Senate committee advances $590 million Bay Area transit loan after lawmakers press for safeguards

The Senate Budget and Fiscal Review Committee voted to advance AB 117, a bill authorizing the California State Transportation Agency to loan up to $590,000,000 from the Transit and Intercity Rail Capital Program to support four Bay Area transit operators.

Department of Finance staff described the proposal as a regional, cost‑neutral short‑term financing mechanism that would let the Metropolitan Transportation Commission receive a state loan and re‑lend it to San Francisco Bay Area Rapid Transit District, the San Francisco Municipal Transportation Agency, the Peninsula Corridor Joint Powers Board (Caltrain) and the Alameda‑Contra Costa Transit District. "This bill provides a loan of up to $590,000,000 to support San Francisco Bay Area Rapid Transit District, San Francisco Municipal Transportation Agency, Peninsula Corridor Joint Powers Board, and Alameda, Contra Costa Transit District," Erica Lee of the Department of Finance said.

The loan package sets a 12‑year term with the first two years interest‑only and ties the interest rate to the state Surplus Money Investment Fund. Legislative Analyst Office staff and Department of Finance witnesses said the structure is designed to be cost‑neutral to the state by securitizing repayment from existing transit funding streams and by using TIRCP balances rather than the General Fund. "The bill is very strict on repayment requirements and we would be able to take the state transit's money from those locals to make sure that all the loans are getting repaid on time," James Moore of the Department of Finance said.

Lawmakers pressed witnesses on the loan's oversight and on the risk if a companion regional sales tax measure does not pass. Senator Sciardo and others warned that a failed ballot measure could increase pressure to forgive loans or divert funds from other projects; DOF and LAO witnesses said the bill includes securitization and multiple oversight layers, including monitoring by the California Transportation Commission and MTC prioritization authority, to protect capital projects. "If it looks as if there's a decreasing amount of funds that have been awarded but not yet allocated… several things are forced to take place including notification and a financial evaluation," a Department of Finance representative explained.

Transit operators and local officials urged support in public comment. Matt Robinson of Caltrain said electrification drove large increases in ridership, adding, "Since that has happened, our ridership has jumped 60% year over year," but noted the agency still faces an operating shortfall. Sylvia Solis Shaw, speaking for the San Francisco mayor's office and SFMTA, said Muni has returned to nearly 80% of pre‑pandemic ridership and that the loan is "critical for Bay Area transportation agencies and their operations." Caltrain and BART representatives urged the committee to advance the bill to avoid short‑term service disruptions.

The committee recorded final passage of AB 117 in committee after absent members returned; the bill was reported out of the Senate Budget and Fiscal Review Committee with a favorable vote and will advance to the next steps in the legislative process.

The committee also asked staff to provide additional detail about projected loan repayments, any prioritization rules to avoid impacts on federal‑eligible capital projects, and planned legislative notifications about monitoring results.