BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
744 (Torrico)
Hearing Date: 08/27/2009 Amended: 07/15/2009
Consultant: Mark McKenzie Policy Vote: T&H 6-1
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BILL SUMMARY: AB 744 would authorize the development of a
high-occupancy toll (HOT) lane network on state highways within
the jurisdiction of the Metropolitan Transportation Commission
(MTC).
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Oversight committee: Caltrans $500 $1,000
$1,000Special*
(initial costs reimbursed in later
years)
Oversight committee: CHP $250 $500
$500Special**
(initial costs reimbursed in later
years)
Caltrans maintenance ongoing costs reimbursed from toll
revenue Special*
CHP enforcement ongoing costs reimbursed from toll
revenue Special**
Express lane network Unknown very major costs to
constructLocal***
network over 10 years (see staff
comments)
Toll revenues Unknown very major revenue gains Local***
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* State Highway Account
** Motor Vehicle Account
*** Bay Area Express Lane Account
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STAFF COMMENTS: SUSPENSE FILE.
AB 744 would authorize the Bay Area Toll Authority (BATA) to
develop, administer, operate, and maintain a Bay Area Express
Lane Network on state highways located in the nine-county San
Francisco Bay Area, funded by network toll revenues, revenue
bonds, and contributions or loans from state, federal, or local
agencies. This bill would do the following relative to the
network:
Prohibit BATA from converting existing non-tolled general
purpose lanes to express lanes.
Authorize BATA to fund the network with bridge toll revenues
in the form of a loan, or to bond against those toll revenues,
if funding from the network, revenue bonds, or other sources
are not available, and if the use of these revenues as a loan
or bond securitization would not result in an increase in
bridge toll rates.
Page 2, AB 744 (Torrico)
Authorize BATA, notwithstanding the above restrictions, to
subsequently increase bridge toll rates if required to meet
its contractual and statutory obligations.
Authorize BATA to set and adjust fee levels for entry and use
of the network at a public hearing at least 30 days after
making the proposed fee schedule available. Toll schedules
may include free or reduced rate access for high-occupancy
vehicles, public transit vehicles, low-emission or energy
efficient vehicles, or motorcycles.
Require BATA to establish a project oversight committee for
the network with specified membership, including
representatives from BATA, the Department of Transportation
(Caltrans), the California Highway Patrol (CHP), and
congestion management agencies.
Require the oversight committee to recommend to BATA an
express lane development plan, to be updated every four years,
that consists of a phasing plan that identifies each corridor
and an operational plan that recommends consistent standards
for the network.
Require the initial phasing plan to prioritize corridors that
can be converted from existing high-occupancy vehicle (HOV)
lanes to HOT lanes or those that would generate sufficient
revenues to cover financing, operation, and maintenance costs.
Require Caltrans and CHP to provide approval, prior to the
committee's recommendations, of those elements of the plan
under each department's authority.
Require the oversight committee to establish corridor working
groups as subcommittees, including representatives of Caltrans
and the CHP, to prepare and submit corridor investment plans,
as specified, to the committee.
Require BATA to implement the express lane development plan,
but provides BATA with discretion to leave out elements of the
plan under specified conditions.
Require that cooperative agreements between BATA, Caltrans,
and CHP related to design, construction, operation and
maintenance of state highway system facilities provide for
reimbursement of state agencies from network-generated
revenues. The bill would continuously appropriate funds to
Caltrans and CHP for these purposes.
Require all revenues generated from the network to be
deposited into the Bay Area Express Lane Network Account,
which is under the control of BATA. Funds in the account
would be available to BATA to pay debt service on revenue
bonds, to repay any loans of federal, state, or local funds,
and to pay for expenses related to the development,
acquisition, construction, operation, maintenance, and
administration of the network.
Require that "net corridor revenue" remaining after paying
obligations and expenses incurred pursuant to the above
provision, less a reserve of up to 5% of this remaining
revenue, shall be allocated by BATA to the various corridors
in proportion to the revenue generated by each corridor, to be
spent on projects consistent with the corridor investment
plans.
Require BATA, within one year from the effective date of this
bill, to assume all rights and obligations of the following
agencies with respect to their individual authorities to
construct and operate value-pricing HOT lanes: (1) the Sunol
Smart Carpool Lane Joint Powers Authority; (2) the Alameda
County Congestion Management Agency; and (3) the Santa Clara
Valley Transportation Authority.
Require BATA to submit a report annually to the Legislature,
including a description of the network and projects in each
corridor, project costs, toll revenues collected and spent,
and the amount and purpose of net revenue distributed to each
corridor.
Page 3
AB 744 (Torrico)
AB 744 authorizes BATA to finance, construct, and operate an
800-mile express lane network, involving the conversion of 500
miles of existing or fully-funded HOV lanes to congestion-priced
express lanes and the construction of 300 miles of new lanesThis
bill is intended to create a framework for collaboration and
partnership in development of the network.
The bill would require Caltrans and CHP staff to participate in
the oversight committee and each of the corridor working groups
that develop corridor investment plans and express lane
development plans. While the bill specifies that "project
development activities" are an allowable use of revenues
generated by the network, staff notes that there will likely be
a delay of several years before the network generates sufficient
revenues to reimburse state agencies. Caltrans' initial
staffing costs would likely be in the range of $1 million
annually for the first several years through the plan
development and vetting process. CHP staffing costs related to
participation in this process would likely be approximately half
of Caltrans costs. Agreements between BATA, Caltrans, and CHP
would provide for ongoing reimbursement of design, construction,
maintenance, operation, and enforcement costs.
Actual costs to build, finance, operate, and maintain the Bay
Area Express Lane Network are unknown. BATA estimates these
costs to be $7.6 billion over the next 25 years, and expects the
network to generate $13.7 billion in toll revenues over this
period. The $6.1 billion in net revenue would be available to
finance additional improvements in the express lane corridors.
Initial costs for the project are likely to be primarily funded
by loans of bridge toll revenues, or revenue bonds backed by
these revenues. The bill requires priority to be given to less
expensive projects that would convert existing HOV lanes to HOT
lanes or those that would generate sufficient revenues to cover
financing, operation, and maintenance costs. The toll revenues
generated by these early projects could be leveraged to fund
additional revenue generating projects.
This bill could create additional pressures on bridge toll
revenues by authorizing BATA to use these revenues to fund the
express lane network in the form of a loan, or to bond against
those toll revenues. Staff notes that Fitch Ratings, while
noting very strong overall credit quality, recently adjusted the
rating outlook on BATA toll bridge revenue bonds from stable to
negative, noting the likely addition of $950 million in capital
needs associated with the inclusion of the Antioch and Dumbarton
Bridges into the Seismic Retrofit Program (as envisioned by AB
1175 (Torlakson), which is scheduled for hearing in this
Committee), and the potential to fund other non-system needs,
such as the regional plan to construct and operate a HOT lane
network envisioned in AB 744. The bill does provide authority
to BATA to increase bridge tolls to meet its contractual and
statutory obligations. Considering these pressures, it is
conceivable that BATA would seek to raise bridge tolls in the
near term in order to meet these obligations.
Staff notes that previous legislation authorizing the
development of HOT lane projects on state highway systems
included a cap on the use of toll revenues for costs associated
with the administration of the projects. Staff recommends an
amendment to specify that administrative expenses shall not
exceed 3 percent of revenues.