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SGC revisits key questions on proposed cap-and-trade program design

Martha Bridegam on
Oct 8, 2014

This week the Strategic Growth Council (SGC) came back to some questions on distributing cap-and-trade proceeds that were asked but not conclusively answered this summer -- and hinted that maybe these are the tough ones. The occasion was a public airing at the Council's October 6 meeting for a recently circulated draft of proposed guidelines for the Affordable Housing and Sustainable Communities (AHSC) program.

The Council took no formal vote on the program, and is not expected to do so until December 11. But in an extended public discussion at the meeting, new official thinking emerged on public comment themes that had seemed uncertain of getting traction during the August and September workshops on possible AHSC rules. Major topics included the fairness of a proposed funding set-aside for transit-oriented development; whether disadvantaged areas with public health hazards should be preferred affordable housing sites; geographic distribution concerns, and the role of regional government.

Out of the $130 million allocation for fiscal 2014-15, $120 million would be offered in AHSC's main point-based competition for grants and loans. The program's smaller agricultural land preservation component, using $5 million in 2014-15, would provide ten $100,000 planning grants and a small fund for agricultural easements. That's not much money from a statewide point of view. But for 2015-16 and beyond, the program has been promised a continuous appropriation thereafter of 20% of the annual Greenhouse Gas (GHG) Reduction Fund created by cap-and-trade proceeds.

Under the proposed SGC guidelines for the funding competition, at least 40% of that funding would be reserved for projects that meet the program's own definition of transit-oriented development (TOD). At least 30% would be reserved for less housing-oriented and smaller Integrated Connectivity Projects (ICP). (See http://www.cp-dr.com/articles/node-3578 for a detailed initial review of the draft.) Staff at the meeting described the TOD and ICP competition areas as mutually exclusive "doors" or "buckets". Vehicle miles traveled (VMT) would be the primary measure of GHG reduction.

There were critics of the recommendation to reserve 40% of the money for projects that by definition must be on or near dense transit routes. Natural Resources Secretary John Laird questioned how the proportions were chosen, raised the possibility that a "complete streets" program might fall between the two "buckets", and asked, "Why divide them at all? Why not see what comes on through the door?"

In public comment, Rob Wiener of the California Coalition for Rural Housing, who has been vocal at every AHSC public meeting, alleged in public comment that restrictions in the eligibility rules for TOD projects meant they "will not benefit rural communities, and in fact will not benefit most communities in the state."

The housing part of the discussion was already affected by a new "public member" attending her first formal SGC meeting: Gail Goldberg, executive director of the Urban Land Institute - Los Angeles, appointed by Assembly Speaker Toni Atkins. Goldberg has been Planning Director in San Diego and in Los Angeles, and has served on the Statewide Coordinating Committee for the Urban Land Institute's California Smart Growth Initiative. She is one of two "public members" added by SB 862, the June 2014 budget bill that created the AHSC program. (See http://www.cp-dr.com/articles/node-3589 for details.)

(The other public member is to be chosen by the State Senate Rules Committee. A staff member at Sen. Steinberg's office said the appointment will be made when the Senate reconvenes in December or later, and is for the new Senate President Pro Tem, Sen. Kevin deLeon, to consider alongside his appointees to the Rules Committee.)

At the SGC meeting, Goldberg elicited staff explanations that every TOD project must have an affordable housing component, whereas ICP projects needn't -- but that, since half the funding block must go to affordable housing, most projects would be likely to have some affordable housing. Later she spelled out a distinction that not all housing drafters make: between "displacement and replacement, which are two separate issues."

One public commenter asked the Council to make anti-displacement measures a threshold requirement for all projects rather than only granting extra points for such measures, as the current draft guidelines would.

Pressure from Bay Area and other northern and coastal areas was evident in a staff report posted with the AHSC agenda item. On geographic distribution of funds, it said, "SGC and the implementing state agency and department staff see merit in designing the AHSC Program to account for the distribution of funds statewide. California's cities and communities statewide are diverse and vary in market dynamics, community need, capacity to manage and deliver projects, track greenhouse gas emissions, population density and size, and the availability of local resources. The method to account for geographic distribution of funds is still undetermined."

The phrases about "geographic distribution" may refer to controversy over perceived slighting of the Bay Area in CalEPA's CalEnviroScreen 2.0 mapping tool for environmental, public health and socioeconomic factors. CalEPA has proposed to use CalEnviroScreen in defining "disadvantaged communities" under SB 535. The AHSC program must use 50% of its grant money to benefit communities that fit the SB 535 definition. Bay Area legislators and others have protested that the CalEnviroScreen map tends to favor inland areas of the Central Valley and Southern California. (See http://lat.ms/1sq0Qao and detailed discussion, including CalEPA officials' responses, at http://www.cp-dr.com/articles/node-3570.)

Laird warned that geographic distribution requirements could be "an absolute nightmare," where an arbitrary line drawn across a map could mean "you always had applications that weren't a hundred percent in the right place."

The staff report for the meeting reopened a question that has been raised in SGC and ARB/CalEPA workshops and written public comments about the distinction between disadvantaged physical locations and disadvantaged people.

The report invited discussion of whether "disadvantaged communities" -- meaning census tracts identified by CalEPA as facing exceptional burdens -- may be served by improving affordable housing in "high opportunity areas". A similar question was raised in past workshops by the East Bay Housing Organizations among other advocacy groups. Several housing advocates have expressed a similar notion in negative form: that it may not help disadvantaged people to place affordable housing in areas that are defined as "disadvantaged" for being environmentally hazardous places to live. At least one Council member echoed that thought at the meeting.

The Air Resources Board adopted guidelines September 18 on defining benefit to disadvantaged communities under SB 535. Those guidelines will affect the AHSC program in common with other programs for cap-and-trade auction proceeds.

The CalEPA designations of "disadvantaged" census tracts had been expected by Tuesday, September 30 but had not yet appeared as of October 7. The Air Resources Board Web page for cap-and-trade auction proceeds, which has been tracking both the ARB and the CalEPA processes on disadvantaged communities, was revised as of October 2 to reflect the September 18 ARB action, but it did not provide any new material on census tract designations. See http://www.arb.ca.gov/cc/capandtrade/auctionproceeds/upcomingevents.htm.

At the meeting, in public comment, a speaker from the Infill Builders Federation said some members who develop affordable housing "are trying to get away from gentrification," hence were hoping to serve disadvantaged communities with affordable housing without necessarily siting projects in the heavily polluted and impoverished neighborhoods identified as "disadvantaged" by CalEnviroScreen. She noted that many neighborhoods, especially in the Bay Area, have varied income levels, and it can be a goal to avoid neighborhoods that have single income levels.

At least one Council member called for serious attention to technical assistance for potential grant applicants who may be less prepared to file successful applications, such as towns whose planning departments have been cut back.

There was a definite sense of unfinished business on the role of metropolitan planning organizations (MPOs) in selecting and coordinating projects.

The staff report describes an "initial concept for coordinated review... currently being developed" that is largely new since the September 23 guidelines. It "would allow for MPO technical review of program thresholds, specifically GHG [greenhouse gas] quantification and SCS [Sustainable Communities Strategy] application in Phase 1. In the Phase 2 Full Application, MPOs would concurrently review applications in conjunction with the State to identify priority projects within their respective region[s]."

Discussion at the meeting was actually less specific on how strongly the MPOs' recommendations would be allowed to affect outcomes. Laird said the Legislature had rejected a provision that would have given the MPOs a formal role and he didn't want to see that issue "re-litigated" in the guidelines.

The staff report for the meeting also invited discussion on "a more precise measure" for each project's effect on GHG reduction and on vehicle trips, suggesting a retreat from the draft guidelines' suggestion to express GHG reduction "relative to scale and cost of the project." Some Council members called for more specific measurement approaches to GHG reduction.

Materials from the October 6 SGC meeting, including a link to the staff report, are at http://sgc.ca.gov/s_100614meetingmaterials.php. That link is also where the video of the meeting is most likely to appear. The AHSC portion begins about an hour and 15 minutes into the session and runs almost two hours.

Comments on SGC's proposed AHSC guidelines are due October 31. Workshops to take public comment on the main guidelines are scheduled for October 23-28 around the state, in all cases by means of pre-reserved free tickets available via http://www.sgc.ca.gov/docs/AHSC_October_Workshop_Notice.pdf.

Separate workshops on the agricultural guidelines will be October 24 in Oroville, October 29 in Bakersfield, and October 30 in Watsonville. The announcement, posted October 7, is at http://www.sgc.ca.gov/docs/SALC_October_Workshop_Notice_FINAL.pdf.

The SGC is scheduled to approve final guidelines at its next meeting December 11.

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