BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 156 (Perea) - California Global Warming Solutions Act of 2006: disadvantaged communities. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: August 18, 2015 |Policy Vote: E.Q. 6 - 1 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 24, 2015 |Consultant: Marie Liu | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 156 would establish a technical assistance grant program to help eligible applicants identify and develop projects that are eligible to receive funding from the Greenhouse Gas Reduction Fund (GGRF). Fiscal Impact: Unknown ongoing costs, likely in the mid-hundreds of thousands to low millions, depending on the size of the grant program, to the GGRF (special fund) for the ARB to administer the grant program Cost pressures of at least $7 million to the GGRF (special fund) for ARB or a third-party to provide technical assistance. Background: The California Global Warming Solutions Act of 2006 (referred AB 156 (Perea) Page 1 of ? to as AB 32, HSC §38500 et seq.) requires the California Air Resources Board (ARB) to determine the 1990 statewide greenhouse gas (GHG) emissions level, to approve a statewide GHG emissions limit equivalent to that level that will be achieved by 2020, and to adopt GHG emissions reductions measures by regulation. ARB is authorized to include the use of market-based mechanisms to comply with the regulations. All monies, except for fines and penalties, collected pursuant to a market-based mechanism are deposited in the Greenhouse Gas Reduction Fund (GGRF) (Government Code §16428.8). Existing law requires that the GGRF only be used to facilitate the achievement of reductions of GHG emissions consistent with AB 32 (HSC §39710 et seq.). To this end, the Department of Finance, in consultation with the ARB and any other relevant state agencies, is required to develop, as specified, a three-year investment plan for the moneys deposited in the GGRF. The investment plan must allocate a minimum of 25% of the funds to projects that benefit disadvantaged communities and to allocate 10% of the funds to projects located within disadvantaged communities. Additionally, the ARB, in consultation with CalEPA, is required to develop funding guidelines for administering agencies receiving allocations of GGRF funds that include a component for how agencies should maximize benefits to disadvantaged communities. Proposed Law: This bill would require the ARB, upon appropriation, to establish a comprehensive technical assistance grant program for eligible applicants assisting communities that the state board determines require technical assistance in accessing programs that allocate money from the GGRF. Priority would be given to those communities demonstrating the greatest need for increased capacity. Eligible applicants include regional agencies and nonprofit organizations coordinating with local governments. Grants could be used for the following activities: Identifying appropriate grant programs, Developing competitive project proposals, Coordinating existing local programs that reduce GHG emissions with new programs that receive GGRF funding, Conducting community outreach to residents of eligible communities regarding consumer programs receiving funding from AB 156 (Perea) Page 2 of ? GGRF or reducing GHG emissions ARB would be required to coordinate with the California Environmental Protection Agency (CalEPA) as well as agencies that administer GGRF funds in the development of grant program guidelines. This bill would require the investment plan to allocate money to fund this technical assistance program. This bill would also require the ARB to prepare and post on its website a report on projects funded to benefit disadvantaged communities. The report is to include the following information on the project: a general description, location of implementation, estimated date of completion, award amount, and the status of any monies not awarded in accordance with the investment plan and the reasons for those funds not being awarded. Related Legislation: SB 398 would create a technical assistance and outreach program, administered by the secretary of the California Environmental Protection Agency (CalEPA), for small businesses and small nonprofits who are interested in applying for grants from programs funded by the Greenhouse Gas Reduction Fund (GGRF). SB 398 is awaiting hearing in the Assembly Appropriations Committee. AB 1179 (Rendon) would require the ARB to prepare and post on its website a report on the GGRF funded projects, identical to the requirement in this bill. Assembly Appropriations held AB 1179 was held under suspense and incorporated the language in AB 1179 into AB 156, also adding Assembly Member Rendon as a principle co-author. Staff AB 156 (Perea) Page 3 of ? Comments: To develop and provide a comprehensive technical assistance program for disadvantaged communities for all GGRF programs, ARB estimates that it would need 40 positions at $7.4 million plus 2 additional positions at $280,000 annually for the first two years. This estimate assumes that ARB would be the entity providing the technical assistance. This estimate includes 20 positions to provide guidance and feedback to communities in developing competitive projects to apply for GGRF-funded grants and 10 positions to conduct outreach to local governments, non-profits, and others on consumer programs aimed at reducing GHG emissions. ARB notes that there are over 2,000 census tracks in the state that meet the definition of "eligible community" in the bill. Each of these communities could receive technical assistance for GGRF-funded programs run by 14 administering agencies with 40 sub-programs. Staff notes that this bill aims to provide assistance in developing grant proposals. This could require a significant amount of workload per project. Depending on the depth of assistance given, the 20 positions estimated for this responsibility could be conservative. According to the author's staff, the intent of this bill is to create a grant program that would allocate grants to third-parties to provide the technical assistance instead of the ARB providing the technical assistance itself. Staff notes that both program designs could be allowed under the current language of the bill. Staff recommends that the bill be amended to clearly reflect the author's intent. If a third-party is providing the assistance, the bill should also clarify whether the third-party can receive a grant to provide technical assistance to a single project or a single applicant. Staff believes the costs associated with the grant program are approximately the same, regardless of who is providing the technical assistance, just distributed differently. If the assistance is to be conducted by a third-party, ARB will likely need approximately 5% of the grant program's appropriation for administration with the remaining amount being issued through grants. Staff notes that there is a very high probability that the grant program would be oversubscribed. If the program is oversubscribed, the ARB will be in a position of choosing which AB 156 (Perea) Page 4 of ? applicants receive funding, therefore giving those communities an advantage over other eligible communities who don't receive assistance. This early advantage could be especially significant given that the assistance could include project development. Providing an early advantage would be especially inappropriate in programs administered by the ARB. Having a third-party administer the technical assistance creates some distance between the awarding agency and potential applicants, especially if the third-party receives a grant to help with multiple projects and applicants. However there still could be the perception, if not the reality, that the technical assistance program would be choosing early winners and losers for the various GGRF-funded grant programs. Staff believes it is not likely that enough funding could be provided to this grant program to avoid oversubscription. -- END --