BOARD MEETING DATE: August 6, 2004
AGENDA NO. 10

Approve Grants to Retrofit Diesel School Buses with Particulate Traps and Issue Program Announcement & Application for New School Buses with Funding from State’s Proposition 40 and Chairman’s Modified School Bus Initiative and Installation of Oxidation Catalysts with Funding from U.S. EPA

SYNOPSIS:

On February 6, 2004, AQMD issued a program announcement under the AQMD Chairman’s Initiative offering $12 million for school bus replacements and retrofits. Four public school districts applied for seven CNG school buses, and four public school districts and five private operators applied for 1,174 PM traps. This action is to approve awards to retrofit up to 766 diesel school buses with PM traps in an amount not to exceed $4,297,000; to purchase up to 21 PM trap cleaning equipment in an amount not to exceed $168,000; and to set aside up to $318,250 for the purchase and installation of insulation blankets on 1,273 school buses already retrofitted through AQMD funding. In addition, this action is to approve issuance of a new program announcement for up to $2,030,000 from Proposition 40 funds, up to $245,000 from U.S. EPA funds, and up to $7,216,750 from unspent funds available in the AQMD Chairman’s Initiative Program to replace pre-1987 school buses; and up to $250,000 from U.S. EPA funds to retrofit school buses with diesel oxidation catalysts.

COMMITTEE:

Technology, July 23, 2004, Recommended for Approval

RECOMMENDED ACTIONS:

1. Authorize the Chairman to approve grant awards to public school districts and private school bus operators to retrofit 1994 and newer school buses with particulate traps as set forth in Table 2, in an amount not to exceed $4,297,000, and to purchase particulate trap cleaning equipment as set forth in Tables 2 and 3, in an amount not to exceed $168,000 from the Lower-Emission School Bus Fund.
    
2. Authorize the Executive Officer to approve grant awards to public school districts and private operators to purchase and install insulation blankets at $250 each on all 1,273 school buses already retrofitted with AQMD funding with awards granted on June 7, 2002, and December 6, 2002, in an amount not to exceed $318,250 from the Lower-Emission School Bus Fund.
    
3. Recognize up to $2,030,000 of Proposition 40 funding (AB 425) from the CARB to the Lower-Emission School Bus Program Fund.
    
4. Recognize up to $495,000 in grant funds from the U.S. EPA to the Lower-Emission School Bus Program Fund.
    
5. Approve issuance of a Program Announcement & Application PA 2005-01 to:

1. Replace school buses with new alternative fuel buses in an amount not to exceed $2,030,000 from State Proposition 40 funding to be placed in the Lower-Emission School Bus Fund.
    
2. Replace school buses with new alternative fuel buses under the modified AQMD Chairman’s School Bus Initiative Program as outlined in Attachment 1, in the amounts not to exceed $7,216,750 from the AQMD Chairman’s Initiative Program unspent funds available in the Lower-Emission School Bus Fund and $245,000 from U.S. EPA grant funds to be placed in the Lower-Emission School Bus Fund.
    
3. Retrofit school buses with diesel oxidation catalysts in an amount not to exceed $250,000 from U.S. EPA grant funds to be placed in the Lower-Emission School Bus Fund.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Exhaust emissions from high emitting diesel-fueled school buses present a risk to children and are a source of public exposure to toxic diesel particulate matter and smog-forming pollutants. There are thousands of older school buses on the road that have remained in service simply because school districts lack funds to replace them. To reduce emissions from these vehicles, AQMD has used state funds and its own funds to replace older diesel buses with new lower-emitting diesel or CNG buses, and to retrofit particulate traps on school buses. Over 50 percent of these funds have gone to school buses operating in communities meeting legislated criteria for disproportionate impacts, as set in Health and Safety Code Section 43023.5 (AB1390, Firebaugh).

Table 1 summarizes awards made under previous AQMD program announcements for replacement of pre-1987 school buses, and retrofits of 1994 and newer school buses with PM traps.

Table 1: Summary of AQMD’s School Bus and PM Trap Awards
 

** Includes 10 percent funding for CNG Refueling Infrastructure

Proposition 40 Funding
The AQMD expects to receive $2,030,000 from CARB for the school bus replacement program. These funds originate from Proposition 40, passed by the state electorate on March 5, 2002, to conserve natural resources and improve state and local parks. Assembly Bill (AB) 425 (Statutes of 2002, Chapter 379) set aside 20 percent for school bus funding from Proposition 40 to public school districts to purchase clean burning buses transporting school children. For FY2002-03, on a statewide basis, this amounted to $4,920,000, of which AQMD had been allocated $2,175,000 to purchase 16 new CNG buses. For FY 2003-2004, out of a total state allocation of $4,600,000, the AQMD will receive $2,030,000 to buy about 15 to 16 new CNG buses.

As stated in the state guidelines, the ratio of new CNG buses to new cleaner diesel buses on a statewide basis is to be on the order of 2:1. Since many districts outside of AQMD plan to purchase cleaner diesel buses, the AQMD has been given the flexibility to allocate its share towards new CNG buses exclusively.

AQMD Chairman’s School Bus Initiative
At its February 6, 2004 meeting, the Board approved the issuance of Program Announcement & Applications #2004-07, for the Chairman’s School Bus Initiative in the amount of $12 million. The school bus initiative was designed to provide funding for the replacement of pre-1987 school buses with new alternative fuel buses as well as the purchase and installation of particulate traps on diesel-powered school buses. Specifically, the initiative provided for:

a)

Total of $7.2 million, with up to $60,000 for Type D, CNG transit bus, $50,000 for mid-size, and $25,000 for a Type A bus. Public school districts and private operators were eligible for the funding with public school districts receiving first priority. Public schools would also have received an additional $12,000 per bus for CNG infrastructure. To be eligible, applicant had to scrap/crush a pre-1987 bus.

b)

Total of $4.8 million for installation of CARB verified particulate traps on 1994 and newer diesel school buses, capable of reducing diesel exhaust particulate matter by at least 85 percent. Both public and private fleets were eligible.

By the closing date of June 11, 2004, four public schools applied for seven new CNG buses, another four public school districts applied for 48 PM traps, and five private operators applied for 1,126 PM traps.

U.S. EPA Grant Funding
AQMD has applied and has been awarded $495,000 in school bus grant funding by the U.S. EPA. The grant funding is comprised of $250,000 for the purchase and installation of diesel oxidation catalysts, and $245,000 for school bus replacement.

Proposal

Several actions are proposed as part of this request to the Board and are discussed in the following sections.

Proposed Awards

1. Four public school districts submitted applications for 48 particulate traps and five private school bus operators submitted applications for 1,126 particulate traps totaling 1,174 units. Among the applications submitted by private operators there were 408 applications for model year 2003 and newer buses, for which there are no CARB verified units. Staff therefore recommends to award 48 particulate traps to four public school districts, and 718 particulate traps to five private school bus operators as set forth in Table 2, to retrofit model years 1994 – 2002 school buses in an amount not to exceed $4,297,000 from the Lower-Emission School Bus Fund. For public school districts, AQMD’s reimbursement per PM trap unit, sales tax, and installation shall not exceed $7,000, plus a maximum of $250 for the optional purchase and installation of insulation blanket. For private school bus operators the AQMD will provide 75 percent of the $7,000 per bus covering the costs for PM trap unit, sales tax, and installation in addition to a maximum of $250 for the optional purchase and installation of insulation blanket. The remaining 25 percent of the cost is to be cost shared by the private school bus operators. Based on the written information provided by the private school bus operators at least 462 of the 766 buses will operate in disproportionately impacted areas for a period of five years as defined in the Program Announcement PA2004-07, and in compliance with AB1390. These buses will mainly serve Long Beach, Compton, and Los Angeles unified school districts, making up at least 60 percent of the total award.
    
2. Staff recommends that public school districts and private operators that have received 30 or more traps in the past and current rounds of funding, be awarded at least one PM trap cleaning equipment at $8,000 per equipment. School districts with multiple depots would be awarded multiple PM trap cleaning systems. It is therefore recommended to award 11 PM trap cleaning equipment to the current recipients of PM trap awards as set forth in Table 2, and ten PM trap cleaning equipment to the past recipients of PM trap awards granted on June 7, 2002, and December 6, 2002, as set forth in Table 3, in an amount not to exceed $168,000 from the Lower-Emission School Bus Program.
    
3. Staff recommends approval of grants to public school districts and private operators to purchase and install insulation blankets on 1,273 school buses already retrofitted with AQMD funding with awards granted on June 7, 2002, and December 6, 2002, in an amount not to exceed $318,250 from the Lower-Emission School Bus Fund. The amount of funding for the optional purchase and installation of the blankets shall not exceed $250 per bus. Public school districts and private operators shall provide a list of already retrofitted buses to the AQMD on which installation blankets would be installed. Upon completion of the installations the AQMD will reimburse schools and private operators directly.

Table 2: List of Applicants for PM Retrofit Traps
 

Table 3: List of Past PM Recipients Recommended for
PM Trap Cleaning Equipment
 

4. Four public school districts applied for replacement of seven pre-1987 diesel school buses with new CNG buses under the Chairman’s School Bus Initiative Program. The detailed list of the applicants with the number of buses requested is listed in Table 4. As the guidelines of the new bus component of this program are proposed in this letter to be modified by the Board to allow more funding per vehicle replacement and making it similar to the state program under Proposition 40, it is proposed to award these four school districts at the same time with other applicants who will be awarded under the modified guidelines of the AQMD Chairman’s Initiative Program. The school districts listed in Table 4 will not be required to reapply. They will be given preference over other applicants and due to modification of the program guidelines they will be eligible for more funding for replacement of the subject school buses.

Table 4: Applicants of New Replacement CNG Buses
(AQMD Chairman’s School Bus Initiative)
 

Program Announcement with Funding Opportunities
Staff recommends the Board to approve the issuance of Program Announcement & Applications #PA 2005-01 with two separate funding opportunities:

Part A
Proposition 40 funds for Replacement School Buses
The AQMD expects to receive $2,030,000 from CARB through Proposition 40 for the school bus replacement program. Part A of the program announcement is in accordance with CARB’s Lower-Emission School Bus Replacement Program guidelines. These funds are available for replacement of existing pre-1987 diesel-fueled buses with new alternative fuel buses. The new buses shall meet CARB’s NOx and PM engine certification standards of 2.5 g/bhp-hr and 0.03 g/bhp-hr, respectively, and shall be equipped with an oxidation catalyst. In reality, CNG buses are certified at lower NOx emission levels. Funding of up to 10 percent for every new CNG bus awarded will also be made available to install CNG infrastructure. Only public school districts are eligible to apply for this funding. Further details and application forms for this program are included in Part A of the program announcement.

Modified AQMD Chairman’s School Bus Initiative
Chairman’s School Bus Initiative Program, which was originally adopted by the Board at its February 6, 2004 meeting, offered public school districts and private school bus operators the incremental cost differential of an alternative fuel bus to replace a pre-1987 school bus as shown in Table 5.

Table 5: Amount of Incremental Funding per Bus
 

Due to difficult economic conditions and the lower relative amount of incremental cost offered, the number of submitted applications was inadequate. Staff therefore recommends that the program be modified to offer new alternative fuel school buses to replace pre-1987 buses with the same amount of funding as offered under the state program with Proposition 40 funds. Specifically, award recipients will pay a maximum of $25,000 for the replacement of a pre-1987 school bus and a maximum of $10,000 for the replacement of a pre-1977 school bus. It is also proposed to add $245,000 from U.S. EPA grant funds to this program to be able to offer more buses. Public school districts, private operators, and private schools may apply under this program. Public school districts will be given preference over private school bus operators and private schools. The modified AQMD Chairman’s School Bus Initiative criteria are outlined in Attachment 1.

On July 13, 2004 AQMD staff held a public workshop for the proposed school bus program. Based on the comments received from public school districts, staff recommends adding the following provision to the school bus replacement program under the AQMD Chairman’s School Bus Initiative:

Public school districts will be allowed to replace a pre-1991 diesel school bus with a new alternative fuel bus, provided their pre-1991 bus replaces a pre-1977 diesel school bus in another public school district within the AQMD jurisdiction, and that the subject pre-1977 bus is crushed. The public school district receiving the new alternative-fueled bus will pay a maximum of $10,000 as its local match. The public school district giving its pre-1991 school bus to another public school district is not allowed to receive any money in return from the recipient for this transaction.

Total amount of funding for this program shall not exceed $7,461,750, comprised of $7,216,750 unspent funds available in AQMD Chairman’s School Bus Initiative Program, and $245,000 from U.S. EPA grant funds. Further details and application forms are included in Part A of the program announcement.

Public school district applications will be considered for funding under both Proposition 40 and the AQMD Chairman’s Initiative program.

Part B
Availability of U.S. EPA Funds for Diesel Oxidation Catalysts
Contingent upon receiving grant funds from the U.S. EPA it is recommended that $250,000 be made available to public school districts to retrofit their diesel buses of 1991-93 model years with diesel oxidation catalysts at $2,500 funding per bus. Further details and application forms are included in Part B of the program announcement.

Funding Distribution

For parts A and B of the proposed program announcement, staff recommends to distribute one-half of the total funding in compliance with Health and Safety Code Section 43023.5 (AB1390, Firebaugh), to directly benefit low-income communities and communities of color that are disproportionately impacted by air pollution. Thus, 50 percent of the funds will be allocated to school districts that qualify under this category. All applications will be evaluated for poverty level, PM exposure, and toxic exposure according to the following criteria:
 

A)	Poverty Level: All school districts in areas where at least 10% of the population falls below the Federal poverty level based on the Year 2000 Census, will be eligible to be ranked in this category.
B)	PM Exposure: All school districts in areas with the highest 15% of PM concentration will be eligible to be ranked in this category. Based on an annual average, the highest 15% of PM concentration is 46 micrograms per cubic meter and above.
C)	Toxic Exposure: Based on AQMD’s MATES II estimates, all projects in areas with the highest 15% of toxic exposure, will be eligible to be ranked in this category. The highest 15% represents a cancer risk of 1,139 in a million and above (MATES II study).

Any applicant qualifying based on both the poverty level and either PM or toxic exposure categories will qualify for disproportionate impact funding. If the programs are oversubscribed, then the applicants will be ranked. A maximum of 40 percent weight would be assigned to applicants in areas with highest poverty levels. Following this, 30 percent maximum weight will be assigned to school districts with the highest PM levels and 30 percent maximum for areas with highest cancer risk levels. All others would be rated proportionately. Awards will be granted to applicants in descending order until 50 percent of all the funds is exhausted with preference given to public school districts. Private school bus operators shall provide information in writing as to where and for what time period their subject buses would operate.

Applicants unable to qualify under AB 1390 can qualify for the remaining 50 percent of the funding. For the school bus replacement programs and with adequate funding available, first one bus will be awarded to each public school district. Then the remaining funds will be distributed among public school districts on a first come first served basis. If the program is oversubscribed and a school district applies for a disproportionately large number of buses compared to other applicants, no school district will receive more than 30 percent of the funds. After public school districts have been awarded, the remainder of the funds, if any, will be distributed among private school bus operators and then private schools on a first come first served basis. Because of the special funding for school bus replacement under the AES Settlement Fund, Jurupa Unified School District will not be eligible for this specific solicitation. For the diesel oxidation catalyst program, the non-AB1390 portion of the funds will be distributed on a first come first served basis.

Outreach

In accordance with AQMD’s Procurement Policy and Procedure, a public notice advertising the RFP/RFQ and inviting bids will be published in the following publications:
 

1.	Antelope Valley Press	11.	La Opinion	21.	Rafu Shimpo
2.	Black Voice News	12.	La Prensa Hispana	22.	San Bernardino Sun
3.	Chinese Daily News	13.	La Voz Publications	23.	State of California Contracts
4.	Desert Sun	14.	Los Angeles Daily News		Register
5.	Eastern Group Publications	15.	Los Angeles Sentinel	24.	The Daily Breeze
6.	El Chicano	16.	Los Angeles Times	25.	The Excelsior
7.	El Informador	17.	Orange County Register	26.	The Signal
8.	Inland Empire Hispanic News	18.	Philippine News	27.	Wave Community Newspapers
9.	Inland Valley Daily Bulletin	19.	Precinct Reporter
10.	Korea Central Daily	20	Press Enterprise

Additionally, potential bidders will be notified utilizing the Los Angeles County MTA Directory of Certified Firms, the Inland Area Opportunity Pages Ethnic/Women Business & Professional Directory; and AQMD’s own electronic listing of certified minority vendors. Notice of the RFP/RFQ 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 where it can be viewed by making menu selections "Inside AQMD"/"Employment and Business Opportunities"/"Business Opportunities" or by going directly to http://www.aqmd.gov/rfp/index.html). Information is also available on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.

Benefits to AQMD

The successful implementation of the Lower-Emission School Bus Replacement program will provide less polluting and safer school transportation for school children, and will reduce public exposure to toxic diesel particulate matter emissions.

The selection methodology, using AB 1390 criteria, for the school bus replacement awards will maximize the potential emission benefits in low income, high-diesel and high-PM10 exposure areas, and will enhance the objectives of the Environmental Justice and Children’s Health Initiatives adopted by the Board.

Resource Impacts

Total funding for retrofit of school buses with PM traps, for purchase of PM trap cleaning equipment, and for purchase and installation of insulation blankets on existing retrofitted buses shall not exceed $4,783,250. Total funding for replacement of school buses with Proposition 40 funding shall not exceed $2,030,000. Total funding for school bus replacement under the AQMD Chairman’s Initiative Program shall not exceed $7,461,750 comprised of $7,216,750 from unspent funds available under this program and $245,000 from U.S. EPA grant funds. Total amount of funding for the retrofit of school buses with diesel oxidation catalysts shall not exceed $250,000 from U.S. EPA grant funds. Sufficient funds are available in the Lower-Emission School Bus Fund.

Attachments

Modified AQMD Chairman’s School Bus Initiative Criteria
Program Announcement & Application #PA 2005-01

Attachment 1

Modified AQMD Chairman’s School Bus Initiative Criteria

1. Replacement of pre-1987 school buses with new alternative fuel buses consistent with state program guidelines under Proposition 40. Specifically, a maximum of $25,000 to be paid by award recipient for a pre-1987 school bus replacement, and a maximum of $10,000 to be paid by award recipient of a pre-1977 school bus replacement.
    
2. Public school districts, private school bus operators, and private schools may apply. Preference would be giving to public school districts over private school bus operators and private schools. Awards will be made consistent with the requirements of AB1390 and other criteria under Proposition 40. Further details are explained in the Program Announcement PA2005-01
    
3. Trading of 1987-90 school buses will be allowed. Public school districts will be allowed to replace a pre-1991 diesel school bus with a new alternative fuel bus, provided their pre-1991 bus replaces a pre-1977 diesel school bus in another public school district within the AQMD jurisdiction, and that the subject pre-1977 bus is crushed. The public school district receiving the new alternative-fueled bus will pay a maximum of $10,000 as its local match. The public school district giving its pre-1991 school bus to another public school district is not allowed to receive any money in return from the recipient for this transaction.

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