August 18, 2015 - From the August, 2015 issue

OPR’s Alex & ULI’s Goldberg Evaluate Strategic Growth Council AHSC Cap-and-Trade Grants

The California Strategic Growth Council handed out its first round of Affordable Housing and Sustainable Communities grants in 2014-15, funded through cap-and-trade revenue. Ken Alex, chair of the SGC and director of California’s Office of Planning and Research, and Gail Goldberg, a public SGC member and executive director of the Urban Land Institute-Los Angeles, describe to TPR readers the goals driving the grant program and lessons learned from AHSC’s first round of awards.


Ken Alex

“Our job with AHSC is to find projects across multiple regions of California that reduce greenhouse-gas emissions while promoting affordable housing and transit opportunities.” —Ken Alex

Ken, California’s Strategic Growth Council—which you now chair—formally approved $122 million in SGC grants in the 2014-15 fiscal year through its Affordable Housing and Sustainable Communities program, to 28 projects designed to reduce carbon emissions throughout the state. Before delving into the specifics of these projects, could you give us the legislative purpose and mission of the Strategic Growth Council?

Ken Alex: The Strategic Growth Council was originally formed with six members of the governor’s cabinet, the director of the Governor’s Office of Planning and Research, and one public member. It has expanded over the last couple of years. 

The SGC now consists of the governor’s most senior appointees and three public members, primarily across agencies that deal with environmental and health issues, as well as housing. 

As we all know, government is often siloed. There are multiple, crosscutting issues, particularly as we deal with climate change in California and impacts on public health. And so there are multiple opportunities, hopefully, to work across agencies, particularly around the concept of sustainable development—covering environmental, transportation and transit, housing, and public-health issues, plus a whole slew of possibilities that we may not have thought of at this point. 

The grant program that you mentioned is one part of a larger effort. The bulk of it is called Affordable Housing and Sustainable Communities (AHSC) but there’s an additional piece that deals with greenhouse-gas emissions from agricultural areas: Sustainable Agricultural Lands Conservation (SALC). 

Our job with AHSC is to find projects across multiple regions of California that reduce greenhouse-gas emissions while promoting affordable housing and transit opportunities—usually at the same time. Given the different types of development across the state, it’s quite a substantial challenge. It’s been a fascinating set of projects to evaluate.

The breadth of eligible projects that applied for funding span from family-size apartments, to Metrolink ticket vending machine improvements, to the LA River Valley Greenway. Gail, as the appointee of the speaker of the California Assembly to SGC charged with helping to evaluate and vote on these projects, what selection criteria is employed?

Gail Goldberg: The Strategic Growth Council, immediately after the allocation of the Round One money, spent several months working with community members in both the north and the south to come up with a set of criteria and a process for evaluating projects. 

Much of the evaluation is based upon greenhouse-gas emission reduction. Projects are also evaluated based on a broad spectrum of other benefits. We take into consideration the investment that applicants are asking the Strategic Growth Council to make, compared to the total project cost, to better understand the leverage being created. There was also an interest in money being spread throughout the state, leading to criteria around the maximum amount that a jurisdiction might get. 

It’s important to note that the criteria were put together extremely quickly in order to get the first round of money out within that fiscal year. There was a lot to be learned from that first year—including some things that the Strategic Growth Council got right and others that we are looking to correct in the second round. 

We’ve been fortunate that so many of the successful and unsuccessful applicants have been willing to come forward to help us better understand which of the criteria worked well to produce the best projects, and what parts need to be reevaluated. We’re in that process now. 

I anticipate that we will alter the criteria in round two based on lessons learned. I suspect that, as we move along, we will continue to improve the criteria so that we are successfully funding the very best projects to achieve greenhouse-gas emission reduction.

Ken, the source of SGC funds, which is growing dramatically, derives from California’s cap-and-trade program. How comfortable is the Strategic Growth Council and the governor’s team with linking, by law, project funding to the legislative goals of cap and trade?

Ken Alex: The cap-and-trade funding and climate law drive all of the grants. People are probably sick of hearing me say at the beginning and end of most meetings involving this topic that the key criteria for the Council is greenhouse-gas emission reduction. It’s embedded in the guidelines, which give a full 55 out of 100 points to greenhouse-gas emission reduction per dollar. 

That has driven some criticism of how we make determinations for the grants, but has been a significant bedrock of the first year. It’s going to remain so because that’s the law. We will, however, make sure we’re using the right number that captures enough of the greenhouse-gas emission reductions that projects provide.

Because of the greenhouse-gas reduction requirement in the law, we’re getting projects within the Affordable Housing and Sustainable Communities program that are doing what we had intended.

Ken, those who have long argued that a carbon tax would be a more efficient means of achieving the goals of cap and trade have suggested that the diversion of 20 percent of this money to the AHSC program incents interest groups who are desperate for resources to lobby the expansion of criteria—to allow this new revenue to be used for all kinds of state priorities. Are they right? What has been the early experience of the Strategic Growth Council?

Ken Alex: Whenever there’s a source of money, you’re very popular.

We’ve seen a lot of interest in this program, and that’s all to the good. We’re glad cities, rural areas, advocacy groups, non-profit organizations, and developers now have a growing interest. They’re doing exactly what we had hoped: thinking about how to propose developments that meet the criteria for reducing greenhouse-gas emissions, promoting transportation, and doing better development. That’s the point of the program. 

Of course, when there are dollars available, there are people and entities that would like to get some of those dollars even though their projects may not fit exactly into the greenhouse-gas reduction construct we created. I’m not terribly worried about that. The Strategic Growth Council and other entities that have received cap-and-trade dollars to provide in grants have been very focused on the underlying goal. Certainly Governor Brown has made it very clear that dealing with climate change is one of his top priorities as governor.

Gail, you’re one of the handful of appointed public members, while the other SGC members are cabinet secretaries. How are the public members staffed? How are you able to evaluate project proposals from across the state and make awards that have a nexus to the legislative mandate and also promise lasting value?

Gail Goldberg: It has certainly been a challenge to add new public members at a time when we are engaged in this major operation: creating the criteria and getting money out. I came on board in October 2014, just as we were starting this process. 

Staff from the SGC has made a great effort to give us the support we need and provide us with background data. There has also been a good deal of support from my fellow Council members. I’ve had the opportunity to meet with several of them to help me better understand the issues. 

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In the next few months, we will begin a new strategic planning process for our Council.  I am sure we will be thinking about organizational changes to better integrate our new public members into the process. I am confident that we’ll work through this challenge.

Ken, could you elaborate on how your Strategic Growth Council responsibilities fit in with all of your other responsibilities?

Ken Alex: When I told the governor that I would be happy to be director of the Governor’s Office of Planning and Research, I didn’t realize that the OPR director sat on the Strategic Growth Council. It turned out to be one of the more interesting of the boards and commissions the director of OPR sits on. I’m happy that I’ve had the chance to do so. 

I have three titles: director of the Office of Planning and Research, chair of the Strategic Growth Council, and senior policy advisor to the governor on energy and environmental issues. 

The OPR itself does a lot of work on land-use issues. That’s one of our main focuses. But we are also doing a fair amount of work on health. It’s an entity that works on the governor’s priorities. Because Governor Brown is so interested in climate issues, I spend a lot of time working on that—both in California and now, with the Paris efforts coming up, internationally. It’s not boring!

Switching gears, TPR will soon feature interviews with Amanda Eaken and Jennifer Hernandez on SB 743. Ken, could you address the CEQA reform challenge of moving from LOS to VMT, and how doing so aligns with the Strategic Growth Council’s agenda?

Ken Alex: It’s a great issue. Under CEQA, the current system requires that evaluation of environmental impacts look at a project’s impacts on traffic. The general way to do so is through evaluating Level of Service—a measure of traffic delay. If you build something in an already populated area, in the downtown of a city, you are almost certain to increase traffic delay. The mitigation for doing so is primarily to widen streets or add traffic signals and controls. In some ways, you control congestion, but you add to vehicle traffic. 

By the same token, if you build a Wal-Mart in a greenfield area that’s not congested, you don’t normally have to do much evaluation of traffic, because that kind of project does not increase traffic delay. It’s a perverse incentive, at least from my perspective, to build more in undeveloped areas and make it harder to develop projects in urban areas.

One of the jobs of OPR, my office, is to work on CEQA guidelines. The legislature passed SB 743 a couple years ago, which directed us to change from Level of Service to Vehicle Miles Traveled. 

The legislature said we had to do that for urban areas and we could do it more broadly. We believe that it’s appropriate to use a Vehicle Miles Traveled standard everywhere in California and that it will simplify evaluation of traffic impacts, as well as encouraging jurisdictions to look at traffic patterns more broadly than on a project-by-project basis. Project mitigation will look to reduce VMT instead of widening streets—so we would anticipate more connection to transit and better ability to walk and bike to and from projects. We think there’s a lot of promise. 

It has taken a while for us to develop the regulations. We’ve been very careful and talked to a lot of experts. We’ve spent time with local jurisdictions, helping them understand the change so that they can get comfortable with it. We’ve come a very long way with people buying into the system. 

I was at a conference a couple of weeks ago where the City of San Francisco pleaded with us to get the next round of the regulation draft out because they are dying to move into the new regime.

It’s a significant change that goes to the basic idea of the Strategic Growth Council, which is to make things more sustainable. Part of that is reducing VMT. The governor is fond of noting that Californians drive 332 billion miles a year. We need to reduce that and reduce our dependence on oil. We need to preserve open space where we can, work in urban areas, and promote transit. This is part of that overall effort and fits in well with the Strategic Growth Council’s underlying purview.

Gail, you lead the Urban Land Institute in Los Angeles and understand better than most how hard it is to effectively collaborate with and integrate siloed public agencies. Address how the programs and funding decisions made at the Strategic Growth Council might improve that collaboration process.

Gail Goldberg: Having been planning director for San Diego and Los Angeles, I’m well aware and have experienced the struggle to bring departments together to achieve the policy vision of a large city. I believe it is even more difficult at a state level. 

In 2008, the Strategic Growth Council was created to provide a structure and forum to bring together key state agencies to better implement the goals of California’s Global Warming Solutions Act of 2006 and to encourage sustainable land-use planning.   

As a planner, I understand the challenge of balancing the public-policy goals of many departments to create plans and policies that achieve the long-term objectives of the state, region, or city.  My brief experience here is that relationships do exist.  Agencies are talking to each other about how to leverage their separate activities. Working together with common goals on things like the AHSC and SALC programs leads to better coordination overall. 

In closing, both of you will be participating in the VerdeXchange Conference in January 2016 on panels that involve the Strategic Growth Council’s project investments—present and future. What will you likely share then? 

Ken Alex: We’ll be right in the middle of Round Two grants. It looks like we will have significantly more grant funding. I think there will be growing interest all over the state in more projects and the connection between housing and transportation. 

We’re going to see growth in the sustainable agriculture program, as well. It’s focusing on best management practices in agriculture to reduce emissions, and also preserving agricultural land, which produces about one-fortieth of the emissions of developed land. 

We also have a new director. He’s working with staff and the Council to talk about new priorities for the next year.

Gail Goldberg: One thing of interest to me is a growing collaboration between the SGC and folks applying for the money in the non-profit, transportation, and development sectors. We have tried to create a very transparent process, and we are learning much from the folks who have applied for the loans and grants.  Working together, I am confident that we will continue to improve the process and achieve our main objective of reducing greenhouse-gas emissions through better land-use decisions. 

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