BOARD MEETING DATE: April 5, 2002
AGENDA NO. 10

Approve Issuance of Program Announcement & Application for 
Zero Emission Vehicle Incentive Program Funding

SYNOPSIS:

The statewide Zero Emission Vehicle Incentive Program resulting from Assembly Bill 2061 (Lowenthal) reduces the cost of new CARB certified ZEVs. The AQMD received $2 million to implement the program locally in 2002, with additional allocations on a first-come, first-served basis. The proposed program announcement and application will provide funding to encourage the purchase or lease of new freeway-capable zero emission passenger vehicles.

COMMITTEE:

Technology, March 22, 2002, Recommended for Approval

RECOMMENDED ACTION:

Approve issuance of Program Announcement & Application for Zero Emission Vehicle Incentive Program in the South Coast Air Basin, in an amount not to exceed $2 million, with one-half reserved for local fleets in Environmental Justice sensitive areas, from the Zero Emission Vehicle Incentive Program Fund.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Mobile sources are responsible for more than half of the ozone-forming emissions in California, and passenger cars and small trucks are responsible for a significant portion of the mobile source contribution. In 1990, the ARB adopted the Zero Emission Vehicle (ZEV) program as the long-term emission reduction component of the Low Emission Vehicle regulations. ZEVs have significant long-term air quality benefits because they have no emission control equipment that can deteriorate or fail, and generate only minimal "upstream" refueling and fuel cycle emissions. Many battery electric vehicles are driving on California roads today, and increasing numbers of ZEVs are expected in the future. Due to the higher cost of new technology and low volume production, there is an incremental cost for these vehicles compared to conventional vehicles.

The Zero Emission Vehicle Incentive Program is the result of Assembly Bill 2061 (Lowenthal) signed by Governor Gray Davis on September 30, 2000. CARB has the primary responsibility for administering this program, which will provide $15.3 million to reduce the cost of zero emission vehicles. On December 7, 2000, the ARB's Governing Board adopted the guidelines for the Zero Emission Vehicle Incentive Program. The purpose of the program is to reduce the incremental cost of electric vehicles and expedite their placement in California.

CARB does not require any match funding from air districts that wish to implement the program locally, but encourages air districts to provide additional incentives for zero emission vehicles and infrastructure, and support the program with staff and outreach material.

The Board previously approved AQMD participation in the program in accordance with CARB approved statewide guidelines, establishment of a special revenue fund, and authorized the Executive Officer to execute grants to qualified recipients.

Additional statewide funding of $20 million for ZEVs through FY 2003-04 was included in the State’s FY 2001-02 Budget. Up to $10 million of the funding is reserved for fleets and could be distributed according to budget act language "through a competitive bid process that gives preference to the award of grants to fleet operators that will use the vehicles primarily in communities that are disproportionately impacted by poor air quality, including low-income communities and communities of color." CARB is scheduled to consider revised guidelines for the expanded program on April 25, 2002, and any necessary revisions to AQMD local implementation will be brought for Board consideration.

Proposal

Eligible vehicles must be new or "substantially upgraded" zero emission passenger cars or light-duty trucks capable of operation on the freeway. CARB maintains a list of eligible vehicle models. Vehicles must register with the Department of Motor Vehicles and meet all applicable safety standards.

All applicants that meet CARB guidelines and register their vehicles within AQMD jurisdiction will be funded on a first-come, first-served basis through 2002 or until funds are exhausted, whichever occurs first. When AQMD runs low of funds, additional funds will be requested from CARB. Vehicles in other areas of CA apply to CARB. Although not required, staff proposes that one-half of the funds allocated by CARB to AQMD for local implementation be reserved for fleets that operate in areas which have the most significant exposure to air pollution or localized air pollution including low income communities or minority communities or both, consistent with AB 1390 (Firebaugh).

Qualified vehicles are eligible for up to $3,000 per year for up to three years resulting in a maximum $9,000 grant per vehicle. These grants are available to individuals, local government, state agencies, nonprofit organizations and private businesses who purchase or lease a qualified ZEV on or after October 1, 2000 but on or before December 31, 2002. Federal agencies qualify as of January 1, 2002. All of the funds are to be used for grants, and not for program administration.

When a consumer leases or purchases a CARB certified zero emission vehicle, the consumer has the choice to assign the grant to the financing company (if the company agrees to accept the grant), or apply for an annual grant. If the consumer assigns the grant, the monthly lease payment is recalculated on the reduced capitalized cost of the vehicle. Grants are available on a first-come, first served basis. Pre-authorization is encouraged.

CARB provides information about ZEV incentives on a dedicated web site http://www.zevinfo.com or by calling 1-800-END-SMOG. Extensive outreach is proposed to automobile makers and their dealers, fleets and individuals.

Disproportionate Impact Funding

Staff proposes that at least 50% of the state’s funds be reserved for fleets that operate in areas which have the most significant exposure to air pollution or localized air pollution including low income communities or minority communities or both. CARB has issued goals and left the details of how to implement AB 1390 to each air district. Staff recommends the following methodology:

All applicants will be evaluated for poverty level, PM exposure, and toxic exposure according to the following criteria:
 

Any applicant operating a fleet that qualifies based on both poverty level and either PM exposure or toxic exposure categories will qualify for reserved disproportionate impact funding. If available funds are not exhausted with the outlined methodology, then the AQMD will reevaluate the criteria and report back to the Board for possible changes. If on the other hand, funding requests exceed available local funding, then additional funds will be requested from CARB until statewide funds are exhausted.

Staff recommends the Board’s approval to issue the attached Program Announcement & Application, for the local implementation of the Zero Emission Vehicle Incentive Program for Passenger Vehicles & Light-Duty Trucks.

Outreach

In accordance with the AQMD’s consulting and contracting policies, a public notice advertising the Program Announcement & Application and inviting applications will be published in the following publications:
 

Additionally, potential applicants will be notified utilizing the Los Angeles County MTA and Cal Trans Directories of Certified Minority, Women, Disadvantaged and Disabled Veterans Business Enterprises; the Inland Area Opportunity Pages Ethnic/Women Business & Professional Directory; AQMD’s own electronic listing of certified minority vendors; and AQMD Purchasing’s mailing list. Notice of the Program Announcement & Application will be mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations; and placed on the Internet at AQMD’s Web site [http://www.aqmd.gov, "Business and Job Opportunities" icon] and AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.

Benefits to AQMD

The AQMP relies on the expedited implementation of advanced technologies and clean-burning fuels in Southern California to achieve air quality standards.

The successful implementation of the Zero Emission Vehicle Incentive program will provide incentives and expedite commercialization of zero emissions vehicles, and will reduce public exposure to mobile source emissions in the South Coast region. These incentives are available for fleets required to comply with AQMD Rules 1191 (Light- and Medium-Duty Public Fleet Vehicles) and 1194 (Commercial Airport Ground Access).

Resource Impacts

The AQMD received an initial allocation of $2 million for the Zero Emission Vehicle Incentive program from CARB. Additional funds are available on a first-come, first-served basis. The AQMD is not required to provide any local match for the program.

Monies received from CARB have been placed in a separate fund called the Zero Emission Vehicle Incentive Program Fund, only to be used as grants for the purchase or lease of zero emission vehicles in the South Coast region, according to the guidelines adopted by the CARB Board on December 7, 2000.

Attachment

Attachment 1: PA 2002-05 - Program Announcement & Application – Zero Emission Vehicle Incentive program for Passenger Vehicles.

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