BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 824| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 824 Author: Beall (D) Amended: 5/31/16 Vote: 21 SENATE TRANS. & HOUSING COMMITTEE: 10-1, 4/19/16 AYES: Beall, Cannella, Allen, Bates, Galgiani, Leyva, McGuire, Mendoza, Roth, Wieckowski NOES: Gaines SENATE APPROPRIATIONS COMMITTEE: 6-1, 5/27/16 AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza NOES: Nielsen SUBJECT: Low Carbon Transit Operations Program SOURCE: Santa Clara Valley Transportation Authority DIGEST: This bill modifies the Low Carbon Transit Operations Program (LCTOP). ANALYSIS: Existing law: 1) Establishes the Transit and Intercity Rail Capital Program (TIRCP) (SB 862, Committee on Budget, Chapter 36, Statutes of 2014), a competitive grant program to fund capital improvements and operational investments that reduce greenhouse gas (GHG) emissions and modernize California's intercity, commuter, and urban rail and bus systems to achieve specific policy objectives. Program goals include SB 824 Page 2 providing at least 25% of available funding to projects that provide a direct benefit to disadvantaged communities (DACs). Existing law continuously appropriates 10% of annual greenhouse gas reduction funds (GGRF) to TIRCP beginning in 2015-16. 2) Establishes the LCTOP (SB 862), which provides operating and capital assistance for transit agencies to reduce GHG emissions and improve mobility, with a priority on serving DACs. Eligible projects include new or expanded bus or rail services and expanded intermodal transit facilities, and may include equipment acquisition, fueling, maintenance, and other costs to operate those services or facilities. All projects must reduce GHG emissions. Funds are allocated to transit agencies pursuant to the State Transit Assistance statutory formula. For agencies whose service area includes DACs, at least 50% of the total monies received must be spent on projects that will benefit DACs. Existing law continuously appropriates 5% of annual GGRF funds to LCTOP beginning in 2015-16. 3) Makes a number of modifications to the TIRCP (SB 9, Beall, Chapter 710, Statutes of 2015), including: a) Requiring funding of 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. b) Eliminating operations funding as an eligible use of TIRCP funds. c) Authorizing the California State Transportation Agency (CalSTA) to make multiyear funding commitments. d) Requiring CalSTA to maximize the total amount of GHG emission reductions achieved under the program. e) Establishing a process whereby an agency applying for funds for a multiyear project can obtain a letter of no prejudice (LONP) from CalSTA to allow the agency to SB 824 Page 3 advance its own fund and be eligible for future reimbursement from the program. This bill: 1) Provides that a recipient transit agency must demonstrate that a project reduces GHG emissions in order to receive LCTOP funds. 2) Allows a recipient transit agency to use LCTOP monies for the costs to operate new or expanded service in the fiscal year in which the service is first implemented, and in any subsequent fiscal year if the agency can demonstrate that additional GHG emissions reductions can be realized. 3) Allows a recipient transit agency to use LCTOP monies to purchase zero-emission buses, including electric buses, or to install necessary equipment and infrastructure related to such buses. 4) Requires a recipient transit agency for capital projects to: a) Specify the phases of work for which it is seeking an LCTOP allocation; b) Identify the sources and timing of all monies required to undertake and complete any phase of a project for which it is seeking an LCTOP allocation; and c) Describe intended sources and timing of funding to complete any subsequent phases of the project, through construction or procurement. 5) Allows a recipient transit agency that does not submit a project for funding in a particular fiscal year to retain its funding share for an unlimited number of fiscal years and to utilize the accumulated funding share in a subsequent fiscal year. Requires the recipient transit agency to specify the number of fiscal years it intends to retain its share and the expenditure for which it is intended. 6) Allows a recipient transit agency, in any fiscal year, to loan or transfer its funding share to another recipient SB 824 Page 4 transit agency in the same region for any identified eligible expenditure under LCTOP. 7) Allows a recipient transit agency to apply to Caltrans to reassign to another eligible expenditure under LCTOP any savings or surplus monies allocated from LCTOP, or any previously allocated LCTOP monies for an expenditure that the agency has determined is no longer a priority. 8) Expands the audit of public transit operator finances required by existing law to include verification of receipt and appropriate expenditure of LCTOP monies. Requires each recipient transit agency receiving LCTOP monies in a fiscal year for which an audit is conducted to transmit a copy of the audit to Caltrans, and requires Caltrans to make these audits available to the Legislature and Controller upon request. 9) Allows a recipient transit agency to apply to Caltrans for an LONP for program expenditures authorized by Caltrans. Allows the recipient transit agency, if the request is approved, to spend its own monies and to be eligible for future reimbursement from LCTOP. Provides that reimbursement shall be made if: a) The authorized expenditures have commenced and any regional or local expenditures, if applicable, have been incurred; b) The expenditures are eligible under LCTOP; c) The recipient transit agency complies with all legal requirements for the project, including the California Environmental Quality Act, if applicable; and d) Sufficient GGRF monies are available. 10) Requires the recipient transit agency and Caltrans to enter into an agreement governing LONP reimbursement. 11) Authorizes Caltrans to develop guidelines to implement the LONP provisions of this bill. Comments SB 824 Page 5 1)TIRCP v. LCTOP. SB 9 of last year eliminated operations as an eligible expenditure under TIRCP. This resulted in TIRCP exclusively funding transit capital projects. On the other hand, while LCTOP was created to provide both operating and capital assistance, LCTOP currently requires a recipient agency to, among other things, demonstrate that the funds will "directly enhance or expand transit service to increase mode share," which is primarily an operating expense. Both programs were created under SB 862, and both are funded with GGRF monies, but they also differ in that LCTOP funds are allocated to transit agencies on a formula basis, while TIRCP is a competitive grant program. 2)Moving funds around. This bill provides flexibility for recipient transit agencies to loan or transfer funds among themselves. The Santa Clara Valley Transportation Authority (VTA), sponsor of this bill, states that this flexibility will help ensure that an agency that is not ready to move forward with a project in a particular year can loan its share to another agency which has insufficient funds to advance an eligible project. (Currently, LCTOP program guidelines allow transfers but require the agency to demonstrate "mutual benefit.") It will also help ensure that if an agency has a share so small that it is outweighed by the costs (in staff time) of preparing the application, or an agency does not currently have an eligible use for its share, or did not spend its entire share due to project savings, it can transfer it to another agency within the same region. 3)Streamlining project eligibility. Existing law requires a recipient transit agency to demonstrate that a project receiving LCTOP funds increases mode share, expands service, benefits DACs, and reduces GHG emissions. However, this bill intends to establish greater flexibility relative to how LCTOP funds can be used for the above-mentioned eligible projects that aim to reduce GHG emissions. VTA, sponsor of this bill, states that by maximizing flexibility for eligible project expenditures, this bill ensures that agencies will be able to use their formula shares for the broadest array of projects and services to reduce GHG emissions, including the purchase of zero-emission electric buses to replace diesel buses. 4)Funding operating costs beyond the first year. This bill SB 824 Page 6 allows an agency to continue to use its LCTOP share to support new or expanded service beyond the first year in which the service is implemented, provided it can demonstrate that additional GHG reductions will be achieved beyond the first year. The author states that this provision addresses the fact that it often takes more than one year for new service to "ramp up" to projected ridership - and, by extension, for projected mode share and GHG reductions to be realized. 5)Audit streamlining. Existing law, the Transportation Development Act (TDA), requires all public transit agencies to undergo a financial audit each year. This bill includes LCTOP in that audit, rather than subjecting agencies to a separate audit just for LCTOP. 6)LONPs. Last year's SB 9 authorized TIRCP grant recipients to receive an LONP from CalSTA, which enables the recipient to spend alternative funds on a project and later be reimbursed from TIRCP. This bill includes similar LONP provisions for LCTOP, enabling an agency to advance its project using local dollars with the promise of later LCTOP reimbursement, rather than having to wait for the LCTOP allocation. This bill was amended on April 11 to ensure that the LONP provisions apply to both capital and operating expenditures. 7)Recent amendments. To help address opposition concerns, the author amended this bill in the Senate Appropriations Committee to remove the authorization for a recipient transit agency to use LCTOP monies for any expenditure for which it can demonstrate GHG emissions reductions. Instead, this bill now allows expenditures to purchase zero-emission buses or install related equipment and infrastructure. In addition, the author amended this bill to delete a provision allowing recipient transit agencies to pool funds among themselves. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee: 1)Unknown cost pressures, to the extent the bill expands eligible projects to include expenditures for the purchase of zero-emission buses and necessary equipment and infrastructure SB 824 Page 7 to operate and support those buses. (Greenhouse Gas Reduction Fund - GGRF) 2)Caltrans administrative costs in the range of $100,000 to $200,000 to adopt revised program guidelines, administer the LONP process, and manage workload related to expanded audit procedures. (State Highway Account) 3)Estimated California Air Resources Board (ARB) costs of approximately $154,000 annually for one position to coordinate with Caltrans on the adoption of program guidelines, and provide guidance on tracking and reporting GHG reductions and disadvantaged communities' benefits. (GGRF) SUPPORT: (Verified5/27/16) Santa Clara Valley Transportation Authority (source) Alameda-Contra Costa Transit District Associated General Contractors Bay Area Rapid Transit District California Transit Association Central Contra Costa Transit Authority Foothill Transit Los Angeles County Metropolitan Transportation Authority Metropolitan Transportation Commission Monterey-Salinas Transit Napa Valley Transportation Authority Peninsula Corridor Joint Powers Board (Caltrain) San Bernardino Associated Governments San Mateo County Transit District San Mateo County Transportation Authority Ventura County Transportation Commission OPPOSITION: (Verified5/27/16) Asian Pacific Environmental Network California Bicycle Coalition California Housing Partnership Corporation California ReLeaf Housing California SB 824 Page 8 Move L.A. Public Advocates Safe Routes to School National Partnership TransForm Trust for Public Land ARGUMENTS IN SUPPORT: The author states that existing law and program guidelines place unnecessary limits on how LCTOP shares are spent. These limits undermine recipient agencies' ability to use the funds in ways that could maximize GHG reductions. This bill gives public transit agencies additional tools and greater flexibility for utilizing LCTOP formula shares, as well as including several administrative streamlining provisions. This bill will help recipient agencies manage program funds more efficiently and effectively, similar to changes made to TIRCP by the author's 2015 legislation. ARGUMENTS IN OPPOSITION: Opponents' state that by eliminating the mode share and service requirements, this bill undermines the basic goals of the program. The opponents assert, "Many federal and state funding programs already support capital expansion of transit," including TIRCP. Specifically, TransForm writes: TransForm understands the need to address certain issues with LCTOP, including the amounts of money to smaller, largely rural agencies, and the potential "yo-yo" funding to service to meet the target of ridership increases and new service year over year. However, SB 824 doesn't address these issues in ways that meet the needs of disadvantaged communities or low-income households, who rely overwhelmingly on bus transit when it's reliable and within reach. While opponents have expressed a desire to retain the existing eligibility criteria for LCTOP projects, the author and proponents assert that the intent of this bill is to provide local transit agencies with the flexibility to ultimately achieve reductions in GHG emissions based on their regional needs. SB 824 Page 9 Prepared by:Erin Riches / T. & H. / (916) 651-4121 5/31/16 20:45:38 **** END ****