BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 824


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          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                |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |
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                                                                     SB 824


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          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,  








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            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; 









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             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.  
             










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          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  








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          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.  








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          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