BOARD MEETING DATE: October 6, 2006
AGENDA NO. 7

Approve Grants to Purchase New CNG School Buses and Retrofit School Buses with Particulate Traps

SYNOPSIS:

At its May 5, 2006 meeting, the Board authorized issuance of Program Announcement PA# 2006-09 to replace pre-1987 school buses with new alternative fuel school buses and to retrofit diesel school buses with CARB-verified particulate traps.  The closing date of the application was July 7, 2006.  This action is to replace 133 pre-1987 school buses with new CNG buses in an amount not to exceed $19,382,132 from the Carl Moyer Program Fund AB 923 Account, and to retrofit 452 diesel school buses with particulate traps in an amount not to exceed $5,469,960 from the Lower-Emission School Bus Fund.

COMMITTEE:

Technology and Mobile Source, September 22, 2006, Recommended for Approval

RECOMMENDED ACTIONS:

1. Authorize the Chairman to approve grant awards to public schools for a total of 133 school bus replacements and infrastructure as set forth in Table 3, in an amount not to exceed $19,382,132 from the Carl Moyer Program Fund AB 923 Account.
2. Authorize the Chairman to approve grant awards to public schools and private operators to retrofit a total of 452 school buses with Level 3 particulate traps as set forth in Table 4, in an amount not to exceed $5,469,960 from 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 have been awarded to school districts that 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 replacement of pre-1987 school buses, and retrofits of school buses with PM traps.

Table 1: Summary of PastAQMDSchool Bus and PM Trap Awards

Program Announcement PA #2006-09, Part A

At its February 4, 2005 meeting, the Board established the Carl Moyer Program Fund AB 923 Account for revenues generated from the $2 per vehicle DMV fee increase. Anticipating revenues of about $22 million per year, the Board also approved the allocation of these funds among the projects as shown in Table 2, for a period of 18 months starting from mid-2005 till the end of CY2006:

Table 2: AB 923 Project Allocations as Approved in February 2006

However, based on about $1.9 million average monthly revenues generated to date, the total revenues by the end of this year will be about $39 million instead. Staff therefore recommends that all the revenues generated in excess of the anticipated $33 million by the end of CY2006, be allocated for funding the Lower-Emission School Bus Program.

By July 7, 2006 application deadline of the Lower-Emission School Bus Replacement Program, 19 school districts applied for 133 new school buses for a total funding request of $19,382,132. Since there will be sufficient funds in the Carl Moyer Program Fund AB 923 Account by the end of CY2006, staff therefore recommends the Board’s approval for funding of all 133 requested new CNG school buses to replace pre-1987 diesel school buses owned and operated by public school districts as set forth in Table 3.

According to the revised Lower-Emission School Bus Program guidelines 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.

Award recipients have to provide a maximum of $25,000 for replacing and crushing a pre-1987 school bus or a maximum of $10,000 for replacing and crushing a pre-1977 school bus. After deducting the school district’s contribution, the AQMD award for each bus will cover the balance of the base CNG bus price. The base CNG price includes the price of the CNG bus not exceeding $144,000, sales tax, and the option of installing a fire suppressant system not exceeding an additional $4,000. 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 were 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.

Table 3: CNG School Bus & Infrastructure Award Recommendation List

*AQMD award covers the cost of a new CNG bus (up to $144,000), fire suppressant system if requested ($4,000), and sales tax minus the school match.
**School crushing one pre 1977 bus engine.

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. At its December 6, 2002 meeting, the Board approved that schools purchase their buses through either the Waterford (awarded to AZ Bus Sales) or the South-West Transportation bids (awarded to California Bus Sales). Subsequently, at its September 5, 2003 meeting, the Board also approved the Covina-Valley School District bid, which was awarded to Bus West. Recently, Bus West purchased California Bus Sales. This leaves Waterford and Covina-Valley as only two valid bids currently existing through which schools can buy school buses.

School buses purchased through these valid bids 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 two 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.

Funding Distribution

Funding under PA #2006-09 is awarded in compliance with the requirements of AB 1390 (Firebaugh). Under Part A of PA #2006-09, awards are to be distributed so that at least one-half of the total funding directly benefit low-income communities and communities of color that are disproportionately impacted by air pollution according to the following criteria:

• 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.
• 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.

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 qualifies for disproportionate impact funding, and is classified as an AB 1390 school district. Los Angeles Unified, Covina Valley, Downey, Montebello, Garden Grove, Moreno Valley, San Jacinto, Chaffey Joint, and Redlands school districts qualified for funding under AB 1390. Their awards equals to a total of 65 buses in the amount of $9,540,872, accounting for 49.2 percent of the total funding amount.

Awards Under PA #2006-09, Part B

AQMD has been allocated up to $5,449,000 in state funds to retrofit 1994 and newer diesel school buses with Level 3 PM traps. By the application closing date of July 7, 2006, a total of 20 applicants applied for 452 PM traps. Public school districts and private operators were eligible to apply. They were also allowed to select their preferred 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 are to be funded first. If funds are still available, then the remaining CARB verified traps will be funded. Funding will cover the cost of the PM trap purchase and installation, electrical infrastructure and life-time maintenance. Preference is given to public school districts followed by private contractors.

Funding requests totaled $5,469,960, which exceeds CARB’s allocated amount of 5,449,000 by $20,960. Staff recommends funding the retrofit of all the 452 diesel school buses with CARB verified traps for the total requested amount of $5,469,960 as set forth in Table 4, from the Lower-Emission School Bus Fund. The additional $20,960 will be provided from interest monies generated under the same fund.

Beaumont, Chaffey, Garden Grove, Hacienda-La Puente, Inglewood, Jurupa, La Habra, Mountain View, Norwalk-La Mirada, Rialto, San Jacinto, and Upland unified school districts qualify under AB 1390. In addition, as the majority of the buses owned by Durham and First Student will serve the Los Angeles Unified School District, the requirements of AB 1390 are met.

Prior to execution of the grant agreements all the awardees must provide evidence that the buses for which they applied for retrofit funding are in compliance with the AQMD Rule 1195.

Table 4: PM Traps Award Recommendation List

* Cleaire = Level 3 Cleaire retrofit trap
   Don = Level 3 Donaldson retrofit trap
   JM = Level 3 Johnson Matthey retrofit trap trap

• Award for PM traps include the purchase price of the PM trap filter, the installation labor and the sales tax.
• Award for electrical outlets is to assist the regeneration process of ‘active’ PM trap filters by electricity, such as those provided by Cleaire.
• Award for the life-time maintenance include a provision to clean the ash trapped in the PM trap every other year for 10 to 11 years. On average, the PM trap is expected to be cleaned every other year i.e. five times during the life of the trap.

All the above provisions are allowed by CARB for school bus retrofits with state funds.

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 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, the State of California Contracts Register website, 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.

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, 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 replacement of school buses and its associated infrastructure shall not exceed $19,382,132. Sufficient funds will be available in the Carl Moyer Program Fund 923 Account to cover this expenditure.

Total funding for retrofit of 452 school buses shall not exceed $5,469,960, comprised of $5,449,000 allocated by CARB and placed in the Lower-Emission School Bus Fund and $20,960 in interest earned from the Lower-Emission School Bus Fund.