Green light for investments in affordable housing and sustainable transportation

Ryan Wiggins Headshot

The end of January marks a milestone for our state as a leader in climate protection and the promising start of our effort to improve the quality of life of all Californians through the cap-and-trade program. 

After many months of public hearings, comment periods, and stakeholder meetings, the state has finalized the program guidelines for three critical investment programs: the Affordable Housing and Sustainable Communities Program (AHSC), Low Carbon Transit Operations Program  (LCTOP), and Transit and Intercity Rail Capital Program (TIRCP).

These guidelines give the green light to start investing the revenues allocated for 2015 – $180 million in all – in projects that will make our communities healthier by reducing greenhouse gas (GHG) pollution, provide more transportation and housing choices, and improve public health and the economy.

When Governor Brown included the yet-to-be-formed AHSC, LCTOP, and TIRCP as part of last June’s landmark budget, state agencies faced a major challenge: how could they create the programs in time to ensure that funding would be awarded by late spring or early summer? It is exciting to report that by finalizing the program structures and timelines this month, we are on track to succeed.

The agencies responsible for administering these programs deserve a lot of credit for ensuring transparency and significant public involvement under a major time crunch. The final guidelines of each program, while not perfect, provide a strong foundation for investing in projects that will make a real difference.

Affordable Housing and Sustainable Communities Program – ambitious and unprecedented.

Without a doubt, the AHSC is the most ambitious – and potentially most challenging – of the three programs. The goal of this competitive program is to reduce GHGs and provide other economic and health benefits by investing in transit-rich, walkable neighborhoods with affordable homes near transit. Applications will be scored on how well projects integrate transit, biking and walking, affordable homes, and green infrastructure to achieve these goals.

It is unprecedented for a program to attempt to weave so many different elements together, and both the state and applicants have a steep learning curve to administer and apply for funding.

There is a lot about this program that we like, including its protections against displacement of low-income households, its investment in transit passes for students, and its focus on investment in disadvantaged communities and affordable homes. The administering agency, the Strategic Growth Council, will review the guidelines after this year’s awards for the $130 million in available funding is announced.

For applicants, the clock is ticking. Initial applications are due mid-February. The state will then ask for full submissions for the most promising projects in early March, require final applications by April 15th, and make awards in June.

Transit and Intercity Rail Capital Program (TIRCP)- promises better transportation but lacks overall transparency.

The TIRCP will fund projects such as heavy rail, light rail, Bus Rapid Transit, and bicycle and pedestrian transit access that reduce GHGs and improve intercity/regional transit systems. Like the AHSC, this program is competitive and includes protections against displacing low-income households and requirements to invest in disadvantaged communities.

Because project applications will be judged against a set of criteria instead of a scoring system, lack of transparency is a potential weakness of this program. It is important for both applicants and the public to have a clear understanding of why certain projects were selected and others were not.

Yet given the short timeframe for developing the program and the modest amount of funding available this year ($25 million) a scoring system would have little immediate benefit. As we begin to see the overall amount of funding in this program climb significantly, developing a scoring system will become more important.

In the meantime, comprehensive reports that detail why a particular project was selected or not can provide this transparency and help applicants design and submit projects that are competitive.

Applicants have until April to identify and submit projects. Project awards are announced in June.

Low Carbon Transit Operations Program (LCTOP)- public input would make the process stronger.

Unlike the AHSC and the TIRCP, funds in this program will be distributed by formula based on the population and size of the transit agencies rather than a competitive process. Transit agencies are responsible for coming up with a list of projects and submitting them to the state for approval. Like the other programs, they must demonstrate GHG reductions and other public benefits.

Because it is formula funded, transit agencies will need to identify investments that have the most impact. This is one of the few areas where these guidelines fall short: they don’t require transit agencies to conduct any type of process to receive input from the public. Public input is important for identifying what investments will serve both existing and potential transit riders, increase ridership, and get people out of their cars.

With only $25 million available this year, only the largest transit agencies will receive significant funding. This means that the state has an opportunity to insert a public process requirement into future guidelines as funding increases significantly in the coming years.

Another key aspect of this program is that, while it is geared to improve transit operations, agencies can use all of the funding for capital improvements rather than increasing the frequency of transit service directly. This includes investments in fueling equipment, low-carbon buses, and bicycle and pedestrian access.

This program shares many of the same strengths as the other two including protection against displacement of low-income households and requirements to invest in disadvantaged communities.

Transit agencies can submit their plans beginning next week through April and begin receiving funds this spring.

Geographic equity

All three of these programs have great potential to reduce GHGs and benefit Californians in urban, suburban, and rural communities. For the competitive grant programs (the TIRCP and the LCTOP), the guidelines allow for the state to exercise discretion to ensure that all regions receive a reasonable amount of investment in the coming years. This is an important policy given that we won’t be able to reach our state’s long term goal of an 80% reduction in GHGs by 2050 without reducing transportation emissions in every region.

Growing the pot                 

Just two weeks ago, Governor Brown released his preliminary budget for the year that included a conservative proposal of $1 billion in cap-and-trade proceeds available for investment in 2016 – an increase of over $100 million. Higher estimates project the amount could total as much as $2.3 billion. The Governor has indicated that the May budget revision would reflect these higher numbers, should the proceeds from the next two auctions come in at projected levels. Because the AHSC, TIRCP, and LCTOP are respectively guaranteed 20%, 10%, and 5% of annual cap-and-trade auction proceeds, they are likely to see a significant bump in funding in years to come.

The goals – and challenges – ahead

In his budget, Governor Brown also included a clear call to set our sights beyond 2020 to more ambitious climate protection goals. Starkly, we will have to cut our petroleum usage by 50% by 2030 to reach our goal of 80% reduction in GHGs by 2050. Far beyond low and zero carbon vehicles, this will require significant investments in world-class transit, bikeable and walkable communities, and affordable neighborhoods.

TransForm will be monitoring the performance of these programs and the projects they fund, to understand and maximize the impact of the cap-and-trade program. It’s critical that we continue to revisit and refine these three programs to make sure we are investing in the projects that will truly make our communities cleaner, less polluted, and more equitable. The future of our climate protection goals – and our state – depend on it.

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