BOARD MEETING DATE: December 5, 2003
AGENDA NO. 8

Approve Release of Program Announcement and CNG School Bus Incentives as Part of FY 2003-04 AB 2766 Discretionary Fund Work Program, and Grant Authority for MSRC to Adjust Project Costs Up to Five Percent and AQMD Chairman to Execute Agreements

SYNOPSIS:

The MSRC has proposed a $14.5 million FY 2003-04 Work Program, including $500,000 for a Diesel Exhaust After-Treatment Retrofit Program and $2 million for a CNG School Bus Incentives Program. The MSRC requests approval to release a revised Program Announcement for the Diesel Exhaust After-Treatment Retrofit Program and to make awards to augment current contracts with three CNG school bus vendors to implement the CNG School Bus Incentives Program. The MSRC requests the AQMD Board grant authority to adjust project costs up to five percent and for the AQMD Chairman to execute amendments with the qualified school bus vendors. (Review: Mobile Source Air Pollution Reduction Review Committee, November 20, 2003)

RECOMMENDED ACTIONS:

1. Approve release of revised Diesel Exhaust After-Treatment Retrofit Program Announcement & Application #PA2004-06 with a target funding of $500,000 as part of FY 2003-04 Work Program;
    
2. Approve $2 million as part of FY 2003-04 Work Program to provide incentives for CNG school buses; modify contracts with A-Z Bus Sales, California Bus Sales and Bus West augmenting each vendor contract in the amount of $600,000; and retain remaining $200,000 to augment the qualified vendor contracts based on sales performance, subject to review and approval of MSRC;
    
3. Authorize MSRC the authority to adjust contracts up to 5%, as necessary; and
    
4. Authorize the Chairman of the Board to execute contract modifications with the three school bus vendors.

William G. Kleindienst
Chair, MSRC

Background

In September 1990 Assembly Bill 2766 was signed into law (Health & Safety Code Sections 44220-44247) authorizing the imposition of an annual $4 motor vehicle registration fee to fund the implementation of programs exclusively to reduce air pollution from motor vehicles. AB 2766 provides that 30 percent of the annual $4 vehicle registration fee subvened to the AQMD be placed into an account to be allocated pursuant to a work program developed and adopted by the MSRC and approved by the AQMD Governing Board. It is projected that more than $15 million will be available in the Discretionary Fund in FY 2003-04 from revenue, interest and turnback funds. This includes allocation of the prudent reserve typically maintained by the MSRC.

The MSRC initially approved the framework for its FY 2003-04 Conceptual Work Program on July 24, 2003. Subsequently, on October 23, 2003, the MSRC approved multiple solicitations to implement its FY 2003-04 Work Program. Included in this action, and subsequently approved by the AQMD Board on November 7, 2003, was the commitment of $2 million for a CNG School Bus Incentives Program. Details on the program were to be considered by the MSRC at a later date. Also included in the MSRC’s October 23, 2003 actions, was approval of a Program Announcement offering incentives for diesel exhaust after-treatment devices. Afterwards, MSRC staff learned of the pending implementation of CARB’s solid waste collection vehicle rule, which might result in the MSRC’s funding mandated obligations through this program. The MSRC’s work programs have consistently focused on funding projects above and beyond mandates to seek additional emissions reductions for the region. Consequently, the MSRC postponed release of the Program Announcement until the matter could be explored further.

Proposals

On November 20, 2003, the MSRC unanimously decided to add the $2 million set aside in the FY 2003-04 Work Program for CNG school bus incentives to enhance its ongoing CNG School Bus Incentives Program. The current program ends December 31, 2003. The MSRC extended the program end date by one year through December 31, 2004, and allocated an additional $600,000 to each of its three qualified school bus vendors, A-Z Bus Sales, California Bus Sales and Bus West. The vendors were chosen last year through a Request for Qualifications process. The remaining $200,000 out of the $2 million will be retained to augment the qualified vendor contracts based on sales performance, subject to review and approval of the MSRC. Additionally, the MSRC limited the incentives to public and private school districts that procure, hold title to and operate pupil transportation buses. Private business entities that provide pupil transportation services on a contract basis to public and private school districts will not be eligible to receive CNG school bus incentives. The MSRC took this course to ensure that smaller school districts, which do not benefit from large bus purchases that result in significant cost savings, would have access to MSRC incentive funds, and because the large pupil transportation providers expressed dissatisfaction with the MSRC’s incentive process in that they do not purchase their school buses through vendors. The MSRC requests Board approval of these awards as part of the FY 2003-04 Work Program.

Also on November 20, 2003, the MSRC amended its Program Announcement offering incentives for diesel exhaust after-treatment devices. New language was inserted as follows: Applicants must demonstrate that the proposed deployment of diesel exhaust retrofit devices is beyond mandated obligations and not required by, or in fulfillment of, any local, state or federal law, rule or regulation. The CARB representative on the MSRC supported this amendment. The revised Program Announcement includes a four-month application period from January 13 through April 9, 2004. Funding will be distributed on a first-come, first-serve basis and provides up to $8,000 per device with an additional $500 per device to offset the higher costs of low-sulfur diesel. As recommended by the AQMD, vehicles operating at or in direct relationship to the Port of Los Angeles will not be eligible for MSRC funds under this Program. The AQMD Board previously approved the Program Announcement on November 7, 2003. At this time the MSRC requests the Board’s approval of the revised Program Announcement, as discussed in this letter and attached.

Additionally, the MSRC requests authority to allocate the remaining $200,000 to the qualified school bus vendor contracts based on sales performance, and adjust funds by up to five percent, as deemed appropriate. These allocations would be made by MSRC without further AQMD Board review. The Board has previously granted the MSRC authority to adjust contract costs up to five percent. Lastly, the MSRC requests authority for the AQMD Board Chairman execute the contract modifications with the three school bus vendors, A-Z Bus Sales, California Bus Sales and Bus West.

Outreach

The Diesel Exhaust After-Treatment Retrofit Program Announcement & Application #PA2004-06, in accordance with the AQMD's consulting and contracting policies, will be advertised in a public notice each on two different days in 25 newspapers and publications, including several targeting minorities.

The PA will be placed on the MSRC's website at "http://www.msrc-cleanair.org" and also included on the AQMD's website under the "Business and Job Opportunities" icon, and information will be included about the PA on the AQMD's bidder's 24-hour telephone message line (909) 396-2724. A press release announcing all the FY 2003-04 Work Program solicitations has already been issued by the MSRC’s Outreach Coordinator.

In addition to the AQMD's standard practices, a brochure announcing these funding opportunities was mailed to over 1,800 interested parties on the MSRC's mailing list, as well as to the Black and Latino Legislative Caucuses, Ethnic Community Advisory Group, City Managers, Chambers of Commerce, and business associations. The brochure was also mailed to local legislators, mayors, city council members and city managers in the four counties, and AB 2766 Subvention Fund city administrators. The perforated portion of the brochure may be returned to request copies of the solicitations.

To assist potential bidders in submitting qualified proposals, a bidders’ workshop will be conducted at AQMD Headquarters in Room CC6 at 10 a.m. on Friday, December 19, 2003.

Proposal Evaluation and Panel Composition

Proposals received for the Work Program’s funding solicitations (outlined under the proposals section) will be evaluated by members of the MSRC-TAC, a diverse group of individuals appointed by participating members as prescribed in the Health & Safety Code. Several evaluation teams will be formed to evaluate proposals in the various program solicitations, the membership of which will be identified in the Board letter recommending specific contract awards.

Resource Impacts

The AQMD acts as fiscal administrator for the AB 2766 Discretionary Fund Program (Health & Safety Code Section 44243). Money received for this program is recorded in a special revenue fund (Fund 23) and the contracts will be drawn from this fund. These contracts will have no fiscal impact on the AQMD’s operational budget.

Attachment

PA #2004-06: Diesel Exhaust After-Treatment Retrofit Program

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