BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 9| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 9 Author: Beall (D), et al. Amended: 9/1/15 Vote: 21 SENATE ENVIRONMENTAL QUALITY COMMITTEE: 7-0, 3/18/15 AYES: Wieckowski, Gaines, Bates, Hill, Jackson, Leno, Pavley SENATE TRANS. & HOUSING COMMITTEE: 10-0, 4/28/15 AYES: Beall, Cannella, Bates, Gaines, Galgiani, Leyva, McGuire, Mendoza, Roth, Wieckowski NO VOTE RECORDED: Allen SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15 AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen SENATE FLOOR: 37-1, 6/3/15 AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Pavley, Roth, Runner, Stone, Vidak, Wieckowski, Wolk NOES: Nielsen NO VOTE RECORDED: Hancock, Pan ASSEMBLY FLOOR: 74-1, 9/3/15 - See last page for vote SUBJECT: Greenhouse Gas Reduction Fund: Transit and Intercity Rail Capital Program SOURCE: Author DIGEST: This bill modifies the Transit and Intercity Rail SB 9 Page 2 Capital Program (TIRCP) to focus on transformative capital rail and transit system improvements. Assembly Amendments remove the requirement for 70% of the funds to be allocated to projects with a total cost of $100 million or more, and 30% to projects costing less than $100 million, define "transformative capital improvement" and modify eligibility, application, and project programming requirements. ANALYSIS: Existing law: 1) Requires, under the California Global Warming Solutions Act of 2006 (also known as AB 32), the California Air Resources Board (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. AB 32 authorizes ARB to adopt a regulation that establishes a market-based mechanism with declining annual aggregate emission limits for sources that emit GHGs. (Health and Safety Code (HSC) §38500 et seq.) 2) Establishes the Greenhouse Gas Reduction Fund (GGRF) and directs auction revenue collected pursuant to a market-based mechanism to be deposited into the fund and expended according to a three-year investment plan developed by the Department of Finance. 3) Establishes the TIRCP to fund capital improvements and operational investments that reduce GHG emissions and modernize California's intercity, commuter, and urban rail systems and bus systems to achieve specific policy objectives. 4) Appropriates, continuously, beginning in 2015-16, 10% of annual cap-and-trade auction revenues for the TIRCP. SB 9 Page 3 5) Directs project applicants for TIRCP grants to submit grant applications to the California State Transportation Agency (CalSTA) for evaluation in accordance with procedures and program guidelines adopted by the agency, and requires CalSTA to submit a list of projects to the California Transportation Commission (CTC) for funding. This bill: 1) Provides that the TIRCP must fund capital improvements that are "transformative", defined as a rail, bus, or ferry transit project that will significantly reduce vehicle miles traveled, congestion, and GHG emissions by creating a new transit system, increasing the capacity of an existing transit system, or otherwise significantly increasing the ridership of a transit system. 2) Eliminates operations funding as an eligible use of TIRCP funds. 3) Clarifies that bus system improvements are eligible for TIRCP funding, and specifically provides that ferry system improvements are also eligible. 4) Directs CalSTA to evaluate project applications consistent with revised criteria as set forth in this bill. 5) Requires CalSTA to additionally consider the following when evaluating grant applications: 6) The extent to which a project reduces GHG emissions. 7) The extent to which a project has supplemental funding from non-state sources. SB 9 Page 4 8) The extent to which a project will increase ridership. 9) Additional cobenefits including enhanced connectivity, integration, and coordination with various transit systems, and reduction in auto trips through growth in transit ridership. 10)Authorizes CalSTA to make multi-year funding commitments and requires project applications to identify, among other things, including project scope, purpose, phases of work, the source and timing of all funds needed to complete the project and fund ongoing operating and maintenance costs. 11)Directs CalSTA to approve a multi-year program of projects according to prescribed procedures and requires CalSTA to maximize the total amount of GHG emissions reductions achieved under the program. 12)Establishes a process whereby an agency that is applying for funds for a multi-year project can obtain a letter of no prejudice from CalSTA to allow the agency to advance its own funds and be eligible for future reimbursement from the program. 13)Makes other technical modifications to the TIRCP. Background The Transit and Intercity Rail Capital Program. SB 862 (Budget and Fiscal Review Committee, Chapter 36, Statutes of 2014) created the TIRCP. The TIRCP funds capital improvements for GHG emission reductions that expand and improve rail service, and integrate state and local rail and other transit systems, including the high-speed rail system. SB 9 Page 5 The 2014-15 Budget provided for a continuous appropriation of 10%, or $25 million, of cap-and-trade funds to this program beginning in 2015-16. CalSTA is required to evaluate applications, and then prepare a list of projects recommended for funding to be used by CTC in awarding grant monies. CalSTA released draft guidelines for the program in December 2014, and finalized them on February 6th. The guidelines describe the policy, standards, criteria, and procedures for the development, adoption and management of the TIRCP. The guidelines state that it is CalSTA's intent to adopt an initial multiyear program of projects covering a minimum of two years of estimated funding. The guidelines also note that "CalSTA will also make some funding available for demonstration projects that are smaller scale efforts with great potential to be expanded. These may include projects such as a novel approach to attracting new riders or a test of a concept related to integrated ticketing, as well as intercity rail or transit effectiveness or operational studies that are expected to have elements that can be implemented with little or no capital investment (such studies must result in a reduction in net greenhouse gas emission)." SB 862 establishes a goal for the TIRCP of providing at least 25% of available funding to projects that provide a direct, meaningful, and assured benefit to disadvantaged communities. SB 862 also requires the ARB, in consultation with the California Environmental Protection Agency, to develop funding guidelines for all agencies that are appropriated monies from the GGRF. These guidelines must include a component for how administering agencies should maximize benefits for disadvantaged communities. At the end of June 2015, CalSTA completed the first round of the program, awarding $224 million to 14 projects throughout California. Comments SB 9 Page 6 1)Purpose of Bill. According to the author, "Transportation funding available under the Transit and Intercity Rail Capital Program should be invested in projects that maximize reductions in greenhouse gas emissions to ensure California meets its climate goals set forth by AB 32. These types of projects are a multi-year effort and requires a level of financial certainty for the operators to plan. SB 9 provides for a multi-year planning and allocation process under the Transit and Intercity Rail Capital Program administered by the California Transportation Agency. This process is utilized by the federal government and common for a variety of other transportation programs." Related/Prior Legislation SB 862 (Committee on Budget, Chapter 36, Statutes of 2014) established requirements for ARB to develop guidelines for agencies administering GGRF funds. FISCAL EFFECT: Appropriation: Yes Fiscal Com.:YesLocal: No According to the Assembly Appropriations Committee, any additional administrative costs to CalSTA will be absorbable. Under current law, the TIRCP is funded by a continuous appropriation of 10% of annual cap-and-trade revenues beginning in 2015-16. Based on current estimates of cap-and-trade revenues, about $200 million will be available to the TIRCP this fiscal year. Given this significant funding level and the numerous other demands for cap-and-trade funds, the modest program expansion in this bill would likely not create any significant cost pressure on the program. SUPPORT: (Verified9/3/15) Alameda-Contra Costa Transit District Antelope Valley Transit District California Transit Association City of San Jose International Longshore & Warehouse Union SB 9 Page 7 Los Angeles-San Diego-San Louis Obispo Rail Corridor Agency Napa County Transportation Planning Agency Northern California Carpenters Regional Council Orange County Transportation Authority San Diego Association of Governments San Diego Metropolitan Transit System San Francisco Bay Area Rapid Transit District San Francisco Bay Area Water Emergency Transportation Authority Santa Clara County Board of Supervisors Santa Clara Valley Transportation Authority Silicon Valley Leadership Group Transportation Agency for Monterey County OPPOSITION: (Verified9/3/15) None received ASSEMBLY FLOOR: 74-1, 9/3/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NOES: Gallagher NO VOTE RECORDED: Brough, Beth Gaines, Harper, Patterson, Salas Prepared by:Rebecca Newhouse / E.Q. / (916) 651-4108 9/3/15 18:47:23 **** END **** SB 9 Page 8