Cap and Trade Proposal for Housing and Transportation

The California Air Resources Board developed the Cap-and-Trade program to reduce greenhouse gas (GHG) emissions by auctioning "emission allowances" to polluting entities. Funds from these auctions must be used to further reduce GHG emissions or to mitigate their impacts. According to a study by the Center for Neighborhood Technology, workers earning modest incomes in California’s four largest metropolitan areas take transit, walk, or bike to work far more than other higher-income groups. Modest-income earners are are more likely to take advantage of nearby transit, lowering GHGs more than higher-income earners. This approach to GHG reduction is at the heart of the Sustainable Communities Strategies developed regionally under Senate Bill 375.

For more than a year, as an outgrowth of work on regional land-use and transportation planning by housing and transportation advocates, the Legislature and the governor’s office will be asked to shape a proposal that expands transportation and housing choices and supports disadvantaged communities by allocating a significant portion of Cap-and-Trade auction revenues to affordable transit and transit-oriented development.

State investment in housing that is affordable to people of modest means and located near transit ensures that those most likely to use public transit are able to do so, taking more cars off the road. Not only does this help California meet GHG emission reduction goals, but it also improves public health and air quality, increases social equity, creates green jobs, and protects habitat and agricultural land. In May, the Department of Finance will release its three-year investment plan for the auction revenues, and in June the Legislature will vote on the plan. If done correctly, this plan has the potential to bring hundreds of millions of dollars to expand housing and transportation choices and promote a California where everyone -- regardless of age, race, or income -- has access to opportunities and a healthy environment.  The amount of funding from Cap-and-Trade auctions is expected to grow substantially; by 2015, it is expected to expand to billions of dollars per year. Our proposal represents a win-win by using these funds to connect Californians to communities of opportunity, while further reducing GHG emissions.

In the last legislative session, a coalition comprised of Move LA, Global Green, TransForm, California Housing Partnership Corporation, and Housing California helped to pass AB 1532 and SB 535. AB 1532 (Pérez) and SB 535 (de León) require at least 25 percent of the Cap and Trade auction revenues to be allocated to benefit disadvantaged communities and establish sustainable transportation and housing as one of six possible funding categories.

Over the upcoming months, the coalition of housing and transportation advocates will be working directly with the ARB and Department of Finance (DOF) to advocate for funding targeted transit and transit-oriented developments that reduce greenhouse gas emissions and benefit the most disadvantaged Californians, under the framework of SB 375 implementation. DOF must submit the administration’s proposed three-year spending plan to the legislature in May 2013 for legislative approval through the budget process. See the proposal here.