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
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          |Author:   |Mendoza                                               |
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          |Version:  |4/6/2015    Amended                                   |
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          |Urgency:  |No                     |Fiscal:      |Yes             |
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          |Consultant|Erin Riches                                           |
          |:         |                                                      |
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          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  







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          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  








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          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  








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            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  








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            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  








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          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.


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