BILL ANALYSIS �
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 446|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 446
Author: Dutton (R), et al.
Amended: 5/10/11
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 9-0, 5/3/11
AYES: DeSaulnier, Gaines, Harman, Huff, Kehoe, Lowenthal,
Pavley, Rubio, Simitian
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Ontario International Airport
SOURCE : City of Ontario
DIGEST : This bill creates the Ontario International
Airport Authority.
ANALYSIS : The City of Los Angeles's Board of Airport
Commissioners, referred to as Los Angeles World Airports
(LAWA), owns and operates Ontario International Airport
(ONT), which is situated in the City of Ontario in San
Bernardino County. ONT is about 35 miles east of downtown
Los Angeles between Interstate 10 and State Route 60, two
significant regional highways. ONT was established in1929,
and LAWA began operating the airport for the City of
Ontario under the terms of a joint powers agreement (JPA)
in 1967. In 1985, LAWA acquired ONT from the city.
The Revenue Bond Law of 1941 establishes uniform procedures
CONTINUED
SB 446
Page
2
for issuing revenue bonds by public agencies in California.
It defines the terms of the covenants, defines the various
agencies that may issue revenue bonds, establishes
procedure to imposing revenues and a variety of other
conditions necessary to issue bonds.
This bill:
1. Establishes the Ontario International Airport Authority
(OIAA) with a seven member board of directors, four of
whom are appointed by the city and three of whom are
appointed by the County of San Bernardino. The term of
office is three years and the terms are staggered.
2. Establishes as officers of the board selected from its
membership a chair, a vice-chair, and other board
offices as the board deems appropriate, and requires the
board appoint a general manager, a chief counsel, and a
chief financial officer, and authorizes the general
manager to enter into contracts on behalf of the board.
3. Requires the OIAA to be subject to the opening meeting
requirements of the Ralph M. Brown Act.
4. Provides that the OIAA may enter into an agreement with
the City of Los Angeles to "facilitate the acquisition
of the ONT the authority , or the transfer of management
and operational control" of ONT to the OIAA.
5. Stipulates the transfer is contingent upon the approval
of the Federal Aviation Administration and the Federal
Transportation Security Administration.
6. Upon the agreement of the City of Los Angeles, mandates
the OIAA "in cooperation with" the cities of Los Angeles
and Ontario to develop a transition plan to facilitate
either the sale of, or the transferring of ONT to the
OIAA.
7. Authorizes the cities of Los Angeles and Ontario, San
Bernardino County, and other local and regional agencies
to develop effective surface transportation access to
ONT.
8. Provides that upon completion of the transfer the OIAA
CONTINUED
SB 446
Page
3
may sue and be sued, received federal grants.
9. Specifies the transfer of ONT to the OIAA does not
relieve the OIAA from all liabilities and obligations
that are secured by revenues generated from airport
activities.
10.Provides that the OIAA shall, to the extent
"practicable," maximize revenue generated from
businesses located on its property.
11.Defines the OIAA as an "enterprise," meaning that the
OIAA is a revenue producing entity.
12.Authorizes the OIAA to acquire, accept, lease and hold
real and personal property within its jurisdiction,
without exception. Allows the OIAA to acquire property
outside its area of jurisdiction for the purpose of
installing equipment related to the safe operation of
the airport, environmental mitigation, or environmental
remediation.
13.Authorizes the OIAA to issue revenue bonds under the
terms of the Revenue Bond Law of 1941.
15.Authorizes the OIAA to form benefit assessment districts
consistent with existing law.
Background
Along with ONT, LAWA manages Los Angeles International
Airport (LAX), the fourth busiest airport in the country,
and Van Nuys Airport. LAWA began managing ONT under a
joint powers agreement with Ontario in 1967. At that time,
ONT was primary a relief airport for LAX when for various
reasons air traffic at LAX was backing up and an
alternative location was necessary for aircraft to land.
In 1985, LAWA acquired ONT from the City of Ontario.
During the 1990's LAWA reconstructed the entire terminal
complex, building two new terminals and allocating for
space the construction of an additional three terminals,
when warranted by demand.
The reconstruction of the terminals included designing and
constructing an entire new automobile circulation system
CONTINUED
SB 446
Page
4
for accessing the terminals. The modernization required
close cooperation between LAWA and Ontario. Both parties
agree that their cooperation has been successful. It
should be noted ONT is the only passenger airport in the
Los Angeles region that is operating without infrastructure
or legal constraints on aircraft operations.
Much of the dispute between LAWA and the City of Ontario is
over the decline in passengers using the airport. Ontario
argues that LAWA has not been attentive to the management
of ONT by pointing to the cost per enplaned passenger
(CPE), at approximately $15.36 for 2010, which is among the
highest in the country. The high CPE is the result of the
high operational cost of ONT, which Ontario asserts is due
to LAWA's mismanagement and has resulted in a decline of
airline service at ONT. New management, Ontario argues,
would have a better chance of turning around the
performance of the airport. Moreover, new management, the
proponents of the bill argue, would be more focused on
marketing to the Inland Empire travel market.
It is difficult to make a correlation between the CPE and
the recent experience in the loss of passengers at the
airport. Between 2007 and 2009, the state's six medium hub
airports-Burbank, Oakland, Ontario, John Wayne, Sacramento,
and San Jose-had decreases in passengers ranging from 12
percent to 33 percent. The number of passengers using
Oakland for the period dropped by 35 percent, yet the
airport's CPE was only $9.25. ONT loss of passengers was
32.5 percent. On a national basis, St. Louis, for example,
has a relatively high CPE of $13.70, but only lost 8.2
percent of its passengers. Finally, the airlines currently
operating at the airport had an opportunity to discontinue
their service, but signed agreements to continue operating
through 2014.
The Ontario market has been strongly impacted by the
recession. The metropolitan statistical area of
Riverside-San Bernardino-Ontario, commonly referred to as
the Inland Empire, had among the highest foreclosure rates
and unemployment rates in the country. Even now Riverside
County has the sixth highest rate of foreclosure in the
country. The areas unemployment rate stood at 13.9 percent
in March of this year. This compares with an unemployment
CONTINUED
SB 446
Page
5
rate of 12.3 percent for California and 9.2 percent for the
nation. The decline in airline passengers and the number
of flights may in large measure be due to both the weak
regional economy and the national economy. The airlines
response to the sour national economy has been to mothball
the number of planes in their fleets and emphasize serving
the stronger markets. Both the weak national and regional
economies have worked against Ontario maintaining high
passenger utilization.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 5/24/11)
City on Ontario (source)
County of San Bernardino
Lake Arrowhead Communities Chamber of Commerce
Loma Linda Chamber of Commerce
Michael Antonovich, Mayor, County of Los Angeles
Montclair Chamber of Commerce
Ontario Chamber of Commerce
San Bernardino Area Chamber of Commerce
Upland Chamber of Commerce
ARGUMENTS IN SUPPORT : This bill transfers the ownership
of ONT from the City of Los Angeles, which acquired the
airport from the City of Ontario in 1985. According to the
author, transferring the airport back to Ontario would
provide local governments the ability to restructure the
airport's operations, reduce costs, and increase marketing
and promotion of the airport to ensure that Southern
California has the airport capacity it needs in the long
term to protect its economy. Control by Ontario would
avoid the internal competition for resources between ONT
and LAX that distracts LAWA from offering both airports
equal benefits. It also places the responsibility for
ONT's success in the hands of the party that has the most
to gain from it and the most to lose from failure, the
OIAA.
JJA:kc 5/24/11 Senate Floor Analyses
CONTINUED
SB 446
Page
6
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED