BOARD MEETING DATE: May 3, 2002
AGENDA NO. 9

Recognize Revenues from U.S. Department of Energy to Augment AES Settlement Funds and Execute Contract to Assist in Purchase of Natural Gas Passenger Cars for Taxicab Services

SYNOPSIS: 

In March 2001, the Board set aside $500,000 to assist in the purchase of Rule 1194-compliant natural gas passenger vehicles for taxicab operators authorized to operate at airports. Recently, the Gas Company requested the U.S. Department of Energy (DOE) to redirect $48,000 of the Gas Company's original grant towards the purchase of natural gas passenger cars for taxicab services. Staff recommends that the Board recognize $48,000 from U.S. DOE and continue to provide funding assistance at a cost not to exceed $299,000 (including U.S. DOE funds) to individual taxicab operators, on a first-come basis, in purchasing natural gas passenger cars as required under Rule 1194. In addition, staff recommends executing a contract with SunLine Services Group in an amount not to exceed $102,000 to provide funding assistance to taxicab operators in the Coachella Valley as required under Rule 1194.

COMMITTEE: 

Not Applicable

RECOMMENDED ACTION:

1. Authorize the Chairman to enter into an agreement with the U.S. DOE to transfer $48,000 in grant funding originally awarded to the Southern California Gas Company to the AQMD for the purchase of CNG taxicab vehicles.
   
    
2. Recognize $48,000 in revenue from the U.S. DOE, upon receipt, to the AES Settlement Fund Account (Fund 35).
   
    
3. Set aside $299,000 from the AES Settlement Fund Account (Fund 35) to assist in the purchase of Rule 1194-compliant alternative-fueled vehicles for taxicab services in the South Coast Air Basin.
   
    
4. Authorize the Executive Officer to approve funding assistance up to $13,000 per vehicle to individual taxicab operators on a first-come basis. Funding assistance shall be limited to operators who have not received prior AQMD funding. The total funding available would be $299,000. However, funding assistance shall not exceed $251,000 until the U.S. DOE funds are received.
   
    
5. Execute contract with SunLine Services Group in an amount not to exceed $102,000 from the AES Settlement Fund Account (Fund 35) to assist in the purchase of Rule 1194-compliant alternative-fueled vehicles for taxicab services in the Coachella Valley.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

As part of the Board’s efforts to incentivize the early introduction of natural gas passenger vehicles for taxicab services to meet the requirements of Rule 1194, the Board in March 2001 approved a one-time revenue expenditure out of the AES Settlement Fund account of $250,000 for "CNG Taxicab Advertisement" program in the Coachella Valley (at Palm Springs Airport) and $250,000 funding assistance for taxicab vehicle purchases at all other commercial airports in the South Coast Air Basin. The program provides a funding assistance of up to $5,000 per alternative-fueled vehicle. The taxicab service must be authorized to operate out of commercial airports in the South Coast Air Basin or at Palm Springs Airport in the Coachella Valley.

As part of its projects approval of AES Settlement Funds on March 16, 2001, the Board directed that any projects not under contract within nine months (with the exception of the railroad overpass project which was twelve months), be placed in reserve for purposes of implementing the fleet rules that have funding requirements, specifically, Rule 1194 – Commercial Airport Ground Access and Rule 1195 – Clean On-Road School Buses. Of the $500,000 allocation from the AES Settlement Funds for taxicabs, $150,000 has been expended for taxicab purchases in the Coachella Valley. There has not been any request for funding assistance for taxicab purchases for other areas in the Basin due to the low level of funding assistance available.

Thirty vehicles have been purchased to-date by Coachella Valley taxicab operators participating in the $5,000 advertisement program. Other incentives offered by the automobile manufacturer and the CEC/MSRC, provided additional funding assistance to further offset the out-of-pocket purchase cost of Rule 1194-compliant vehicles to the operator. However, an initial 14 vehicle purchases were not able to access the CEC/MSRC $3,000 buy-down because the CEC did not have a mechanism in place at the time. The CEC indicated that it would not provide retroactive funding. As such, individual taxicab operators had to pay an additional $3,000 out-of-pocket expense for these vehicles. The remaining 16 vehicle purchases were able to assess the CEC/MSRC funds.

Relative to the Board approval to provide funding assistance of up to $5,000 per vehicle for taxicab purchases in the other areas of the Basin, staff believes that for many of the individual owner/operators operating in the South Coast Air Basin (in particular, Los Angeles County) the funding assistance needed in order to purchase Rule 1194-compliant vehicles would be higher since their respective associations or cooperatives do not purchase large quantities of vehicles for their membership and would not be able to access all of the available fleet purchase incentives offered by the manufacturer. In addition, these individual operators receive minimal support services from their respective association. Prior Board approved funding to assist in the purchase of Rule 1194-compliant vehicles were from the DWP Settlement Funds and the Rule 2202 AQIP. The funding was provided to taxicab companies and cooperatives who provide vehicle purchases on behalf of their members.

Lastly, under a separate incentives funding program for alternative fuel taxicab vehicles, Southern California Gas Company is administering a grant from the U.S. DOE of $140,000. Of the total funds, Southern California Gas Company has awarded $92,000 toward the purchase of natural gas vehicles for taxicab services. Southern California Gas Company is recommending that the remainder of the funds ($48,000) be transferred to the AQMD to assist in the purchase of natural gas vehicles for taxicab services consistent with Rule 1194.

Proposal

Staff is recommending three actions relative to the AES Settlement Funds to assist in the purchase of Rule 1194-compliant alternative-fuel taxicabs:

1. Recognize $48,000 from the U.S. DOE to the AES Settlement Fund Account (Fund 35).
   
    
2. Allocation of $299,000 to assist in the purchase of Rule 1194-compliant alternative-fueled vehicles for taxicab services out of commercial airports in the South Coast Air Basin (excluding Palm Springs Airport). The funding would be provided to individual taxicab operators who have not received prior AQMD funding for such vehicle purchases. To assist individual taxicab operators who belong to associations or cooperatives that do not purchase vehicles for their membership, staff is proposing that up to $13,000 per vehicle in funding assistance be provided. In addition, staff is requesting the Board’s authorization for the Executive Officer to approve funding requests from individual operators in an amount not to exceed $13,000 per vehicle. Upon the Executive Officer’s approval of a funding request, the funds would be provided to the auto dealership upon delivery of the vehicle to the operator. A mechanism for approving requests will be developed by staff to track the requests. The total funds of $299,000 would assist in the purchase of up to 23 vehicles assuming that the maximum funding assistance would be $13,000. However, the Executive Officer will not authorize a total expenditure greater than $251,000 until the U.S. DOE funds are received. In return for the AQMD funding assistance, the emission reduction benefits from these vehicles would be retired.
   
    
3. Execute a contract with SunLine Services Group for an amount not to exceed $102,000 to administer the "CNG Taxicab Advertisement" Program in the Coachella Valley. Forty-two thousand dollars ($42,000) of the allocated funds would be to those 14 taxicab vehicle purchases in the Coachella Valley that were not able to assess the CEC/MSRC $3,000 buy-down with the condition that the advertisement program be extended by two years. The remaining $60,000 would assist new Rule 1194-compliant vehicle purchases that provide passenger pickup services at Palm Springs Airport.

The total funding recommendation is $401,000 with $353,000 from the AES Settlement Funds for Fleet Rule Implementation and $48,000 from U.S. DOE.

Fiscal Impact

Sufficient funds are available from the AES Settlement Funds Account – Fund 35 ($353,000) and from U.S. DOE grant monies ($48,000). Minor administrative costs would be incurred to execute contracts and approve individual funding requests.

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 35 alternative-fueled vehicles purchased with the funding assistance will result in about 0.96 tons/year of NOx emission reductions. In addition, there will be about 3.5 tons/year of CO emission reductions and about 0.72 tons/year of VOC emission reductions. In addition, there would be a reduction in air toxic emissions especially in areas where the taxicab vehicles will be operating.

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