BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 615
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: Lowenthal
VERSION: 4/28/11
Analysis by: Art Bauer FISCAL: yes
Hearing date: June 28, 2011
SUBJECT:
High-speed rail
DESCRIPTION:
This bill would exclude the High-Speed Rail Authority (HSRA)
from the Department of General Services (DGS) involvement,
oversight and approval of the following activities and other
property rights for the high-speed rail project and would
further exclude HSRA from seeking approval of the State Public
Works Board and the Department of Finance before appropriated
capital outlay funds are expended. This bill would also provide
HSRA authority for property disposal, leasing, rental and
management, as well as establish where revenues from these
activities will be deposited.
ANALYSIS:
In November 2008, California voters approved Proposition 1A, the
Safe, Reliable High-Speed Passenger Train Bond Act for the 21st
Century of 2008 (Proposition 1A). The $9.95 billion bond
measure provides $950 million for improving conventional rail
services connecting to the high-speed rail line and $9 billion
for high-speed rail development. Of the remaining $9 billion,
$900 million is for the project's planning, environmental
analysis, and preliminary engineering. Proposition 1A limits the
expenditure of the $8 billion available for construction to not
more than 50 percent of the cost of building the systems.
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. The total estimated cost of
Phase I is between $43 and $65 billion.
Proposition 1A defines the capital cost for which bond revenues
may be used to include acquisition of property, acquisition and
construction of tracks, structures, power systems, and stations;
acquisition of train equipment; mitigation of direct and
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indirect environmental impacts; relocation assistance; and other
related capital facilities, including financing and refinancing
if authorized by a subsequent statute. It also authorizes the
HSRA to contract for services and equipment for developing and
operating the high-speed train service.
In January 2010, 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's (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. In a second round of federal
funding the HSRA received approximately $1.3 billion, and in a
third round of funding the HSRA received $300 million from funds
declined by Florida. The HSRA and the FRA jointly selected a
segment from near Fresno to near Bakersfield as the first
construction segment. Between federal funds and state bond
funds, the HSRA has committed about $5.7 billion for this
Central Valley project. As a condition of the ARRA grants, the
HSRA must complete construction by September 30, 2017.
Existing law governing the acquisition and disposal of real
property by state agencies:
1) Authorizes the director of the Department of General
Services (DGS) to approve the receipt of real property by
state agencies but exempts Caltrans from this requirement
for the acquisition of highway right-of-way, the Coastal
Conservancy for property providing access to the coastline,
and the Department of Parks and Recreation for historical
property.
2) Exempts Caltrans from obtaining the approval of DGS when
acquiring or disposing of real property obtained for
highway purposes. The State Lands Commission, the
Controller, and the State Compensation Insurance Fund enjoy
a similar exemption when acquiring property.
3) Authorizes the governing bodies of several state
agencies, including the California Transportation
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Commission (CTC) on behalf of Caltrans, to adopt a
resolution of necessity to initiate eminent domain.
4) Requires DGS to develop an inventory of state property,
but excludes from that inventory property owned by the
Legislature, the University of California, the State Lands
Commission, and Caltrans. These entities, with the
exception of the Legislature, must provide a separate
submittal to DGS.
5) Exempts Caltrans from obtaining the approval of the
Department of Finance or the State Public Works Board when
expending funds appropriated for capital outlay purposes.
All other state agencies must obtain approvals from both
agencies.
6) Requires any acquisition of land or other real property
authorized in any appropriation, except an appropriation to
Caltrans, to be subject to the provisions of the State's
Property Acquisition Law.
7) Exempts Caltrans from using DGS to negotiate, in the
name of the state, access to right-of-way it owns,
including the value of the right of access.
8) Authorizes DGS, with the exception of state highways,
to quitclaim in the name of the state, the right, title,
and interest of the state in and to easements and
rights-of-way owned by the state.
9) Requires DGS to have sole charge and direct control of
state capital outlay projects, except projects undertaken
by the Department of Water Resources, Caltrans, the
Department of Boating and Waterways, the Department of
Corrections and Rehabilitation, and the Military
Department.
10) Authorizes Caltrans to enter into leases with public
agencies or private entities for any term not to exceed 99
years.
11) Provides general authority to the HSRA for the
development and implementation of the high-speed rail
project, including the acquisition of rights-of-way through
purchase and eminent domain.
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This bill :
1) Authorizes the HSRA to purchase property, easements, and
other property rights to the authority granted to other
state agencies, such as Caltrans and the Department of
Water Resources.
2) Authorizes the HSRA, on behalf of the Department of
High-Speed Trains, to adopt a resolution of necessity to
initiate eminent domain.
3) Authorizes HSRA, when it has acquired title to any real
property for high-speed rail purposes and leases that
property for commercial or business uses to the former
owner for a term exceeding six months, to secure insurance
against the risk of damage or destruction by fire where the
former owner requests this coverage, with the premium
included in the rental agreement. This is similar to the
authority existing law confers upon Caltrans.
4) Provides an exemption, similar to the exemptions
accorded to Caltrans, the University of California, State
Lands Commission, and the Legislature, from the property
inventory reporting to DGS.
5) Prohibits DGS from granting easements or acquiring
rights-of-way across the property of the HSRA.
6) Authorizes the HSRA to negotiate, in the name of the
state, access to rights-of-way it owns, including the value
of the right of access. The revenues received would be
deposited with HSRA for use in the development,
improvement, and maintenance of the high-speed rail system.
7) Distinguishes HSRA's role from DGS's in terms of state
quitclaims and its role in public contracting for capital
outlay projects.
8) Authorizes HSRA to lease property for any term not to
exceed 99 years, as Caltrans may.
9) Makes enactment of this bill contingent upon enactment
of AB 145 (Galgiani) that creates a Department of
High-Speed Rail.
COMMENTS:
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1) Purpose . The purpose of this bill is to align the
authority of the HSRA for the purchase of property,
easements, and other property rights with the authority
statute grants state agencies, including Caltrans, the
Department of Water Resources, and other large agencies
involved with a significant number of real estate
transactions.
2) Why is this bill needed ? The authority granted to DGS
to oversee the acquisition of real estate is to ensure that
there are uniform ground rules for the acquisition,
disposal of property, and the inventorying of property by
state government. Some state agencies, notably Caltrans,
are exempt from the uniform provisions related to property
acquisition and management. For Caltrans to exercise its
real estate activities, the California Transportation
Commission (CTC) must approve the various forms of
transactions.
The chair of the HSRA argues that the HSRA needs
authority similar to Caltrans', which this bill
grants. He states:
The current process in place is arduous, and if
unchanged by legislation, could seriously
jeopardize the project schedule. In order to
remain on track and fulfill the promise of
high-speed rail to the people of California, it is
essential that the process by which the Authority
obtains right-of-way be appropriate and in line
with the needs of the projects.
3) Scope of this bill . The authority extended to the HSRA
in this bill pertains only to real estate acquisition and
related issues. This is a substantial grant of authority,
which only a select group of state agencies enjoy. The
HSRA supports the exceptions to the existing process
managed by DGS because it believes it would be unable to
meet the construction completion date of September 30,
2017. The policy decision associated with the bill is
important.
4) Management issues . The independent Peer Review Group,
the Legislative Analyst Office, the State Bureau of Audits,
and the Institute of Transportation Studies at the
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University of California Berkeley, have all raised serious
concerns about the management of the HSRA program. There
is little to suggest, therefore, that the HSRA will be
successful in managing the processes authorized by this
bill. In fact the HSRA has had difficulty managing the
retention of a financial consultant for the preparation of
a statutorily required business plan due for submittal to
the Legislature on October 1, 2011. This two year
engagement has a budget of approximately $2.4 million. The
request for proposal (RFP) was issued nearly a year ago on
July 9, 2010. Due to poor management and a protest by a
losing bidder, the HSRA was unable to enter into a contract
for the services of a financial consultant until June 8,
2011. Four months before the HSRA is to deliver a business
plan to the Legislature, the HSRA was finally free to issue
a notice to proceed to a financial advisory consultant.
This bill will allow the HSRA to initiate property
acquisition through either negotiations or eminent domain
without any oversight. The Legislative Analyst Office
(LAO) concluded in its review of the HSRA that the proposed
$5 billion construction project in the San Joaquin Valley
is "more like a state project in that. . .the
implementing organization must engage in a number of
activities traditionally accomplished by government. .
.These activities include, for example, the use of eminent
domain to acquire large swaths of property." The LAO
recommends, "the need for a more 'hands-on' involvement by
the state at this phase in both day-to-day administrative
and strategic decisions."
The HSRA is about to embark on a $5 billion construction
project where right-of-way will be a critical path
activity. In light of the HSRA's difficulty in managing
the procurement of a relatively low value professional
services contract and the LAO's recommendation that there
is a need for "hands-on involvement by the state," the
committee may wish to consider an amendment that would
require HSRA to enter into an agreement with Caltrans for
the day-to-day management of the implementation of all
aspects the authorization granted to the HSRA by this bill.
5) Why is this bill contingent up the enactment of AB 145
(Galgiani) ? This bill assumes that AB 145 (Galgiani),
which creates a Department of High Speed Trains and makes
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other statutory changes pertaining to the HSRA, will become
law. Arguably the provisions of this bill related to
property acquisition and management are appropriate for the
HSRA, whether it continues in its present organizational
arrangement or not. The committee may wish to consider an
amendment to remove the contingency language from the bill.
Assembly Votes:
Floor: 59-16
Appr: 12-5
Trans: 12-0
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 22, 2011)
SUPPORT: California High-Speed Rail Authority
Californians for High-Speed Rail
OPPOSED: None received.