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SGC proposes 40% of cap-and-trade funds for transit-oriented development

The Strategic Growth Council has proposed that 40% of its estimated $130 million in cap-and-trade funds be devoted to transit-oriented development (TOD) projects and that another 30% be devoted to a variety of infrastructure-related programs that may include housing.

The SGC issued draft program guidelines yesterday afternoon. The week before, the Air Resources Board (ARB) adopted guidelines on benefits to disadvantaged communities.

The newly public documents represent important strands in a braid of agency rules required by prior AB 32 / SB 535 provisions and the new programs set up by this year's SB 862 budget bill.

In particular, SGC has begun more definitely to describe the Affordable Housing and Sustainable Communities (AHSC) program, which as of June 2014 brought housing issues into a statutory scheme previously focused on reducing carbon emissions and environmental disadvantage. (See information on SGC's prior workshops asking the public how to create the new program here.)

The final strand in the braid, required by the end of the month, will be a definite decision from CalEPA on which of California's 8,000 census tracts to designate as "disadvantaged," most likely through application of the CalEnviroScreen 2.0 environmental/socioeconomic metric. (Prio CP&DR coverage of the "disadvantage" definitions issue can be found here.)

On September 18 the Air Resources Board (ARB) approved a lightly revised version of its previously circulated guidelines on defining benefits to disadvantaged communities. The revisions raise the percentage of CAL FIRE urban forestry grants to serve disadvantaged communities from 55% to 100%, and they add, in 26 separate instances, the phrase "direct, meaningful, and assured" as a descriptor for the ways benefits should be provided to disadvantaged communities.

[Update: Mari Rose Taruc, state organizing director with the Asian Pacific Environmental Network, reported that in the meeting, ARB Board member John Gioia directed staff to insert further language in response to concerns of the California Environmental Justice Alliance and SB 535 Coalition. In Taruc's summary, the language called for "Prioritizing projects that provide multiple benefits in the section of the Guidance that lays out the process for selecting which projects qualify for SB 535 funds," "directing all agencies to avoid displacement of low-income residents, and "requiring agencies to maximize benefits ‘to the maximum extent feasible' rather than simply, "whenever feasible."]

The proposed SGC guidelines refer to the September 18 approvals but state the resulting "disadvantaged community threshold requirements" table is "subject to revision to be available by September 30, 2014."

SGC's main 82-page non-agricultural guidelines draft recommends "two project prototypes", identified as transit-oriented development (TOD) projects, to receive at least 40% of funds, and "Integrated Connectivity Projects" (ICP), to receive at least 30% of funds. It describes the program as offering "gap financing for rental housing developments that include affordable units, and as mortgage assistance for homeownership developments. In addition, grants are available for [specified eligible] infrastructure improvements."

In the TOD category each project area to receive an award of $1 million to $15 million with a "Major Transit Stop within a 1/2 mile catchment area." The transit stop can connect to high-speed rail, "commuter or light rail," Bus Rapid Transit (BRT), or an "Express Bus." Each TOD area "must" include both affordable housing and a "capital use" from a list that may include a variety of housing, transportation or greenhouse gas (GHG) reduction programs.

The ICP description does not require housing but does require two eligible projects, one of which must be an "Infrastructure-Related Capital Use" that may promote housing, transportation, transit, "green infrastructure," pollution reduction or "planning implementation". It allows for grants of $500,000 to $8 million for project areas. Its transit requirement may be met by an ordinary bus or "vanpool/shuttle" stop but it must increase transit use to "key destinations".

(The references to less urban choices such as home mortgage assistance and bus or vanpool transit could be concessions to calls made by rural housing advocates and planners for ways to use AHSC money outside major transit corridors.)

Additional requirements and limits on uses apply, in part according to each project's type of existing landscape and proposed use. Housing infrastructure spending is restricted to $35,000 per housing unit or $50,000 per affordable "restricted unit", and program uses are restricted to 10% of each whole grant.

Other limits further push projects away from infrastructure-only planning toward mixed purposes that are likely to include housing. The program forbids any grant-assisted profit that "exceeds the commercially reasonable range for other developments of similar size and level of risk". Further "The applicant must show that Program funds are reasonably necessary for Project feasibility and no other source of compatible funding is reasonably available." Rental housing developments must carry 55-year affordability covenants.

Projects that demolish or rehab existing affordable housing units must replace them at a level of "equal or greater affordability". This is a key difference from, for example, the SB 628 Enhanced Infrastructure Financing Districts program, which also requires any lost low-rent units to be replaced, but at levels of "affordability" targeted to incomes as high as 120% of area median.

The application process is to be managed as separate TOD and ICP competitive processes, each handled according to a point scoring system. "Anti-displacement strategies" are among the factors to be considered in the "community orientation" scoring category, though it's not clear if there would be any requirement to compensate for gentrification effects that do not directly evict existing tenants.

Other factors (among many) include housing affordability levels, "affordability factors" of project locations, blocks shorter than 500 feet, sidewalks, bike facilities, green building techniques, electric vehicle charging stations, and maximum limits on parking. "Co-benefits" that earn points include public health and safety improvements, economic and job training advantages to residents, and reduced pollution exposures.

After 40% of the funds have been allocated to TOD applicants and 30% to ICP applicants, the remaining 30% goes to "Either TOD or ICP based upon score; [Affordable Housing] and [Disadvantaged Community] requirements."

A cover memo appearing as part of the posted draft guidelines PDF sets out "issues to be resolved prior to Council adoption of the Final Guidelines in December." It lists "coordination and partnership" with regional government entities, "geographic distribution of funds throughout the state," "ARB guidance on GHG reductions quantification" and choices of point values for application scoring. (The current draft leaves point values to be filled in later.)

On the roles of Metropolitan Planning Organizations (MPOs) and other regional government entities, SGC states in the draft guidelines themselves that it is "soliciting input and advice from" such entities and "developing a framework for thorough, meaningful consultation with these institutions." It does not suggest a more than advisory direct role for them. The draft guidelines do however require funded projects to be consistent with regional agencies' Sustainable Communities Strategies.

The agricultural lands proposal calls for planning grants of $100,000 each to "counties and/or cities in collaboration with other partners," adding up to $1 million; and agricultural easement grants of unspecified individual amounts, adding up to $3.75 million. It calls for spending an unspecified further amount on creating incentives for GHG reduction through land management in cooperation with USDA.

The planning grants are to cover purposes such as designing farmland conservation plans or exploring possibilities for agricultural easements. Applicants are to use CalEnviroScreen to determine whether half the proposed project area is in a disadvantaged community or, if not, must show how the proposed project provides "direct, meaningful and assured benefits" to a nearby disadvantaged community.

A resource appendix to the agricultural land preservation draft carries a dense collection of links to state and federal agency Web sites on land use, GHG reduction and conservation.

The main SGC draft guidelines as released September 23 are here. The workshop notice currently sets hearings October 23-28 but has yet to announce precise dates or times. It states written comments may be submitted until October 31, 2014 to AHSC@SGC.CA.GOV and the Strategic Growth Council's adoption board meeting will be December 11.

The agricultural lands draft from SGC is at http://bit.ly/1wKxcdW. A September 23 email announcement of the agricultural lands draft said "Public workshops for this specific Program will be noticed by the end of September. Public Comments shall be sent to AHSC_AG@sgc.ca.gov."

The ARB approval was announced in a press release at http://www.arb.ca.gov/newsrel/newsrelease.php?id=658. The guidelines as approved are at http://bit.ly/1Dm4VPp. Public comments on the ARB and CalEPA elements of the proposed disadvantaged communities definitions are at http://www.arb.ca.gov/lispub/comm2/bccommlog.php?listname=sb-535-guidance-ws. The combined workshop page for the ARB and CalEPA processes is at http://www.arb.ca.gov/cc/capandtrade/auctionproceeds/upcomingevents.htm. The CalEnviroscreen 2.0 metric is at http://oehha.ca.gov/ej/ces2.html.