BILL ANALYSIS �
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THIRD READING
Bill No: AB 1770
Author: Bonnie Lowenthal (D)
Amended: As introduced
Vote: 21
SENATE TRANSPORTATION & HOUSING COMM. : 6-3, 6/19/12
AYES: DeSaulnier, Kehoe, Lowenthal, Pavley, Rubio,
Simitian
NOES: Gaines, Harman, Wyland
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-3, 7/3/12
AYES: Wolk, DeSaulnier, Hernandez, Kehoe, Liu
NOES: Dutton, Fuller, La Malfa
NO VOTE RECORDED: Yee
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 69-4, 5/3/12 - See last page for vote
SUBJECT : California Transportation Financing Authority
SOURCE : State Treasurer
DIGEST : This bill clarifies that the California
Transportation Financing Authority (CTFA) may approve rail
projects that are, or include, rolling stock; also provides
that a project may be eligible for financing under CTFA if
it is owned or operated (rather than owned and operated) by
the Department of Transportation (Caltrans) or other
project sponsor.
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ANALYSIS : Existing law establishes the CTFA within the
State Treasurer's Office to assist transportation agencies
in obtaining financing for transportation projects. The
objective of CTFA is to increase new capacity in the state
transportation system in a manner consistent with the
state's greenhouse gas reduction, air quality improvement,
and natural resource conservation goals. CTFA will
accomplish this through issuing bonds directly or through
the approval of the issuance of bonds that are backed by
specified transportation-related revenues.
Further, existing law specifically defines parameters in
which projects can be eligible for CTFA assistance. For
example, a project sponsor is defined as either Caltrans, a
regional transportation planning agency, a county
transportation commission, any other local or regional
transportation entity designated in statute as a regional
transportation agency, or a joint powers authority. In
addition, only highway, public street, rail, bus, or
related facilities that are supplemental to or improvements
upon existing facilities Caltrans or another project
sponsor currently own and operate qualify for CTFA's
assistance.
Finally, existing law lays out specific requirements that a
project must meet to qualify for CTFA assistance. Should a
project meet all identified requirements, then CTFA may,
among other things, authorize a project sponsor to impose
and collect tolls as one source of project funding.
This bill makes two clarifying changes to CTFA's enabling
statutes which determine eligibility for CTFA assistance:
1. Specifies that a rail project may consist of, or
include, rolling stock (i.e. buses, rail cars, or
locomotives).
2. Specifies that a project must be a facility currently
owned or operated by Caltrans or other project sponsor
(as opposed to a facility owned and operated by Caltrans
or other sponsor).
Comments
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Purpose of the bill . This bill clarifies definitions
contained in CTFA enabling statutes. The author contends
these clarifying changes to law are technical in nature but
necessary to address some ambiguities identified by the
Treasurer's staff. First, existing law is not clear
whether rolling stock is an eligible expenditure, and this
bill clarifies that it is. Second, because transportation
projects are complex and often involve multiple entities,
the author believes it is important to broaden the universe
of eligible projects by requiring that a project sponsor is
either the owner or operator of the facility (and not
necessarily both). By resolving these ambiguities, CTFA
will have maximum flexibility within its original statutory
parameters in order to help finance viable transportation
projects.
Impact of changes . The clarifying changes this bill makes
appear technical and non-controversial, but after only two
years of existence it is still unclear what role CTFA will
play in the state's transportation infrastructure
development. Toll roads are feasible principally in urban
areas where the transportation agencies are relatively
sophisticated in their own right but also have the
resources to contract for any additional financial and
legal expertise they may need. Smaller transportation
agencies in less populated areas of the state would perhaps
benefit most from this bill, but these agencies are less
likely to undertake a toll project. Because CTFA has yet
to be called upon for assistance, it is difficult to know
what impact the changes proposed in this bill may have on
transportation financing and development.
Using bond funds responsibly . One way CTFA can assist a
project sponsor to increase capacity in the transportation
system is to issue bonds to fund upfront project costs. A
basic principal of bond finance is to align repayment of
the debt with an asset over its lifetime, giving those who
benefit from the asset the opportunity to share its cost.
Therefore, when issuing bonds, it is important to weigh the
value the bond proceeds provide over time against the
borrowing costs associated with the bond issuance. For
example, it may not be prudent to issue bonds with 30-year
terms in order to purchase items with an expected useful
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life of only 12 to 15 years, such as typical transit buses.
In this case, it makes more sense to sell bonds with
shorter terms in order to align the costs with the expected
life of the purchased asset. By including rolling stock in
the definition of eligible projects for CTFA assistance,
this bill creates the possibility for shorter-life assets
to be purchased with longer-termed bonds. It seems
reasonable to expect the State Treasurer's Office to
understand the drawbacks of such an action.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/7/12)
State Treasurer (source)
California Transit Association
Santa Clara Valley Transportation Authority
ASSEMBLY FLOOR : 69-4, 5/3/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bradford, Brownley,
Buchanan, Butler, Charles Calderon, Campos, Carter,
Cedillo, Chesbro, Conway, Cook, Davis, Dickinson, Eng,
Feuer, Fong, Fuentes, Beth Gaines, Galgiani, Gatto,
Gordon, Gorell, Grove, Hagman, Halderman, Hayashi, Hill,
Huber, Hueso, Huffman, Jeffries, Jones, Knight, Lara,
Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Mitchell,
Monning, Morrell, Nestande, Norby, Olsen, Pan, Perea, V.
Manuel P�rez, Portantino, Silva, Skinner, Solorio,
Swanson, Torres, Valadao, Wagner, Wieckowski, Williams,
Yamada, John A. P�rez
NOES: Donnelly, Garrick, Harkey, Nielsen
NO VOTE RECORDED: Bonilla, Fletcher, Furutani, Hall, Roger
Hern�ndez, Mansoor, Smyth
JJA:m 8/8/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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