(a) The department may advance funds for a transit or passenger rail project or project component when all of the following conditions exist:

(1) The lead applicant agency for, and all direct recipients of, advance funds are public agencies.

(2) The commission has allocated the funds pursuant to either of the following:

(A) Section 14533 of this code and in accordance with § 99317 of the Public Utilities Code.

(B) The Transit and Intercity Rail Capital Program (Part 2 (commencing with Section 75220) of Division 44 of the Public Resources Code).

(3) The lead applicant agency requests advance funds in its application for the applicable program or as soon as the lead applicant agency anticipates a need for advance funds.

(4) The direct recipients of the advance funds have a record of good financial management and have not been sanctioned by any state or federal agency.

(5) The lead applicant agency or any other recipient of the advance funds offers sufficient security, as determined by the department.

(6) The project or project component for which the advance funds are requested is to be delivered by a specified date or dates.

(7) The financing plan and the schedule for the project have been approved by the department pursuant to Section 14085, if applicable.

(8) The department and the direct recipients have entered into a fund transfer agreement which specifies the terms of the advance and the procedure for periodic reimbursement of actual costs incurred for the project or project component.

(9) The lead applicant agency has demonstrated to the satisfaction of the department that the advance is required to pay current expenses on the project or project component for which the allocation is authorized.

(10) The advance will not jeopardize the timely discharge of the other commitments against the account from which the advance is made.

(11) Upon request of the department, the recipient agency provides a finding approved by its governing body that demonstrates a financial need for an advance payment pursuant to the program to deliver the project or project component.

(b) The lead applicant agency may request advance funds within approximately 30 days before the project incurs an eligible capital expense. All interest accrued on the advance funds shall be used only for eligible project costs and shall be deducted from future payments under the program or returned to the department.

(c) If, upon completion of the project or project component, the advance of funds, together with interest on the advance of funds earned for the full period of the advance equivalent to the average rate earned by investments in the Pooled Money Investment Account during the same period, exceeds that portion of the actual reimbursable costs for which the recipient has not been reimbursed, the lead applicant agency or the recipient agency shall repay the excess amount to the state for deposit in the account from which the advance was made.

(d) The lead applicant agency or the recipient agency shall repay the amount of the funds advanced, plus an amount equal to the interest that the money would have earned in the Pooled Money Investment Account, to the state if the department, the Transportation Agency, or any other state agency charged with monitoring the stewardship of public funds finds any of the following:

(1) The lead applicant agency or the recipient agency misused any public funds available to the project or project components.

(2) The lead applicant agency or the recipient agency made an expenditure that is not eligible under the applicable program.

(3) The improvement or rolling stock is not delivered in accordance with the fund transfer agreement.

(4) The lead applicant agency or the recipient agency breached the advance payment procedures developed by the department pursuant to subdivision (f).

(5) The lead applicant agency or the recipient agency is obligated to reimburse the state pursuant to subdivision (b) or (c).

(e) If the lead applicant agency or recipient agency fails to repay any money to the state pursuant to subdivision (d), the agency that makes the finding may request the Controller, Treasurer, or any other authorized state agency to demand a transfer of an amount equal to the amount paid to the recipient agency to be paid to the state or may withhold payment from future apportionments or any other funds to the recipient agency.

(f) The department may develop guidelines to advance funds under this section.

(Amended by Stats. 2022, Ch. 71, Sec. 2. (SB 198) Effective June 30, 2022.)