BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        SB 824|
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                                   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  








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              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  







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                 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  







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              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







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          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  







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            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  







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            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







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          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.  









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          Prepared by:Erin Riches / T. & H. / (916) 651-4121
          5/31/16 20:45:38


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