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Solimar Research

Insight: Will SGC money pay for planning or implementation?

William Fulton on
Jun 25, 2014

Last Friday in San Diego, Gov. Jerry Brown signed the first cap-and-trade appropriation bill as part of the state budget. This means that the Strategic Growth Council will now have $130 million to dole out next year for smart growth planning and related activities many times more than ever before and that number is expected to grow rapidly in the years ahead.

Coming on top of the SGC's recent award of $16 million in local planning grants, the cap-and-trade appropriation news means it's a good time to take a look at how the SGC has doled out its money over the last few years and what the impact has really been.

Up to now, SGC's grants program has been funded primarily by the $90 million for planning contained in Proposition 84, the 2005 initiative that was advertised as the "Safe Drinking Water Act." (The $16 million allocated by the SGC at its meeting on June was the last of the $90 million, so the cap-and-trade money came along just in time.) The SGC was created after Proposition 84 passed. The Legislature subsequently assigned it to distribute the funds in a way that encourages creation of "sustainable communities" under AB 32 -- that is, communities expected to reduce greenhouse gas (GHG) emissions under California's 2006 climate change law, which calls for significant GHG reductions by 2020.

The planning funds were doled out in three rounds 2010, 2012, and 2014 and in each case the SGC sliced the pie a different way. In 2010, for example, there was a set-aside for metropolitan planning organizations to do modeling. In 2012, there was a category for regional cooperation. In 2014, there was an environmental justice set-aside. (Disclosure: The City of San Diego, where I work, won one of the biggest grants in Round 1 and got one out of the two it applied for in Round 3.) A separate program funded planning and construction of "urban greening" projects.

Two external events over the past few years made the SGC grant program more important than it otherwise would have been. The first was the economic crash of 2008, which caused local governments' general funds to shrink and thus made it more difficult for cities and counties to fund their planning efforts. The second was the end of redevelopment in 2012, which robbed local governments mostly cities of a funding source they had often used to do plans in specific neighborhoods.

Looking at the patterns, there's no question that SGC grants have been used to fund local plans that the cities and counties might otherwise have funded on their own. This was especially true in the first and second grantmaking rounds, before general funds began to recover from the 2008 downturn. (Many of these planning efforts were also funded by similar grant programs from the state's biggest metropolitan planning organizations, which have used either federal or local transportation funds for these programs.)

But in the most recent round, something interesting happened: Cities and counties weren't seeking to use SGC grants to replace lost redevelopment planning funds, as one might expect. Instead, local governments and their nonprofit partners are focusing on implementation of previous plans especially climate action plans as well as transportation projects. Transportation plans received many grant awards in 2014 after getting virtually none in the first two rounds.

The big question, of course, is whether the SGC funds have encouraged cities and counties to undertake planning efforts focused on infill and transit-oriented development efforts that they might otherwise not have undertaken with their own money. That's the whole point of a grant program, after all to give somebody  money to do something they might not otherwise have done in order to achieve your objective.

It's hard to know what cities and counties might otherwise have done if they had more money of their own. Even in the wake of the big economic downturn in 2008, an awful lot of local governments in California continued to start up general plan updates with money that they had squirreled away but, of course, they had to focus on GHG reductions because of AB 32 and other state laws requiring them to do so.

All three rounds of grants have focused on a few basic themes, including:

1. District and corridor plans tied to transit-oriented or infill development.
2. Climate action plans or other efforts to reduce greenhouse gas emissions.
3. General Plan updates focusing on such topics as GHG reduction and healthy communities.

General plan updates and district or corridor plans are, of course, the bread-and-butter of local planning in California. And at the time of the first round, most cities and counties in California had realized they had to do some kind of climate action plan in order to comply with new state laws and emerging practices under the California Environmental Quality Act.

But here's what's interesting: While the district and corridor plans continued apace among grantees in SGC's third round, the general plan updates and climate action plans slowed down. That's probably because, by 2014, most cities and counties had updated their general plans to reflect the new emphasis on greenhouse gas emissions.

In place of General Plan updates and Climate Action Plans, cities and counties and, in many cases, nonprofit partners working with them focused on different things in Round 3, including:

1. Implementation of climate action plans and GHG reduction strategies.
2. Transportation plans and projects
3. Energy projects.

For example, a number of cities including Goleta near UC Santa Barbara and the ever-hip City of West Hollywood got grants to focus on bicycle and pedestrian projects. Several others got grants to focus on various aspects of energy. These were often partnerships at the county level, including in Santa Clara, Sonoma, Butte, Monterey, and Madera Counties. The energy projects ranged from examining community choice aggregation (the ability to use small-scale, community-based energy production to break the hold of big utilities on the energy system) to experimenting with fuel cell technology.

The focus on transportation and energy makes sense. Now that most local governments have big-picture plans in place for GHG emissions reduction, they actually have to produce by switching to alternative energy sources, or by encouraging their residents to switch from driving to walking or bicycling. The shift to walking and biking what has become known as "active transportation" is an especially important component in meeting 2020 GHG targets because people can switch modes tomorrow, rather than waiting for big transit projects or major transit-oriented development.

But in the long run, GHG reductions after 2020 are likely to depend in large part on those longer-range plans more transit stops and more development around those stops. That's why cities and counties are still getting a lot of money from the SGC and from the MPOs in their own grant programs for district and corridor plans. The built environment takes a long time to change.

So as SGC embarks on its huge new program with cap-and-trade money, it will be interesting to see whether this trend continues. Will SGC fund primarily implementation-type plans, such as zoning ordinances and bike/ped plans? Will there be yet more general fund updates to fund? Will corridor and district plans still be popular?

Or will SGC push the locals deeper into implementation? Assuming it has hundreds of millions of dollars available in the years ahead, SGC may place a greater focus on actual construction of hard infrastructure, such as bikeways and the public realm components of transit-oriented development projects. After all, with the end of redevelopment these projects are very hard to pay for.

Even though the cap-and-trade money is a drop in the bucket compared to redevelopment, the SGC may very well get pushed in the direction of using cap-and-trade money to build public realm amenities and infrastructure, not just funding plans.