BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 1245
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: simitian
VERSION: 2/19/10
Analysis by: Jennifer Gress FISCAL: no
Hearing date: April 20, 2010
SUBJECT:
High-occupancy vehicles (HOVs): tolls
DESCRIPTION:
This bill requires that HOV facilities that were free of tolls
for HOVs as of January 1, 2010 shall remain free of tolls for
those vehicles.
ANALYSIS:
Existing law permits the California Department of Transportation
(Caltrans) and local agencies to permit exclusive or
preferential use of highway lanes for high-occupancy vehicle
lanes. Prior to establishing these lanes, existing law requires
that engineering estimates be prepared to assess the effect of
the lanes on safety, congestion, and highway capacity.
Existing law also provides authority to develop a specified
number of high-occupancy toll (HOT) lanes, which are HOV lanes
that allow single-occupant vehicles to access the lane for a
fee. In total, 13 HOT lane projects are currently authorized
in statute for projects that are or will be located in Alameda,
Orange, Los Angeles, Riverside, San Diego, and Santa Clara
counties.
Existing law establishes the Metropolitan Transportation
Commission (MTC) as a local area planning agency to provide
comprehensive regional transportation planning for the
nine-county Bay Area region. Existing law establishes BATA as a
public instrumentality governed by the same board as that
governing MTC, although BATA is a separate legal entity from
MTC. BATA is responsible for the programming, administration,
and allocation of all toll revenues, except revenues from the
seismic retrofit surcharge, from the seven state-owned toll
bridges within the geographic jurisdiction of MTC.
SB 1245 (SIMITIAN) Page 2
This bill requires that HOV lanes, including high-occupancy toll
(HOT) lanes, on a highway or bridge that were free of tolls to
HOVs as of January 1, 2010 shall remain free of tolls for those
vehicles.
COMMENTS:
1.Purpose . According to the author, the intent of the bill is
to ensure that vehicles that meet the occupancy threshold to
access a HOV lane will be able to continue to use those lanes
for free. The author asserts that there may be pressure to
increase the occupancy standards for HOV lanes because of
plans to convert existing lanes to or construct new HOT lanes.
Under current law, nothing regulates occupancy standards once
an HOV lane has been established. The author is concerned
that an increase in occupancy standards would constitute a de
facto toll on an HOV in a HOT lane.
2.Hampers the ability to manage the system . While the bill
itself is ambiguous, the author's office explains that the
goal of the bill is to ensure that any vehicle that meets the
vehicle occupancy standard in effect on January 1, 2010 for an
HOV facility shall not be charged tolls ever. The author
chose January 1, 2010 in response to BATA's decision to assess
tolls, albeit at a 50 percent discount ($2.50), on carpoolers
who use the bridges under its authority. By specifying that a
vehicle must meet standards that were in effect at a single
point in time, this bill effectively prevents an agency from
raising occupancy standards on that facility from that time
forward. For example, if an HOV lane facility has an
occupancy standard of 2+ as of January 1, 2010 and
double-occupant vehicles are able to use the lane for free at
that time, then double-occupant vehicles will still be able to
use the facility for free even if the occupancy standard is
raised to 3+.
The principal problem with this approach is that it prevents a
transportation agency from using HOV lanes, and occupancy in
particular, as a traffic management tool. Demand for vehicle
transportation on streets and highways will increase over
time. As demand grows, HOV lanes will become an increasingly
important tool to manage the system because increasing the
number of people in a vehicle increases the number of people
that may use the road overall. If an HOV lane provides no
travel time savings, people will not opt to carpool, thus
reducing overall throughput in a corridor and increasing
SB 1245 (SIMITIAN) Page 3
congestion.
The author is concerned that a transportation agency may raise
vehicle occupancy standards to create room in a HOV/HOT lane
for toll-paying vehicles. In other words, occupancy standards
could be manipulated for purposes of generating revenue rather
than reducing congestion and increasing throughput.
Increasing an occupancy standard, for example from 2+ to 3+,
could reduce the incentive for occupants of what were
previously considered HOVs from carpooling, while also
increasing congestion in the general purpose lanes where
vehicles that were previously considered high-occupancy would
then be forced to drive. And increased congestion in the
general purpose lanes increases the likelihood that a person
will opt to pay a toll to use an HOV/HOT lane.
3.Unclear and uneven application of the law . A second issue
with the bill is that it is unclear how it would apply to HOV
lanes that do not exist as of January 1, 2010. One
interpretation suggests that those lanes would not be subject
to the restriction imposed by the bill. If the lanes did not
exist, HOVs could not have been using the facility for free as
of January 1, 2010. If this interpretation prevailed, the
bill would be creating two sets of rules to govern the
operation of HOV lanes, one for HOV lanes in existence before
January 1, 2010 and one for those in existence after.
4.Author's amendments . To address these concerns, the author
intends to offer amendments in committee that do two things.
First, they would delete the January 1, 2010 date and clarify
that vehicles that meet the occupancy standards established
for an HOV lane shall not be charged tolls for the use of that
lane. This amendment would allow a transportation agency to
raise occupancy standards as needed to manage the system while
also ensuring that vehicles that meet those standards are not
charged a toll.
Second, the amendments would provide that if Caltrans wished
to raise occupancy standards, it must do so in a manner that
maximizes throughput, and it must report to the Legislature
the basis for that standard. The author thus intends to
provide some measure of assurance that person throughput, not
revenue generation, remains the principal consideration for
changing occupancy standards.
5.Need to establish a process for establishing and changing
SB 1245 (SIMITIAN) Page 4
occupancy standards . No explicit criteria have been developed
for determining whether raising an occupancy standard is
warranted. Most HOV facilities in the state have an occupancy
of 2+ and all but one of the 3+ facilities in the state
commenced operation as 3+. (The exception is one that began
as a bus-only lane.) If the committee passes this bill, the
author may wish to consider working with Caltrans and other
transportation agencies to develop a process for determining
the occupancy standard of an HOV lane, whether new or
existing. In establishing such a process, the bill should
articulate which agency would be responsible for making the
determination about occupancy standards (e.g., Caltrans), the
goals to be achieved by a proposed occupancy standard (e.g.,
maximize throughput, reduce congestion, improve air quality),
factors that must be considered in making the determination
about a proposed standard (e.g., impacts of standard, for
example, reduced carpooling and increased congestion in the
general purpose lanes), and strategies to mitigate negative
impacts of a proposed standard (e.g., enhancing support for
vanpool services, expanding park-and-ride facilities, offering
discounted tolls or transit passes for low-income drivers).
6.MTC/BATA's arguments in opposition . MTC, acting as BATA,
strongly opposes the bill unless an amendment is taken to
remove bridges from the bill. The foundation of its complaint
resides in the fact that the bill represents the state's
interference with BATA's authority to raise revenue by
assessing tolls, which may have a number of serious impacts on
BATA, the state, and ultimately, toll-payers. The first
impact is that BATA would have to find other means, most
likely increasing tolls on other users, to generate the $25
million it expected to raise by charging tolls to carpoolers.
More significantly, current law provides that the state may
not "limit, alter, or restrict the rights" of BATA to finance
toll bridge projects or "impair" the terms of any agreements
made with bondholders. To this effect, existing law states:
The State of California pledges and agrees with the
holders of the bonds issued pursuant to this chapter, and
with those parties who may enter into contracts with the
authority pursuant to this chapter, that the state will
not limit, alter, or restrict the rights hereby vested in
the authority to finance the toll bridge improvements
authorized by this chapter, Chapter 4 (commencing with
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Section 30910), or Chapter 4.5 (commencing with Section
31000). The State of California pledges and agrees not to
impair the terms of any agreements made with the holders
of bonds, and with the parties who may enter into
contracts with the authority pursuant to this chapter, and
pledges and agrees not to impair the rights or remedies of
the holders of any revenue bonds or any parties until the
bonds, together with interest, are fully paid and
discharged and any contracts are fully performed on the
part of the authority. [Streets and Highways Code Section
30963(a)]
With reference to these provisions of law, this bill has
implications for current bondholders and for future bond
issuances. Regarding existing bondholders, BATA contends
that, because SB 1245 represents an action by the state that
would "impair" the terms agreed to by existing bondholders,
passage of the measure would likely prompt bondholders to
pursue protracted litigation against the state that could
result in a significant monetary judgment against the state.
BATA's Counsel argues:
"Enactment of S.B. 1245 would mean the legislature, not
the Authority, is setting tolls on the bridges, which would
be contrary to existing law, contrary to the promises made
by the State to bondholders in Streets and Highways Code
section 30963(a) and subsequently repeated in the bond
documents, contrary to the descriptions of the Authority's
toll-setting authority in the Authority's bond official
statements, and contrary to representations made to the
rating agencies."
Finally, BATA asserts that the Authority has maintained a AA
credit rating, which allows it to issue bonds at a lower cost
than it might otherwise be able to do. One factor that
contributes to this rating is BATA's ability to generate
revenue to repay bondholders without interference from the
state. BATA is concerned that if rating agencies interpret
passage of this bill to mean that the state, not BATA, is
setting tolls or that it could alter BATA's authority to set
tolls, the agencies may lower BATA's credit rating, thereby
increasing the cost of issuing debt to raise capital for
bridge projects. Increasing the cost of capital will only
serve to create further pressure on BATA to increase toll
revenue.
SB 1245 (SIMITIAN) Page 6
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
April 14, 2010)
SUPPORT: None received.
OPPOSED: Metropolitan Transportation Commission/Bay Area
Toll Authority
(unless amended)