BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                       AB 2722|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                   THIRD READING 


          Bill No:  AB 2722
          Author:   Burke (D) 
          Amended:  8/16/16 in Senate
          Vote:     21 

           SENATE ENVIRONMENTAL QUALITY COMMITTEE:  5-2, 6/29/16
           AYES:  Wieckowski, Hill, Jackson, Leno, Pavley
           NOES:  Gaines, Bates

           SENATE APPROPRIATIONS COMMITTEE:  5-2, 8/11/16
           AYES:  Lara, Beall, Hill, McGuire, Mendoza
           NOES:  Bates, Nielsen

           ASSEMBLY FLOOR:  51-26, 6/2/16 - See last page for vote

           SUBJECT:   Transformative Climate Communities Program


          SOURCE:    California Environmental Justice Alliance
                     Greenlining Institute


          DIGEST:  This bill creates the Transformative Climate Communities  
          Program, administered by the Strategic Growth Council (SGC), to  
          award competitive grants for the development of transformative  
          climate community plans, and projects that implement plans, which  
          contribute to greenhouse gas emissions reductions and demonstrate  
          other benefits, as specified, in disadvantaged communities.
          
          ANALYSIS:  

          Existing law:  
          
          1) Requires, under the California Global Warming Solutions Act of  
             2006 (also known as AB 32), the California Air Resources Board  








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             (ARB) to determine the 1990 statewide greenhouse gas (GHG)  
             emissions level and approve a statewide GHG emissions limit  
             that is equivalent to that level, to 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 these regulations. (Health and Safety Code §38500  
             et seq.) 

          2) Establishes the Greenhouse Gas Reduction Fund (GGRF) in the  
             State Treasury, requires all moneys, except for fines and  
             penalties, collected pursuant to a market-based mechanism be  
             deposited in the fund. (Government Code §16428.8)

          3) Prohibits the state from approving allocations for a measure  
             or program using GGRF moneys except after determining that the  
             use of those moneys furthers the regulatory purposes of AB 32,  
             and requires moneys from the GGRF be used to facilitate the  
             achievement of reductions of GHG emissions in California. (HSC  
             §39712) 

          4) Appropriates, continuously, 60% of GGRF moneys to transit,  
             affordable housing and sustainable communities, including 20%  
             continuously appropriated to the SGC for the Affordable  
             Housing and Sustainable Communities Program. (HSC §39719)

          This bill:  

          1) Establishes the Transformational Climate Communities Program  
             (Program) to fund the development and implementation of  
             neighborhood-level transformative climate community plans that  
             include multiple, GHG emissions reduction projects that  
             provide local economic, environmental, and health benefits  
             that are directly connected to communities most impacted by  
             pollution and vulnerable to climate change. 

          2) States the intent of the Legislature that private resources  
             can "more effectively be catalyzed to support innovative  
             community and climate transformation in disadvantaged  
             communities."

          3) Requires the SGC, in coordination with the Assistant Secretary  
             for Environmental Justice and Tribal Affairs at California  








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             Environmental Protection Agency (CalEPA), to award competitive  
             grants to eligible entities, including nonprofit  
             organizations, community-based organizations, faith-based  
             organizations, coalitions or associations of nonprofit  
             organizations, community development finance institutions,  
             community development corporations, local agencies, and joint  
             powers authorities. 

          4) Directs SGC to award grants for plans and projects that  
             implement plans that contribute to the reduction of GHG  
             emissions and demonstrate potential climate, economic,  
             workforce, health, and environmental benefits located in  
             communities that have a demonstrated need for climate,  
             economic, workforce, health, and environmental benefits.

          5) Authorizes SGC to award a grant over multiple years.

          6) Specifies that, in order to be eligible for funding under the  
             program, a plan, and a project that implements a plan, must  
             demonstrate that it will achieve a reduction in GHG emissions.

          7) Requires SGC, in awarding grants, to prioritize plans, and  
             projects that implement plans that maximize, to the extent  
             feasible, climate, public health, environmental, workforce,  
             and economic benefits.

          8) Defines "economic benefits" as high-quality, well-paid  
             employment opportunities for residents, benefits for small  
             businesses, and benefits for minority-, LGBT-, woman-, or  
             disabled veteran-owned small businesses in the plan's region.  
             Defines "LGBT" as lesbian, gay, bisexual, or transgender.

          9) Requires SGC to "endeavor to identify" additional public and  
             private sources of funding to sustain and expand the Program  
             and a network of technical assistance providers to assist in  
             plan development, implementation, and project financing.

          10)Requires SGC to conduct at least three public workshops,  
             consider any feedback, and post draft guidelines on their  
             website before adopting the guidelines and selection criteria.

          11)Specifies that the bill will only become operative if AB 1613  








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             (Committee on Budget) is enacted and becomes effective on or  
             before January 1, 2017, and AB 1613 appropriates $205 million  
             from the GGRF, as specified.

          Background
          
          1) Cap-and-trade auction revenue.  Since November 2012, ARB has  
             conducted 15 cap-and-trade auctions, generating over $4  
             billion in proceeds to the state.  

             State law specifies that the auction revenues must be used to  
             facilitate the achievement of GHG emissions reductions and  
             outlines various categories of allowable expenditures.   
             Statute further requires the Department of Finance, in  
             consultation with ARB and any other relevant state agency, to  
             develop a three-year investment plan for the auction proceeds,  
             which are deposited in the GGRF.  

             SB 535 (de León, Chapter 830, Statutes of 2012) requires the  
             Department of Finance, in the investment plan, to allocate at  
             least 25% of available moneys in the GGRF to projects that  
             provide benefits to disadvantaged communities, and at least  
             10% to projects located within disadvantaged communities.  

             Additionally, SB 862 (Committee on Budget and Fiscal Review,  
             Chapter 36, Statutes of 2014) requires ARB to develop  
             guidelines on maximizing benefits for disadvantaged  
             communities by agencies administering GGRF funds, and guidance  
             for administering agencies on GHG emissions reduction  
             reporting and quantification methods. 

             Legal consideration of cap-and-trade auction revenues.  The  
             2012-13 Budget analysis of cap-and-trade auction revenue by  
             the Legislative Analyst's Office noted that, based on an  
             opinion from the Office of Legislative Counsel, the auction  
             revenues should be considered mitigation fee revenues, and  
             their use requires that a clear nexus exist between an  
             activity for which a mitigation fee is used and the adverse  
             effects related to the activity on which that fee is levied.   
             Therefore, in order for their use to be valid as mitigation  
             fees, revenues from the cap-and-trade auction must be used to  
             mitigate GHG emissions or the harms caused by GHG emissions. 








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             In 2012, the California Chamber of Commerce filed a lawsuit  
             against the ARB claiming that cap-and-trade auction revenues  
             constitute illegal tax revenue.  In November 2013, the  
             superior court ruling declined to hold the auction a tax,  
             concluding that it is more akin to a regulatory fee.  The  
             plaintiffs filed an appeal with the 3rd District Court of  
             Appeal in early 2014, and that case is pending.

             Budget allocations.  SB 862 (Committee on Budget and Fiscal  
             Review, Chapter 36, Statutes of 2014), a budget trailer bill,  
             established a long-term cap-and-trade expenditure plan by  
             continuously appropriating portions of the funds for  
             designated programs or purposes.  The legislation appropriates  
             25% for the state's high-speed rail project, 20% for  
             affordable housing and sustainable communities grants, 10% to  
             the Transit and Intercity Rail Capital Program, and 5% for  
             low-carbon transit operations.  The remaining 40% is available  
             for annual appropriation by the Legislature.  

             The Governor's 2016-17 proposed budget appropriates over $3  
             billion to a variety of programs and projects in the  
             transportation, energy, natural resources, and waste diversion  
             sectors. 

          2) Governor's Transformative Climate Communities budget proposal.  
              The Governor's 2016-17 budget proposal requests $100 million  
             to establish the Program, administered by the SGC, to support  
             local climate action implementation in the top five percent  
             disadvantaged communities in California.  According to the  
             proposal, "Funding would support projects that integrate  
             multiple, cross-cutting approaches to reduce GHGs, and that  
             the program combines climate investments within a local area  
             for catalytic impact-including investments in energy,  
             transportation, active transportation, housing, urban,  
             greening, land use, water and waste efficiency, and other  
             areas-while also increasing job training, economic, health and  
             environmental benefits." 

             The Senate and Assembly budget plans for fiscal year 2016-17  
             include a $400 million and $100 million appropriation from the  
             GGRF for "local climate programs." 








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          Comments
          
          1) Purpose of Bill.  According to the author, "Assembly Bill 2722  
             establishes the Transformative Climate Communities Program  
             administered by the Strategic Growth Council to ensure that  
             California is making investments that reduce greenhouse gases  
             and also demonstrate co-benefits for the economy, workforce,  
             and the health of California's most vulnerable communities.   
             AB 2722 creates a one stop shop for cities, counties, and  
             community-based organizations to fund multiple projects that  
             reduce greenhouse gas emissions. Our state has been a strong  
             leader in the fight against climate change and reducing  
             pollution, and AB 2722 is a step to ensure that we leave no  
             community behind."

          2) What types of investments will be supported through the  
             program?  AB 2722 does not prescribe the types of projects  
             that are eligible for funding, or provide categorical guidance  
             for plans and projects that may be funded under the Program.   
             Instead, the bill specifies that the Program will fund  
             "neighborhood-level transformative" plans that include  
             "multiple, coordinated greenhouse gas emissions reduction  
             projects."  The bill also requires that plans and projects  
             awarded grants by SGC demonstrate an "integrated, innovative,  
             crosscutting" approach and "provide multiple benefits to the  
             community and demonstrate community engagement and leadership  
             in all phases." 

             The Governor's proposal includes investments in energy,  
             transportation, active transportation, housing, urban,  
             greening, land use, water and waste efficiency, and other  
             areas, as possible projects that could be funded through the  
             Program.

             The sponsors of the bill have provided examples of the types  
             of projects that might be funded through the Program.  These  
             include community-led planning in National City to develop a  
             land use plan to build a vibrant, healthy community with  
             affordable housing, equitable transit, safe pedestrian  
             walkways, and increased clean energy.  Other examples from the  
             sponsors include an urban greening project in the San Fernando  








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             Valley to increase green infrastructure and active  
             transportation, and an affordable housing development in South  
             Los Angeles that includes community gardens, open space, and a  
             community room and commercial space that serves the local  
             community. 


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          According to the Senate Appropriations Committee:


              Unknown ongoing costs, between the high hundreds of  
              thousands to low millions (GGRF) for the SGC to develop,  
              administer, and oversee the financial assistance programs.


              Approximately $715,000 annually in years one and two for  
              ARB, and approximately $550,000 ongoing (GGRF).


              Unknown, potentially significant, costs (GGRF) to CalEPA  
              for consultation.


          SUPPORT:   (Verified8/15/16)


          California Environmental Justice Alliance (co-source)
          Greenling Institute (co-source)
          Audubon California
          California Association of Local Conservation Corps
          California Equity Leaders Network 
          California League of Conservation Voters 
          California Pan Ethnic Health Network
          Coalition for Clean Air
          Fresno Economic Opportunities Commission
          Health Officers Association of California
          Los Angeles Neighborhood Land Trust 
          Lutheran Office of Public Policy - California








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          National Audubon Society
          PAN North America
          Sierra Club California
          TransForm
          Union of Concerned Scientists
          Valley Clean Air Now


          OPPOSITION:   (Verified8/15/16)


          None received


          ARGUMENTS IN SUPPORT:     Supporters state that the Program will  
          foster an integrative collaborative approach to comprehensively  
          address the burdens of disproportionately impacted communities  
          that have suffered from decades of environmental pollution and  
          neglect.  They also state that the Program moves out of the  
          project-specific silos that has characterized most GGRF spending  
          thus far and instead, the bill promotes multi-stakeholder  
          collaborations and leverages a range of funding sources,  
          including private sector, to achieve large-scale impact in a  
          holistic manner.

          ASSEMBLY FLOOR:  51-26, 6/2/16
          AYES:  Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown,  
            Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper,  
            Dababneh, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo  
            Garcia, Gatto, Gipson, Gomez, Gonzalez, Gray, Roger Hernández,  
            Holden, Irwin, Jones-Sawyer, Levine, Linder, Lopez, Low,  
            McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk,  
            Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,  
            Thurmond, Ting, Weber, Williams, Wood, Rendon
          NOES:  Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,  
            Chávez, Dahle, Beth Gaines, Gallagher, Grove, Harper, Jones,  
            Kim, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte,  
            Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk
          NO VOTE RECORDED:  Daly, Gordon, Hadley

          Prepared by:Rebecca Newhouse / E.Q. / (916) 651-4108
          8/16/16 17:50:30








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