BILL ANALYSIS Ó
AB 1051
Page 1
Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 1051 (Bocanegra) - As Amended: April 8, 2013
SUBJECT : Sustainable Communities for All
SUMMARY : Creates the Sustainable Communities for All Program to
fund, via cap-and-trade auction revenues, the equitable
implementation of SB 375 (Steinberg), Chapter 728, Statutes of
2008. Specifically, this bill :
1)Makes legislative findings and declarations regarding
sustainable communities strategies (SCS), as required by SB
375, including; the potential for affordable, transit-oriented
development to reduce a low-income family's greenhouse gas
emissions by 65%; the role transit can play in reducing
greenhouse gas emissions; and, the need for investments in
transit-oriented residential development and related green
infrastructure features.
2)Establishes the Sustainable Communities for All Program, to
begin operations on January 1, 2015, with the goal of
equitably implementing SB 375 by providing transportation and
housing choices that allow lower-income Californians to drive
less and reduce household costs.
3)Requires the program to fund all of the following through
competitive grants and loans:
a) Expanded or improved public transit service, including
operations to quickly expand service and increase
ridership;
b) Transit capital maintenance;
c) Development and rehabilitation of transit-oriented
residential development that is affordable to low-income
households and that provides trip reduction strategies
including transit passes and car share;
d) Expanded bicycle and pedestrian networks, facilities,
and programs that promote additional use and safety and
AB 1051
Page 2
that provide access to transit, schools, colleges,
shopping, and other destinations;
e) Expanded vanpool, car share, and carpool promotion
programs;
f) Transportation demand management strategies and
incentives that reduce both vehicle travel and ownership,
including discounted transit passes in transit priority
zones;
g) Energy efficiency improvements in existing multifamily
rental homes affordable to lower income households; and,
h) Open-space protection, local parks, and urban forestry.
4)States legislative intent that all cap-and-trade revenues are
to be appropriated consistent with the California Global
Warming Solutions Act of 2006, the Greenhouse Gas Reduction
Fund Investment Plan and Communities Revitalization Act, and
other related provisions of existing law.
5)Makes implementation of the new program, including development
of standards and guidelines by the State Air Resources Board
(ARB) and provision of financial assistance to eligible
recipients, contingent upon appropriation of funds by the
Legislature.
6)States legislative intent to achieve the goals of the
Sustainable Communities for All program in the short term by
funding existing programs in the 2013-14 budget year.
7)Appropriates an unspecified amount from the Greenhouse Gas
Reduction Fund (in which auction proceeds are deposited) to be
allocated in the 2013-2014 budget year as follows:
a) An unspecified amount to the Department of Housing and
Community Development (HCD) to be expended to provide loans
under the Transit-Oriented Development Implementation
Program for the development and construction of housing
within close proximity to transit stations, with the
following conditions:
i) The funds can only finance housing units that
AB 1051
Page 3
will be available at an affordable rent to persons of
very low or low income for at least 55 years, although
the units may be located in a mixed-income development;
ii) HCD must use project density as a scoring
criterion in place of project size; and,
iii) HCD must give priority to developments that
achieve additional greenhouse gas emissions reductions
or energy conservation through onsite renewable energy,
energy efficiency, discount transit passes, car
sharing, or other similar features.
a) An unspecified amount to the projects and programs that
are eligible to receive funds through the State Transit
Assistance program and that show greenhouse gas reductions;
b) An unspecified amount to the projects and programs that
are eligible to receive funds through the Bicycle
Transportation Account and that show greenhouse gas
reductions;
c) An unspecified amount to the projects and programs that
are eligible to receive funds through the Safe Routes to
Schools program and that show greenhouse gas reductions;
d) An unspecified amount to the projects and programs that
are eligible to receive funds through the federal
Transportation Alternative Program and that show greenhouse
gas reductions;
e) An unspecified amount to the Energy Savings Assistance
Program and the Weatherization Assistance Program; and,
f) An unspecified amount to the California Natural
Resources Agency for allocation to its departments and
state conservancies for the purposes of funding the
following projects that show greenhouse gas reductions:
urban forestry, local parks, and the protection of open
space, including wildlife habitats and working lands.
EXISTING LAW :
1)Enacts the Global Warming Act of 2006 (AB 32 (Nunez), Chapter
488, Statutes of 2006) that requires ARB to adopt a statewide
AB 1051
Page 4
greenhouse gas emissions limit equivalent to the statewide
greenhouse gas emissions levels in 1990 to be achieved by
2020.
2)Requires ARB to provide each region of the state with
greenhouse gas emission reduction targets for the automobile
and light truck sector.
3)Requires a regional transportation plan to include an SCS
designed to achieve the targets for greenhouse gas emission
reduction.
4)Requires ARB to adopt regulations to achieve maximum
technologically feasible and cost-effective greenhouse gas
emission reductions; to this end, authorizes ARB to permit the
use of market-based compliance mechanisms (cap-and-trade
program) to comply with greenhouse reduction regulations.
4)Requires cap-and-trade auction proceeds be used to reduce
greenhouse gas emissions in the state.
5)Requires the Department of Finance, in consultation with ARB,
to develop and submit a three-year investment plan to the
Legislature to guide the use of auction proceeds.
6)Requires the investment plan to include allocations for
disadvantaged communities, as follows: 1) a minimum of 25% of
the available auction proceeds to projects that provide
benefits to identified disadvantaged communities; and, 2) a
minimum of 10% of the auction proceeds to projects located
within identified disadvantaged communities.
7)Requires auction proceeds to be appropriated through the
annual Budget Act.
FISCAL EFFECT : Unknown
COMMENTS : ARB's cap-and-trade program was established to help
the state meet its AB 32 goals. In the cap-and-trade program,
ARB places a cap on greenhouse emissions by issuing a limited
number of tradable permits (called allowances) equal to the cap.
Each year, the number of allowances declines in proportion to
the cap to achieve the intended emission reductions. Businesses
that aggressively reduce their emissions can trade their surplus
allowances to firms that find it more expensive to reduce their
AB 1051
Page 5
emissions. In distributing the emissions allowances, ARB
allocates a portion of the allowances for free to covered
entities, places some in a cost containment reserve, and
auctions the remainder. The price of auctioned allowances is
set by the marketplace. Over time, program regulations require
a greater reliance on auctioning, which will, among other
things, help maximize incentives for sources to reduce their
emissions and provide auction proceeds that can be reinvested
for public benefit to further the purposes of AB 32.
For Fiscal Year 2012-13, ARB's auctions are estimated to
generate roughly $660 million to upwards of $3 billion. The
Governor's budget for Fiscal Year 2012-13 assumes that the state
will receive $1 billion from such auctions. Of this amount, the
budget assumes that $500 million of the total revenue will be
used to offset existing General Fund costs of current greenhouse
gas mitigation activities, and the remaining revenues will be
used on new or expanded programs intended to reduce greenhouse
gas emissions.
Legislation enacted last session, AB 1532 (John A. Pérez),
Chapter 807, Statutes of 2012, requires development of an
investment plan to guide the state's investments of auction
revenues. ARB just released the draft investment plan and will
provide the final version of the plan to the Legislature in time
for proposed budget adjustments next month. The plan is
intended to support the appropriation of cap-and-trade auction
proceeds during the three-year period from Fiscal Year 2013-14
to 2015-16.
AB 1532 authorizes a range of greenhouse gas reduction
investments, including funding to reduce greenhouse gas
emissions through investments in programs implemented by local
and regional agencies, local and regional collaboratives, and
nonprofit organizations coordinating with local governments.
In its draft plan, ARB states that auction revenue investments
should be governed by the following principles:
1)Investments must further the purposes of AB 32.
2)Investments should focus on near-term and long-term benefits.
3)Investments should be prioritized toward sectors with both the
AB 1051
Page 6
highest greenhouse emissions and the greatest need for future
reductions to meet greenhouse goals.
4)State agencies should seek to maximize investments in and
benefits to disadvantaged communities wherever possible.
5)Investments should foster job creation, including
opportunities for training to amplify investment benefits, and
maximize economic benefits for California wherever possible.
6)Investments should consider the state's planning principles to
promote infill development and equity; to protect
environmental and agricultural resources; and to encourage
efficient development patterns.
7)Investments should be coordinated with other local, state, and
federal funding programs and avoid duplicative efforts. The
state should coordinate its clean energy, transportation, and
climate change investments to maximize their impacts and,
where possible, utilize existing programs and processes.
8)Funding should leverage private and other government
investment to the maximum extent possible.
The Sustainable Communities for All Program created by this bill
incorporates many of the investment principles proposed by ARB.
According to the author, AB 1051 seeks to make investments in
transformative housing, conservation, and transportation choice
that benefit all Californians. This bill makes the new program
operational on January 1, 2015. To achieve similar goals in the
short term, however, the bill makes a variety of appropriations
in the 2013-2014 budget year. The programs proposed for funding
in 2013-2-14, all in unspecified amounts, include the
Transit-Oriented Development Housing Program, the Energy Savings
Assistance Program, the Weatherization Assistance Program, the
State Transit Assistance Program, the Bicycle and Transportation
Account, the Safe Routes to School Program, and the
Transportation Alternatives Program. Projects and programs will
have to show greenhouse reductions in order to receive funding
from these short-term appropriations.
According to the proponents of AB 1051, California's
transportation sector is responsible for 38% of the state's
greenhouse emissions, the largest of any sector. Because
transportation needs are driven in large part by where people
AB 1051
Page 7
want-and can afford-to live, housing affordability affects the
sector's emissions. Proponents view cap-and-trade revenue as a
critical resource, since substantial reductions in
transportation and housing funding threaten the ability of
communities to achieve AB 32 and SB 375 goals. Therefore, they
are proposing to allocate a significant percentage of the
cap-and-trade revenues to improve public transportation choices
and build homes affordable to lower-income households near
transit. They note that policymakers have made it a priority to
avoid and mitigate the disproportionate impacts of climate
change and cap-and-trade on disadvantaged communities and
households. They argue that funding and policies that avoid
displacement of existing residents where transit investments are
made are paramount to achieving both environmental and social
equity goals.
Opponents of this bill argue that questions remain regarding the
cap-and trade program and that it would be premature to develop
a program to spend auction proceeds. According to opponents:
1)ARB's legal authority to auction cap-and-trade allowances is
still in question.
2)ARB is currently undertaking a multi-year analysis of the
potential leakage impact of the program's cost to the economy
and adjustments may need to be made in the amount of
withholding necessary to minimize leakage (therefore the
amount of money that will be available for investments is
uncertain).
3)ARB's is still in the process of developing its final
investment plan and will be updating the AB 32 scoping plan;
therefore, it is unclear what strategies ARB may recommend in
this next iteration of the plan to reach AB 32 goals and to
invest auction proceeds.
Committee concerns : AB 1051 is one of a number of bills
currently pending before the Legislature to fund implementation
of SB 375 and/or establish programs to expend auction revenues.
Collectively, the proposals represent a broad spectrum of policy
options to meet the state's greenhouse gas emission reductions
objectives. Individually, none are without their respective
strengths and weaknesses, including AB 1051.
AB 1051 boasts key strengths, including its consistency with a
AB 1051
Page 8
number of ARB's proposed investment principles, focused
investments benefitting lower-income households, and investments
in transit. Unfortunately, it also has a number of weaknesses,
some more serious than others, for example:
1)While the goal of the Sustainable Communities for All Program
is an equitable implementation of SB 375, it does not actually
require that any of the investments comply with an SCS or, in
fact, even result in greenhouse gas reductions.
2)The bill does not specify which agency would administer the
Sustainable Communities for All Program, consequently, it is
unclear which level of government, if indeed it even is
government, will administer the competitive grant and loan
program.
3)The bill directs funds to be distributed on a competitive
basis but it is silent as to what that basis would be, for
example, cost, greenhouse gas emission reductions, number of
housing units built, etc.
4)The bill fails to provide for accountability, performance
measures, or progress review. Furthermore, it is not clear
how or if funds would be allocated throughout the state.
Related legislation : AB 416 (Gordon) requires ARB to establish
the Local Emission Reduction Program to provide grants and other
financial assistance to eligible local government recipients for
the purposes of developing and implementing greenhouse gas
emissions reduction projects. That bill is pending in the
Appropriations Committee.
AB 574 (Lowenthal) creates the Sustainable Communities
Infrastructure Program to fund SCSs and equivalent greenhouse
gas reducing strategies using cap-and-trade auction revenues.
The bill is pending in Assembly Natural Resources Committee.
AB 1002 (Bloom) impose an additional $6 vehicle registration tax
for local and regional agency implementation of SB 375. The
bill passed out of this committee last week and is currently
pending in Assembly Local Government.
Previous legislation : AB 32 (Nunez), Chapter 488, Statutes of
2006, the California Global Warming Solutions Act, set a
greenhouse gas emissions limit equivalent to the statewide
AB 1051
Page 9
greenhouse gas emissions levels in 1990 to be achieved by 2020.
SB 375 (Steinberg), Chapter 728, Statutes of 2008, requires MPOs
to include SCSs in their RTPs for the purpose of reducing
greenhouse gas emissions.
AB 1532 (John A. Pérez), Chapter 807, Statutes of 2012, creates
the Greenhouse Gas Reduction Fund Investment Plan and
Communities Revitalization Act to set procedures for the
investment of auction revenues.
SB 535 (De Leon), Chapter 830, Statutes of 2012, provides that
the required investment plan for cap-and-trade revenue is to
allocated funds as follows: 1) a minimum of 25% of the
available moneys in the fund to projects that provide benefits
to identified disadvantaged communities; and, 2) a minimum of
10% of the available moneys in the fund to projects located
within identified disadvantaged communities.
SB 1018 (Committee on Budget and Fiscal Review), Chapter 89,
Statutes of 2012, among other things, establishes new
legislative oversight and controls over the ARB including: the
creation of a separate expenditure fund for proceeds from the
auction or sale of allowances pursuant to cap-and-trade program.
Double referral : AB 1051 was approved by the Committee on
Housing earlier this month.
REGISTERED SUPPORT / OPPOSITION :
Support
Amigos de los Rio
Benicia Tree Foundation
Bike San Diego
California Association of Housing Authorities
California Association of Local Housing Finance Agencies
California Bicycle Coalition
California Energy Efficiency Industry Council
California Housing Partnership Corporation
California ReLeaf
California Urban Forests Council
Canopy
AB 1051
Page 10
Century Housing
Central California Regional Obesity Prevention Program
City Heights Community Development Corporation
Construction Employers Association
Domus Development
First Community Housing
Fixing Angelenos Stuck in Traffic
Fresno Metro Ministries
Goleta Valley Beautiful
Housing California
Huntington Beach Tree Society
Keep Eureka Beautiful
Kennedy Commission (Orange County)
Los Angeles Alliance for a New Economy
Los Angeles Conservation Corps
Los Angeles County Bicycle Coalition
Marin ReLeaf
Mercy Housing
Mid-City CAN
Move LA
Move San Diego
Non-Profit Housing Association of Northern California
North East Trees
Oakland Landscape Committee
Our City Forest
Prevention Institute
Public Advocates
Public Health Institute
Richmond Trees
Roseville Urban Forest Foundation
Sacramento Housing Alliance/Coalition on Regional Equity
Sacramento Tree Foundation
Safe Routes to School National Partnership
San Diego Housing Federation
Southern California Association of Non-Profit Housing
The Nature Conservancy
The Transit Coalition
TransForm
Tree Davis
Tree Foundation of Kern
Tree Fresno
Tree Musketeers
Tree Partners Foundation
TreePeople
Trust for Public Land
AB 1051
Page 11
Urban ReLeaf
Urban Tree Foundation
Ubuntu Green
Walk Sacramento
Walk San Diego
Walk San Francisco
Western Center on Law and Poverty
Western Chapter, International Society of Arboriculture
Woodland Tree Foundation
Opposition
California Chamber of Commerce
California League of Food Processors
California Manufacturers & Technology Association
CalTax
Western States Petroleum Association
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093