DATE:
TO:
FROM:
SUBJECT:
July 31, 2013
Housing and Land Use Committee and Transportation Policy Committee
Stephanie Ilagan, Housing Coordinator, and Bena Chang, Director, Hsg & Trans
Cap-and-Trade Investment Priorities
ACTION
Provide feedback and input on how transportation revenue from cap-and-trade should be
spent.
BACKGROUND
In 2006, Governor Schwarzenegger signed AB 32, the Global Warming Solutions Act. AB 32
requires a reduction of greenhouse gas (GHG) emissions to 1990 levels by 2020. A key
component of AB 32 is the cap-and-trade program. The cap-and-trade program applies an
aggregate greenhouse gas allowance cap on covered entities (mostly utilities and large
industrial sources) and provides a trading mechanism for unused credits. The emissions cap is
designed to decline over the life of the program. In the Governor’s budget proposal, cap-andtrade is expected to raise $400 million in FY 2013–2014. Additional revenue is expected to
come from the transportation sector when fuel distributors come under the cap in 2015.
In 2008, Governor Schwarzenegger signed into law SB 375 as a companion piece to AB 32. SB
375, also referred to as the Sustainable Communities and Climate Protection Act, requires that
the Air Resources Board create regional targets to reduce GHG emissions. Each region of the
state is covered by a metropolitan planning organization (MPO), which is required through this
legislation to create a sustainable communities strategy (SCS). This strategy illustrates how the
region will meet its GHG reduction target through integrated land use, housing, and
transportation management. Existing revenue funds certain aspects of the SCS but there
currently is not a statewide funding source specifically dedicated to achieving regional
sustainable community strategies.
In this legislative session there are two bills that seek to use revenue generated from the
transportation sector under cap-and-trade to achieve objectives from the Sustainable
Communities Strategy. The two bills provide very different approaches.
AB 1051 (Bocanegra), which is sponsored by TransForm, requires that the state create a
Sustainable Communities for All program. This program’s goal is to provide transportation and
housing choices that allow lower income Californians to drive less and reduce their household
costs. This bill identifies specific categories that would be funded by cap-and-trade revenue
including expanded and improved transit services, transit maintenance, affordable transitoriented residential development, expanded bike and pedestrian networks, expanded carpool
programs, energy efficiency improvement in existing multifamily rental homes, and open space
protection. These funds are distributed by statewide competitive grants.
AB 574 (Lowenthal) is sponsored by Transportation Coalition for Livable Communities, a
coalition of regional governments and transit/transportation agencies. The bill sets
performance goals and allows regions to figure out how to spend funds to best achieve the
goals and their Sustainable Communities Strategies. Transportation agencies historically have
opposed using transportation funds for non-transportation purposes like affordable housing.
Unlike AB 1054, AB 574 does not include a set-aside for housing.
In the Bay Area, the Metropolitan Transportation Commission (MTC) and the Association for
Bay Area Governments (ABAG) recently adopted the Bay Area’s SCS, known as Plan Bay Area.
Plan Bay Area includes a reserve account specifically for projected cap-and-trade revenues to
be used for transit-oriented affordable housing, transit operating and capital rehabilitation and
replacement, and for local street and road rehabilitation.1 Plan Bay Area does not assign
revenue to any of these eligible categories.
ANALYSIS
Last year, the Leadership Group adopted a broad set of principles on cap-and-trade
expenditures. The full list of AB 32 Cap-and Trade Investment Opportunities document is
attached. The principles focused on Clean and Efficient Energy and Next-Generation LowCarbon Transportation, Natural Resources Management, and Sustainable Infrastructure
Development. Specifically on transportation investments, we support transportation efficiency
measures, land use incentives and improved transportation options.
Staff seeks additional input on the priorities among the various principles. Specifically, is this
organization comfortable with spending revenue raised from the transportation sector on
transit-oriented and/or affordable housing.
To help facilitate the discussion, staff put together a table summary cost for development and
CO2 reductions per year for various projects that could be funded under cap-and-trade.
Tons of CO2 reduced
per year
Cost
People
Cost/ton of CO2
reduced annually
Affordable transitoriented Housing 2
3 per unit
$356,583/unit
3 per unit
$118,861
Bus Rapid Transit (El
Camino)3
9,188 total
$13 million/mile
33,000 daily
$23,487
BART extension to
Silicon Valley
28,947 total4
$368,750,000/mile5
794,894 daily6
$203,820
Bike Lanes in SF
5,300 total7
$529,411/mile8
11,640 daily in San Jose9
$3,396
1
Average trip of 3.3 miles
http://onebayarea.org/pdf/final_supplemental_reports/FINAL_PBA_Financial_Assumptions.pdf
Michael Lane, NonProfit Housing
3 http://www.vta.org/brt/el_camino.html
4 http://www.bart.gov/images/bluesky/GreenSheet.pdf
5
http://www.walkinginfo.org/engineering/roadway-bicycle.cfm
6 http://www.vta.org/bart/images/Environmental/draft_seir/4_2.pdf
7 http://www.spur.org/publications/library/report/critical_cooling/option21
8 http://www.spur.org/publications/library/report/critical_cooling/option21
9
http://sf.streetsblog.org/2012/08/21/san-jose-sets-out-to-build-the-bay-areas-most-bike-friendly-downtown/
2
High-Speed Rail 10
100,000 total
$1,375,000/mile
87,677 daily
$11,000
Questions for the Housing and Land Use and Transportation Policy Committees to consider:
1. Should revenue from cap-and-trade be allocated through statewide competitive
grants or to individual regions?
2. Should transportation revenue from cap-and-trade be invested in affordable
housing?
10
http://www.hsr.ca.gov/docs/about/legislative_affairs/HSR_Reducing_CA_GHG_Emissions_2013.pdf