BOARD MEETING DATE: March 16, 2001 AGENDA NO. 31

At the February 16, 2001 Governing Board meeting, staff presented for the Board’s consideration a draft proposal of several program options to be considered for funding from the $17 M one-time revenue realized from the AES settlement. The Board approved the first option presented and allocated $6 Million to alternative fuels infrastructure. The Board scheduled a special meeting, held February 23, 2001, to review allocation options for the remaining $11 Million.

At the February 23 meeting, staff provided additional information regarding the initial draft proposal as well as other options that had been suggested by members of the Governing Board. Presented below is a final draft list of options based on the input received at the special Board meeting and subsequent suggestions from Board Members and staff. The Board may wish to add, delete or modify items during its discussion of this matter at the March 16, 2001 Board meeting. In addition, while some options may show suggested funding amounts, those amounts are only staff suggestions to be modified by the Board, as appropriate.

The key difference between the preliminary proposal submitted in February and the current one, other than the new options identified, is deletion of the following:

In addition to the two items deleted, there was Board discussion regarding deleting the item entitled "RECLAIM AQIP Pre-Funding (Loan)" -- $3 M funding request. The February board letter identified the funding for this effort as a loan to be repaid to the AES settlement account upon local business participation in the AQIP. Some members of the Board present at the special Board meeting felt that this item could also be funded out of the undesignated fund balance since it is intended to be a loan of monies to the AQIP. However, staff expressed some concern regarding such an approach because there is no absolute guarantee of the level of participation by businesses in the AQIP and while unlikely, some issues could arise regarding EPA acceptance of AQIP credits. Moreover, AQMD’s FY 2000-01 projected unreserved fund balance is at an appropriate level as compared to other public agencies.

The Board members present asked that two options regarding RECLAIM AQIP – a loan from AES settlement monies or prefunding from undesignated fund balance – be presented to the full Board for its consideration. Finally, it is important to note that the action of prefunding is important in terms of EPA approval of a temporary RECLAIM AQIP.

Staff proposes that the Board consider various options for funding programs from the remaining $11 Million not previously allocated by the Board, and approve appropriate projects and funding amounts. Original options referred for Board consideration are summarized in Attachment A and described in detail in Attachment B. Additional options identified over the interim period since the last Board meeting are also set forth in Attachment B.

Funding for the proposed projects is from an unanticipated increase in penalty and settlement revenue.

ORIGINAL ITEMS	Option and Description	Original Suggested Funding Amount
1	RECLAIM AQIP Prefunding DESCRIPTION: As part of the upcoming RECLAIM program rule amendments, staff is proposing a limited Air Quality Investment Program. The program would operate similarly to the Rule 2202 AQIP. Prefunding is important to U. S. EPA acceptance.	$3,000,000
2	Enhanced Education and Outreach to Black, Hispanic and Asian Communities (Multimedia/Two-Year) DESCRIPTION: A two-year campaign to educate members of the communities most impacted by localized air contaminant emissions about the potential health effects of such emissions and prevention measures. The program would empower those individuals to help develop and implement solutions. In addition, funds would be used to address Environmental Justice issues. As part of the campaign, efforts would be made to foster Community leadership development in air quality advocacy and increase participation of ethnic community members at the grass roots level relative to AQMD’s policy development and program implementation and participation in AQMD community meetings and workshops. Part of the effort would include identifying non-profit corporations with ethnic community audiences to help promote the program, and to promote cost-saving energy conservation technologies.	$1,500,000
3	Adopt-A-School Bus Foundation/ Or Direct Funding to School Districts DESCRIPTION: The Adopt-A-School Bus Foundation is a nonprofit charitable organization established by the South Coast AQMD Governing Board to facilitate the effort to reduce children’s exposure to harmful diesel exhaust. The Foundation raises and disburses funds to help defray the cost of retrofitting school buses with diesel particulate traps, defray the increased cost to purchase and operate clean-fueled buses, or defray infrastructure costs. The Foundation seeks to leverage its funds to maximize the funding available to achieve its mission. Staff is determining if it is possible to have another non-profit take over the day-to-day administrative functions (i.e., accounting, etc.). Expenses for such action would be approved by the AQMD Governing Board and paid for out of the suggested allocation. Alternatively, the grants could be given directly from AQMD to local school districts in high pollution areas, such as western Riverside County, for the purchase of CNG vehicles in support of proposed Rule 1995.	$1,000,000
4	Inland Empire Initiatives Reserve DESCRIPTION: This would be a reserve amount set aside to fund specific initiatives to be identified that will promote air quality improvement in the Inland Empire.	$500,000
5	University of California Air Quality Fellowships (to be divided one-third each to UCLA, UCI and UCR Graduate students) DESCRIPTION: UCI/National Fuel Cell Research Center - Support 3 graduate fellowships at $15,000/year for 3 years and 2 undergraduate research scholarships at $5,000/year for 3 years. Key areas include distributed energy combustion, fuel cell development, hybrid fuel cell gas turbine, and fuel cell distributed generation technologies. UCLA/Southern California Particle Center & Supersite – Support 4 doctoral students on an annual basis of $21,000/year for 2 years. Key areas include exposure assessment/environmental monitoring, toxicology, environmental chemistry and epidemiology. UCR/College of Engineering, Center for Environmental Research & Technology (CE-CERT) – Support student volunteer organization engaging undergraduate students in engineering competitions ($40,000/year for 2 years); support research fellowships ($40,000/year for 2 years). Key areas include hybrid-electric vehicle, fuel cell and hydrogen technologies; clean air research and alternative fuels technologies.	$500,000
NEW ITEMS
6	Railroad Overpass DESCRIPTION: The City of Montclair has proposed an overpass project (Ramona Avenue/Union Pacific Railroad Grade Separation). Without a grade separation, by 2010 traffic delays will exceed 110 hours per day as vehicles are required to queue for train passage. The delays include 14.6 hours during the AM peak hour and 22.4 hours during the PM peak hour.¹ By 2020 traffic delays will exceed 150 hours per day.² Delays would be expected to exceed 54,000 hours over the course of a year and exceed 2,700,000 hours over the 50-year life expectancy of the structure. Every hour of delay causes additional air pollutant emissions. This $12M project meets the federal CMAQ funding criterion for traffic congestion relief and air pollution reduction. The City has CMAQ funding of $1.6M, PUC $5M, and the railroad $500,000. The City has asked for AQMD cost sharing of $500,000 to assist in the implementation of this project. ¹ Source: "Traffic Analysis-Proposed Ramona Avenue Grade Separation," WPA Traffic Engineering, Inc., November 16, 1999 ² Source: "Inland Goods Movement Corridor Study: Rail Crossing Improvement Plan," Parsons Brinckerhoff, August 2000-Revised January 2001	New Option
7	Asthma Clinic on Wheels Vehicle DESCRIPTION: A multi-stakeholder project is proposed to develop a mobile health unit which would provide screening for asthma and other respiratory health problems to children and families in Orange, Riverside and/or San Bernardino Orange Counties. (Breathmobiles are already operated in Los Angeles County under the auspices of County/USC Medical Center.) Additionally, the mobile unit(s) would serve as a point of distribution for air pollution and health related information. The primary objective of this project is to build, equip and operate a low emission mobile medical unit, staffed by appropriate medical and other personnel. Staff proposes consideration of funding at a minimum of $500,000 per unit, fully staffed, should the Board want to fund this item.	New Option
8	Palm Springs Airport Taxicab Advertising Proposal DESCRIPTION: Fund a "clean air advertisement program" that would involve placing ads on 50 vehicles at a cost of $5 K per vehicle. Funding would be used to "pay down" the higher cost of natural gas vehicles. Total cost would be $250,000.	New Option
9	CNG Taxi for All Local Airports (Advertising Program) DESCRIPTION: Incentive money is provided from MSRC and automobile manufacturers, and possibly from airport entrance fees, to help the implementation of Rule 1194 for the conversion of gasoline-powered taxi fleets to CNG. Consider allocating additional funding of $5,000 for up to 100 vehicles, should the Board want to fund this item. Total cost would be $500,000.	New Option
10	Energy Efficiency Programs DESCRIPTION: Demand side management/energy efficiency programs for a wide variety of end users, including municipal buildings and residences. Activities would include enhanced public outreach and education, as well as hardware programs to reduce electricity demands. These programs could include more efficient lighting, heating and air conditioning, energy efficient appliances, as well as improved maintenance for the previously-referenced items. Programs implemented at the local district level would supplement programs conducted by the utilities or which are forthcoming from actions by the California Legislature. Decreasing energy demand is an important strategy to solving California’s current energy crisis which requires a combination of additional power production capabilities, demand management, and peak demand shaving. In order to be a meaningful participant in these types of programs, a funding allocation of at least $1,000,000 would be advisable.	New Option
11	Microturbines DESCRIPTION: Assist in funding for small turbines that are used for distributed power generation, hybrid electric motors, landfill gas applications, and backup power for schools, hospitals. other essential public services, or high-tech business parks. Compared to diesel engines, microturbines are much cleaner, quickly installed, low maintenance, high overall efficiency with cogeneration, and high reliability. $40,000-50,000 per turbine. Staff proposes consideration of an additional funding for Orange, San Bernardino and Riverside Counties.	New Option
12	White-Color Roofing for Distribution Center Warehouses DESCRIPTION: White-color roofing helps reflect the solar radiation and thus reduce the ambient temperature and in-house temperatures. This will reduce the need for power for air conditioning and reduce the potential for ozone formation. Significant square footage on rooftops of new and planned distribution center warehouses in the Inland Empire areas are ideal candidate sites for the implementation of this technology. Staff proposes consideration of up to $500,000 funding, with additional cost-sharing from warehouse companies, should the Board want to fund this item.	New Option
13	Solar Tiles DESCRIPTION: The California Energy Commission provides $3.00 per watt for the solar photovoltaic systems on the roof and the DWP provides $5.00 per watt in their service areas. The modern solar shingles cost around $9-10 per watt and the traditional solar photovoltaic system costs $7-8 per watt. Staff recommends that the AQMD consider an additional $2-3 per watt for the installation of solar photovoltaic systems and/or solar tiles. Staff proposes consideration of up to $3,000,000 to install these systems on 600-900 houses, should the Board want to fund this item. Consideration should be given to low-income housing in areas subject to Environmental Justice impacts as the highest priority for funding.	New Option
14	Solar Air Conditioning DESCRIPTION: Solar-powered air conditioning systems can be cost-effective and energy-efficient for commercial building applications. Staff proposes consideration of funding up to $1,000,000 for up to five major commercial center applications, should the Board want to fund this item.	New Option
15	Advanced Technology Funds for VOC and Toxics RD&D DESCRIPTION: The AQMD has an advanced technology fund using fines and penalty monies to conduct non-clean-fuel RD&D projects. These research projects are needed to support additional studies related to AQMD’s VOC and air toxics rulemakings. Originally this account had $3,000,000 and the current balance is about $350,000. Staff proposes consideration of funding an additional $500,000 or more to help fund future RD&D projects, should the Board want to fund this item.	New Option
16	Electrification of Truck Idling Operations at Warehouse Distribution Centers DESCRIPTION: Diesel trucks continue using the engines for idling operations and significant emission reductions can be achieved if the power need can be satisfied by electrification. Staff proposes consideration of funding $1,000,000 for the conversion of the trucks and installation of electric supply at the loading docks at a number of Inland Empire warehouse distribution centers, should the Board want to fund this item.	New Option
17	Residential Fuel Cell Demonstration DESCRIPTION: Staff proposes a 50-50 cost-sharing demonstration program for fuel cell residential electricity projects. Approximately $25,000-$50,000 would be needed for a single household. Staff proposes consideration of $500,000 in funding to adequately provide for fuel cell installation in 10-20 houses as a demonstration project, should the Board want to fund this item.	New Option
18	Auxiliary Power Units (APUs) for In-Basin Trucks DESCRIPTION: To reduce emissions from idling trucks, this option proposes that auxiliary power units be used in lieu of the main engines of the trucks, thus greatly reducing the energy consumption and emissions. Traditional petroleum fuel-based clean fuel or fuel cell APUs could potentially be used for this project. Currently $3-10,000 would be needed to provide adequate non-fuel cell APU capacity depending on the idling operation needed by the truck. Staff proposes to provide $1-2,000 per APU as an incentive for the purchase of APUs for trucks registered in our Basin. Staff proposes funding of $500,000, should the Board want to fund this item.	New Option
19	Alternatives to Diesel Portable Equipment DESCRIPTION: Significant PM, NOx and air toxics are emitted from diesel-powered portable equipment such as electric generators, wood chippers, concrete pumpers. Propane, CNG, or LNG-fired sparked ignition engines with three-way catalyst can greatly reduce these emissions. Staff proposes consideration of $500,000 in funding to provide additional incentives for the replacement of the diesel-powered equipment, should the Board want to fund this item.	New Option
20	Fund Additional Emissions Reductions DESCRIPTION: Various options exist to further reduce NOx, particulates, and other pollutants. NOx reductions appear available from a variety of sources at $15,000/ton or less and could be retired for the benefit of the environment.	New Option

AES $17 Million	(Million $)
Natural Gas Fueling Station Infrastructure with Public Access (Four County Region)	6.0¹
RECLAIM AQIP Pre-Funding (Loan)	3.0
Eliminate Permit Backlog (Hire Temporary Employees or Contractors, Senior Engineering Manager, Two Senior Engineers)	2.5²
Litigation Defense and Prosecution Fund (Outside Counsel and Special Consultants)	2.0²
Enhanced Education and Outreach to Black, Hispanic and Asian Communities, (Multimedia/Two-Year)	1.5
Adopt-A-School Bus Foundation Program	1.0
Inland Empire Initiatives Reserve	0.5
University of California Air Quality Fellowships ($166,000 Each to UCLA, UCI and UCR Graduate Students)	0.5
TOTAL	$17.0³

¹ Only item selected for funding at February Board meeting. Item therefore not summarized in Attachment B. ² Funding to occur by other means. Item therefore not summarized in Attachment B. ³ $11 million remains for Board designation and approval.

South Coast Air Quality Management District