BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 1122 (Pavley) - Sustainable communities: Strategic Growth
Council.
Amended: May 5, 2014 Policy Vote: EQ 6-0, T&H 9-1
Urgency: No Mandate: No
Hearing Date: May 19, 2014 Consultant: Marie Liu
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1122 would allow the Strategic Growth Council
(SGC) to manage and award financial assistance, from monies in
the Greenhouse Gas Reduction Fund, through a regional granting
authority for the implementation of a sustainable communities
strategy or alternative planning strategy to reduce greenhouse
gas (GHG) emissions. The SGC would also be authorized to award
financial assistance to a city, county, or regional agency for
the development and implementation of specified land protection
plans that reduce GHG emissions.
Fiscal Impact:
Unknown ongoing costs, potentially between the mid-hundreds
of thousands to low millions, from the Greenhouse Gas
Reduction Fund (special) to develop, administer, and oversee
financial assistance programs.
Background: The California Global Warming Solutions Act of 2006
(aka AB 32/act) (Health and Safety Code §38500 et seq.) requires
the State Air Resources Board (ARB) to adopt GHG reduction
measures to reduce the statewide GHG emissions to 1990 levels by
2020. One of the key AB 32 implementation programs is the
Cap-and-Trade Program. Under this program, ARB establishes an
overall limit or cap on GHG emissions from specified industries.
Facilities subject to the cap may reduce their own emissions or
purchase allowances from others to emit GHGs, including from
facilities that have reduced emissions more than required.
Allowances are auctioned off by ARB. To date, ARB has completed
six auctions, resulting in a total of $663 million in proceeds,
which are deposited into the Greenhouse Gas Reduction Fund. The
monies in this fund may only be used to facilitate the
achievement of GHG emission reductions in California consistent
with AB 32.
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Senate Bill 375 (Steinberg) Chapter 728, Statues of 2008,
requires the ARB to provide each region that has a metropolitan
planning organization (MPO) with a GHG emission-reduction target
for the automobile and light-truck sector for 2020 and 2035,
respectively. Each MPO, in turn, is required to include within
its regional transportation plan (RTP) a sustainable communities
strategy (SCS) or alternative planning scenario (APS) designed
to achieve the ARB targets for GHG emission reductions. Each MPO
must submit its SCS or APS to ARB for review. ARB must accept or
reject the MPO's determination that the SCS or APS would, if
implemented, achieve the GHG emissions-reduction targets.
Proposed Law: This bill would authorize the SGC to administer
two grant programs funded by the GHG Reduction Fund. The first
program would be to allocate money to a regional granting
authority that would grant funds to projects that implement a
SCS, APS, or a RTP (only if an SCS is not required for that
region). Each region of the state would receive monies on a per
capita basis. The regional granting authority could be a council
of governments, MPO, or regional transportation planning agency.
The SGC would be required to develop guidelines that would
direct how the regional granting authority identifies which
projects to fund. The guidelines would be required to include,
among other things, a requirement that projects be selected
through a competitive public process based on the anticipated
GHG reductions from that project and methods for evaluating,
monitoring, and verifying GHG emission reductions. The SGC would
be required to consult with ARB and MPOs to establish standards
for modeling and measurement methods to ensure consistency in
evaluating the potential effectiveness of projects and verifying
actual benefits after project completion.
This bill would specify that eligible projects include things
such as transportation network and demand management; public
transportation service; enhancing transit options; clean
transportation fueling infrastructure and support; multimodal
network connectivity; development and adoption of local plans
and land use policies; community infrastructure; multiuse
facilities and accommodations for bicyclists, pedestrians, and
neighborhood electric vehicles; evaluation, monitoring, and
verification systems; and administrative costs. Administrative
costs for each "recipient" is limited to five percent of the
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award.
The second program would be for the SGC to directly award
financial assistance to a city, county, city and county, or
regional agency for the development and implementation of
agricultural, natural resources, and open-space land protection
plans that reduce GHG emissions and are consistent with SCS,
APOs, or other regional GHG emission reduction plans.
Staff Comments: The costs to the SGC to develop, administer, and
oversee the grant programs established in this bill would depend
on the amount of money that they are dispensing and through
which grant program. Typically, administrative costs are
approximately 5% of the amount being dispensed. Assuming that
the SGC could be delivering at least $10 M of grants,
administrative costs could be in the mid-hundreds of thousands
to low millions.
In respect to the regional financial assistance program, the
bill specifies a 5% cap on administrative costs for each
"recipient." While this cap was intended to limit the
administrative costs of the regional granting authority (see the
analysis of the Transportation and Committee for this bill),
both the regional granting authority and the SGC will incur
administrative costs. The SGC's costs would be for the
development of the guidelines and to review the regional
programs while the regional granting authority's costs would be
for project selection and award administration. Staff recommends
that it be clarified that the administrative cost cap would
apply to the combined costs of the SGC and the regional granting
authority.
There is no specified cap on administrative costs for the
financial assistance program for land protection plans.