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Central Valley Air District Targeting Development for Emissions Reductions and/or Impact Fees


09/24/04

The San Joaquin Valley Air Pollution Control District (District), the agency that regulates air quality in the Central Valley, has announced that it is undertaking the development of two proposed Indirect Source Rules (ISRs) -- Rule 3180 (Indirect Source Mitigation Fee) and Rule 9510 (Indirect Source Review).  The District is currently working to adopt these ISRs before January 1, 2005, with additional public workshops planned for November.

If adopted, the proposed ISRs will increase the costs of development projects by requiring the payment of air quality impact fees and subsequent air quality analyses at various phases of project development when subsequent discretionary, and perhaps even ministerial, approvals are sought.  Further, the proposed ISRs could negatively affect mitigation associated with project operational air quality emissions.

Because of the potential ramifications of these proposed ISRs on development projects, developers and homebuilders should actively participate in the District's rule development process for these ISRs.

DISTRICT’S REASON FOR THE ISRs

The District defines indirect sources as any facility, building, structure, or installation, or combination thereof, which generates or attracts mobile source activity that results in emissions of any pollutant (or ozone precursor) for which there is a state or federal ambient air quality standard.  Examples of indirect sources include virtually all land uses.

The District believes that an ISR Program can offset some of the growth in emissions associated with development and help expedite attainment of the federal ozone and particulate matter (PM10) standards.  The ISR Program would require developers and homebuilders of new development projects to pay into a mitigation fund that would be used to finance the most cost-effective projects and/or programs to reduce emissions.  The proposed ISRs implement the ISR Program contemplated in the District’s 2003 PM10 Plan, and will be implemented through proposed Rules 3180 and 9510.

PROPOSED ISRs’ REQUIREMENTS, APPLICABILITY AND FEES

Requirements

As currently proposed, the ISRs include a review process where new development projects are reviewed to determine their indirect air quality impacts for the purposes of determining a mitigation fee to offset impacts from the new development.  To implement the ISR program, the District is currently considering several options for its initial approach to the ISR program.  The regulatory language for the ISR program will be contained in Rule 9510.  Rule 9510 is expected to contain provisions requiring:

·         a review of all development projects to calculate project emissions;

·         the option for mitigating emissions on-site through project design and location; and

·         credit for the installation of infrastructure and equipment at the project site that will reduce vehicle trips or emissions and/or the payment of a mitigation fee.

These provisions may be imposed through one or a combination of the options listed below:

  • District Permit Program: This option would require permit applicants to obtain a permit from the District prior to obtaining a building permit.  The District would require applicants to provide specific documents needed to determine the emissions from their projects using a land use emissions model entitled URBEMIS.  The District would then require mitigation measures as conditions of approval of the permit and/or calculate a fee.  Under this option, the District would collect the mitigation fee prior to issuing the District permit or defer the fee until a city or county issued the building permit.
  • City/County Review: This option would allow a city or county to review the applicant’s project using URBEMIS.  Under this option, the locality would collect the mitigation fee, if any, and transfer the fee to the District’s mitigation fund accounts.  The local government would also operate the entire program including expenditure of funds on emission reduction projects if the city/county adopted a program at least as effective at reducing emissions as the District’s ISRs.
  • District Review: Under this option, the District would require the project applicant to provide information to perform an URBEMIS analysis.  The District would calculate the fee amount based on total emissions and identify credits for specific mitigation measures included in the project.  Prior to issuance of a building permit, the locality would review the list, check which mitigation measures had been incorporated into the project, and collect the fee, if any.
  • Simple Fee: This option would allow cities and counties to charge a fee based on certain criteria, such as size or number of units.  Most likely, the per-unit fee would be based on the Institute of Transportation Engineers trip generation rates for the different land uses and emissions calculated by URBEMIS.  Under this option, the city or county would assess and collect the fee.  An appeal program or a rebate program is a possibility to give credit for any mitigation measures that were performed or incorporated into the design of the project.

These options may be employed as a condition of application completeness, during the environmental review, or while compiling conditions of permit approval as part of the local development processes.

Apparently, URBEMIS will be utilized for all options and will consider the location of the project, the design of the site, and the design of the structure.

When The ISRs Are Triggered

Currently, the District envisions having the ISRs take effect January 1, 2005.  Development applications submitted after this date would be subject to the ISRs.

As currently proposed, it appears that even where development approvals had already been obtained prior to the effective date of the ISRs, subsequent approvals would be subject to the ISRs.  It also appears that the District envisions that the ISRs would apply to all discretionary development permit applications and possibly to at least certain  if not all ministerial permit applications. 

Currently, the District is contemplating that all discretionary development permit applications, and the ministerial permit applications subject to the ISRs, would be required to undertake an URBEMIS2002 analysis (the most up-to-date version of URBEMIS) and that the emission results from that analysis would be used to determine the air quality impact development fee to be paid for that phase of the development.

For development projects, this could mean that despite Specific Plan approvals, and other related approvals, future discretionary permit applications (i.e., tentative tract maps, site plan review, etc.), and possibly future ministerial permit applications (i.e., building permits), if not obtained before January 1, 2005, would be subject to the ISRs.  As noted above, the ISRs could require conducting an URBEMIS2002 analysis after initial project approval to determine the development phase’s emissions and paying air quality development impact fees based on these emissions.

Possible Air Quality Development Impact Fees

As currently proposed, Rule 3180 will contain the schedule of fees mandated by Rule 9510.  Because emissions from new indirect sources cannot be entirely mitigated on-site, the District is committing to ISRs that would mandate mitigation measures and/or emission-based fees that would be used to fund unspecified projects that reduce emissions off-site in the most cost-effective manner possible.

The District’s early estimates of air quality development impact fees are $4,500 per ton of PM10 reduced and $9,000 to $13,000 per ton of NOx reduced.  However, the District has indicated that these values will be further evaluated during the rule development process and are subject to change.

As currently proposed, any fees collected through the ISRs will be used to fund projects and/or programs that will achieve emissions reductions in a cost-effective manner.  Some potential projects and/or programs to reduce NOx and PM10 emissions include:

·         projects currently qualifying for the District’s Heavy-Duty Engine Incentive Program, including alternative fuel low-emission school buses, transit buses, and other vehicles, diesel engine retrofits and repowers for trucks, PM-efficient street sweepers powered by natural gas, agricultural water pumping engine replacements, locomotive repower/retrofits, electric forklifts, etc;

·         gross polluter replacement;

·         biomass subsidies;

·         electric vehicle or lawn equipment rebates;

·         truck refrigeration unit plug-ins at distribution centers;

·         wood stove replacement/retirement;

·         video-teleconferencing systems;

·         bus simulators for training; and

·         telecommuting start-up costs.

Potential projects for reducing PM10 emissions specifically include:

·         paving or treating unpaved roads, unpaved road shoulders, and unpaved parking lots; and

·         reductions from agricultural operations could provide significant reductions, including subsidizing the purchase of wood chipping machines to reduce open burning of agricultural waste, and lower emission harvesting equipment.

POSSIBLE RAMIFICATIONS TO DEVELOPERS AND HOMEBUILDERS

Subsequent Air Quality Analysis

Because the ISRs would require, at a minimum, an URBEMIS analysis to be done on all discretionary applications to estimate the development phase’s emissions, a project’s previous operational air quality analysis could be opened to scrutiny after project approval, specifically if (1) the previous air quality analysis was based on an older version of URBEMIS or no URBEMIS analysis was done and/or (2) only the overall project emissions were estimated, and not each individual phase.  This could potentially open up the previous air quality analysis to further scrutiny.

ISR Fees

The ISRs schedule of fees has not been determined to date.  Depending on the amount of fees and how they are applied, additional costs could be added to development projects.  For example, fees based on tons of pollution generated can be substantial for development projects, considering that these projects may generate substantial NOx and PM10 emissions from automobiles and diesel trucks.  Further, fees based on square footage of industrial/commercial development could be substantial, considering the size of development projects.

Contact Nossaman at (949) 833-7800 with any questions, or if you would like more information about the proposed ISRs.

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