BILL ANALYSIS Ó SENATE COMMITTEE ON TRANSPORTATION AND HOUSING Senator Jim Beall, Chair 2015 - 2016 Regular Bill No: SB 760 Hearing Date: 4/14/2015 ----------------------------------------------------------------- |Author: |Mendoza | |----------+------------------------------------------------------| |Version: |4/6/2015 Amended | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Erin Riches | |: | | ----------------------------------------------------------------- SUBJECT: Disadvantaged Community Enhancement Act of 2015. DIGEST: This bill establishes a new program under the Strategic Growth Council (SGC) to direct cap-and-trade spending to certain projects in disadvantaged communities. ANALYSIS: AB 32: California Global Warming Solutions Act of 2006 AB 32 (Núñez), Chapter 488, Statutes of 2006, requires the state Air Resources Board (ARB) to develop a plan to reduce emissions to 1990 levels by 2020. It also requires ARB to ensure that programs to reduce greenhouse gas (GHG) emissions are targeted, to the extent feasible, to the most disadvantaged communities (DACs) in the state. AB 32 authorizes ARB to deposit any fees paid by GHG emission sources into the Greenhouse Gas Reduction Fund (commonly known as cap-and-trade). The 2014-15 budget agreement allocates $832 million in cap-and-trade revenues to a variety of GHG emission reduction programs. Beginning in 2015-16, the budget agreement 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% to low-carbon transit projects. The remaining 40% is available for annual appropriation by the Legislature. SB 535 (De León), Chapter 830, Statutes of 2012, requires the Department of Finance, when developing the three-year investment SB 760 (Mendoza) Page 2 of ? plan for cap-and-trade monies, to allocate 25% of these funds to projects that provide benefits to DACs, and at least 10% to projects located within DACs. To meet the SB 535 mandate, the California Environmental Protection Agency is developing options to identify DACs based on a tool called CalEnviroScreen. This tool assesses census tracts with vulnerable populations that are disproportionately affected by pollution. In addition, the 2014-15 budget agreement requires ARB to develop guidelines for agencies administering cap-and-trade funds relating to maximization of benefits for DACs, as well as GHG emissions reduction reporting and quantification methods. Sustainable Communities Pursuant to SB 375 (Steinberg), Chapter 728, Statutes of 2008, ARB sets regional targets for GHG emission reductions from passenger vehicle use. SB 375 requires each of the state's 17 metropolitan planning organizations to prepare a sustainable communities strategy as part of its regional transportation plan, to help the region meet its GHG emissions reduction target. The Sustainable Communities Planning Grants and Incentives Program, authorized under Proposition 84 of 2006 and administered by the SGC, assists local governments in developing sustainable communities strategies. (Proposition 84 provides $5.4 billion in general obligation bonds for water and parks projects.) SGC was created in 2008 to help make California's communities more sustainable. In addition to the sustainable communities program, SGC administers the Sustainable Agricultural Lands Conservation Program. This program reduces GHG emissions by limiting expansive, vehicle-dependent forms of development in favor of compact, transit-oriented development. SGC's Urban Greening Grant Program, also authorized under Proposition 84, funds urban greening projects to reduce energy consumption, conserve water, and improve water and air quality. In addition, the 2014-15 budget agreement established the Affordable Housing and Sustainable Communities Program (AHSC) under SGC. AHSC provides grants to local agencies for projects to reduce GHG emissions through land use, housing, transportation, and agricultural land preservation. Eligible projects include infill housing development, transit projects to support ridership, and active transportation projects. As noted above, the 2014-15 budget agreement allocates 20% of SB 760 (Mendoza) Page 3 of ? cap-and-trade funds to AHSC beginning in 2015-16. This bill: 1.Requires SGC to develop and implement a Disadvantaged Community Enhancement Program. 2.Provides that this program shall award grants to DACs for "community enhancement improvement projects" to reduce GHG emissions in, and provide multiple environmental benefits to, DACs. 3.Provides that eligible projects shall include, but are not limited to: Land acquisitions in urban settings of blighted or contaminated properties serving little sequestration benefit for greenspace conversion Urban greening projects, including urban forestry and landscaping Park development and land protection for passive or active recreation Hardscape conversions and repurposing of lands to serve greenspace benefits Non-motorized trail and other active transportation projects Heat island mitigation Planning of a sustainable community 1.Requires SGC to award grants through a competitive process. Requires SGC to consider all of the following factors in prioritizing awards: poverty rate, unemployment rate, childhood obesity rate and incidents of asthma, availability of greenspace and venues for physical activity, lack of non-motorized infrastructure supporting an active transportation program, levels of air pollution, drinking water quality, and groundwater quality (if applicable). 2.Requires SGC to also consider the environmental benefits resulting from the project, including, but not limited to, water quality improvement; groundwater storage, recharge, or remediation; and storm water capture. 3.Requires SGC to prioritize eligible applicants and projects located wholly within distressed watershed areas with significant populations and heavy concentrations of industrial SB 760 (Mendoza) Page 4 of ? facilities and trade corridor activity. 4.Requires an applicant to articulate how the grant would be used to address the factors described above; explain what other funding sources the applicant will leverage for the project; and demonstrate how the project would help the state meet its AB 32 goals. 5.Provides that funds awarded under this program shall not supplant other sources of funding designed to benefit DACs. 6.Requires ARB to determine a methodology to quantify the carbon reduction benefits of applicant projects. COMMENTS: 1.Purpose. The author states that for expediency's sake, the first year of cap-and-trade funding was routed through existing programs; however, DAC funding was "shoehorned" into these programs without attempting to tackle the historic underinvestment in these communities in a targeted manner. The author states that the Governor's three-year investment plan for cap-and-trade monies includes no specific mention of investments in park improvements, despite the relative dearth of park space in many DACs. This bill calls for a leveraging of local resources and encourages a "cross-media" approach (air, water, toxics, park space) to enable utilization of other funding sources such as Proposition 1. (Proposition 1, approved by voters in November 2014, authorizes $7.5 billion in general obligation bonds for state water supply infrastructure projects.) 2.Why a new program? This bill specifies a number of project categories that would be eligible under the new program. It appears that most, if not all, of these project categories are already included in other programs. For example, this bill would fund "planning of a sustainable community," but SGC already administers two sustainable communities programs. This bill would also provide funds to non-motorized trail and other active transportation projects; the state Department of Transportation already administers an Active Transportation Program. This bill requires SGC to prioritize eligible applicants and projects in distressed watershed areas with significant populations and heavy concentrations of industrial facilities and trade corridor activity. Last year's budget SB 760 (Mendoza) Page 5 of ? agreement allocates $25 million in cap-and-trade funds to the Department of Fish and Wildlife for wetlands and watershed restoration. The author states that this bill seeks to establish and implement a more targeted method to allocate cap-and-trade revenues to California's DACs. The Watershed Conservation Authority, sponsor of this bill, states that it will establish a mechanism for lasting and targeted funding of greening and urban park and open space opportunities, including alternative transportation improvements, in DACs. 3.Effective use of cap-and-trade funds? Existing law (AB 1532, Pérez, Chapter 807, Statutes of 2012) specifies that cap-and-trade auction revenues must be used to facilitate the achievement of GHG emissions reductions and outlines various categories of eligible expenditures. Several new programs have already been created to distribute cap-and-trade funds, including the Low Carbon Transit Operations Program and the Transit and Intercity Capital Rail Program under the California State Transportation Agency; AHSC under SGC; and the California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program under ARB. Although a new program can target funds in a new way, it can also slow down fund allocation because existing law requires agencies to undergo a public process in order to implement a new program. 4.Assisting DACs. This bill aims to target funds to DACs. As noted above, existing law already requires a 25% set-aside of cap-and-trade funds to projects that provide benefits to DACs, and allocates a minimum of 10% of cap-and-trade funds to projects located within DACs. Existing law has also established a process for identifying DACs and for providing guidance to agencies administering cap-and-trade funds to maximize benefits for DACs. The program proposed by this bill may be inconsistent with the SB 535 requirements and process. 5.Double referral. This bill has also been referred to the Environmental Quality Committee. Related Legislation: AB 156 (Perea), pending hearing in the Assembly Natural Resources Committee, requires ARB to establish a comprehensive SB 760 (Mendoza) Page 6 of ? technical assistance program, and a three-year investment plan, to assist DAC applicants. AB 1336 (Salas), also in the Assembly Natural Resources Committee, requires a minimum of 40% of cap-and-trade funds to be allocated to projects that provide benefits to DACs. FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No POSITIONS: (Communicated to the committee before noon on Wednesday, April 8, 2015.) SUPPORT: Watershed Conservation Authority (sponsor) Safe Routes to Schools National Partnership OPPOSITION: None received. -- END --