BOARD MEETING DATE: April 7, 2006
AGENDA NO. 13

Approve Second Phase FY 2005-06 $5.0 Million AB 2766 Discretionary Fund Conceptual Work Program, and Approve New Contract and Two Contract Modifications as Part of MSRC's First Phase FY 2005-06 Work Program 

SYNOPSIS:

The MSRC developed a two-phase Conceptual FY 2005-06 Work Program, which was approved by the AQMD Board on September 9, 2005. The first phase includes $12.875 million in solicitations and projects, including $2.5 million allocated for alternative fuel infrastructure and $2 million for CNG school bus incentives. On March 23, 2006, the MSRC met to consider the second phase FY 200506 Work Program in Concept as well as one additional application received for alternative fuel infrastructure funding.   On January 26 and March 23 the MSRC considered modification requests for additional dollars for CNG school bus incentives. At this time, the MSRC requests approval of these awards/modifications as part of the FY 2005-06 Work Program. The MSRC also requests authority to adjust contracts up to five percent and authority for the Board Chairman to execute agreements.

COMMITTEE:

Mobile Source Air Pollution Reduction Review, January 26 and March 23, 2006

RECOMMENDED ACTIONS:

Approve a total $5.0 million second phase FY 200506 AB 2766 Discretionary Fund Conceptual Work Program, of which:

$2.0 million is to continue the CNG School Bus Incentives Program, through future augmentation of existing qualified vendor contracts with AZ Bus Sales, California Bus Sales, and BusWest based on sales performance, subject to review and approval of the MSRC;

$1.0 million is set aside for a Local Government Match Program, subject to MSRC and AQMD Board approval at a later date;

$2.0 million is set aside for an Advanced OnRoad Natural Gas HeavyDuty Engine Program, subject to MSRC and AQMD Board approval at a later date;

Approve contract  award totaling $136,000 to Capistrano Unified School District under the Alternative Fuel Infrastructure Funding Opportunities Program, as part of  first phase of FY 2005-06  AB 2766 Discretionary Fund Work Program, as described in this letter;

Approve augmentation of two awards under the CNG School Bus Incentives Program, as part of first phase of FY 2005-06 Work Program, as described in this letter and as follows:

1. Augmentation of contract with BusWest in an amount not to exceed $420,000; and
2. Augmentation of contract with A-Z Bus Sales in an amount not to exceed $240,000;

Authorize MSRC the authority to adjust contract awards up to five percent, as necessary; and

Authorize the Chairman of the Board to execute contract  as part of FY 2005-06 AB 2766 Discretionary Fund Work Program  and the contract modifications  as described above and within this letter.

Ron Roberts
Vice-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 approximately $7.0 million will be available in the Discretionary Fund from revenue, interest and turnback funds to implement the second phase of the FY 2005-06 Work Program.

First Phase FY 2005-06 Work Program

The first phase includes $12.875 million in solicitations and projects, including  $2.5 million for a Alternative Fuel Infrastructure Funding Opportunities Program and $2.0 million to continue the  CNG School Bus Incentives Program.

The Alternative Fuel Infrastructure Funding Opportunities Program Announcement (PA), #2006-07, provides  funds for new and upgraded or expanded alternative fuel stations as well as facility modifications. New publicly accessible stations are eligible for 50 percent of project costs up to a maximum of $250,000 to $350,000 depending upon station type. New limited access stations are eligible for 25 percent of project costs up to a maximum of $150,000. Upgrades/expansions are eligible for 50 percent of costs up to $150,000 for public access and 25 percent up to $75,000 for limited access. Maintenance facility modifications are eligible for 50 percent of project costs up to $50,000. The MSRC’s award combined with any AQMD cost-sharing may not exceed 50 percent of the total project costs. The maximum funding for any one entity cannot exceed 60 percent of the total funding in this work program category. The extended application period for the Alternative Fuel Infrastructure Funding Opportunities Program is October 4, 2005 through June 30, 2006. The MSRC and AQMD Board previously approved five applications totaling $1,197,981 under this Program. One more application was considered at the MSRC’s March 23, 2006 meeting; details are provided in the Proposals section.

The MSRC also allocated $2 million to continue the CNG School Bus Incentives Program as part of the first phase of their FY 2005-06 Work Program. To implement the program, the MSRC augmented and extended existing sole-source contracts with AZ Bus Sales, California Bus Sales, and BusWest. These vendors had previously qualified under a Request for Quotes process to implement a similar MSRC program in previous years. Initially each vendor was awarded $360,000, while the remaining $920,000 was retained to augment the vendor contracts based on sales performance, subject to review and approval by the MSRC. The AQMD Board approved these modifications on September 9, 2005. At its January 26, 2006 meeting, the MSRC considered a request from BusWest for an additional $180,000 for new purchase orders. At its March 23, 2006 meeting, the MSRC considered a request from BusWest for another $240,000 for other new purchase orders, as well as a request from AZ Bus Sales for an additional $240,000 for new purchase orders; details are provided in the Proposals section.

Outreach

The funding solicitation  described above, in accordance with the AQMD's consulting and contracting policies, was advertised in a public notice on two different days in 27 newspapers and publications, including several targeting minorities.

The funding solicitation was placed on the MSRC's website at http://www.msrc-cleanair.org and placed on the AQMD’s website at http://www.aqmd.gov. Information was also available on the AQMD’s bidder’s 24-hour telephone message line (909) 3962724. A press release on funding opportunities available in the FY 2005-06 Work Program was issued and placed on the MSRC’s website.

In addition to the AQMD's standard practices, a postcard announcing the FY 2005-06 funding opportunities was mailed to nearly 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 postcard was also mailed to local legislators, mayors, city council members and city managers in the four counties, and AB 2766 Subvention Fund city administrators.

Bidders’ Conferences

A non-mandatory bidders’ conference was conducted on September 28, 2005, for the Alternative Fuel Infrastructure Funding Opportunities Program.

Proposal Evaluation and Panel Composition

Proposals received were evaluated by members of the MSRC-TAC, a diverse group of individuals appointed by participating members as prescribed in the Health & Safety Code.

Proposals

On March 23, 2006, the MSRC met to consider the second phase FY 200506 Work Program in Concept as well as one additional application received for alternative fuel infrastructure funding. On January 26, 2006 and March 23, 2006, the MSRC met, considered and unanimously approved modifications to two contracts. Specific details follow.

Second Phase FY 2005-06 Conceptual Work Program

The MSRC developed a two-phase Conceptual FY 2005-06 Work Program, the first phase of which was approved by the AQMD Board on September 9, 2005. On March 23, 2006, the MSRC approved their $5.0 million Conceptual Work Program for the second phase of FY 200506. The second phase Work Program consists of the following elements:

• $2.0 million to continue the CNG School Bus Incentives Program, providing incentives for both public school districts and private student transportation providers wanting to purchase CNG school buses. This will be implemented through augmenting the contracts of the three previously qualified vendors, California Bus Sales, AZ Bus Sales and BusWest, based on sales performance, subject to review and approval of the MSRC. With this approach all vendors who serve the Southern California area are included in the Program. Additionally, the incentive amount for the purchase of a mid-sized CNG school bus will be increased from $50,000 to $60,000, because the engine drive train configuration for the full-size and mid-size buses is the same.  Thus, the incremental cost is the same;
• $1.0 million for a Local Government Match Program, providing matching funds to local governments’ AB 2766 Subvention funds and other locally generated funds towards the purchase of alternative fuel vehicles and infrastructure. The specifics and solicitation documents for this program are still being developed and are subject to MSRC and AQMD Board approval at a later date; and
• $2.0 million for an Advanced OnRoad Natural Gas HeavyDuty Engine Program, providing co-funding for the purchase of natural gas engines. The specifics and solicitation documents for this program are still being developed and are subject to MSRC and AQMD Board approval at a later date.

The MSRC will consider the details for the Local Government Match Program and the Advanced OnRoad Natural Gas HeavyDuty Engine Program in the next few months. At its March 23, 2006 meeting, the MSRC unanimously approved committing $3.0 million of the total $5.0 million for these two elements and currently seeks Board approval of the second phase FY 2005-06 Conceptual Work Program, including target funding contributions for these two programs. The MSRC will take further action when program details are more defined and bring them forward to the AQMD Board for consideration at that time.

Alternative Fuel Infrastructure Funding Opportunities Program

As mentioned in the Background section, the MSRC set aside $2.5 million as part of its first phase FY 200506 Work Program to provide funds for new and upgraded or expanded alternative fuel stations as well as maintenance facility modifications.   The MSRC and AQMD Board previously approved five applications totaling $1,197,981 under this Program. At its March 23, 2006 meeting, the MSRC approved an additional award totaling $136,000 to Capistrano Unified School District for construction of a new limited-access CNG refueling station at their district headquarters in the city of Aliso Viejo.

This Program Announcement remains open until June 30, 2006. Since this Program was allocated $2.5 million, funding remains available under this Program. Thus, future awards are anticipated, and will be subject to MSRC and AQMD Board approval as part of the FY 200506 Work Program.

Contract Augmentations/Modifications For Current CNG School Bus Incentives Program

As mentioned in the Background section, two contractors requested additional funding under the CNG School Bus Incentives Program as part of the first phase FY 200506 Work Program. The MSRC had the authority to augment the vendor contracts based on sales performance. The requests were as follows:

1. In January 2006, BusWest had expended $240,000 of their $600,000 total contract value, then received orders from Montebello Unified School District for four more buses and from Redlands Unified School District for five more buses, contingent upon receiving the MSRC’s $60,000 per-bus buydown. The remaining balance in BusWest’s contract would cover incentives for six of the nine bus orders, so BusWest requested an additional $180,000. On January 26, 2006, the MSRC unanimously awarded an additional $180,000 to BusWest to ensure that the Montebello and Redlands School Districts could receive the $60,000 buydown for each bus.  In March 2006, BusWest received additional orders from San Jacinto Unified School District for four more buses,  contingent upon receiving the MSRC’s $60,000 per-bus buydown. BusWest requested an additional $240,000. On March 23, 2006, the MSRC unanimously awarded an additional $240,000 to BusWest to ensure that the San Jacinto School District could receive the $60,000 buydown for each bus. These two actions result in a total combined augmentation of $420,000.
2. AZ Bus Sales had expended $675,000 of their $1,035,000 total contract value, then received orders from the Menifee Union School District for ten more buses, contingent upon receiving the MSRC’s $60,000 per-bus buydown. The remaining balance in AZ Bus Sales’ contract would cover incentives for six of the ten bus orders, so AZ Bus Sales requested an additional $240,000. On March 23, 2006, the MSRC unanimously awarded an additional $240,000 to AZ Bus Sales to ensure that the Menifee School District could receive the $60,000 buydown for each bus.

In some cases the full amount requested in an application or proposal is not recommended for funding or the proposed scope of work has been modified. This is consistent with the MSRC's administrative policies, which allow the MSRC to approve a portion of a proposer’s scope of work and/or funding request. In those cases where the proposed funding level or scope of work has been modified by the MSRC, and the proposer cannot perform the project as approved, the MSRC may rescind the funding commitment and retain the funds in the Discretionary Fund for future work programs.

The MSRC respectfully requests the AQMD Board’s approval of the above contract awards  and modifications as part of the FY 2005-06  AB 2766 Discretionary Fund Work Program.  The MSRC also requests authority to adjust the funds allocated to each project specified in this Board letter by up to five percent of the project's recommended funding. The Board has granted this authority to the MSRC for all past work programs. Finally, the MSRC requests the Board authorize the AQMD Chairman of the Board the authority to execute all agreements described in this letter.

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.

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