Cal. Government Code - GOV 4. — CHAPTER 4. Financial Transparency and Review [67760. - 67766.] | Government Code - GOV — California

Cal. Government Code - GOV § 67760. Section 67760.

The Legislature finds and declares that financial efficiency and transparency are imperative to build public confidence and support for public transit.

Cal. Government Code - GOV § 67762. Section 67762.

(a) The commission shall conduct a financial efficiency review of the subject operators, which are AC Transit, BART, Caltrain, and Muni pursuant to the timeline set forth in Section 67766. (b) Phase one of the financial efficiency review shall exclusively identify the following: (1) Cost-saving measures implemented since January 1, 2020, by the subject operators. (2) (A) Early action strategies that would assist the subject operators in delivering increased or improved service and enhanced customer experiences with existing resources. (B) In furtherance of the identification of early action strategies, phase one of the financial efficiency review shall include an analysis of the each subject operator’s real property assets. The analysis shall be conducted in consultation with the subject operators, and shall include an inventory of existing holdings and identify potential redevelopment opportunities, with an emphasis on housing, commercial, and mixed-use projects, and other efficient land uses near transit that can support ridership growth and generate long-term value. The analysis shall include a property asset map and a preliminary list of redevelopment opportunities to inform phase two of the financial efficiency review. (c) (1) Phase two of the financial efficiency review shall identify a menu of cost-saving measures that, if implemented, would reduce one-time and ongoing fixed and variable costs for the subject operators. The review shall evaluate cost-saving measures using metrics such as cost per passenger mile and subsidy per passenger mile, reported in both nominal dollars and real dollars, and any other relevant measures needed to ensure results are quantifiable and actionable. (2) (A) Phase two of the financial efficiency review shall also include a comprehensive regional assessment of development and financing strategies to maximize the value of each subject operator’s real property assets. The assessment shall, at a minimum, do all of the following: (i) Evaluate strategies to leverage assets through housing, commercial, mixed-use, and other transit-supportive development. (ii) Analyze potential impacts on ridership, revenue generation, fiscal stability, and broader public benefits, including affordable housing, job creation, and systemwide financial sustainability. (iii) Consider governance structures and financing mechanisms, including opportunities for regional partnerships, and alignment with existing public and private financing tools. (iv) Produce a regional development and financing strategy. (d) The scope of both phases of the financial efficiency review shall consider administrative, operating, and capital costs and shall clearly distinguish between any recommended actions that would not impact service and those that would require service realignments or reductions.

Cal. Government Code - GOV § 67764. Section 67764.

The commission shall contract with, and manage, a third-party consultant to conduct one or both phases of the financial efficiency review. The third-party consultant shall conduct the review in consultation with the subject operators and an oversight committee established by the commission that consists of all the following members: (a) The chair of the commission, if the chair is from the geographic jurisdiction of the district, or another member of the commission designated by the chair that is from the geographic jurisdiction of the district. (b) The board chair or president, or another member of the board designated by the chair or president, of each subject operator. (c) Four independent experts appointed by the commission with expertise in public transit operations and finance. (d) One representative from the Transportation Agency and one representative the Department of Finance as ex officio, nonvoting members.

Cal. Government Code - GOV § 67766. Section 67766.

(a) On or before April 1, 2026, the third-party consultant procured for phase one shall complete the phase one analysis described in subdivision (b) of Section 67762 and transmit it to the oversight committee. The oversight committee shall review the phase one analysis, direct the third-party consultant to make any revisions, and adopt a final phase one analysis. The commission shall transmit the final phase one analysis to all of the following entities: (1) The subject operators. (2) The Legislature, in compliance with Section 9795. (3) The Transportation Agency. (4) Each participating county transportation entity. (b) On or before July 1, 2026, each subject operator shall identify the specific strategies in the final adopted phase one analysis that it commits to implementing, and shall adopt those strategies as formal policy or budget actions, as applicable. (c) If the certified election results identify that the tax ordinance has been approved by the voters pursuant to this title, all of the following shall occur no later than 480 days after the election results are certified: (1) The third-party consultant procured for phase two shall complete the analysis described in subdivision (c) of Section 67762 and transmit it to the oversight committee. The oversight committee shall review the phase two analysis, direct the third-party consultant to make any revisions, and adopt a final phase two analysis, including a regional development and financing strategy produced pursuant to clause (iv) of subparagraph (A) of paragraph (2) of subdivision (c) of Section 67762. The commission shall transmit the phase two analysis to the entities described in paragraphs (1) to (4), inclusive, of subdivision (a). (2) The oversight committee shall specify to each subject operator what information, at a minimum, shall be included for each cost-saving measure that each operator chooses to include in its implementation plan pursuant to subdivision (d). (d) No later than 120 days after the actions required by subdivision (c) are complete, each subject operator shall submit to the oversight committee a draft implementation plan that describes all cost-saving measures the operator plans to implement, including all information related to those measures required by the oversight committee pursuant to subdivision (c). In developing the implementation plan, the operator shall balance financial efficiency, service, and system safety. (e) The oversight committee shall review each draft implementation plan and either approve the plan or recommend revisions to further facilitate the implementation of recommendations identified in the phase two analysis. (f) No later than 60 days after the oversight committee takes action pursuant to subdivision (e), the subject operator’s governing board shall do all of the following: (1) Incorporate oversight committee recommendations made pursuant to subdivision (e), if applicable, into its implementation plan. (2) Adopt a final implementation plan and transmit it to the oversight committee and to the entities described in paragraphs (1) to (4), inclusive, of subdivision (a). (3) (A) Notwithstanding paragraph (1), a subject operator may reject the inclusion of one or more of the recommendations made by the oversight committee pursuant to subdivision (e) if the governing board of the operator makes a written finding when adopting the final implementation plan pursuant to paragraph (2) that the recommendation has an unacceptable impact on transit service or safety or is inconsistent with other documented local policies and procedures. (B) Within 10 business days after a subject operator adopts a finding pursuant to subparagraph (A), the commission shall transmit written notice of the adoption of that finding to the policy committees of the Legislature with jurisdiction over transportation and to the Transportation Agency. The notice shall include the subject operator’s adopted finding pursuant to subparagraph (A). (C) Any finding adopted pursuant to subparagraph (A) shall be time limited and shall expire no later than 12 months after adoption unless renewed by the subject operator following the procedures set forth in this chapter with an updated assessment demonstrating continuing need. The subject operator shall provide annual status updates to the commission that specifically address the basis for the adopted finding, including whether the circumstances or obstacles identified as preventing compliance have been resolved, mitigated, or otherwise changed. The status update shall identify specific steps taken to address the stated obstacle and a timeline for when compliance could reasonably be achieved if the obstacle is removed. (g) The oversight committee shall terminate after each subject operator takes the actions required pursuant to subdivision (f). Each subject operator shall adhere to the final implementation plan it adopted pursuant to subdivision (f) until the expiration of the tax approved pursuant to this title, unless doing so is infeasible due to circumstances beyond the operator’s control, in which case the operator shall make a good faith effort to comply. (h) As a condition of receiving continued funding pursuant to Chapter 3 (commencing with Section 67750), each subject operator shall verify with the commission that it is in compliance with the requirements of this chapter. Before taking an action to withhold funds from a subject operator for noncompliance with the requirements of this chapter, the commission shall provide the operator a period of 90 days to comply before withholding funds. The commission shall withhold the funds until the operator complies with the requirements of this chapter. If the subject operator does not comply with the requirements of this chapter before the commission makes the final allocations of revenue from the tax ordinance approved by the voters pursuant to this title, the commission shall reallocate the withheld funds to support public transit expenses within the county or counties that the operator serves.