BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                            Senator Bob Wieckowski, Chair
                                2015 - 2016  Regular 

          Bill No:           SB 698           Hearing Date:     04/15/2015
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          |Author:   |Cannella                                              |
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          |Version:  |2/27/2015                                             |
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          |Urgency:  |No                     |Fiscal:      |Yes             |
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          |Consultant|Rebecca Newhouse                                      |
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          Subject:  Active Transportation Program:  school zone safety  
          projects

            ANALYSIS:                                                     
          
          Existing law:

          1. Under the California Global Warming Solutions Act of 2006 (also  
             known as AB 32), requires 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, 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 monies 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. Continuously appropriates 60% of GGRF monies to transit,  
             affordable housing and sustainable communities, including 20%  







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             continuously appropriated to the Strategic Growth Council for  
             the Affordable Housing and Sustainable Communities Program.  
             (HSC §39719)

          5. Creates the Active Transportation Program in the California  
             Department of Transportation for the purpose of encouraging  
             increased use of active modes of transportation, such as biking  
             and walking. (Streets and Highways Code §2380)


          This bill continuously appropriates an unspecified percentage of  
          GGRF monies to the State Transportation Fund to fund school zone  
          safety projects within the Active Transportation Program. 

          Background

          1.Safe Routes to Schools and the Active Transportation Program. 

               A.     Safe Routes to Schools.

                 State program:  AB 1475 (Soto) Chapter 663, Statutes of  
                 1999, created the Safe Routes to School program.  The  
                 program was subsequently amended to extend the program  
                 indefinitely with funding provided from the State Highway  
                 Account. 

                 The program requires the Department of Transportation, in  
                 consultation with the California Highway Patrol (CHP), to  
                 make grants available to local governmental agencies under  
                 the program based upon the results of a statewide  
                 competition and rates those proposals based on need,  
                 potential for reducing child injuries and fatalities,  
                 potential for encouraging increased walking and bicycling,  
                 and other considerations.

                 Federal program:  Originally created as a five-year program  
                 in 2005, extensions through continuing resolutions have  
                 been enacted by Congress extending the federal Safe Routes  
                 to School program to fund infrastructure, and  
                 non-infrastructure projects for the purposes of  enabling  
                 and encouraging students to safely walk and bicycle to  
                 school, making walking and bicycling to school a more  
                 appealing mode choice, and facilitating the planning,  
                 design, and implementation of projects that will improve  








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                 safety, environment, and overall quality of life. The  
                 California Department of Transportation is responsible for  
                 developing and implementing the program.

              B.     Active Transportation Program.

                 SB 99 (Committee on Budget and Fiscal Review), Statutes of  
                 2013, Chapter 359, and AB 101 (Committee on Budget),  
                 Statutes of 2013, Chapter 354, creates the Active  
                 Transportation Program (ATP) in the California Department  
                 of Transportation (CalTrans), and consolidates several  
                 existing federal and state transportation programs,  
                 including the Transportation Alternatives Program, Bicycle  
                 Transportation Account, and State Safe Routes to School,  
                 into a single program. 

                 The purpose of ATP is to encourage increased use of active  
                 modes of transportation by achieving goals including  
                 increasing the number of biking and walking trips,  
                 increased safety and mobility for bikers and walkers,  
                 reduced GHG emissions through active transportation,  
                 enhanced public health, and benefits to disadvantaged  
                 communities. 

                 The program is made up of a statewide, small urban or  
                 rural, as well as a large Metropolitan Planning  
                 Organization component, which, respectively, receive 50,  
                 10, and 40% of the available funds. Additionally, a minimum  
                 of 25% of the ATP funds must benefit disadvantaged  
                 communities.

                 A total of 265 projects with almost $368 million in ATP  
                 funds (from the federal Transportation Alternative Program  
                 and Highway Safety Improvements funds as well as State  
                 Highway Account funds) were programmed as of December,  
                 2014, and of these projects, about $161 million, or roughly  
                 44%, was programmed for 149 safe-routes-to-school projects.  


          2.Affordable Housing and Sustainable Communities Program.

            The Budget Act of 2014 appropriates $130 million from the GGRF  
            to develop and implement the Affordable Housing and Sustainable  
            Communities Program (AHSC). SB 862 (Committee on Budget and  








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            Fiscal Review) Statutes of 2014, Chapter 36, continuously  
            appropriates 20% of GGRF annual proceeds to the AHSC beginning  
            in FY 2015-16. The AHSC, administered by the Strategic Growth  
            Council, is tasked with reducing GHG emissions through projects  
            that implement land use, housing, transportation, and  
            agricultural land preservation practices to support infill and  
            compact development.

            Additionally, the statute specifies that project objectives  
            include reducing air pollution, improving connectivity and  
            accessibility to jobs, housing and services, and increasing  
            options for mobility, including implementation of the Active  
            Transportation Program. 

            The guidelines specify that the program will provide grants and  
            loans to reduce GHG emissions through increasing accessibility  
            of affordable housing, employment centers and key destinations  
            via low-carbon transportation resulting in fewer vehicle miles  
            traveled through shortened or reduced vehicle trip length or  
            mode shift to transit, bicycling or walking. Key destinations  
            are defined in the guidelines as, "one or more community  
            amenities such as schools, community centers, employment  
            centers, retail, services, parks and other destinations.

          3.Use of Cap and Trade Auction Revenue. 

            ARB has conducted ten cap-and-trade auctions, generating almost  
            $1.6 billion in proceeds to the state. 

            Several bills in 2012, and one in 2014, provide legislative  
            direction for the expenditure of auction proceeds including SB  
            535 (de León) Chapter 830, Statutes of 2012, AB 1532 (J. Pérez)  
            Chapter 807, Statutes of 2012, SB 1018 (Budget Committee)  
            Chapter 39, Statutes 2012, and SB 862 (Budget Committee) Chapter  
             36, Statutes of 2014.

            SB 535 (de León) Chapter 830, Statutes of 2012, requires that  
            25% of auction revenue be used to benefit disadvantaged  
            communities and requires that 10% of auction revenue be invested  
            in disadvantaged communities. 

            AB 1532 (J. Pérez) Chapter 807, Statutes of 2012, directs the  
            Department of Finance to develop and periodically update a  
            three-year investment plan that identifies feasible and  








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            cost-effective GHG emission reduction investments to be funded  
            with cap-and-trade auction revenues. AB 1532 specifies that  
            reduction of greenhouse gas emissions through strategic planning  
            and development of sustainable infrastructure projects, are  
            eligible investments of GGRF. 

            SB 1018 (Budget Committee) Chapter 39, Statutes of 2012, created  
            the GGRF, into which all auction revenue is to be deposited. The  
            legislation requires that before departments can spend monies  
            from the GGRF, they must prepare a record specifying: (1) how  
            the expenditures will be used, (2) how the expenditures will  
            further the purposes of AB 32 (Nuñez, Pavley) Chapter 488,  
            Statutes of 2006, (3) how the expenditures will achieve GHG  
            emission reductions, (4) how the department considered other  
            non-GHG-related objectives, and (5) how the department will  
            document the results of the expenditures. 

            SB 862 (Budget Committee) Chapter 36, Statutes of 2014, requires  
            the ARB to develop guidelines on maximizing benefits for  
            disadvantaged communities by agencies administering GGRF funds,  
            and guidance for administering agencies on GHG emission  
            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. 

            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. 

            AB 32 auction revenue investment plan: The first three-year  
            investment plan for cap-and-trade auction proceeds, submitted by  
            Department of Finance, in consultation with ARB and other state  








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            agencies in May of 2013, identified sustainable communities and  
            clean transportation as one of the key sectors that provide the  
            best opportunities for achieving the legislative goals and  
            supporting the purposes of AB 32. The plan recommended the  
            aforementioned sector receive the largest allocation of funds  
            from the GGRF, but did not specify a monetary amount. 

            Budget allocations: The 2014-15 budget allocates $832 million in  
            GGRF revenues to a variety of transportation, energy, and  
            resources programs aimed at reducing GHG emissions.  Various  
            agencies are in the process of implementing this funding.  The  
            budget agreement specifies how the state will allocate most  
            cap-and-trade auction revenues in 2015-16 and beyond.  For all  
            future revenues, the legislation appropriates 25% for the  
            state's high-speed rail project, 20% for affordable housing and  
            sustainable communities grants, 10% to intercity capital rail  
            projects, and 5% for low-carbon transit operations.  The  
            remaining 40% is available for annual appropriation by the  
            Legislature.

            The Governor's proposed 2015-16 cap-and-trade expenditures are  
            largely the same as the 2014-15 plan, albeit with larger amounts  
            proposed allocations for programs with continuous  
            appropriations, including the Affordable Housing and Sustainable  
            Communities program ($200 million).

            Comments
          
          1. Purpose of Bill.  

             According to the author, "In an effort to continue to reduce  
             greenhouse gas emissions, more emphasis needs to be placed on  
             the Active Transportation Program.  ATP consolidated several  
             programs to achieve greenhouse gas reduction goals, enhance  
             public health, and ensure that disadvantaged communities benefit  
             from the program.  Funding hasn't been adequate to meet these  
             expectations."

          2. Do School Zone Safety Projects Advance the Goals of AB 32? 

             Promoting active transportation is an important component of  
             any comprehensive transportation strategy to reduce greenhouse  
             gas emissions, as it fills in the gap for the "last mile" where  
             public transportation only gets the rider most of the way to  








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             the destination. However, it is unclear to what extent a school  
             zone safety project that is not part of a larger project that  
             connects these school zone improvements with other sustainable  
             community features, such as infill development and transit,  
             will result in significant greenhouse gas emissions reductions.  
              
                            
             Any projects funded through GGRF monies are required to  
             facilitate the achievement of GHG emission reductions and be  
             used to advance the regulatory purposes of AB 32.  As an  
             isolated project, without incorporation into a broader  
             development plan, it is unclear to what extent school zone  
             safety projects, called out specifically in SB 698 to receive a  
             continuous appropriation of GGRF monies, meet that requirement.  
              

          3. Funding For School Zone Safety.

             As noted above, safe-route-to-school projects are a key  
             component of the state's Active Transportation Program. Of the  
             $368 million ATP funds programmed for 2014, 44% was programmed  
             for 149 safe-routes-to-school projects throughout the state. 

             Additionally, the Affordable Housing and Sustainable  
             Communities Program receives 20% of cap-and-trade revenue  
             annually (with total GGRF funds at $1.6 billion), and specifies  
             projects that reduce GHG emissions through sustainable housing,  
             land use and transportation developments, including active  
             transportation projects eligible under the ATP, as eligible  
             projects under the AHSC program.  To the extent school zone  
             safety projects are able to reduce GHGs through reduced vehicle  
             miles by improving safety along corridors that connect  
             communities to schools, and encouraging active modes of  
             transportation along those corridors, they are currently  
             eligible for cap-and-trade revenue funding as part of  
             sustainable communities projects through that the AHSC program.  


             Does this specific expenditure, school zone safety projects,  
             require another dedicated stream of funding?












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          4. Definition. 

             The bill does not define the term "school zone safety  
             projects."  Are these projects the same types of projects that  
             qualified under the safe-routes-to-school program and are now  
             included as a component of the Active Transportation Program?   
             This should be clarified. 

          5. Unspecified Allocation.

             As noted above, California has dedicated funds specifically for  
             ATP and school zone safety.  This bill would allocate an  
             additional amount for school safety, but currently contains a  
             blank line in the bill for that allocation.  As the author is  
             currently unable to identify the additional amount needed for  
             this purpose and thereby justification for that amount, it is  
             unclear where an additional appropriation by the Legislature is  
             warranted.


           6. Double Referral to Senate Transportation and Housing  
             Committee.  

             If this measure is approved by the Senate Environmental Quality  
             Committee, the do pass motion must include the action to  
             re-refer the bill to the Senate Transportation and Housing  
             Committee.  
              
            
          SOURCE:                    Safe Routes to Schools National Partnership  

           SUPPORT:               
          None on file  

           OPPOSITION:    
          California Chamber of Commerce  


           
                                          
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