MEMORANDUM. Santa Clara Valley Transportation Authority

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1 MEMORANDUM TO: FROM: Board of Directors Kurt Evans, Government Affairs Manager DATE: September 12, 2014 SUBJECT: Legislative Update: Cap-and-Trade Together, the FY 2015 Budget Act and SB 862, a budget trailer bill that was approved by the California State Legislature and signed into law by Gov. Jerry Brown, put in place both a short-term and a long-term plan for the expenditure of proceeds derived from cap-and-trade auction sales. The Budget Act contains a one-time appropriation of $872 million in cap-and-trade auction proceeds, while SB 862 establishes a framework for the future investment of these revenues, as follows: Low-Carbon Transit Operations Program: The Budget Act appropriates $25 million in FY 2015, while SB 862 dedicates 5 percent of all future cap-and-trade auction proceeds, beginning in FY 2016, to a new Low Carbon Transit Operations Program. This formula-based program will provide operating and capital assistance to public transit agencies to reduce greenhouse gas emissions, improve mobility, and enhance or expand service to increase mode share. Funding will flow to public transit agencies according to the State Transit Assistance Program (STA) formula. For public transit agencies whose service areas include disadvantaged communities, at least 50 percent of their funding must be used for projects or services that benefit those communities. Caltrans will serve as the grant administrator for the Low-Carbon Transit Operations Program, and will be responsible for reviewing and approving the proposed list of expenditures submitted by each public transit agency for its formula share of the funding. Transit and Intercity Rail Capital Program: The Budget Act appropriates $25 million in FY 2015, while SB 862 allocates 10 percent of all future cap-and-trade auction proceeds, beginning in FY 2016, to a new Transit and Intercity Rail Capital Program. This competitive grant program is intended to fund capital improvements and operational investments that will reduce greenhouse gas emissions, and modernize intercity, commuter and urban transit systems. The California State Transportation Agency (CalSTA) will be responsible for developing and adopting guidelines for the Transit and Intercity Rail Capital Program, evaluating applications based on those guidelines, and submitting a list of projects recommended for funding to the California Transportation Commission (CTC). The CTC will award grants to eligible applicants using the list prepared by CalSTA. SB 862 requires 25 percent of the money allocated to the Transit and Intercity Rail Capital Program to be spent in a way that benefits disadvantaged communities.

2 Affordable Housing and Sustainable Communities Program: The Budget Act appropriates $130 million to a new Affordable Housing and Sustainable Communities Program in FY Meanwhile, SB 862 sets aside 20 percent of all future cap-and-trade auction proceeds, beginning in FY 2016, for this program. The Affordable Housing and Sustainable Communities Program will provide grant funds on a competitive basis for projects that reduce greenhouse gas emissions through the implementation of land-use, housing, transportation, and agricultural land preservation practices that support infill and compact development. Under the provisions of SB 862, the types of projects that would be eligible for funding include: affordable housing that supports infill and compact development; public transit capital projects and programs that support ridership; pedestrian and bicycle facilities; transit-oriented development; complete streets; acquisition of easements to protect agricultural lands; and planning to support the implementation of a sustainable communities strategy. The Strategic Growth Council will be responsible for developing and administering the Affordable Housing and Sustainable Communities Program. The council is required to coordinate with metropolitan planning organizations (MPOs) and other regional agencies to identify and recommend projects for funding. SB 862 establishes a goal of spending 50 percent of available funding to benefit disadvantaged communities. In addition, at least half of the money must be used for affordable housing projects. High-Speed Rail: For FY 2015, the Budget Act appropriates $250 million in cap-and-trade auction proceeds for the construction of the initial piece of the state s proposed high-speed rail system in the Central Valley, and for further environmental and design work related to other segments of the project. In addition, SB 862 allocates 25 percent of the annual amount of cap-and-trade auction proceeds to high-speed rail, beginning in FY Miscellaneous: The FY 2015 Budget Act appropriates $197 million to the California Air Resources Board (CARB) to augment its existing programs for providing rebates for zero-emission cars, as well as vouchers for hybrid and zero-emission trucks and buses. Beginning in FY 2016, SB 862 calls for setting aside 40 percent of annual cap-and-trade auction proceeds for low-carbon transportation, as well as for energy efficiency, clean energy, weatherization, wetlands and coastal watersheds, fire prevention and urban forestry, and waste diversion. How much would be appropriated in any given fiscal year to each of these categories would be determined by the Legislature during the annual budget process. Guidelines for each program will need to be developed by the state agencies that are tasked by SB 862 to implement them. In addition, CARB, in conjunction with the California Environmental Protection Agency (CalEPA), is required to craft guidelines related to certain elements that would govern all of the programs created by SB 862, such as the identification of disadvantaged communities, a process for determining how investments would benefit those communities, and standardized methods for measuring greenhouse gas emissions reductions and other co-benefits. The Strategic Growth Council was the first state agency to hold a public meeting related to cap-andtrade auction proceeds after the enactment of the FY 2015 Budget Act and SB 862. In July, the council took action to delegate the administration of the Affordable Housing and Sustainable Communities Program to the Department of Housing and Community Development. The Strategic Growth Council also announced that it intended to model the Affordable Housing and Sustainable Communities Program after other, similar programs managed by the state, such as the Proposition 1C 2

3 Transit-Oriented Development and Infill Infrastructure Programs, and the Williamson Act Agricultural Land Preservation Program. During the month of August, the Strategic Growth Council held three public workshops on the Affordable Housing and Sustainable Communities Program, while CalSTA and Caltrans conducted a series of joint workshops on the Low Carbon Transit Operations, and Transit and Intercity Rail Capital Programs. In each case, the purpose of the workshops was to receive public input prior to the release of draft program guidelines. It is expected that draft guidelines for these three programs will be released either sometime this month or in early October, setting off another round of public workshops. The Strategic Growth Council, CalSTA and Caltrans all have established a goal of having final program guidelines in place by January Once these three agencies have finalized their program guidelines, they will do a call for projects to be funded with cap-and-trade auction proceeds appropriated in the FY 2015 Budget Act. Meanwhile, CARB and CalEPA have been seeking public input on a methodology for identifying disadvantaged communities. While SB 862 establishes specific targets for some individual programs, SB 535 (de Leon) sets the overall goal of directing at least 25 percent of all cap-and-trade auction proceeds to projects that would not only reduce greenhouse gas emissions, but also provide a benefit to disadvantaged communities, with a minimum of 10 percent going for projects that are physically located within such a community. Enacted in 2012, SB 535 charges CalEPA with identifying disadvantaged communities for this purpose based on geographic, socioeconomic, public health, and environmental hazard criteria. In August, CalEPA released a report entitled Approaches to Identifying Disadvantaged Communities. This report discusses various options for configuring a tool called CalEnviroScreen using different inputs to identify disadvantaged communities pursuant to SB 535. CalEnviroScreen was initially developed several years ago by the Office of Environmental Health Hazard Assessment to identify communities in the state that are most burdened by pollution and most vulnerable to its effects, taking into account socioeconomic characteristics and underlying health. While CalEnviroScreen was not specifically designed to implement SB 535, both CARB and CalEPA have determined that it is an appropriate tool to use to identify disadvantaged communities for this purpose. CalEnviroScreen relies on data generated from 19 different variables to come up with a score for every census tract in the state. These variables fall into two broad areas: (1) pollution exposure and environmental effects; and (2) population characteristics and socioeconomic factors. CalEPA s Approaches to Identifying Disadvantaged Communities report outlines five different ways to combine the different CalEnviroScreen variables to determine an overall score for each census tract to be compared with a yet-to-be-determined threshold. Census tracts with scores above the threshold (i.e., the top 20 percent) would be identified as disadvantaged communities for the expenditure of capand-trade auction proceeds. Since the release of the Approaches to Identifying Disadvantaged Communities report, CalEPA has held several workshops to solicit public input and has indicated that it will adopt a preferred option before the end of this month. Meanwhile, CARB has released and held a series of public workshops on a second document called Interim Guidance to Agencies Administering Greenhouse Gas Reduction Fund Monies. This draft document provides state administering agencies with interim guidance on how to maximize the 3

4 benefits of investments made with FY 2015 cap-and-trade auction proceeds to disadvantaged communities. It outlines criteria to be used by state administering agencies to determine if a proposed project is located in or provides benefits to a disadvantaged community. CARB is expected to finalize the interim guidance before the end of this month. This fall, CARB will begin working on full funding guidelines to be adopted in mid The full funding guidelines will provide direction to state administering agencies regarding methods to be used to quantify greenhouse gas emissions reductions and other co-benefits for proposed projects. In addition, this document will spell out metrics for tracking and reporting investments in disadvantaged communities. The interim guidance will be incorporated into the full funding guidelines. CARB intends for state administering agencies to begin using the full funding guidelines in FY

5 September 10, 2014 The Honorable Edmund G. Brown Jr. Governor, State of California State Capitol Sacramento, CA Dear Governor Brown: The (VTA) supports AB 1783 (Jones-Sawyer) and respectfully requests that you sign this bill into law. AB 1783 extends an existing exemption for public transit workers from the requirements of the Public Employees Pension Reform Act of 2013 (PEPRA) until January 1, 2016, pending a ruling from the courts as to whether the act violates a provision in federal law known colloquially as 13(c). As you know, shortly after the enactment of PEPRA, several unions representing public transit workers began filing objections with the U.S. Department of Labor (DOL) claiming that the changes to public employee retirement benefits in the new law were not negotiated and, therefore, are inconsistent with 13(c). Enacted in 1964 as part of the Urban Mass Transit Act, 13(c) requires DOL to certify that public transit agencies are preserving their employees collective bargaining rights as a condition of receiving federal grant funding. In response to the unions, DOL refused to certify one of the grants submitted by the Sacramento Regional Transit District (SacRT), a decision that was legally challenged. At the same time, AB 1222 (Bloom) was enacted to exempt public transit workers from PEPRA until January 1, 2015, which persuaded DOL to certify and release federal grant funds for California public transit agencies while the SacRT case was being litigated. When AB 1222 was crafted, it was assumed that the federal district court would rule on the SacRT case and thereby resolve the fundamental legal question by January 1, Unfortunately, the court decision is still pending and may not occur before the end of the calendar year. Therefore, AB 1783 is needed to extend the PEPRA exemption for public transit workers to allow more time for the legal process to play out. Without this bill and without a court ruling, it is expected that DOL would begin holding up grant applications submitted by California public transit agencies come January 1, We respectfully seek your support for AB Thank you for your consideration of our request. Sincerely, Ash Kalra, Chairperson Board of Directors

6 September 9, 2014 The Honorable Edmund G. Brown Jr. Governor, State of California State Capitol Sacramento, CA Dear Governor Brown: The (VTA) supports AB 1193 (Ting) and respectfully requests that you sign this bill into law. AB 1193 provides cities and counties with more flexibility when it comes to design standards used to plan and construct bikeway facilities on their local streets and roads. Current state law defines bikeways to mean all facilities that provide primarily for bicycle travel, and categorizes these facilities into three different classes: (1) bike paths; (2) bike lanes; and (c) bike routes. For each class of bikeways, Caltrans is required to establish minimum safety design criteria and standards, which apply not only to bikeways on the state highway system, but also to those on local streets and roads under the jurisdiction of cities and counties that are not part of the state highway system. Cities and counties are required to use these criteria and standards when planning and constructing bikeways on their local roadway systems, unless they obtain a design exception from Caltrans. This process is cumbersome, time-consuming and expensive. If a design exception is approved, the bikeway facility is considered to be temporary, with removal sometimes required by Caltrans after an experimentation period. AB 1193 was introduced to encourage the implementation of innovative bicycle facilities that have been shown to dramatically increase bicycling and improve safety in other metropolitan areas around the country. The bill contains a number of key provisions. First, AB 1193 establishes cycle tracks as a fourth class of bikeways under state law. Cycle tracks are bikeways that are separated from the roadway by a physical barrier, such as a grade separation, flexible posts, inflexible physical barriers, or on-street parking. While already well-established in numerous bicycle-friendly European cities, cycle tracks are becoming more prevalent in major metropolitan areas in the United States and in California. Second, similar to the other classes of bikeways defined in state law, AB 1193 requires Caltrans, by January 1, 2016, to establish minimum safety design criteria and standards for the planning and construction of cycle tracks. Third, the legislation eliminates the Caltrans design exception process. Instead, AB 1193 allows cities and counties to use either the minimum safety design criteria and standards developed by the department for cycle tracks and the other three classes of bikeways defined in state law, or their own, if those criteria: (1) have been reviewed and approved by a qualified engineer; (2) are adopted by resolution at a public meeting; and (3) adhere to guidelines established by a national association of public agency transportation officials, such as the National Association of City Transportation Officials (NACTO).

7 The Honorable Edmund G. Brown Jr. Support for AB 1193 (Ting) September 9, 2014 Page Two The intent of AB 1193 is to modernize bikeway design practices, and encourage the development of innovative bicycle facilities in California. It provides more flexibility to cities and counties by allowing them to adopt their own minimum safety design criteria and standards for bikeway facilities on their local roadway systems, rather than being forced to use the criteria established by Caltrans. In essence, AB 1193 gives cities and counties similar authority when it comes to the planning and construction of bikeways on their own streets and roads that they currently have with regard to the roadways themselves. We respectfully seek your support for AB Thank you for your consideration of our request. Sincerely, Ash Kalra, Chairperson Board of Directors

August 12, The Honorable Edmund G. Brown Jr. Governor, State of California State Capitol Sacramento, CA Dear Governor Brown:

August 12, The Honorable Edmund G. Brown Jr. Governor, State of California State Capitol Sacramento, CA Dear Governor Brown: August 12, 2014 The Honorable Edmund G. Brown Jr. Governor, State of California State Capitol Sacramento, CA 95814 Dear Governor Brown: The (VTA) supports AB 1720 (Bloom) and respectfully requests that