South Coast Air Quality Management District

Allocate Rule 2202 AQIP Funds to Assist in Purchase of Natural Gas Vehicles for Taxicab Services

SYNOPSIS: 

Staff recently discovered that potentially up to 97 Rule 1194-compliant alternative vehicles may be available to replace existing older gasoline vehicles used for taxicab services. Based on the estimated emission reduction benefits associated with the purchase of a ULEV compared to the historical purchase of an existing pre-owned TLEV, staff believes that funding assistance at this time would accelerate implementation of Rule 1194. Funding for 13 of the 97 vehicles is currently available based on prior Board actions. Funding for the remaining 84 vehicles could be made under the Rule 2202 AQIP and the emission reductions would go towards meeting the rule’s emission reduction targets. Staff is recommending that the Board consider providing assistance to individual taxicab operators at a cost not to exceed $1,175,370 (up to $15,382 per vehicle) for up to 84 vehicles from the CY 2002 1^st quarter Rule 2202 AQIP. Remaining 1^st quarter Rule 2202 AQIP funds will be recommended for disbursement at a future date.

COMMITTEE: 

Administrative, June 14, 2002

RECOMMENDED ACTION:

1. Allocate $1,175,370 from the CY 2002 1^st quarter Special Revenue Fund, Rule 2202 Account to assist in the purchase of natural gas vehicles for taxicab services.
   
   
2. Authorize the Executive Officer the ability to approve disbursement of funds from the Rule 2202 allocation for taxicab purchase assistance upon the recommendation of the current contractor for the taxicabs funding assistance program, Adrianus Resources.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Under previous Board actions, funding assistance for the purchase of 373 natural gas Ford Crown Victoria vehicles has been provided through various funding programs including the Rule 2202 AQIP. Under Subparagraph (d)(6) of Rule 1194 – Commercial Airport Ground Access, taxicab operators may purchase a non-Rule 1194 compliant vehicle if funding to offset the cost of a rule-compliant alternative-fueled vehicle, less $10,000 (plus sales tax) as provided in the Rule exemption [Section (e)(3)] is not available or an alternative-fueled vehicle is not physically available to the taxicab operator within ten working days (three working days if the taxicab operator’s existing vehicle was totally damaged in an accident). Recently, staff was informed that as many as 97 new model year 2002 natural gas Ford Crown Victoria P72 models (the P72 model is the taxicab version of the Ford Crown Victoria passenger car) might be physically available to taxicab operators in the South Coast Air Basin. Staff is working with Ford Motor Company to make these vehicles available to taxicab operators in Southern California. However, funding is available for only 13 vehicles at this time and funding assistance for up to 84 vehicles is still needed. In addition, 35 of these vehicles contain extended range tank packages that would allow the vehicles to go an additional 100 miles. The cost of the extended range vehicles is about $2,382 (including applicable sales tax) more than the standard basic P72 taxicab package.

Proposal

In response to this information, staff is proposing that Calendar Year (CY) 2002 1^st quarter Rule 2202 AQIP funds be allocated to assist in the purchase of the 84 Rule 1194 compliant vehicles. Staff calculated the emission reductions associated with the purchase of a new natural gas ULEV Ford Crown Victoria compared to an existing pre-owned TLEV gasoline-powered Ford Crown Victoria. The emissions reductions on an annual basis are provided in Table 1. The emission calculations are based on estimated annual miles traveled of 60,000 miles. As shown in Table 1, there will be significant emission reductions associated with the natural gas ULEV compared to an existing TLEV.

Staff calculated the yearly emission reductions associated with the 84 requested vehicles and compared the emission reductions to the Rule 2202 emission targets. The comparison provided in Table 2 shows that if the 84 alternative fueled vehicles were deployed, the associated emission reductions would achieve a portion of the Rule 2202 emission reduction targets for VOC, NOx, and CO. The remaining emission reduction targets would be achieved through other project proposals submitted (further discussion of the other proposals is provided in the section under "Rule 2202 Request for Projects"). Regardless, the Rule 2202 emission bank balance for CY 2002 (see Table 2) shows that there are sufficient emission reductions accrued at this time and that moving forward with the staff’s proposal to fund the natural gas vehicles would provide additional reductions to meet Rule 2202’s emission reduction targets for CY 2002. In addition, it is estimated that the natural gas vehicles used for taxicab services would have about four years useful life (based on historical use of these vehicles in the taxicab industry) and would contribute to the Rule 2202 emission bank beyond CY 2003. Hence, staff believes that providing funding assistance towards the purchase of the alternative fueled vehicles would provide significant air quality benefits at this time. Staff therefore is recommending that up to $1,175,370 from the Rule 2202 AQIP be expended for this purpose.

The total funds of $1,175,370 would assist in the purchase of up to a total of 84 vehicles (49 standard P72 models and 35 extended range P72 models) assuming that the maximum buydown would be $13,000 for the standard model and $15,382 for the extended range model. A maximum funding assistance of $13,000 is requested based on the cost of a P72 model year 2002 natural gas Ford Crown Victoria and does not include any additional options that may be available with the vehicle. In addition, the $13,000 per vehicle buydown represents the maximum cost if the taxicab operator is not able to access Ford’s fleet incentives or volume purchase discounts. For the extended range model, an additional $2,382 per vehicle is needed to cover the cost of the extended range tank. At the time a taxicab operator makes a request for funding and there is a choice between the basic model and the extended range model, funding would be provided for the basic model only (i.e., up to $13,000). However, if the extended range model is the only model available, the operator may access up to $15,382. Regardless, if an operator chooses to purchase the extended range model when both models are available, the operator may do so at the operator’s expense. In all funding assistance, staff will work with the local dealerships to ensure the lowest purchase price possible. As such, if the maximum funding assistance per vehicle is not fully utilized, remaining funds could be used to assist in the purchase of Rule 1194 compliant alternative fuel vehicles beyond the 84 vehicles if additional vehicles are identified. Nevertheless, the funds would remain available until the total allocation ($1,175,370) has been expended. In return for the AQMD buydown assistance, the emission reduction benefits from these vehicles would go towards the Rule 2202 AQIP Emission Bank Balance.

To facilitate disbursement of funds, staff is proposing that $1,175,370 be allocated so that the current contractor (Adrianus Resources, Inc.) authorized to process taxicab operator’s request for funding, has the ability to recommend disbursements when approving rule-compliant vehicle purchases. All funding disbursements would be made upon concurrence of the Executive Officer. The payment would be made directly to the vehicle dealership upon delivery of the vehicle to the taxicab operator.

Rule 2202 Request for Projects

The Request for Projects for the first quarter Rule 2202 AQIP funds closed on May 3, 2002. Nineteen proposals consisting of 44 separate projects were received by the closing date (see Attachment A). As shown in Attachment A, many of the proposed projects are for marine vessels and off-road equipment. While many of the projects would provide greater emission reductions compared to the natural gas vehicle purchase, staff believes that funding the natural gas vehicles would provide more immediate air quality benefits since the replacement of a gasoline-powered taxicab with the natural gas powered vehicle would provide immediate air quality benefits to local communities where these vehicles are operated. Regardless, staff has made a preliminary evaluation of the submitted projects and has identified three projects (vehicle scrapping, marine vessel diesel repower, and off-road scraper retrofit) that could provide sufficient emission reductions in conjunction to the taxicab funding assistance proposal to meet the first quarter targets. The total cost of the three projects could be funded with the remaining first quarter AQIP funds. Staff will complete its evaluation of all the proposals and will provide its recommendation at a future Board meeting date.

Staff believes that the funding assistance for natural gas vehicles is an effective strategy to reduce emissions and to assist in meeting Rule 2202 emission targets. The purchase and deployment of the alternative-fueled ULEV vehicles would result in air quality benefits and earlier than otherwise required under Rule 1194 (since Rule 1194 implementation is based on availability of funding and vehicle within ten working days of a request to purchase a vehicle). In addition, the use of alternative-fuel vehicles by the taxicab industry will provide the public a greater awareness of the benefits of clean fuel vehicles.

Fiscal Impact

The total first quarter Rule 2202 AQIP funds available is $1,842,582. Staff is requesting that up to $1,175,370 of the first quarter Rule 2202 AQIP be set aside to assist taxicab operators with the purchase of natural gas Ford Crown Victoria vehicles. Minor administrative costs to execute the contracts would be covered within the existing Budget.

Air Quality Benefits

Providing funding assistance to taxicab operators at this time to purchase cleaner alternative fueled vehicles will provide overall air quality benefits to the region. If funding is not available, the taxicab operators will most likely purchase existing pre-owned gasoline-powered vehicles. Staff estimates that the 84 alternative-fueled vehicles purchased with the funding assistance will result in 2.9 tons/year of NOx emission reductions. In addition, there will be about 11.7 tons/year of CO emission reductions and 2.2 tons/year of VOC emission reductions. In addition, there would be a reduction in air toxics emissions especially in areas where the taxicab vehicles will be operating.

Table 1
Estimated Annual Emission Reductions Associated with a Ford Natural Gas ULEV
Crown Victoria Compared to a Ford Gasoline-Powered TLEV Crown Victoria

Table 2
Comparison of Rule 2202 CY 2002 1^st Quarter Emission Reduction
Targets to the Emission Reductions Associated with the Purchase of
84 Natural Gas Ford Crown Victorias
 

ATTACHMENT A
Proposals Submitted Under the Rule 2202 AQIP

/ / /