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: July 5, 2011
SUBJECT:
High-speed rail
DESCRIPTION:
This bill would exempt 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 Commission (CTC) on
behalf of Caltrans, to adopt a resolution of necessity to
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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.
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
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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:
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
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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 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)
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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 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
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POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 29, 2011)
SUPPORT: California High-Speed Rail Authority
Californians for High-Speed Rail
OPPOSED: None received.