HomeMy WebLinkAbout22 AB 1261 (CABALLERO) 02-05-08AGENDA REPORT City Manager
MEETING DATE: FEBRUARY 5, 2008
TO: WILLIAM A. HUSTON, CITY MANAGER
FROM: PUBLIC WORKS DEPARTMENT/ENGINEERING DIVISION
SUBJECT: ASSEMBLY BILL 1261 (CABALLERO)
22
SUMMARY
Assembly Bill 1261 would reaffirm a local governmental agency authority to enter into an
agreement with a private entity for financing for specified types of revenue generating
infrastructure projects. The Bill is currently before the Senate Appropriations Committee
and staff is recommending that a letter of support be sent to the committee members and
local representatives.
RECOMMENDATION
Staff recommends that the City Council send a letter of support for Assembly Bill 1261 to the
Senate Appropriations Committee and local legislators.
FISCAL IMPACT
There is no fiscal impact associated with this item.
BACKGROUND
Existing law approved in 1996 permits a local governmental agency to solicit proposals and
enter into agreements with private entities for the design, construction, or reconstruction
projects which they may lease to private entities for specified types of fee-producing
infrastructure projects. The law also permits these agreements to provide for the lease of,
or ownership of, infrastructure facilities owned by a governmental entity, but constructed by
a private entity, to that private entity for a period of up to 35 years. Agencies wishing to
construct projects utilizing this law have reportedly been frustrated by conflicting
interpretations of the law's various provisions.
This Bill would clarify ambiguities in the existing law and reaffirm that local governmental
agencies have the authority and flexibility to utilize private financing or public financing to
study, plan, design, construct, develop, finance, maintain, rebuild, improve, repair, or
operate fee-producing infrastructure facilities. The Bill would also extend the lease period to
up to 50 years.
Tim D. Serlet
Director of Public Works/City Engineer
TDS: Assembly Bill 1261.docx
February 5, 2008
RE: AB 1621 Relating to Infrastructure Financing
NOTICE OF SUPPORT
Dear
I am writing on behalf of the City Tustin to inform you that we support Assembly Bill 1261
and urge a Yes vote.
The City supports efforts to assure that local agencies have the maximum flexibility to
finance, design, construct and maintain vital infrastructure projects. The City is confident
that this bill will restore the original intent of AB 2660 which was enacted in 1996.
For these reasons, the City of Tustin urges a Yes vote for AB 1261 when this issue comes
before you.
Sincerely
Jerry Amante
Mayor
c: Senator Dick Ackerm
Assemblyman Chuck DeVore
Assemblyman Todd Spitzer
Anthony Thomas Legislative Representative League of California Cities
AB 1261 Assembly Bill - Status
CURRENT BILL STATUS
MEASURE A.B. No. 1261
AUTHOR(S) Caballero.
TOPIC Infrastructure financing.
HOUSE LOCATION SEN
+LAST AMENDED DATE 08/20/2007
TYPE OF BILL
Active
Non-Urgency
Non-Appropriations
Majority Vote Required
Non-State-Mandated Local Program
Fiscal
Non-Tax Levy
LAST HIST. ACT. DATE: 08/20/2007
LAST HIST. ACTION In committee: Set, first hearing. Hearing canceled at
the request of author.
COMM. LOCATION SEN APPROPRIATIONS
TITLE An act to amend Sections 5956, 5956.1, 5956.2, 5956.3,
5956.4, 5956.5, 5956.6, 5956.7, 5956.8, 5956.9, and
5956.10 of, and to add Section 5956.11 to, the
Government Code, relating to infrastructure financing.
Page 1 of 1
AMENDED IN SENATE AUGUST 20, 2007
AMENDED IN SENATE JULY 17, 2007
AMENDED IN ASSEMBLY MAY 24, 2007
AMENDED IN ASSEMBLY APRIL 24, 2007
AMENDED IN ASSEMBLY APRIL 9, 2007
CALIFORNIA LEGISLATURE-200]-OS REGULAR SESSION
ASSEMBLY BILL No. 1261
Introduced by Assembly Member Caballero
February 23, 2007
An act to amend Sections 5956, 5956.1, 5956.2, 5956.3, 5956.4,
5956.5, 5956.6, 5956.7, 5956.8, 5956.9, and 5956.10 of, and to add
Section 5956.11 to, the Government Code, relating to infrastructure
financing.
LEGISLATIVE COUNSEL'S DIGEST
AB 1261, as amended, Caballero. Infrastructure financing.
Existing law permits a governmental agency to solicit proposals and
enter into agreements with private entities for the design, construction,
or reconstruction by, and may lease to, private entities, for specified
types of fee-producing infrastructure projects. Existing law permits
these agreements to provide for the lease of, or ownership of,
infrastructure facilities owned by a governmental entity, but constructed
by a private entity, to that private entity for a period of up to 35 years.
This bill would authorize a local governmental agency, as defined,
to enter into an agreement with a private entity for financing for
specified types of revenue generating infrastructure projects. The bill
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would require an agreement entered into under these provisions to
include adequate financial resources to perform the agreement, and
would permit the agreements to lease, license, or provide other permitted
uses by the governmental agency to extend for a term of up to 50 years,
after which time the project would revert to the governmental agency.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
The people of the State of California do enact as follows:
1 SECTION 1. Section 5956 of the Government Code is amended
2 to read:
3 5956. Local governmental agencies have experienced a
4 significant decrease in available tax revenues to fund necessary
5 infrastructure improvements. If local governmental agencies are
6 going to maintain the quality of life that this infrastructure provides,
7 they must find new funding sources. One source of new money is
8 private sector financing utilized to study, plan, design, develop,
9 finance, construct, maintain, improve, rebuild, repair, operate, or
10. any combination thereof, infrastructure facilities. Private sector
11 financing may be used with public and private financing pursuant
12 to this chapter and projects may be financed by a combination of
13 public and private financing under this chapter. Private sector
14 financing for a project under this section may include, but-aye is
15 not limited to, cash and cash equivalents, loans, debt assumption,
16 letters of credit, capital investment, in-kind contributions of
17 materials or equipment, construction or equipment financing,
18 carrying of costs during construction,
19 and any combination
20 thereof. Unless private sector financing becomes available to study,
21 plan, design, construct, develop, finance, maintain, rebuild,
22 improve, repair, or operate, or any combination thereof,
23 fee-producing infrastructure facilities, some local governmental
24 agencies will be unable to replace deteriorating infrastructure.
25 Further, some local governmental agencies will be unable to expand
26 and build new infrastructure facilities to serve the increasing
27 population.
28 SEC. 2. Section 5956.1 of the Government Code is amended
29 to read:
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AB 1261
5956.1. It is the intent ofthe Legislature that local governmental
agencies have the authority and flexibility to utilize private
financing or public financing, and any combination thereof, to
study, plan, design, construct, develop, finance, maintain, rebuild,
improve, repair, or operate, or any combination thereof,
fee-producing infrastructure facilities. Without the ability to utilize
these sources of financing to study, plan, design, construct, develop,
finance, maintain, rebuild, improve, repair, or operate, or any
combination thereof, fee-producing infrastructure facilities, the
Legislature finds that some local governmental agencies will not
be able to adequately, competently, or satisfactorily retrofit,
reconstruct, repair, or replace existing infrastructure and will not
be able to adequately, competently, or satisfactorily design and
construct new infrastructure.
SEC. 3. Section 5956.2 of the Government Code is amended
to read:
5956.2. It is the intent of the Legislature that this chapter be
construed as creating a new and independent authority for local
governmental agencies to utilize private sector financing or public
financing, and any combination thereof, to study, plan, design,
construct, develop, finance, maintain, rebuild, improve, repair, or
operate, or any combination thereof, fee-producing infrastructure
facilities. To that end, this authority is intended to supplement and
be independent of any existing authority and does not limit, replace,
or detract from existing authority. This chapter may be used by
local governmental entities when they deem it appropriate in the
exercise of their discretion. It is the intent of the Legislature that
this act create no new governmental entities.
SEC. 4. Section 5956.3 of the Government Code is amended
to read:
5956.3. (a) For purposes of this chapter, "governmental
agency" includes a city, county, city and county, including a charter
city or county, school district, community college district, public
district, county board of education, joint powers authority,
transportation commission or authority, or any other public or
municipal corporation.
(b) For purposes of this chapter, "private entity" includes a
person, business entity, combination of persons and business
entities, or a combination of business entities.
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1 (c) For purposes of this chapter, "fee-producing infrastructure
2 project" or "fee-producing infrastructure facility" means the
3 operation of the infrastructure project or facility will be paid for
4 in whole or in part by the persons or entities benefited by or
5 utilizing the project or facility.
6 SEC. 5. Section 5956.4 of the Government Code is amended
7 to read:
8 5956.4. A governmental agency may solicit proposals and enter
9 into agreements with private entities for the design, construction,
10 or reconstruction by, and may lease to, private entities the following
11 types offee-producing infrastructure projects:
12 (a) Irrigation.
13 (b) Drainage and sanitary sewer systems.
14 (c) Energy or power ,
15 dam: production. ,
16 (d) Water supply, treatment, and distribution.
17 (e) Flood control.
18 (f) Inland waterways.
19 (g) Harbors.
20 (h) Municipal improvements.
21 (i) Commuter and light rail.
22 (j) Highways or bridges.
23 (k) Tunnels.
24 (~ Airports and runways.
25 (m) Purification of water.
26 (n) Sewage treatment, disposal, and water recycling.
27 (o) Refuse disposal.
28 (p) Structures or buildings, except structures or buildings that
29 are to be utilized primarily for sporting or entertainment events.
30 SEC. 6. Section 5956.5 of the Government Code is amended
31 to read:
32 5956.5. Notwithstanding Chapter 10 (commencing with Section
33 4525) of Division 5, or Part 2 (commencing with Section 10100)
34 or Part 3 (commencing with Section 20100) of Division 2 of the
35 Public Contract Code, the governmental agency soliciting proposals
36 and entering into agreements with private entities for the studying,
37 planning, design, developing, financing, construction, maintenance,
38 rebuilding, improvement, repair, or operation, or any combination
39 thereof, by private entities for fee-producing infrastructure projects
40 shall ensure that the contractor is selected pursuant to a competitive
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negotiation process. Projects may be proposed by the private entity
and selected by the governmental agency at the discretion of the
governmental agency. Projects may be proposed and selected
individually or as part of a related or larger project. The competitive
negotiation process shall utilize, as a primary selection criteria,
the demonstrated competence and qualifications of the private
entity to perform the services required under the-ag~eemen~
agreement, including prior experience in performing similar
services. The selection criteria shall also ensure that the facility
be operated at fair and reasonable prices to the user of the
infrastructure facility services. The competitive negotiation process
shall not require competitive bidding. The competitive negotiation
process shall specifically prohibit practices that may result in
unlawful "activity," including, but not limited to, rebates,
kickbacks, or other unlawful consideration, and shall specifically
prohibit governmental agency employees from participating in the
selection process when those employees have a relationship with
a person or business entity seeking a contract under this section
that would subject those employees to the prohibition of Section
87100. Other than these criteria and applicable provisions related
to providing security for any required construction and completion
of the facility, the governmental agency soliciting proposals is not
subject to any other provisions of the Public Contract Code, this
code, or other code provisions that relates to public procurements.
SEC. 7. Section 5956.6 of the Government Code is amended
to read:
5956.6. (a) For purposes of facilitating projects, the agreements
specified in Section 5956.4 may include provisions for the lease,
license, or permissive use ofrights-of--way in, and airspace over,
property owned by a governmental agency, for the granting of
necessary easements, and for the issuance of permits or other
authorizations to enable the private facility to
construct, maintain, rebuild, improve, or repair infrastructure
facilities supplemental to existing government-owned facilities.
Infrastructure constructed by a private entity pursuant to this
chapter shall, at all times, be owned by a governmental agency.
All public works constructed pursuant to this section shall comply
with Chapter 1 (commencing with Section 1720) of Part 7 of~
Division 2 of the Labor Code. The agreement may provide for the
lease, license, or other permissive use of those facilities to the
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1 private entity for up to 50 years. In consideration therefor, the
2 agreement shall provide for complete reversion of the privately
3 constructed facility to the governmental agency at the expiration
4 of the lease, license, or other permissive use at no charge to the
5 governmental agency. Subsequent to the expiration of the lease,
6 license, or other permissive use period, the governmental agency
7 may continue to charge fees for use of the infrastructure facility.
8 If, after the expiration of the lease, license, or other permissive use
9 period, the governmental agency continues to lease airspace rights
10 to the private entity, it shall do so at fair market value.
11 (b) The agreement between the governmental agency and the
12 private entity shall include, but need not be limited to, provisions
13 to ensure the following:
14 (1) Compliance with the California Environmental Quality Act
15 (Division 13 (commencing with Section 21000) of the Public
16 Resources Code). Neither the act of selecting a proposed project
17 or a private entity, nor the execution of an agreement with a private
18 entity, shall require prior compliance with the act. However,
19 appropriate compliance with the act shall thereafter occur before
20 project development commences.
21 (2) Security for performance of the agreement and contractual
22 provisions that are necessary to protect the funding and financial
23 terms of the agreement.
24 (3) Adequate financial resources of the private entity to perform
25 the agreement.
26 (4) Authority for the governmental agency to impose user fees,
27 in whole or in part, for use of the facility in an amount sufficient
28 to protect the revenue streams necessary for projects or facilities
29 undertaken pursuant to this chapter. User fee revenues, used in
30 whole or in part, may be paid to the governmental agency or the
31 private entity and shall be dedicated exclusively to payment of the
32 private entity's and governmental agency's direct and indirect
33 capital outlay costs for the project, direct and indirect costs
34 associated with financing of the facility, including interest,
35 principal, repayment, issuance, and refinancing costs, direct and
36 indirect costs associated with operations, direct and indirect user
37 fee collection costs, direct and indirect costs of administration of
38 the facility, direct and indirect costs of maintenance, other project
39 related costs, and a reasonable return to the private entity as set
40 forth specifically in the agreement, or included as part of the costs
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and fees, as negotiated or determined during the procurement
process.
(5) As a precondition to the imposition or increase of a user fee,
the governmental agency shall conduct at least
two public hearings at which public testimony will be received
regarding a proposed user fee revenue or increase in user fee
revenues. The public hearing shall precede the action by the
governmental agency to actually impose a user fee or to increase
an existing user fee. The governmental agency shall consider the
public testimony prior to imposing a new or increased user fee.
The governmental agency shall provide the following notices and
utilize the following procedures:
(A) Notice of the date, time, and place of the meeting, including
a general explanation of the matter to be considered, shall be mailed
at least 14 days prior to the meeting to any interested party who
files a written request with the governmental agency for mailed
notice of the meeting on new or increased fees or service charges.
Any written request for mailed notices shall be valid for one year
from the date on which it is filed unless a renewal request is filed
prior to the expiration of the one-year period for which the written
request was filed. The legislative body may establish a reasonable
annual charge for sending notices based on the estimated cost of
providing the service.
(B) At least 10 days prior to the meeting, the governmental
agency shall make available to the public data that supports the
amount of the fee or the increase in the fee.
(C) (i) At least 10 days prior to the meeting, the governmental
agency shall publish a notice in a newspaper of general circulation
in that agency's jurisdiction stating the date, time, and place of the
meeting, including a general explanation of the matter to be
considered.
(ii) Any costs incurred by the governmental agency in
conducting the meeting or meetings required by this section may
be recovered from fees charged for the services that are the subject
of the fee.
(iii) For infrastructure projects authorized by this chapter, at
least 10 days prior to the meeting, the governmental agency shall
publish for four consecutive times, a notice in the newspaper of
general circulation in the affected area stating in no smaller that
10-point type a notice specifying the subject of the hearing, the
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date, time, and place of the meeting, and in at least 8-point type a
general explanation of the matter to be considered.
(D) No governmental agency shall levy a new fee or service
charge or increase an existing fee or service charge to an amount
that exceeds the estimated costs for which the user fee revenues
are dedicated including a reasonable rate of return on investment,
pursuant to paragraph (4). Any action by a governmental agency
to levy a new fee or service charge or to approve an increase in an
existing fee or service charge pursuant to this chapter shall be taken
only by ordinance or resolution. The legislative body of a
governmental agency shall not delegate the authority to adopt a
new fee or service charge, or to increase a fee or service charge.
(6) Require that if the legislative body of the governmental
agency determines that fees or service charges create revenues in
excess of the actual cost for which the user fee revenues are
dedicated including a reasonable rate of return, pursuant to
paragraph (4), those revenues shall either be applied to any
indebtedness incurred by the private entity or the governmental
agency with respect to the project, be paid into a reserve account
in order to offset future operation costs, be paid into the appropriate
government account, be used to reduce the user fee or service
charge creating the excess, or a combination of these sources.
(7) If the private entity operates the facility, require the private
entity to maintain the facility in good operating condition at all
times, including the time the facility reverts to the governmental
agency.
(8) Preparation by the private entity of an annual audited report
accounting for the income received and expenses to operate the
facility. The private entity shall make that report available to any
member of the public for a cost not to exceed the cost of
reproduction of the report.
(9) Provision for a buyout of the private entity's capital
investment by the governmental entity in the event of termination
or default before the end of the lease term.
(10) Provision for appropriate indemnity promises between the
govermnental agency and the private entity.
(11) Provision requiring the private entity to maintain insurance
with those coverages and in those amounts that the governmental
agency deems appropriate.
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(12) In the event of a dispute between the governmental agency
and the private entity, both parties shall be entitled to all available
legal or equitable remedies.
SEC. 8. Section 5956.7 of the Government Code is amended
to read:
5956.7. (a) The governmental agency may exercise any power
possessed by it with respect to the development and construction
of infrastructure projects pursuant to this chapter. Agreements for
the maintenance and operation of services entered into pursuant
to this chapter shall provide for full reimbursement for services
rendered by the governmental agency in accordance with the terms
and conditions specified in the agreement. The governmental
agency may provide services for which it is reimbursed with respect
to preliminary planning, environmental certification, and
preliminary design of the infrastructure prof ects. The governmental
agency may consult with legal, financial, and other consultants in
the negotiation and development of the agreement. To the extent
existing public utility infrastructure is necessarily required to be
modified, relocated, or removed in order for an infrastructure
project authorized by this chapter to be constructed, the cost of
modification, relocation, or removal of the existing infrastructure
shall be borne by the private entity and included as a recoverable
capital cost of the project. This cost shall not be construed to
include costs of increasing the capacity, or upgrading, or improving
the existing public utility infrastructure.
(b) The private entity's responsibility to modify, relocate, or
remove existing public utility infrastructure shall not alter any
agreements that may be in place between the governmental agency
and any public utility regarding projects funded by the
governmental agency.
(c) In the event of a dispute regarding the reimbursement
required, a private entity may request an audit of the public utility's
costs by a mutually acceptable certified public accountant. The
result of the audit shall determine the actual costs. If the audit
indicates that the public utility's actual costs were less than 95
percent of the cost claimed, the cost of the audit shall be borne by
the public utility. If the audit indicates that the public utility's
actual costs were 95 percent or more of the cost claimed, the cost
of the audit shall be borne by the private entity.
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SEC. 9. Section 5956.8 of the Government Code is amended
to read:
5956.8. The plans and specifications for each. project
constructed pursuant to this chapter shall comply with all applicable
governmental design standards for that particular infrastructure
project. The private entity performing the agreement shall utilize
private sector design and construction firms to design and construct
the infrastructure facilities. However, a facility subject to this
chapter and leased, licensed, or permitted to a private entity shall,
during the term of the lease, license, or permit, be deemed to be
public property for purposes of maintenance, enforcement of laws
and for purposes of Division 3.6 (commencing with Section 810).
All construction, alteration, demolition,
installation, maintenance, and repair workperformed pursuant to
this chapter shall comply with Chapter 1 (commencing with Section
1720) of Part 7 of Division 2 of the Labor Code.
SEC. 10. Section 5956.9 of the Government Code is amended
to read:
5956.9. In order to use the authority conferred by this chapter
to the maximum extent, a governmental agency may use private
infrastructure financing pursuant to this chapter as the exclusive
funding or revenue source or as a supplemental funding or revenue
source with federal or local funds. The governmental agency
involved may be a local governmental agency or a combination
of local governmental agencies. The governmental agency may
work cooperatively with the California Infrastructure and Economic
Development Board with regard to the design, construction,
operation, and financing of privately financed facilities, but the
projects will not be subject to the review or approval of that board.
SEC. 11. Section 5956.10 of the Government Code is amended
to read:
5956.10. Notwithstanding any provision of this chapter, neither
the state nor any state agency may directly or indirectly use the
authority in this chapter, nor may any governmental agency as
defined in Section 5956.3, use the authority in this chapter, to
design, construct, finance, or operate a state project. For purposes
of this section, a state project includes any of the following:
(a) Toll roads on state highways.
(b) State water projects.
(c) State park and recreation projects.
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1 (d) State financed projects.
2 These limitations shall not prohibit the state, any state agency,
3 or any governmental agency as defined in Section 5956.3, from
4 utilizing authorizations contained in other provisions of law.
5 This section shall not be construed to prohibit a governmental
6 agency, as defined in subdivision (a) of Section 5956.3, from using
7 this chapter to accomplish prof ects that are not expressly prohibited
8 in this section.
9 SEC. 12. Section 5956.11 is added to the Government Code,
10 to read:
11 5956.11. The governmental agency may determine the validity
12 of any permits, authorizations or approvals, contracts and
13 agreements, user fees, and other actions taken pursuant to this
14 chapter, by initiating a validating proceeding, as provided in
15 Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of
16 the Code of Civil Procedure. The validating action may also be
17 initiated by interested person as provided in Chapter 9
18 (commencing with Section 860) of Title 10 of Part 2 of the Code
19 of Civil Procedure.
20 SEC. 13. Except as it amends Chapter 14 (commencing with
21 Section 5956) of Division 6 of Title 1 of the Government Code,
22 nothing in this act shall be construed to affect the application of
23 any other law.
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