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off-airport rental companies, existing law provides that the
fee must be proportionate to the cost of the common-use
transportation system. (Civ. Code Sec. 1936(m).)
4)Provides that the CFC must be separately identified on the
rental agreement. Under existing law, the fee is a user fee,
not a tax imposed upon real property or an incidence of
property ownership under the California Constitution and the
revenues from the fee may not exceed the reasonable costs of
financing, designing, constructing, or operating the facility
or transportation services and shall not be used for any other
purpose. (Civ. Code Sec. 1936(m).)
COMMENTS : 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. These
facilities may be served by common-use transportation systems,
including bus shuttle systems, which transport rental car
customers to and from terminals and the consolidated rental car
facility.
History of Customer Facility Charges To Support Consolidated
Airport Car Rental Facilities. These facilities and systems are
made possible by rental car user fees for customers who choose
to rent from an on-airport rental car company. The authority to
collect these fees began in 1999 when the Legislature passed and
the governor signed SB 1228, which permitted San Jose
International Airport to collect a customer facility charge of
$10.15 to finance and construct a consolidated rental car
facility and common-use transportation systems, subject to
certain conditions. San Francisco and San Diego were also
permitted similar statutory authority.
In 2001, AB 491 (Frommer, Ch. 661, Stats. 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,
Ch. 44, Stats. 2007) repealed the special authorization for San
Jose International Airport and instead applied the more general
provisions enacted by AB 491 to San Jose International Airport,
thus permitting it to collect a $10 per contract CFC.
Now Los Angeles International Airport (LAX) wishes to build a
consolidated rental car facility in order to decrease traffic
congestion and reduce greenhouse gas emissions, among other
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goals, but argues that the current fee authorization is
insufficient to accomplish those plans. Three other airports
are also covered by the bill. Of these, only Fresno has an
existing CFC; it argues that the existing fee has proved to be
inadequate.
According to the author, consolidated rental-car outlets at
California commercial airports are 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.
A recent Los Angeles Times article noted the following about the
LAX 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
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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 plan. ("LAX plans a consolidated car rental facility,"
Los Angeles Times, February 26, 2010.)
New Fee Authority Permitted By This Bill, Subject To Oversight
and Accountability. This bill would permit LAX and other
covered airport operators to collect an alternative fee based on
an amount per day during the rental period, rather than the
current $10 rate per-contract, capped at a maximum of five days.
Supporters argue, "[The current] 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 affected."
According to the sponsor the amount of CFC charged in other
large hub U.S. airports for consolidated rental car facilities
ranges from $2.50 per day (Orlando, Fl.) to $6.20 per day (New
Orleans, La.). Of the 12 non-California airports surveyed, the
majority (five airports) were in the $2.50 to $4.00 range. Two
airports charged fees in the $4.01 to $5.00 range; four airports
in the $5.00 to $6.00 range; and one airport was above $6.00.
This bill would allow the CFC to be increased at the covered
airports over a period of time, starting at $6 and potentially
increasing to $9 if circumstances warrant. The City of Los
Angeles states that average car rental terms at LAX are a little
over four days. Under this bill, the CFC charge could go from
$10 to approximately $36. Supporters, including the California
Chamber of Commerce, believe increased fees are appropriate.
New Review And Approval Process To Ensure Justification For The
Increase And Responsible Use. This bill would permit the
alternative customer facility charge to be collected after a
review and approval process, beginning with a public hearing at
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the airport and subject to a further review by the State
Controller to substantiate the need for and amount of the fee
request.
According to a survey by the sponsor, six airports are currently
collecting a CFC, but none of the six have completed the audit
required by existing law. The new review and approval process
is designed to ensure that there is better oversight and
accountability.
REGISTERED SUPPORT / OPPOSITION :
Support
City of Los Angeles (sponsor)
Alliance for a Regional Solution to Airport Congestion
Bob Hope Airport; California Airports Council
California Airports Council
California Chamber of Commerce
Fresno Yosemite International Airport
Inglewood-Airport Area Chamber of Commerce
San Francisco International Airport
Opposition
None on file
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334