BOARD MEETING DATE: May 5, 2006
AGENDA NO. 8

Issue Program Announcement and Application for New CNG School Buses with AB 923 Funds and Retrofit Diesel School Buses with State Funds

SYNOPSIS:

This action is to approve issuance of a program announcement to replace pre-1987 school buses with new CNG buses in the amount of approximately $14 million in AB 923 funds, and to retrofit diesel school buses with PM trap filters in an amount not to exceed $5,449,000 in state funds.

COMMITTEE:

Technology, April 28, 2006, Recommended for Approval

RECOMMENDED ACTIONS:

1. Recognize up to $5,449,000 in state funds from CARB to the Lower-Emission School Bus Program Fund.
2. Approve issuance of Program Announcement and Application #PA 2006-09 to:
   1. Replace pre -1987 school buses with new alternative fuel school buses in an amount not to exceed $14,000,000 from the Carl Moyer Program Fund AB 923 Account.
   2. Retrofit diesel school buses with CARB-verified PM trap filters in an amount not to exceed $5,449,000 from state 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.  To reduce emissions from these vehicles, AQMD has funded the replacement of older diesel buses with new lower-emitting diesel or CNG buses, and the retrofit of diesel school buses with particulate (PM) traps.  Over 50 percent of the funds were awarded to school districts who operate school buses in communities meeting legislated criteria for disproportionate impacts, as set in Health and Safety Code Section 43023.5 (AB 1390, Firebaugh).

Table 1 summarizes awards made under previous AQMD program announcements for the replacement of pre-1987 school buses, and retrofits of 1994 and newer school buses with PM traps.  State funds accounted for about $40 million, AQMD funds accounted for about $15.3 million, and U.S. EPA funds accounted for $0.5 million of the total awards to-date.

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

Fiscal Year(s)	New CNG Buses**	New Diesel Buses	PM Traps (’94 and newer buses)	Total Award (MM$)
00 – 01	102	66		17.9
01 – 02	39	20		6.8
00 – 02			1036	7.4
02 – 03	38		237	6.6
03 – 04	22			2.9
04 - 05	70		829	14.2
Total	271	86	2,102	55.8

** Includes 10 percent funding for CNG Refueling Infrastructure

At its February 4, 2005 meeting, the Board approved the allocation of approximately $14 million for the Lower-Emission School Bus Replacement Program from revenues generated under AB 923 by the end of Calendar Year 2006.  In addition, CARB has allocated $5,449,000 from state funds to the AQMD for the retrofit of diesel school buses with particulate filter traps.

Proposal

Staff is recommending the Board issue Program Announcement and Application #PA 2006-09 with the following funding opportunities:

Part A:  AB 923 Funds for Replacement School Buses

At its February 2005 meeting, the Board allocated about $14 million from funds to be generated under AB 923 by the end of 2006 for the AQMD’s Lower-Emission School Bus Replacement Program.  These funds are now being made available to purchase new CNG buses for the replacement of existing pre-1987 diesel-fueled buses owned by public school districts.  According to the revised Lower-Emission School Bus Program guideline adopted by CARB on February 23, 2006, the new buses must comply with the following requirements:

• For model year 2006, new CNG buses must meet CARB’s engine certification standards of 1.8 g/bhp-hr for NMHC and NOx, and 0.01 g/bhp-hr for PM.
• For model year 2007, new CNG buses must meet emission limits of 0.5 g/bhp-hr for NOx and 0.01 g/bhp-hr for PM.
• The new buses must be equipped with oxidation catalysts.

Award recipients will provide a maximum of $25,000 if they crush a pre-1987 school bus or a maximum of $10,000 if they crush a pre-1977 school bus.  After deducting the school district’s contribution, the AQMD award for each bus will cover the balance of the bus base price.  The base price includes the CNG package, oxidation catalyst, sales tax, and the option of installing a fire suppressant system at a cost not to exceed $4,000, if so desired by the school district.  Funding of up to 10 percent of the award amount for each new CNG bus will be made available for CNG fueling infrastructure.

Public schools will be allowed to donate their model year 1977 through 1986 school buses to public schools located in areas affected by Hurricane Katrina instead of crushing them.  In such cases, a letter of request by the recipient school and a letter of consent by the donor school specifying the number of buses and their serial numbers must be submitted with the application for approval by the District.

School Bus Purchases Through Competitive Bids

Typically, school districts order new school buses through bids issued by other public school districts, joint power authorities, etc.  The State DGS bids have expired, and unless renewed in the future, are no longer valid.  Thus, at its December 6, 2002 meeting, the Board approved that schools purchase their buses through either the Waterford or the South-West Transportation bids.  Subsequently, at its September 5, 2003 meeting, the Board also approved the Covina-Valley School District bid (recently, the Madera bid has replaced the now expired South-West Transportation bid).  School buses purchased through these three valid bids (Waterford, Covina Valley and Madera) are required to comply with all current California and Federal motor vehicle performance, safety, and emission standards in effect at the time of bid.  Such competitive bids allow more options and flexibility for school districts.  Staff recommends that the Board approve school bus purchases through these three legally valid bids and any other subsequent valid bid as long as the price does not exceed the price of the existing bids.

Staff has met with all the school bus vendors and discussed the issue of potential tax credits allowed under the Energy Bill.  In case of availability of tax credits from the sale of these buses, the school bus vendors have agreed to work with staff in order to use the credits towards the sale of more buses as requested by public school districts.

Trading

In the 2004-05 funding cycle, the AQMD allowed trading under the Chairman’s Initiative, Lower-Emission School Bus Program.  This facilitated the removal of 14 additional pre-1977 school buses, which otherwise would have remained on the road.  The proposed trading will permit public school districts to replace a post-1990 school bus with a new alternative fuel bus, provided they donate their post-1990 bus free of charge to another public school district within the AQMD jurisdiction, and the receiving school, in turn, crushes a pre-1977 bus.  The donor public school district will receive a new CNG bus for a maximum of $10,000 as its local match.  Staff recommends to allow trading under the proposed program.

Oldest Pre-1977 Buses Not Eligible for Trading

In an attempt to remove the worst polluting buses in the state, CARB has specifically identified 15 of the oldest pre-1977 buses in the South Coast Air Basin for replacement with state funds.  School districts who own these buses will receive a free new CNG bus (i.e., without any school district match funding).  These 15 buses will not be eligible for trading as described above.  Recommendation for approval of awards for the 15 buses will be presented to the Board for consideration in the near future after the details of the new bus purchases are worked out and are accepted by the recipient schools.

Part B:  State Funds to Retrofit 1994 and Newer School Buses with PM Traps

AQMD will administer state funds of up to $5,449,000 to retrofit 1994 and newer school buses with PM traps.  Public school districts and private operators are eligible to apply.  It is entirely up to the applicants to select the vendor and the type of Level 3 CARB verified unit.  However, under the new state budget legislation, Level 3 PM traps with the lowest NO2 emissions will be funded first.  If funds are undersubscribed, then the remaining Level 3 PM traps will be funded.  Funding for the PM trap cost and installation will be provided, with up to an additional $4,000 for maintenance of the trap unit, and $50 for data logging.  From the applicants requesting traps with the lowest NO2 emissions, preference will be given to public school districts followed by private contractors on a first come, first served basis with no contractor receiving more than 50% of the funds in case of oversubscription.

Funding Distribution

Under Part A of the proposed program announcement, staff recommends to distribute at least one-half of the total funding, or about $7,000,000, 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.  An AB 1390 school district will be defined as the school district that is directly receiving the funds from this program, and not the school district that is crushing a pre-1977 bus under the trading provisions of this program.

All applications will be evaluated for poverty level, PM exposure, and toxic exposure according to the following criteria:

1. 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.
    
2. 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.
    
3. 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 funds are oversubscribed under AB1390, eligible school districts will be ranked.  A maximum of 40 percent weight will be assigned to school districts in areas with highest poverty levels.  Following this, 30 percent maximum weight is assigned to school districts with the highest PM levels and 30 percent maximum for areas with highest cancer risk levels.  Other qualified school districts will be rated proportionately.  New school bus awards will be granted to applicants in descending order until 50 percent of all the funds, is exhausted.

Applicants unable to qualify or not receiving awards under AB 1390 can qualify for the remaining 50 percent of the funding.  If adequate funding is available, as the first step, one bus will be awarded to each public school district.  Following this step, the remaining funds will be distributed among public school districts on a first come first served basis subject to county allocation as listed in Table 2.  If a school district applies for a disproportionately large number of buses compared to other applicants, and except for Los Angeles Unified School District, no school district will receive more than 30 percent of the funds allocated for that county. 

Other criteria that will be considered are as follows:

• Funds will be distributed proportionately to each county’s general population in the Basin as shown in Table 2.
• Los Angeles Unified School District’s eligibility is limited to a maximum of fifty percent of the total funds allocated for Los Angeles County.
• If funds are undersubscribed in a particular county, the surplus funds would flow to the other counties.

Table 2: Proposed Distribution of Funds for School Bus Replacement

	Population by County*	% of Total Population	Funding for CNG Buses per County**
Los Angeles	9,937,739	59.4	8,316,000
Orange	2,987,591	17.9	2,506,000
San Bernardino	1,921,131	11.5	1,610,000
Riverside	1,871,950	11.2	1,568,000
Total	16,718,411	100	$14,000,000

*  The population numbers are estimates for year 2004, obtained from the official Website
   of the Census Bureau.   http://quickfacts.census.gov/qfd/states/06/06071.html

** Funds allocated to each county will be close to the nearest amounts shown in the table.

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 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 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 and Retrofit 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

Sufficient funds will be available in the Lower-Emission School Bus Program Fund and in the Carl Moyer Program Fund AB923 Account to cover:

1. the replacement of school buses at a cost not to exceed $14,000,000 from the Carl Moyer Program Fund AB923 Account, and
2. the retrofit of school buses with PM trap filters at a cost not to exceed $5,449,000 from state funds to be placed in the Lower-Emission School Bus Program Fund.

Attachment (DOC 349kb)
Program Announcement and Application #PA 2006-09