Bill Text: CA AB878 | 2009-2010 | Regular Session | Amended
Bill Title: Infrastructure financing.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2010-02-02 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB878 Detail]
Download: California-2009-AB878-Amended.html
BILL NUMBER: AB 878 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 20, 2009
INTRODUCED BY Assembly Member Caballero
FEBRUARY 26, 2009
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 878, 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 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
no . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 5956 of the Government Code is amended to read:
5956. Local governmental agencies have experienced a significant
decrease in available tax revenues to fund necessary infrastructure
improvements. If local governmental agencies are going to maintain
the quality of life that this infrastructure provides, they must find
new funding sources. One source of new money is private sector
financing utilized to study, plan, design, develop, finance,
construct, maintain, improve, rebuild, repair, operate, or any
combination thereof, infrastructure facilities. Private sector
financing may be used with public and private financing pursuant to
this chapter and projects may be financed by a combination of public
and private financing under this chapter. Private sector financing
for a project under this section may include, but is not limited to,
cash and cash equivalents, loans, debt assumption, letters of credit,
capital investment, in-kind contributions of materials or equipment,
construction or equipment financing, carrying of costs during
construction, and any combination thereof. Unless private sector
financing becomes available to study, plan, design, construct,
develop, finance, maintain, rebuild, improve, repair, or operate, or
any combination thereof, fee-producing infrastructure facilities,
some local governmental agencies will be unable to replace
deteriorating infrastructure. Further, some local governmental
agencies will be unable to expand and build new infrastructure
facilities to serve the increasing population.
SEC. 2. Section 5956.1 of the Government Code is amended to read:
5956.1. It is the intent of the 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.
(c) For purposes of this chapter, "fee-producing infrastructure
project" or "fee-producing infrastructure facility" means the
operation of the infrastructure project or facility will be paid for,
in whole or in part, by the persons or entities benefited by or
utilizing the project or facility.
SEC. 5. Section 5956.4 of the Government Code is amended to read:
5956.4. A governmental agency may solicit proposals and enter
into agreements with private entities for the design, construction,
or reconstruction by, and may lease to, private entities for
the following types of fee-producing infrastructure
projects:
(a) Irrigation.
(b) Drainage and sanitary sewer systems.
(c) Energy or power production.
(d) Water supply, treatment, and distribution.
(e) Flood control.
(f) Inland waterways.
(g) Harbors.
(h) Municipal improvements.
(i) Commuter and light rail.
(j) Highways or bridges.
(k) Tunnels.
(l) Airports and runways.
(m) Purification of water.
(n) Sewage treatment, disposal, and water recycling.
(o) Refuse disposal.
(p) Structures or buildings, except structures or buildings that
are to be utilized primarily for sporting or entertainment events.
SEC. 6. Section 5956.5 of the Government Code is amended to read:
5956.5. Notwithstanding Chapter 10 (commencing with Section 4525)
of Division 5, or Part 2 (commencing with Section 10100) or Part 3
(commencing with Section 20100) of Division 2 of the Public Contract
Code, the governmental agency soliciting proposals and entering into
agreements with private entities for the studying, planning, design,
developing, financing, construction, maintenance, rebuilding,
improvement, repair, or operation, or any combination thereof, by
private entities for fee-producing infrastructure projects shall
ensure that the contractor is selected pursuant to a competitive
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 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 "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 code
provisions relating to public of
the Public Contract Code, this code, or other code provisions that
relate 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 of rights-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 entity
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
private entity for up to 50 years. In consideration therefor, the
agreement shall provide for complete reversion of the privately
constructed facility to the governmental agency at the expiration of
the lease, license, or other permissive use at no charge to the
governmental agency. Subsequent to the expiration of the lease,
license, or other permissive use period, the governmental agency may
continue to charge fees for use of the infrastructure facility. If,
after the expiration of the lease, license, or other permissive use
period, the governmental agency continues to lease airspace rights to
the private entity, it shall do so at fair market value.
(b) The agreement between the governmental agency and the private
entity shall include, but need not be limited to, provisions to
ensure the following:
(1) Compliance with the California Environmental Quality Act
(Division 13 (commencing with Section 21000) of the Public Resources
Code). Neither the act of selecting a proposed project or a private
entity, nor the execution of an agreement with a private entity,
shall require prior compliance with the act. However, appropriate
compliance with the act shall thereafter occur before project
development commences.
(2) Security for performance of the agreement and contractual
provisions that are necessary to protect the funding and financial
terms of the agreement.
(3) Adequate financial resources of the private entity to perform
the agreement.
(4) Authority for the governmental agency to impose user fees, in
whole or in part, for use of the facility in an amount sufficient to
protect the revenue streams necessary for projects or facilities
undertaken pursuant to this chapter. User fee revenues, used
in whole or in part, may be paid to the governmental agency or
the private entity and shall be dedicated exclusively to payment of
the private entity's and governmental agency's direct and indirect
capital outlay costs for the project, direct and indirect costs
associated with financing of the facility, including interest,
principal, repayment, issuance, and refinancing costs, direct and
indirect costs associated with operations, direct and indirect user
fee collection costs, direct and indirect costs of administration of
the facility, reimbursement for the direct and
indirect costs of maintenance, other project-related costs, and a
reasonable return to the private entity as set forth specifically in
the agreement, or included as part of the costs 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
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 local 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
amount required to provide the service cost for
which the fee or service charge is levied and
user fee revenues are dedicated including a reasonable rate of
return on investment, pursuant to paragraph (4). Any action by a
local 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 local
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 and 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
governmental 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.
(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 projects. 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.
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 work performed 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.
(d) State-financed projects.
These limitations shall not prohibit the state, any state agency,
or any governmental agency as defined in Section 5956.3, from
utilizing authorizations contained in other provisions of law.
This section shall not be construed to prohibit a governmental
agency, as defined in subdivision (a) of Section 5956.3, from using
this chapter to accomplish projects that are not expressly prohibited
in this section.
SEC. 12. Section 5956.11 is added to the Government Code, to read:
5956.11. The governmental agency may determine the validity of
any permits, authorizations or approvals, contracts and agreements,
user fees, and other actions taken pursuant to this chapter, by
initiating a validating proceeding, as provided in Chapter 9
(commencing with Section 860) of Title 10 of Part 2 of the Code of
Civil Procedure. The validating action may also be initiated by
interested person as provided in Chapter 9 (commencing with Section
860) of Title 10 of Part 2 of the Code of Civil Procedure.
SEC. 13. Except as it amends Chapter 14 (commencing with Section
5956) of Division 6 of Title 1 of the Government Code, nothing in
this act shall be construed to affect the application of any other
law.
