BILL ANALYSIS Ó SB 824 Page 1 SENATE THIRD READING SB 824 (Beall) As Amended August 18, 2016 Majority vote SENATE VOTE: 26-11 -------------------------------------------------------------------- |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+-----------------------+---------------------| |Transportation |12-1 |Frazier, Linder, |Melendez | | | |Baker, Bloom, Brown, | | | | |Chu, Daly, Dodd, | | | | |Eduardo Garcia, Gomez, | | | | |Nazarian, O'Donnell | | | | | | | |----------------+-----+-----------------------+---------------------| |Appropriations |14-2 |Gonzalez, Bloom, |Gallagher, Obernolte | | | |Bonilla, Bonta, | | | | |Calderon, Daly, | | | | |Eggman, Eduardo | | | | |Garcia, Holden, Quirk, | | | | |Santiago, Weber, Wood, | | | | |McCarty | | | | | | | | | | | | -------------------------------------------------------------------- SB 824 Page 2 SUMMARY: Makes various program changes to the Low Carbon Transit Operations Program (LCTOP). Specifically, this bill: 1)Recasts and streamlines the requirements for eligible uses of funding for LCTOP for operating or capital assistance projects by requiring transit agencies to meet any, instead of all, of the following expanded criteria: a) Directly enhance or expand transit service by supporting new or expanded bus or rail services or water-borne transit; and expanded intermodal transit facilities, including equipment acquisition, fueling, maintenance, and other costs of operating the facility; b) Operational expenditures to increase transit mode share; or, c) The purchase of zero-emission buses, including electric buses, and the installation of the necessary equipment and infrastructure to operate and support those zero-emission buses. 1)Allows a transit agency to use LCTOP funds for continued operations of new or expanded transit services or programs previously funded from LCTOP if the agency can demonstrate continued reductions in greenhouse gas emissions (GHG). 2)Requires a transit agency proposing to use LCTOP expenditures on capital projects to submit information to the California Department of Transportation (Caltrans), specifying the phases of work for which the agency is seeking an allocation, SB 824 Page 3 identifying the sources and timing of all moneys required for the project, and describing the intended sources of funding and timing to complete any subsequent phase. 3)Allows a transit agency to retain their funding share, for no more than four years, to accumulate and utilize funding in a subsequent year for a larger expenditure. Requires the agency to specify the number of years it intends to retain its share and on what the agency intends to spend the funds. 4)Allows a transit agency to loan or transfer its funding share, in a fiscal year, to another eligible transit agency within the same region. 5)Allows a transit agency to apply to Caltrans to reassign any project savings to another or reassign funds from a previously approved project to another eligible expenditure. 6)Allows a transit agency to apply to Caltrans for a letter of no prejudice (LONP) for eligible expenditures under the program to allow the agency to expend its own resources and be eligible for reimbursement from its future funding share. 7)Requires the state to reimburse the transit agency for the LONP if all of the following are met: a) The expenditures have commenced and regional or local expenditures have been incurred; b) The expenditures made by the transit agency are eligible for the program; SB 824 Page 4 c) The recipient transit agency has complied with all applicable legal requirements, including the California Environmental Quality Act (CEQA), and federal and state civil rights and environmental justice laws; and, d) There are funds available from the Greenhouse Gas Reduction Fund (GGRF) designated for the program and from the transit agency's formula allocation. 1)Requires Caltrans and the transit agency to enter into an agreement governing the LONP reimbursement. 2)Allows Caltrans to develop guidelines for the use of the LONP. 3)Requires transit agencies receiving LCTOP funding to demonstrate that the expenditures do not supplant another source of funds. 4)Expands the contents of the existing audit of transit agencies required under the Transportation Development Act to include verification and receipt of funds from LCTOP and requires a copy of the audit be sent to Caltrans to be available to the Legislature or the Controller for review. 5)Requires that transit agencies comply with all applicable legal requirements, including the CEQA, and federal and state civil rights and environmental justice laws and clarifies that the section does not expand any of those laws to the agencies. SB 824 Page 5 FISCAL EFFECT: According to the Assembly Appropriations Committee: 1)Ongoing special fund costs to Caltrans, which administers the LCTOP, of $200,000 for two positions to revise program guidelines, establish systems for tracking the LONP process, monitor transit agencies' accounting for and use of funds, as modified by the bill, prepare the Legislature report, and for workload associated with the expanded audit requirements. 2)Ongoing special fund cost to the Air Resources Board of $160,000 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. 3)Potentially significant cost pressures, from expanding eligible use of LCTOP funds to include expenditures for the purchase of zero-emission buses and equipment and infrastructure to operate and support those buses. COMMENTS: LCTOP was created by SB 862 (Committee on Budget and Fiscal Review), Chapter 36, Statutes of 2014, as part of a comprehensive package of programs to target GHG reductions in California using funds generated by the state's cap and trade program. LCTOP is administered by Caltrans and is continuously appropriated 5% of GGRF funds. In 2014-15, LCTOP received $25 million, and in 2015-16 it was funded at $100 million. Although, the Governor's January 2016-17 Budget proposed $100 million for the program, it is unclear what the funding level will be for this year. Specifically, LCTOP was created to provide operating and capital assistance for transit agencies to reduce GHG emission and SB 824 Page 6 improve mobility, with a priority on serving disadvantaged communities. Currently, approved projects in LCTOP support new or expanded bus or rail services and expand intermodal transit facilities and may include equipment acquisition, fueling, maintenance, and other costs to operate those services or facilities, with each project reducing GHG emissions. For transit agencies whose service area includes disadvantaged communities, at least 50% of the total moneys received shall be expended on projects that will benefit disadvantaged communities. Currently, for operations, LCTOP supports only new and expanded transit service that increase mode share - shift new riders out of their cars - to reduce GHG emissions. Prior to receiving an allocation, which is distributed by the State Controller following the State Transit Assistance (STA) formula, eligible transit agencies must submit a description of their proposed expenditures and demonstrate how each expenditure will reduce GHG emissions. According to the author, this bill makes a few modest adjustments to the existing LCTOP that will give transit agencies more flexibility in how they spent the funds they receive from the program. More Flexibility: This bill contains numerous changes to the LCTOP program, which give more flexibility to transit agencies to utilize the funds. Specifically, this bill allows transit agencies to use LCTOP funding to support new or expanded transit service and continue funding the operation of that service in subsequent years as long as the service continues to help reduce GHGs. Additionally, this bill authorizes the use of a LONP so that transit agencies can utilize their own resources to initiate new or expanded service or commence a capital project or expenditure and be reimbursed from their future formula share of the program. SB 824 Page 7 Existing Practices: This bill also codifies numerous existing practices in LCTOP. Specifically, this bill allows a transit agency to "bank" their formula fund share, for no more than four years, to save up sufficient funds to use for a larger expenditure. Additionally, agencies that are not ready to move forward can loan or transfer their LCTOP formula share to another eligible agency in the region, or the transit agency can reassign their funds to another eligible project and retain any savings from a project for future eligible uses. Please see the policy committee analysis for full discussion of this bill. Analysis Prepared by: Melissa White / TRANS. / (916) 319-2093 FN: 0004361