AB 1150 codifies when and how local airport operators in California can require rental‑car companies to collect customer facility charges (CFCs) from customers. It preserves a per‑contract collection model with a statutory cap, and also authorizes an alternative per‑day charge—but only after public hearings, written findings, and subject to explicit daily caps and a five‑day per‑rental limit.
The bill confines CFC revenues to financing, construction, major maintenance of consolidated rental vehicle facilities and the design, construction, operation, or vehicle acquisition for common‑use transportation systems, requires audits and public posting of financial reports, and declares these fees exempt from sales, use, and transaction taxes. For airports, rental companies, and municipal finance officers, the measure changes both how facilities are funded and the compliance steps required to collect those funds.
At a Glance
What It Does
Authorizes airports to require rental companies to collect a per‑contract customer facility charge (subject to a cap) or, after a public Brown Act hearing and specified findings, an alternative per‑day charge capped by statute and limited to five days per rental. It limits permissible uses of proceeds to facility and common‑use transportation project costs, mandates audits and website disclosure, and exempts the fees from sales and transaction taxes.
Who It Affects
Local airport operators (cities, counties, joint powers authorities, special districts, and the San Diego County Regional Airport Authority), on‑airport and off‑airport rental car companies, customers renting vehicles, municipal finance teams issuing bonds tied to CFCs, and auditors/compliance officers tracking use of proceeds.
Why It Matters
The bill creates a clearer statutory path for airports to back facility and shuttle financing with customer fees while imposing transparency and limits intended to prevent diversion of funds. Practitioners in airport finance, rental‑car compliance, and municipal audit should expect new procedural steps, reporting obligations, and technical billing changes.
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What This Bill Actually Does
AB 1150 lays out two alternative collection regimes for customer facility charges and a set of rules that control how those revenues may be generated, used, and monitored. First, it affirms that an airport may require a rental company to collect a per‑contract user fee when the airport imposes that requirement under its authority; the fee must be presented separately on the rental agreement and is capped unless an alternative rate structure is adopted under the bill’s secondary path.
The statute makes clear that the per‑contract charge is a user fee—not a property tax incident—so that it does not fall within Article XIII D property tax definitions.
Second, the bill provides a structured process for an airport to adopt an alternative customer facility charge calculated on a per‑day basis. That process starts with a publicly noticed Brown Act hearing where the airport must establish the revenue requirement, find that the standard per‑contract fee is insufficient, explain why the daily rate is needed, and disclose steps taken to limit costs and other financing alternatives considered.
The statute sets explicit per‑day rate ceilings (with a schedule of maximums culminating in $12 per day as of January 1, 2026) and caps collection to no more than five days per rental contract.AB 1150 restricts use of proceeds: revenues may pay reasonable costs of financing, designing, constructing, and performing major maintenance on consolidated rental vehicle facilities, and financing, designing, constructing, operating, or acquiring vehicles for common‑use transportation systems. Airports must post annual reports online detailing amounts collected and expenditures, complete an independent audit before initial collection (and periodically thereafter in specified circumstances), and keep audit copies publicly available for six years.
Finally, the statute declares that fees collected under this authority are not subject to sales, use, or transaction taxes.
The Five Things You Need to Know
The bill allows a per‑contract customer facility charge but caps it at no more than $10 per contract unless the alternative per‑day charge is used.
An airport may adopt an alternative per‑day customer facility charge only after a Brown Act public hearing with specific findings that the per‑contract fee cannot fund the project; statutory per‑day caps escalate to a maximum of $12 per day as of January 1, 2026.
The alternative per‑day charge may be collected for no more than five days per rental contract.
Airports must post annual reports and complete an independent audit before initial collection; audits must be updated before any increase and kept publicly available (including posting on a single, easily accessible webpage) for six years.
Fees collected under this section are expressly excluded from sales, use, and transaction taxes.
Section-by-Section Breakdown
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When a rental company may collect a per‑contract customer facility charge
These paragraphs set the baseline rule: an airport may require a rental company to collect a per‑contract user fee only if the airport itself imposes the requirement. The provision emphasizes that the charge must be a user fee—not a real property tax—clearing the way for fee treatment under state constitutional tax categories and signaling how the fee should be characterized on legal and financial statements.
Per‑contract caps, identification, and limits on double charging
This block imposes a nominal $10 cap on the per‑contract fee (subject to the alternative pathway) and requires the fee to appear separately on the rental agreement. It forbids airports from forcing rental companies to collect more than one customer facility charge from a consumer for a single rental, and clarifies that certain other statutory fee regimes remain unaffected by this section.
Special rule for consolidated rental vehicle facilities and on‑ vs off‑airport customers
When a consolidated rental vehicle facility and a common‑use transportation system are both funded, the statute requires collection only from on‑airport rental customers for the consolidated facility portion and limits the fee on off‑airport customers to the share proportionate to the common‑use transportation system’s costs. The provision defines 'on‑airport rental vehicle company' by reference to airport leases, concessions, or license agreements, creating a practical test for which companies may be charged the full facility amount.
Procedure and statutory caps for an alternative per‑day charge
Paragraph (b) lays out the required public process: a Brown Act hearing where the airport must (A) establish the revenue need for design and construction, (B) find the per‑contract fee insufficient, (C) find the project cost requires the additional daily revenue, and (D) describe cost‑limiting steps and alternatives. If those findings are made, the airport can require a per‑day charge but only within statutory maximums (including a $12/day ceiling as of 2026) and limited to five days per contract.
Transparency and audit prerequisites for alternative charges
Before an airport may collect the alternative charge, it must publish annual reports showing totals collected and expenditures, and complete an independent audit prior to initial collection. The airport must update the audit before any rate increase and, where the charge funds the operation or acquisition of transportation vehicles, perform audits at least every three years; all required documents must be consolidated and posted on an easily accessible single webpage.
Limits on bond proceeds and tax exemption
Use of bond proceeds or revenues from alternative CFCs is restricted to construction, design, major maintenance of the consolidated rental facility, and operating costs of the common‑use transportation system. Separately, subdivision (c) declares that fees collected under this section are not subject to sales, use, or transaction taxes, removing those taxes as a potential drag on bond‑backed revenue streams.
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Explore Transportation in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Airport operators that need predictable, fee‑backed revenue: AB 1150 gives airports a statutory route to increase revenue via per‑day charges when per‑contract fees fall short, and the tax exemption preserves more net revenue for project financing.
- Bond investors and municipal finance teams: the explicit limitation on use of proceeds and the tax exclusion improve the clarity of revenue streams underlying bonds backed by CFCs.
- Passengers who use consolidated rental facilities and common‑use shuttles: the statute ties revenues explicitly to facility construction, major maintenance, and shuttle operations, increasing the likelihood that collected fees fund visible customer infrastructure rather than unrelated airport expenses.
Who Bears the Cost
- Rental car companies: mandated collection, separate line‑item reporting on agreements, and potential per‑day billing changes impose operational, IT, and accounting costs and require contract amendments with customers and airports.
- Customers renting vehicles: the statutory caps do not eliminate the charge; customers (on‑airport and certain off‑airport users) will still pay per‑contract or per‑day fees capped by the statute—up to the five‑day limit.
- Airport administrations: the bill requires Brown Act hearings, detailed findings, independent audits, and ongoing website disclosures, adding procedural and compliance costs and administrative workload prior to collecting alternative charges.
Key Issues
The Core Tension
The bill reconciles two competing goals: giving airports a reliable, fee‑backed way to finance rental facility and shuttle projects while imposing transparency and limits to prevent diversion of those fees—creating a trade‑off between predictable project financing and added procedural, administrative, and legal friction for airports, rental companies, and customers.
AB 1150 builds guardrails—caps, findings, audit, and posting requirements—around airport collection of customer facility charges, but several implementation tensions remain. The statute repeatedly relies on 'reasonable costs' as the test for permissible uses and financing, a term that courts and auditors often parse differently; absent a tighter definition or guidance, airports and rental companies may litigate what counts as reasonable project costs, particularly where projects combine facility construction and shuttle operations.
The bill also requires detailed pre‑collection audits and ongoing reporting but does not specify enforcement mechanisms or penalties for misuse of proceeds, leaving practical compliance reliant on local oversight or bond covenant language.
The alternative per‑day path is procedurally demanding: Brown Act hearings and explicit findings increase transparency but also raise the bar for small airports with limited staff. The statutory schedule of per‑day caps provides predictability but can become a constraint if construction or maintenance costs rise faster than the capped amounts, pushing airports either to pursue more frequent rate increases (triggering additional procedural work) or to seek alternative revenue sources.
Finally, shifting the collection obligation to rental companies reduces the airport’s transactional role but transfers administrative burdens and potential reputational risk to private firms that must amend billing systems and customer disclosures.
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