BOARD MEETING DATE: May 5, 2006
AGENDA NO. 7

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

SYNOPSIS:

One of the compliance strategies under Rule 2202 allows employers to invest in AQIP.  Monies received are placed in a restricted account to fund programs that result in equivalent emission reductions that would otherwise have been achieved by the participating employers.  The Board approved release of an RFP on February 3, 2006 to solicit projects to meet the Rule 2202 emission reduction targets for the second semi-annual period of 2005.  Staff evaluated the proposals received by the March 17, 2006 due date.  This action is to fund three AQIP project proposals in an amount not to exceed $787,131.  In addition, a proposal specific to the buy-down of the cost of natural gas vehicles for taxicab services was submitted under the current solicitation.  Staff believes that this proposal will provide additional air quality benefit specifically at commercial airports.  This action is to also allocate $547,400 from the Rule 2202 AQIP funds to assist in the purchase of natural gas vehicles for taxicab services.  Staff further recommends that $1,000,000 from the Clean Fuels Fund be allocated to assist in the purchase of additional natural gas vehicles for taxicab services for a total of $1,547,400.

COMMITTEE:

Mobile Source, April 28, 2006, Recommended for Approval

RECOMMENDED ACTION:

1. Authorize the Chairman to execute the following contracts for a total amount not to exceed $787,131 from the Rule 2202 AQIP Special Revenue Fund:
   1. Approve a contract with Don Copps Crushing to repower a crushing plant generator with a new Tier 3 certified engine in an amount not to exceed $30,743.
   2. Approve a contract with Peed Equipment to repower a dual engine wheel scraper with new low emission engines in an amount not to exceed $256,388.
   3. Approve a contract with the AQMS Automotive, LLC to generate emission reductions by scrapping old vehicles under Regulation XVI in an amount not to exceed $500,000.
2. Allocate $1,000,000 from the Clean Fuel Funds to assist in the purchase of natural gas vehicles for taxicab services, and authorize the Executive Officer to approve (up to $23,800 per vehicle) disbursement of these funds.
3. Allocate $547,400 from Rule 2202 Special Revenue Fund (Fund 27) to assist in the purchase of natural gas vehicles for taxicab services and authorize the Executive Officer to approve (up to $23,800 per vehicle) disbursement of these funds.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The Rule 2202 Air Quality Investment Program (AQIP) allows subject employers to participate by electing to invest in an AQMD-administered restricted fund.  Investment can be either $60 annually per employee reporting to the worksite during the 6:00 a.m. to 10:00 a.m. peak window, or $125 triennially per employee.  The restricted monies are to be used by the AQMD to fund proposals that achieve mobile source emission reductions that would otherwise have been achieved by implementing a rideshare program. 

Upon registering under this option and submitting the designated investment amount, an employer is considered to be in compliance with the Rule and there is no need for the employer to take further action to reduce mobile source emissions.  The collected monies are used to fund alternative mobile source emission reduction strategies that reduce mobile source emissions at a more cost-effective rate which could potentially result in greater overall emission reductions.  This Board letter contains a discussion regarding the disbursal of funds from the AQIP for the second semi-annual period of 2005.

The second half of calendar year 2005 participation period ended on December 31, 2005 with 81 employers participating in the AQIP program.  The total amount of AQIP funds received during this period was $905,185, which includes both annual and triennial participants.  In addition, an unused amount of $433,553 was available from the previous period.  Therefore, the total amount available for this period is $1,338,738 (see Attachment 1, Table 4).

Proposal Evaluation

During the bidding process for the second semiannual period of 2005, five proposals were received under three of the six different categories: on-road alternative fuel, off road diesel repowering and old vehicle scrapping, requesting funds ranging from $30,743 to $2,380,000.  Attachment 2 gives a summary of emission reduction targets and the emission reduction credit balance.  Attachment 3 gives a summary of each proposal received and funds requested. 

Attachment 4 provides an overall summary of the proposals by category consistent with the February 3, 2006 RFP, listing the proposals received, funds requested, total proposal costs, and emission reductions expected from each proposal.

All proposals were reviewed and scored within each category based on the information in the proposal as submitted to the AQMD to determine their relative ranking within their respective categories.  After all of the proposals were scored within their respective categories they were ranked by total score (as described in the RFP) for further consideration.

Selection Criteria

Attachment 5 provides a summary of the proposal rankings.  After all the proposals were scored and ranked projects were selected from the highest scoring proposals with the specific goal of meeting the emission reduction targets for VOC, NOx, and CO, respectively.  Staff selected the highest ranked projects that would meet the one-year targets for all three pollutants.  Staff based its selection on the scoring criteria outlined in the RFP.  Reasons for recommendations made are provided at the end of each proposal summary in Attachment 3.

The proposals were relatively ranked within each of the three categories (with the most cost-effective proposal receiving a score of 100) and all proposals were ranked by total score as provided in the RFP.  The top scoring proposals in two of the categories (Don Copp Crushing, Peed Equipment and AQMS Automotive LLC) were selected as the best projects to meet the targets of all three pollutants VOC, NOx and CO.  Only one proposal was received in the on-road category and automatically received a score of 100 as stated in the RFP.  Only partial funding is being recommended for AQMS Automotive.

The following AQIP proposals are recommended for approval (as detailed in Attachment 6):

Don Copp Crushing proposes to generate emission reductions by installing a new engine at the generator set for a crusher.  The cost-effectiveness of this proposal is $0.57 per pound.  (Recommended for funding; Ranked first overall.)

AQMS Automotive proposes to generate emission reductions by scrapping old vehicles under Regulation XVI.  The cost-effectiveness of this proposal is $2.28 per pound.  (Option 1 ranked second over all and is recommended for a partial funding.)

Peed Equipment proposes to repower a dual engine wheel scraper with two new engines certified to Tier 3 emission levels.  The cost-effectiveness of this proposal is $1.99 per pound.  (Recommended for funding; ranked second in its category.)

Taxicab Services

AQMD has historically provided funding assistance to taxicab operators for the purchase of Rule 1194 compliant alternative-fuel taxicabs.  Through the 2004 model-year, Ford Motor Company produced a ULEV certified natural gas-fueled Crown Victoria that could be used in taxicab applications, and hundreds of these vehicles were purchased by taxicab operators with AQMD co-funding.  When Ford announced that it would no longer produce natural gas-fueled Crown Victorias, the Board approved co-funding BAF Technologies to develop and certify a natural-gas powered Crown Victoria meeting at least the super ultra-low-emission vehicle (SULEV) certification levels.  On March 8, 2006, CARB certified a 2006 model year natural gas-fueled Crown Victoria meeting the super-ultra-low emission vehicle (SULEV) certification level.  

Recently, staff received comments from taxicab operators and automotive dealers indicating a strong demand for these vehicles, if the AQMD could continue to provide co-funding for the purchase of these vehicles at similar funding levels as has been historically provided.  In September 2005, the Board approved $1,190,000 from the AQIP to assist in the purchase of 50 natural gas-fueled vehicles for taxicab applications (at a cost up to $23,800).  In addition, since the Board approval, federal tax credits of up to $4,000 per vehicle are available to purchasers of alternative fueled vehicles.  If the federal tax credit is applicable for the purchase of the natural gas Crown Victorias, an additional ten vehicles could be funded with the original allocations.  Regardless, staff believes that the current Board-approved funding amount is insufficient based on the potential demand for these vehicles.  Staff is aware of at least 100 vehicles being requested by two fleets operating at John Wayne Airport in Orange County.  There are indications that perhaps another 400 natural gas vehicles would be purchased this year if funding assistance is provided.

Based on the available remaining funds, should the Board approved the recommendation provided in the above discussion, staff recommends that $547,400 (up to $23,800 per vehicle) from the AQIP be allocated to assist in the buy-down of a minimum of 23 natural gas-fueled vehicles to reduce emissions associated with taxicab services provided at commercial airports.  To further incentivize the purchase of cleaner natural gas vehicles for taxicab services at commercial airport, staff recommends that $1,000,000 be allocated from the Clean Fuels Fund to assist in the buy-down of an additional 42 natural gas-fueled vehicles for taxicab services at commercial airports.  The total number of vehicles covered under the proposed funding allocation will be 115 vehicles, which includes the 50 vehicles approved by the Board in September 2005.  If the two fleets are able to access the federal tax credits, an additional 16 vehicles could be funded under the current and proposed funding allocation of $2,737,400, which will cover between 115 to 131 vehicles.  Should the funding be depleted and there is a continued demand for the purchase of natural gas vehicles, staff will evaluate other funding options for the Board’s consideration.

The buy-down program will be implemented by staff in the same manner as previous natural gas-fueled taxicab buy down programs.  A maximum of $23,800 of co-funding would be available per vehicle and would be reduced by the federal tax credit if it is available to the purchaser.  The emission reductions associated with the buy-down program will be accounted as part of the Rule 2202 emission reduction target, for those taxicabs that are funded by this program.

Outreach

In accordance with AQMD’s Procurement Policy and Procedure, a public notice advertising the RFP/RFQ and inviting bids was published in the Los Angeles Times, the Orange County Register, the San Bernardino Sun, and Riverside County Press Enterprise newspapers to leverage the most cost-effective method of outreach to the entire South Coast Basin.

Additionally, potential bidders may have been 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 was 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/).  Information was also available on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.

Resource Impact

Total cost of expenditure for the proposed projects and fund allocation for taxicab purchase shall not exceed $1,334,531 from the Rule 2202 Air Quality Investment Program Special Revenue Fund and $1,000,000 from the Clean Fuels Fund.  Sufficient funds are available in the Rule 2202 AQIP Special Revenue and Clean Fuels Funds.

Attachments (DOC 136kb)
1. AQIP Funding and Participation
2. Summary of Emission Reduction Targets and Credit Balances
3. Summary of AQIP Proposals Received
4. Summary of Proposals by Type
5. Summary of Proposal Ratings
6. Recommendation for Funding