Final Draft Staff Report for Proposed

Rule 9510 and Rule 3180 SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

FINAL DRAFT STAFF REPORT

December 15, 2005

Rule 9510 – Indirect Source Review (ISR)

Rule 3180 – Administrative Fees for Indirect Source Review

Prepared by: Chrystal Meier, Air Quality Specialist Jennifer Barba, Senior Air Quality Specialist Dave Mitchell, Planning Manager Tom Jordan, Special Projects Administrator Scott Nester, Planning Director

I. SUMMARY

A. Reasons for Rule Development and Implementation

The San Joaquin Valley Air Basin (SJVAB) is classified as a nonattainment area for the state and federal health based ambient ozone and PM10 standards by the California Air Resources Board (ARB) and the U.S. Environmental Protection Agency (EPA). The SJVAB is currently classified as serious nonattainment for the 24-hour and annual National Ambient Air Quality Standards (NAAQS) for particulate matter 10 microns in size and smaller (PM10), serious nonattainment for the new federal 8-hour ozone standard, non-attainment for the new federal PM2.5 standard, and severe

nonattainment for the 1-hour state ozone standard.

Legislation

SB 709, Florez, was passed by the state legislature, was signed by Governor Gray Davis, and codified into the Health and Safety Code in §40604 in 2003. This requires the San Joaquin Valley Air Pollution Control District to adopt, by regulation, a schedule

of fees to be assessed on areawide or indirect sources of emissions.

PM10 Plan Commitment.

The San Joaquin Valley Unified Air Pollution Control District (District) adopted its 2003 PM10 Plan on June 19, 2003, which projects attainment of the NAAQS for PM10 at the earliest practicable date of December 31, 2010. As part of its PM10 attainment strategy, the District is required to reduce directly emitted PM10 and the PM10 precursor oxides of nitrogen (NOx). The 2003 PM10 Plan commits the District to develop new rules or amend existing rules to achieve these emission reductions. The Indirect Source Rule (ISR) is one of the commitments contained in the 2003 PM10 PlanSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Final Draft Staff Report for Proposed

Rule 9510 and Rule 3180 2 to meet these requirements. The ISR commitment will be implemented through Rule 3180 and Rule 9510. Indirect sources are land uses that attract or generate motor vehicle trips.

Ozone Plan Commitment.

Emission reductions from Rule 9510 are also important for attaining state and federal ozone standards. As an extreme nonattainment area, the SJVAB was required by the Federal Clean Air Act (CAA) to attain the NAAQS for ozone by November 15, 2010. In order to achieve attainment by 2010, the Extreme Ozone Attainment Demonstration Plan contained commitments to reduce a precursor of ozone, NOx and volatile organic compounds (VOC). These commitments included NOx reductions from indirect sources. Although the federal one-hour standard has been revoked, the plan commitments must still be implemented to ensure progress is made toward attaining the new more stringent 8-hour ozone standard. By 2007, the District will be required to prepare a plan to comply with the federal 8-hour ozone standard that is expected to require additional reductions. Additionally, the California Clean Air Act (CCAA) requires the District to adopt all feasible control measures to attain the standards.

Health Impacts of Non-Attainment

Since 1996 there have been more than 800 new scientific studies published that associate the effects of airborne particulates on human health. Overall the studies validate earlier research and confirm the relationship between particulate air pollution, illness, hospitalization and premature death. Infants and children, particularly asthmatic children, are especially sensitive to the effects of fine particulate pollutions. For additional information on particulate health impacts see the 2003 PM10 Plan, Chapter

1.

Ozone research has produced strong evidence that correlates exposure to ozone and adverse health effects. In humans, ozone can irritate and inflame the respiratory tract, particularly during heavy physical activity, which results in heavy coughing, throat irritation, and breathing difficulties. For additional information on ozone health impacts see the District’s Extreme Ozone Attainment Demonstration Plan, Section 2.3.

B. District Authority and Limitations

Authority

The primary provision of state law giving the District authority to regulate indirect source emissions is part of the California Clean Air Act legislation adopted in 1988. The provision, incorporated into Health and Safety Code, Section 40716, states that “a district may adopt and implement regulations to ... reduce or mitigate emissions from indirect and areawide sources of air pollution.” To further clarify, a California Attorney General opinion issued in 1993 states thatSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 3 “a district’s regulations may require the developer of an indirect source to submit the plans to the district for review and comment prior to the issuance of a permit for construction by a city or county. A district may also require the owner of an indirect source to adopt reasonable post-construction measures to mitigate particular indirect effects of the facility’s operation. Such regulations could be enforced through an action for civil penalties...”

Indirect source mitigation programs are also consistent with ARB’s interpretation of the CCAA all feasible measures requirement:

“every feasible measure to mean that, at a minimum, a district consider regulations that have been successfully implemented elsewhere. They should also consider going beyond what has already been accomplished by evaluating new technologies and innovative approaches that may offer potential emission reductions. Further, districts should consider not onlytechnological factors, but also social, environmental, economic (e.g., costeffectiveness), and energy factors which prevail in the district, along with the resources realistically available to the district to adopt, implement, and

enforce the measures.”

Health and Safety Code 42311(g) allows districts to adopt a schedule of fees on areawide or indirect sources which are regulated, but for which permits are not issued, to cover the costs of District programs related to this source. SB 709, Florez, was passed by the state legislature, was signed by Governor Gray Davis, and codified into the Health and Safety Code in §40604 in 2003. This requires the San Joaquin Valley Air Pollution Control District to adopt, by regulation, a schedule of fees to be assessed

on areawide or indirect sources of emissions.

Finally, the District has the authority to control indirect sources, defined in the Clean Air Act (CAA §110(a)(5)(C)) as, “... a facility, building, structure, installation, real property,

road , or highway which attracts, or may attract, mobile sources of pollution”(emphasis added). This authority comes from the CAA §110(a)(5)(A)(i):

“Any State may include in a State implementation plan ... any indirect source review program.”

Analysis of Nexus Applicability

The District analyzed the applicability of Nexus requirements for Rule 9510 and 3180. The District’s legal council’s analysis found that the Rule and supporting documentation likely meets the federal ‘reasonable relationship test’. In addition, the analysis found that the California Mitigation Fee Act (CGC §66000 et seq.) does not apply to Rule 9510 and 3180. The analysis similarly found that California Proposition 13 and 218 do not apply to Rules 9510 and 3180.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 4 California’s Mitigation Fee Act (CGC §66000 et seq.) establishes authority and limitations on fees or taxes charged, “by a local agency to the applicant in connection with approval of a development project .” CGC §66001 (a) states, “In any action establishing, increasing, or imposing a fee as a condition of approval of a development project by a local agency on or after January 1, 1989, the local agency shall do all of the following,” and §66001 (b), “In any action imposing a fee as condition of approval of a development project. (Italics added).” The District cannot impose on the local land-use authority and will not be approving or disapproving development projects. As such, the District cannot place ‘conditions of approval’ on a project. Therefore, the Mitigation Fee Act does not apply to the ISR Rule. The District does not consider the action of approving or disapproving an air quality analysis and assessment of fees as a discretionary action.

Limitations

The District will not be approving development projects, but the air impact assessments associated with development projects. In this approval, the District will assess air impacts, the amount of reduction required by the rule, the amount of applicant-specified on-site emission reductions, and the amount of off-site emissions reductions needed, if any. The District recognizes the land-use authority of SJVAB Cities and Counties and does not have land-use authority itself.

II. RULE DEVELOPMENT PROCESS

As part of the rule development process for this project, District staff held public scoping meetings in Fresno, Modesto, and Bakersfield in October 2003. At the scoping meetings, District staff presented the objectives of the proposed rulemaking project, collected information, and received comments from interested parties, local agencies, the building industry, real estate associations, consultants, and trade associations. The comments received were incorporated into the draft rules and staff report. In March of 2004, the District presented a draft Rule 9510, and several other documents. In June of 2005, the District presented draft Rule 9510 and draft Rule 3180, as well as associated appendices. The comments received were incorporated into the draft rules and staff report. In addition, District staff held a public workshop September 1, 2005 and solicited input on

the draft rule and associated documents. The District received comments from interested parties and affected entities. Information obtained throughout this workshop process was used to develop and modify the draft rules and staff report.

Pursuant to state law, District staff is required to perform an assessment of the socioeconomic impacts prior to the adoption, amendment, or repeal of a rule that will have significant air quality benefits or that will strengthen emission limitations. As a part of the District’s socioeconomic analysis process, District staff held a Focus Group meeting on August 11, 2005 to assist in the collection of socioeconomic data for theSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Final Draft Staff Report for Proposed

Rule 9510 and Rule 3180 5 implementation of the new proposed program. The Focus Group consisted of a limited number of representatives from interested groups.

Final drafts of the proposed rules, staff report, emission reductions analysis, cost effectiveness analysis, on-site emission reduction checklist, socioeconomic analysis, and rule consistency analysis, will be published prior to a public hearing by the Governing Board to consider the adoption of proposed Rules 3180 and 9510. The tentative schedule for the public hearing to consider the adoption of the newly proposed rules by the District Governing Board is for December 15, 2005.

III. BACKGROUND

A. Growth and Emissions

The District exceeds state and federal air quality standards for ozone and PM10, despite significant reduction of air pollution from both mobile and stationary sources, primarily because of increases in population and vehicle miles traveled (VMT) in the

SJVAB.

Reductions Federal, state and local efforts have led to approximately 30 percent reduction in smog precursors and a ten percent reduction in PM10 (overall) in the SJVAB since 1990 1

. Significant reductions from stationary sources have been achieved, so that mobile sources now produce 69 percent of all NOx emissions in the District. Today's new cars pollute about 90 percent less than models produced 25 years ago due to California's strict vehicle emissions standards. By 2003, the average new car in California will pollute 75 percent less than 1994 models 2 . Although these standards will continue to greatly improve air quality, large increases in population and driving partially reduce the benefits of cleaner motor vehicles. The following chart shows how much lower the emissions from motor vehicles would be if growth were not to occur.

Figure 1
Difference in NOx Emissions for All Vehicle Types

0 20 40 60 80 100 120 140 160 180 200

2006 2010 2015

Yeartons Growth

No GrowthSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 6 Population Growth The SJVAB has experienced a large increase in population in the past several decades. The total population in the District increased by 22% between 1990 and 2000, and California’s Department of Finance is projecting that the SJVAB will see an overall increase in population of 24% between 2000 and 2010. Each county varies, with the highest expected growth in terms of percentage increase in Madera, and the lowest expected growth in Fresno, but in terms of numbers of people, Fresno is expected to see the largest increase 3 . With increased population there is an increase in emissions from area sources, such as consumer products, fuel combustion, landscape maintenance equipment, etc.

VMT Growth The total number of vehicle miles traveled (VMT) in the District has increased at a faster rate than population growth. The District witnessed a nine percent increase between 1999 and 2002, and is expecting a 27 percent increase from 2002 to 2010 4

. Entrained and re-entrained paved road dust and corresponding PM10 emissions, increase as VMT increases. The ozone and PM10 precursor NOx, also increases as

VMT increases.

Figure 2
PM10 Emissions from Development

0 2 4 6 8 10 12 14 16

2006 2010 2015

YearEmissions (tpd) Re-entrained Paved

Road Dust Growth

Motor Vehicle Exhaust

Growth

Construction Exhaust

Increased Emissions From Growth The past and projected increases in population, associated development and construction emissions and vehicle miles traveled, and the slower than expected introduction of technological advances in automobile and truck emission controls, have significantly slowed progress toward attainment. The ISR program can reduce and offset some of the growth in emissions and is required for attainment of the federal ozone and PM10 standards by the dates required in ozone and PM10 attainment plans.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 7 B. Existing Indirect Source Programs

The District identified several examples of air pollution agencies in California that are currently reviewing land use projects for indirect source impacts and/or collecting mitigation fees in their districts. Five air pollution agencies have adopted and implemented an indirect source rule or policy. The methods and authority over development projects vary from air district to air district. Brief descriptions of these programs are provided below.

Mendocino County Air Quality Management District (AQMD) outlines their permitting process for indirect sources in Rule 1-200. The rule requires any indirect source to obtain an Authority to Construct (ATC) prior to starting construction. When Mendocino AQMD receives an application, they perform a California Environmental Quality Act (CEQA) determination. The ATC is not issued until a Notice of Determination is completed and filed.

Great Basin Unified Air Pollution Control District (APCD) also has an indirect source permit rule in place, Rule 216. This rule defines indirect sources as a secondary source, which is any structure, building, facility, equipment, installation, operation, or aggregation thereof. The application and associated informational documents are reviewed, and an analysis on expected emissions and air quality impact is performed. Public notice is published, and the general public is allowed to review and comment. The District then considers comments and imposes conditions on the approval of the permit or denies a permit if it is determined that the secondary source will contribute to a violation of any air quality standard. The fees imposed on secondary sources in

Great Basin are outlined in Rule 301. Those fees are based on the size of the commercial unit and the number of parking spaces, or the number of residential dwelling units.

Colusa County APCD has an indirect source fee rule, Rule 4.8. The fees are assessed for building permit applicants during the city or county’s permit process. The fees are based on the square footage of commercial or industrial projects, or by residential unit. The city or county may retain an administrative fee of ten percent. The fees are used to offset the District’s costs, and any excess is used to mitigate air quality impacts.

Placer County APCD has instituted a “Policy Regarding Land Use Air Quality Mitigation Funds.” During CEQA review, the APCD assesses total emissions that are estimated to occur during the ozone season from a particular project. The emissions are estimated by utilizing URBEMIS, which will be mentioned later in this staff report. After estimating emissions during the ozone season from URBEMIS, Placer County APCD requires 40% mitigation of a project’s impact or to below a significance threshold, either on-site, off-site, by paying a fee, or a combination of those options.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 8 Shasta County AQMD has adopted Rule 3:16, which allows Shasta County to place reasonable conditions on any fugitive, indirect or non-traditional source. At the current time, Shasta County utilizes the rule to mitigate the impact of new residential dirt roads by requiring paving or paying a fee. Their Resolution 84-2 authorizes an in-lieu buy out schedule for road paving, which is currently set at $800 per parcel below 1,000 feet in

elevation.

In addition to the above examples, numerous government agencies in the SJVAB have created impact fee programs that have proved useful in drafting this program. The most common are transportation/transit impact fees for cities such as Bakersfield, Lathrop, and Visalia. The City of Stockton and the City of Turlock also have air quality impact fee programs in place.

C. Program Options

The District considered several options for the initial approach to the ISR program. The options were developed to coincide with the normal development process as a condition of application completeness during the environmental review with a city/county, or while compiling conditions of permit approval as part of the cities/counties development processes.

District Permit Program : This option would require permit applicants to obtain a permit from the District prior to paying the city/county’s building permit fees. The District could require applicants to provide specific documents needed to determine the emissions from the project using URBEMIS. The District could then require on-site emission reduction measures as conditions of approval of the permit and/or calculate a fee. Under this option, the District could collect the off-site fee prior to issuing the District permit or defer the fee until the city/county issued the building permit.

City/County Review & Administration : This option would allow the city/county to review the emissions generation of an applicant’s project, likely using URBEMIS. Under this option, the city/county would collect the off-site fee, if any, and transfer the fee to the District’s off-site fund account(s). The city/county could 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 rule.

District Review & City/County Administration : Under this option, the District would require the applicant to provide documents necessary to perform an emissions generation analysis, likely using URBEMIS. The District would calculate the off-site fee amount based on total emissions and identify credits for specific on-site emission reduction measures included in the project. Prior to authorization of a building permit, the city/county would review the list, check which on-site measures have been incorporated into the project, and collect the fee, if any.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 9 Simple Fee : This option would allow cities/counties to charge an off-site fee based on certain criteria, such as size or number of units. If this option was pursued, most likely the per unit fee would be based on the Institute of Transportation Engineers (ITE) 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 would be a possibility to give credit for any on-site measures that were performed or incorporated into the design of the project.

District Review & Administration : Under this option, the District would require the applicant to provide documents necessary to perform an emissions generation analysis, likely using URBEMIS. The District would calculate a required reduction amount based on total emissions and identify credits for specific on-site emission reduction measures included in the project. Required reductions not achieved by voluntary on-site measures would be achieved off-site through an offset fee. Offsite reductions would be subject to criteria including (but not limited to) being quantifiable and surplus. The District would conduct annual reporting to analyze the effectiveness of the off-site emission reduction program.

The District chose to pursue the ‘District Review & Administration’ option for several factors. Primarily, the District chose to craft the ISR rules to be compatible with local land-use authorities decision-making processes, and to have the ability to be worked into CEQA documents at the Lead Agencies’ discretion. The District includes the options for voluntary on-site emission reduction measures that would allow a reduction

in off-site fees.

IV. PROPOSED REGULATIONS

A. Proposed Rule 9510

The purpose of proposed Rule 9510 is to reduce emissions of NOx and PM10 from new development projects. The rule applies to development projects that will seek to gain a discretionary approval for projects that, upon full build-out will include any one of the following: 50 residential units, 2,000 square feet of commercial space, 25,000 square feet of industrial space, 20,000 square feet of medical office space, 39,000 square feet of general office space, 9,000 square feet of educational space, 10,000 square feet of government space, 20,000 square feet of recreational space, or 9,000 square feet of uncategorized space. The rule also applies to transportation projects whose construction exhaust emissions will result in a total of two tons per year of NOx and PM10 combined. However, there are several sources that are exempt. These include transportation projects that meet certain conditions, reconstruction projects that result from a natural disaster, development project’s whose primary functions are from District permitted stationary sources. Also, development projects that have a mitigated baseline below two tons per year for NOx and PM10 shall be exempt from theSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

Rule 9510 and Rule 3180 10 mitigation requirements of the rule. Anti-circumvention language was added to prevent piecemealing of development projects.

Applicability

Rule 9510 applies to any applicant that applies for a final discretionary approval for a development project which will include any of the following: 50 residential units; 2,000 square feet (sf) of commercial space; 25,000 sf of light industrial space; 100,000 sf of heavy industrial space; 20,000 sf of medical office space; 39,000 sf of general office space; 9,000 sf of educational space; 10,000 sf of government space; 20,000 sf of recreational space; 9,000 sf of space not identified, and; transportation and transit projects where construction exhaust emissions results in a total of 2 tons of NOx and

PM10 combined.

Exemptions

Transportation and Transit projects are only subject to the construction emission reduction requirements of the rule. Development projects subject to the rule that reduce their operational emissions to less than 2 tons per year of NOx and PM10 each not subject to the rule’s operational or construction emission reductions requirements.

Reconstruction of a development that was damaged or destroyed that is rebuilt to essentially the same use and intensity is similarly not subject the rule’s requirements. In addition, development projects whose primary functions are regulated by District permits are exempt. Those stationary source projects are exempted because the projects’ primary emissions are from stationary sources that are currently regulated by District rules and permitting requirements.

Application Rule 9510 requires applicants of new development projects to submit an Air Impact Assessment (AIA) application to the District prior to or at the project’s application for a final discretionary approval with a public agency. The application would include the information necessary for the District to perform an assessment, project location and description, an on-site emission reduction checklist, and an assessment by theapplicant (if desired). An AIA would consist of inputting project data into an APCOapproved model to estimate emissions, and inputting on-site emission reduction measures that are components of the project design and/or other project specifics to calculate emissions reductions. This will be performed by the District and may be performed by the applicant. The emissions and emissions reduction outputs will be used to calculate the amount of on-site emission reduction is achieved, and what the off-site emission reduction fee would be, if any. Proposed Rule 9510 specifies the use of an APCO-approved model (Draft Rule 9510 Section 3.2), which in most cases will be URBEMIS. In the event that URBEMIS is not suitable for the proposed land use (i.e. does not have ITE trip rate), the District may approve another model, or review and approve off-line with project-specific calculations. If project-specific data is entered intoSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 11 the APCO-approved model and overrides defaults, the applicant shall document and justify those project-specific inputs.

On-Site Emission Reduction Checklist The measures listed in the checklist have a known quantification methodology in URBEMIS 8.7. The methodologies can be found in the URBEMIS User’s Guide,
available at South Coast AQMD’s website http://www.aqmd.gov/ceqa/urbemis.html . The on-site emission reduction checklist shall identify which measures have been voluntarily selected by the applicant, the enforcement mechanisms available for those measures, and the reasons for not selecting the remaining measures. All measures selected that are above District or State requirements, regardless of enforcement mechanism, will count towards emission reductions for the project, in accordance with the methodologies in URBEMIS. The measures for the On-Site Emission Reduction Checklist can be found in Appendix C.

On-Site Enhancing Measures The District has identified several measures that are known to have an air quality benefit. However, at this time they do not have a quantification methodology for project-level emission reductions. These measures still have a beneficial air quality impact. For this reason, the District will maintain a list of ‘On-Site Enhancing Measures’ and make it available to applicants. There are no requirements on selection of measures from the On-Site Enhancing Measures list. As emission reduction methodologies are determined for these and other new measures, they can be incorporated into URBEMIS. The list is available in Appendix C.

Monitoring and Reporting Schedule For projects that select on-site measures that do not already have an enforcement mechanism, a proposed SJVAPCD On-Site Monitoring and Reporting Schedule (MRS) will be completed. The District will provide a standard form for the MRS, and the applicant is responsible for completing the MRS. The District will then work with the applicant to finalize the MRS. Draft Rule 9510 §5.4 discusses the components of a

MRS.

Fee Deferral Schedule In addition to the AIA application, the applicant may propose a Fee Deferral Scheduleat the time of application or during application review in anticipation of a possible offsite fee, or within 15 days of receiving an off-site fee invoice. The District will provide the Fee Deferral Schedule format. The applicant can choose the schedule of payments, but all fees for a development or phase thereof must be received prior to construction of that development or phase thereof. Draft Rule 9510 §5.5 discusses the components of a FDS.

Completeness Finding The District will have 10 days to determine whether or not the application is complete. After the District deems the application complete, the District has 30 days to approveSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 12 the application and notify the applicant of the estimated fee amounts. In addition, the application and MRS will be submitted to the applicable public agency for voluntary review. The public agency may provide comment at their discretion. The applicant may have the assessment modified to incorporate more on-site measures, if desired. Once the proposed MRS is approved, the District and the applicant shall finalize the MRS. Ifthere are changes to the project that will impact the emissions total or schedule of buildout, the applicant shall notify the District of that change within 60 days of said changes, or prior to the start of project construction, whichever is first. As stated above, if a project mitigates to less than two tons of operational NOx and PM10, it will not be subject to the required emission reductions stated in the draft Rule 9510 §4.3.

Required Emission Reductions

Proposed Rule 9510 would require applicants to reduce NOx and PM10 emissions. The rule is designed to reduce the impact of the development projects to the extent

needed for the District to reach attainment of ozone and PM10 standards. The District calculated the level of reduction needed on a per-project basis that would achieve the emission reduction committed to in the PM10 and ozone attainment plans. Draft Rule 9510 Section 6.0, et seq., describes the required emission reductions.

Although the majority of the NOx emissions associated with a project are due to motor vehicles, there is a decline in NOx emissions over time due to ARB’s tailpipe controls. The NOx mitigation fee is structured to account for a 50% decline in annual NOx emissions from motor vehicles over ten years. Thus, the rule requires mitigation of the cumulative NOx emissions in excess of 50% of the project’s operational baseline emissions (the emissions at the first year of buildout) until the project’s emissions reach half of the project’s first-year baseline emissions, which is approximately 10 years. This method ensures that a project does not over-mitigate its emissions. Draft Rule 9510

Sections 3.8 defines baseline emissions. Rule 9510 Sections 3.10 and 3.27 define construction baseline and operational baseline, respectively. Rule 9510 Section 3.20 defines ‘mitigated baseline’. Project emissions and the required mitigation can be visually represented as follows:SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 13 Figure 3

NOx Project Emissions and Reductions Compared to 50% of

the First Year Emissions

0 0.5

1 1.5

2 2.5

3 3.5

1 2 3 4 5 6 7 8 9 10

Number of YearsEmissions (tons) Baseline Project

Emissions in

Excess of 50% of

First Year

50% of first Year

In essence, the NOx mitigation required for Rule 9510 is represented above by the triangle, which is equal to one third of total project emissions during the first ten years. The applicant can reduce the emissions represented by that triangle by using on-sitemitigation measures, by paying the District a fee to fund emission reduction projects offsite, or through a combination of the two. The fee amount would decrease or be eliminated depending on the amount of on-site mitigation incorporated by the applicant into the design of the project.

The PM10 mitigation requirement is different from NOx. Operational PM10 emissions from a project do not decline over time – they remain constant. Accordingly, Rule 9510 will require mitigation equal to half of the emissions for the first year after build-out for 10 years (the same period of time required for NOx mitigation).

Proposed Rule 9510 would also require applicants to reduce NOx and PM10 construction equipment emissions. The rule requirement is to reduce construction NOx emissions by 20% and PM10 emissions by 45% beyond the statewide average. In determining the level of reduction for construction emissions, the District researched what other air districts had set, and found those targets are achievable. There are several options available for controlling NOx and PM10 emissions from equipment used for construction on-site. Options can include, utilizing newer equipment, altering fuel type, modifying an engine, or using exhaust after-treatment devices, to meet the rule requirements. New equipment can provide a high percentage of emissions reductions, depending on the horsepower and the year of the equipment. The reductions are achievable with existing technology with a mix of newer equipment and retrofit devices, and will allow applicants applying moderate effort to pay no fee on construction.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 14 Achieving Emission Reductions

If on-site mitigation measures are chosen by the applicant, the applicant shall submit a MRS to the District for the those on-site mitigation measures that do not have built in

enforcement mechanisms. All on-site emission reductions measures that are above District and State requirements will be credited to emission reductions for the project. The MRS will identify enforcement mechanisms, which may include identifying specific funding mechanisms, as well as monitoring, recordkeeping and reporting. The Proposed MRS shall be forwarded by the District to the public agency for review. It is important to note that the percent reduction achieved onsite results in a greater reduction of the NOx fee. While on-site mitigation is not required, the “bigger bang for the buck” is achieved with as much on-site mitigation as possible. For example, when onsite NOx reductions exceed the excess emissions above 50% of the first year’s baseline, the NOx fee becomes zero. Additionally, if the onsite measures reduce the NOx and PM10 to less than 2 tons per year each at buildout (baseline), no additional reductions are required. See Table 1 for examples of on-site emission reductions and the associated off-site fee reduction. See Table 2 for a list of simple measures that small projects can achieve, and a list for larger projects. If the emission reductions required by the rule are not fully achieved on-site, off-site fees would be required.

The use of off-site fees is strictly limited to procurement of off-site emission reductions. Absolutely no off-site funds may be used for District staffing or budget. The District shall provide annual reporting per draft Rule 9510 Section 10.4. Annual reports shall include, at a minimum: the total amount of off-site fees received; the total monies spent; total monies remaining; any refunds distributed; a list of all projects funded; the total emission reductions realized, and; the overall cost-effectiveness factor for the projects

funded.

Off-site mitigation would consist of paying a fee to fund emission reduction projects for required emission reductions that are not reduced on-site. Rule 9510 contains pollutant-specific fee formulas in Section 7.0, et seq. Appendix B shows how those formulas were developed. The off-site fees are strictly tonnage based. This means that all projects are treated equally, and assessed on the amount of emissions associated with the project. The fee formula applies equally to all applicable projects, accounts for the amount of on-site emission reductions. The fee would be payable in 60 days upon notification of fee amount, unless the applicant has arranged a FDS with

the District.

Both the NOx and the PM10 fee formulas include a Cost of Reductions for one ton of that pollutant. These values were determined based on historical grant programs with the district and project fund use, and represents an average value for a range. Appendix E contains a greater description of how those values were derived.

Rule 9510 directs the District to administer the fee use to achieve emissions reductions that the fees were based on, in a cost-effective manner. There are numerous emissionsSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 15 reduction projects available. Potential projects are as follows: 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. Other potential projects include gross polluter replacement, biomass subsidies, electric vehicle or lawn equipment rebates, truck refrigeration unit plug-ins at distribution centers, woodstove replacement/retirement, video-teleconferencing systems, and telecommuting start-up costs. Potential PM10 reduction programs include paving or treating unpaved traffic surfaces and shoulders and PM10 efficient street sweeper purchases. Some projects will achieve reductions of NOx and PM10. The funds will be managed by a grant-like program and allocated as applications are received. If a sufficient amount of applications to fund projects are not received, the District will consider a directive program that would be approved by the Governing Board. The District recognizes the sensitivity of the geographic distribution of the funds. Any emissions reduction project will provide a localized benefit to the area of fee origin.

Table 1 On-Site Reductions and Associated Operational Off-Site Fee Reductions.

On-Site Emission Reduction (%) Operational OffSite Fee Reduction (%) Example Project 150 Single-Family Units in 2006

On-Site Package

- Increased Density (from 50 to 30 acres)

- No Wood Stoves

- Increased Energy Efficiency by 10%

- Located near local-Serving Retail

- Bus Service Nearby

- Traditional Street Design

- Sidewalks on Both Sides of Street

- Bikelanes on 20% of streets

- 10% of units Deed-Restricted Below Market Rate NOx

12% PM10

36% NOx

36% PM10

72%

On-Site Emission Reduction (%) Operational OffSite Fee Reduction (%) Example Project
200 Multi-Family Units 40,000 sf Strip Mall 60,000 sf General Office

On-Site Package

- No Wood Stoves

- Increased Energy Efficiency by 10%

- Located near local-Serving Retail

- Bus Service Nearby

- Traditional Street Design

- Sidewalks on Both Sides of Street

- Bikelanes on 20% of streets

- 5% of units Deed-Restricted Below Market Rate

- Commercial and Retail implement Transportation

Demand Measures

- Commercial and Retail Reduce Parking Supply NOx

23% PM10

29% NOx

68% PM10

59%SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 16 Table 2 Basic On-Site Measures for Small and Large Projects.
Small Projects

All Land Uses: Traditional Street Design Increased Energy Efficiency

Include Sidewalks on all streets Locate near mass transit stops

Locate near a mix of uses

Residential: No Fireplaces or Woodstoves Locate near local serving retail Locate near jobs

Non Residential: Reduce parking supply

Locate near residences Implement Transportation Demand

Measures

Include Bike Racks Large Projects Same as Small Projects, Plus:

All Land Uses:

Include a mix of uses

Install Bike Paths or Bike Lanes and/or Pedestrian paths

AIA Approval

The District will provide a decision on the AIA application within 30 days of finding the application complete. The District will approve the AIA application or disapprove the AIA application. It is important to note that the District will not be approving a permit or other discretionary action as a result of Rule 9510. In addition, the District will not be approving or disapproving the development project itself, but the Air Impact Assessment application for that project. The authority for land-use decisions lies with the local land-use agency. The AIA application approval is ministerial and will not involve conditions of approval.

MRS Maintenance

For those projects that have a MRS with the District, the applicant is responsible for implementing those measures identified. The District is responsible for monitoring and receiving reports for on-site emission reduction measures. The District shall provide a tentative compliance letter to the applicant, public agency and public upon request. Upon completion of the last MRS requirement, the District shall provide a letter of MRS completion to the public agency and applicant. The District shall also make the letter available to the public.

If the applicant committed to on-site construction emission reductions, the applicant is responsible for submitting the construction equipment schedule to the District prior to applying to the public agency for a grading permit. At that time, the District will verify construction emissions for the project. If the on-site emission reductions specified by the applicant are not achieved, the District shall assess and invoice for off-site fees required by the rule.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTDraft Staff Report: Rules 9510 and 3180 December 15, 2005Final Draft Staff Report for ProposedRule 9510 and Rule 318017YesApplicationandApplicationFee SubmittedComplete?Notify applicantofCompletenessFindingProblem?Send ApprovalLetter to ApplicantInvoice forAdminstrative Fee,if anyFee DeferralSchedule?InvoicePay Fee9510 Receiptof payment(s)Satisfy MRSFinal MRSCompletion10 Days to DeemCompleteNoNo30 days toReview forApprovalTime &MaterialsAdministrative Fees duein 60 daysNoOff-Site FeeDue in 60 daysor by FDSISR Application Flow ChartYesYesStop 30 day clock& ask forclarification/additional infoSend Application to LandUse Authority forVoluntary Review(incl. Checklist and MRS)ApplicantDistrictIs there an Off-SiteFee?YesNoPublic AgencySubmitRevisedInformationIs there anMRS?No FeeFinalize FDSNo MonitoringActionYesNoRedesign projector change on-sitemeasuresResubmitApplicationEvaluateapplicationpacket, AIAinformation,Checklist, MRS,FDSNo ActionRequiredSend Approval Letter toLand Use AuthorityNo ActionRequiredApproveAIAPublicNo ActionRequiredSend MRSCompletionLetter toApplicant,Public AgencyPropose aFDS?NoYesNo15 days toPropose anFDS15 days toFinalize FDSSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 18 B. Proposed Rule 3180

The purpose of proposed Rule 3180 is to recover the costs of administering Rule 9510. The proposed rule includes a non-refundable application-filing fee to be paid when an application is submitted to the District. Once an application and the application fee are received, district staff will log the total staff hours spent on the project using the District’s automated Labor Information System. The application evaluation fee will comprise those hours at a weighted average labor rate, minus the application-filing fee, so that only the cost of the actual hours spent on the project will be recovered.

Rule 3180 also contains a fee equal to 4% of the offsite emission reduction fees to recover the cost of administering off-site emission reduction projects. The 4% would be payable when the offsite emission reduction fees are collected.

C. Program Implementation - Streamlining

The process identified in Rule 9510 may be completed prior to or concurrent with theCity/County permit review process. Specifically, Rule 9510 has been designed for noninterference with the City/County land-use and California Environmental Quality Act (CEQA) processes. However, information from the ISR process may be used by a Lead Agency in environmental documents, at their discretion. Currently, air quality impact assessments are usually required for projects with potentially significant air impacts. Since the NOx and PM10 pollutants will be addressed through ISR, it will not place an added burden to the applicant, and should provide a foundation for or replace the ozone precursor and PM10 emission analysis included in that environmental document. The On-Site Emission Reduction Checklist will help applicants identify quantifiable mitigation alternatives and provide justification for feasibility or infeasibility. The MRS will identify enforcement mechanisms for on-site emission reduction measures that were selected by the applicant.

The District will provide information on the District’s website, such as application forms and guidance documents. The District will revise its Guidelines for Assessing and Mitigating the Air Quality Impacts (GAMAQI) document as needed. In addition, the

District will work with Cities and Counties on additional measures to facilitate communication and streamlining of the application and review process.

Finally, the ISR program is set up to allow the applicant to provide the AIA. However, the applicant is not required to provide modeling or emissions calculations. The District will prepare the AIA based on the project-specific information provided in the AIA application. The District will not charge a specific fee for modeling, but will invoice for any time and materials beyond that covered by the application filing fee. The application filing fee was estimated based on the average time expected to review and AIA application and conduct emissions calculations/modeling for the project.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 19 D. Use for Environmental Review – CEQA

The ISR program operation is not subject to CEQA requirements. The review conducted on applications for the program is a ministerial action not subject to CEQA, per PRC §21080 Division Application to Discretionary Projects; Nonapplication; Negative Declarations; Environmental Impact Report Preparation (b)(1):

(b) This division does not apply to any of the following activities: (1)Ministerial projects proposed to be carried out or approved by public agencies.

The ISR Program will require an amount of emission reductions from certain development projects subject to the rule. Implementation and compliance with the rule will reduce the cumulative NOx and PM10 impacts of anticipated growth to less than significant because the reductions attributed to this program were identified in two attainment plans as necessary to achieve the applicable standards. CEQA Guidancedocument § 15064 (h)(3) statesA lead agency may determine that a project’s incremental contribution to a cumulative effect is not cumulatively considerable if the project will comply with requirements in a previously approved plan ... which provides specific requirements that will avoid or substantially lessen the cumulative problem (e.g. ... air quality plan).

The GAMAQI will be updated with any necessary changes to District CEQA policy and provides a suitable location for changes to defaults and guidance on model usage.

E. APCO- Approved Models

Proposed Rule 9510 specifies the use of an APCO-approved model, which in most

cases will be URBEMIS. URBEMIS stands for "Urban Emissions Model." URBEMIS was originally developed by the California Air Resources Board (ARB) as a modeling tool to assist local public agencies with estimating air quality impacts from land use projects when preparing a CEQA environmental analysis. The model was developed to estimate construction, area source, and operational air pollution emissions from vehicles from a wide variety of land use development projects in California, such as residential neighborhoods, shopping centers, office buildings, etc. Originally designed as a ‘sketch planning’ tool for CEQA project review, it has been continuously enhanced with each new version to provide greater capability and accuracy. URBEMIS is used statewide by air agencies and public agencies and contains air basin-specific information. URBEMIS has substantial flexibility to accommodate project specific travel and vehicle information when available. The model also includes a mitigation component that allows the user to select specific measures and quantify emission

reductions associated with the selected measures 5

.

The District undertook an extensive effort to ensure that URBEMIS is the right tool for this program. The District hired a consultant, TY Lin International/CCS, to reviewSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 20 available land use emissions models, recommend which model is most suitable for this program, and identify areas of improvement. The consultant recommended URBEMIS as the best tool for ISR for several reasons, including:

• URBEMIS contains the latest California-specific emission factors with motor vehicle emission factors based on EMFAC2002,

• URBEMIS is the only model that contains emissions calculations for PM10

• URBEMIS contains emissions calculations for area sources

• URBEMIS contains motor vehicle activity based on trip rates from the Institute of Transportation Engineers (ITE) ITE rates are nationally accepted, are widely used and have withstood legal challenges.

• URBEMIS does not require large amounts of input for an emissions estimate (it is easy to use)

• URBEMIS inputs are objective and quantifiable. For Example- For sidewalk coverage, the input fields include percent of streets with sidewalks on both sides and the percent of streets with sidewalks on one

side.

• URBEMIS contains the flexibility to modify defaults if project-specific information

is known.

• URBEMIS is free.

TY Lin International/CCS made recommendations on the improvements to the areawide mitigation component and hired a sub consultant, Nelson/Nygaard, to make detailed recommendations for improvements to the operational mitigation component. Nelson/Nygaard researched the latest studies on land use, what design features consistently reduced vehicle activity (and consequently emissions) in the real world and by how much. Nelson/Nygaard then created emissions reduction calculation methodologies based on those studies and submitted a report to the District. The District then initiated an extensive statewide effort to update the URBEMIS model with the resulting recommendations. The District, TY Lin International/CCS, and Nelson/Nygaard met with the URBEMIS working group, which is a group of representatives from air districts throughout the state of California, as well as the California Department of Transportation (CalTrans), and presented the recommended changes to URBEMIS. Once the URBEMIS Working Group made recommendations that were incorporated into the report, the report was then peer reviewed by several well respected researchers in the field of land use and travel activity. The peer review comments were incorporated into the report and approved. The final report was incorporated into URBEMIS 8.7, released to the public, and is included in this document as Appendix D.

The URBEMIS model would require, at minimum, the following inputs: type of land use, number of units, and any mitigation measures selected. However, there are numerous defaults that can be modified if more precise information on the project is available.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 21 These can include: trip rate(s), emission factors and usage rates for specified area source emissions, year of project use, fleet characteristics in terms of percentage of and fuel use of vehicle types, trip speeds, trip lengths, trip percentages, ambient seasonal temperatures, variable start percentages, and emission reduction inputs. Emission reduction inputs can include increased density, zero hearth options, percent energy efficiency beyond Title 24, percent of landscape equipment electrically powered, number of housing units and study area employment (job to housing ratio), the presence of local serving retail, the number of transit stops, intersections per square mile, percentage of streets with sidewalks, percentage of bike lane coverage, percentage of housing units below market rate, numerous transportation demand management measures, number of actual parking spaces, and controls on fleets. Based on those inputs, the model calculates total area source emissions, total vehicle emissions, total overall emissions and total reduced emissions in terms of lbs/summer day, lbs/winter day, or tons/year.

In addition to the benefits of URBEMIS, this model was chosen over other potential models for various reasons. A different option was to use transportation models used by the COGs for conformity purposes. Transportation models, while appropriate for their current use, are not appropriate for ISR for the following reasons:

• There is not one model used valley-wide.

o There are eight different models. Some cover only one county, others cover multiple counties.

• The eight models do not use the same modeling basis, making for inconsistencies of software if multiple models are used.

• The analysis requires subjective inputs.

• Certain trips are not accounted for in the transportation model. For example- While URBEMIS will account for the very-short trips associated with new gas stations (passby trips), transportation models do not include the short drives into gas stations.

• The transportation models include deviations from known trips.

o They do not account for 10-15% of trips on Arterial Streets

o They do not account for 15-35% of trips on Collector Streets

o Trips on local streets are not included

• The trip types come from old, 1970’s data that is only periodically updated.

• Does not include new area emissions, which are wholly attributable to new developments.

• Transportation modeling requires many inputs, and is not easily used by an average applicant.

• Transportation modeling is not free

It is the view of the District that URBEMIS is the best tool available. As stated above, URBEMIS has a solid, proven basis (EMFAC2002, ITE, peer-reviewed quantification), is flexible and allows changes to various calculation inputs when project-specific information is known. Comments received by the District pointed out that URBEMISSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 22 contains some information that may need refinement. Particularly, the fleet mix and the on-road silt-loading factor. The District agrees that new, more accurate information should be incorporated into URBEMIS when that information becomes available Concerning the on-road silt-loading factor, the District concurs with the air basin specific factor received in comments and will be recommending using the factor of .031 for analyses prepared for the rule and will incorporate that factor into the San Joaquin Valley portion of URBEMIS. To remedy the fleet-mix issue, the District has hired a consultant (VRPA) to investigate and recommend new land-use specific fleet mixes. In addition, the District is participating in a statewide effort to improve the construction portion of URBEMIS. In the interim detailed guidance and sample construction inputs will be provided by the District to assist applicants.

F. Other Issues

The 2003 PM10 Plan also included a one-ton per day PM10 emission reduction commitment for Metropolitan Bakersfield by 2010. That commitment is being addressed through a “task force” composed of staff from the City of Bakersfield, Kern County, and the District. The task force is identifying the projects that would provide the greatest impact on ambient PM10 levels in the area.

Input from the public during the scoping meetings and from written comments suggested that the proposed indirect source rules should include existing sources as well. There are several types of land uses that generate significant trips that could be considered: event centers, distribution centers, and regional shopping centers. The District has performed some preliminary research on distribution centers and warehouses. There are well over 2600 distribution facilities in the SJVAB, with an average size of 800,000 sq ft, according to District estimates. The District will continue to consider regulations on these types of sources for some time in the near future.

The District will work to coordinate the ISR program with the public agency land-use approval process. The District will be coordinating review with the public agencythrough1. Making the ISR process concurrent with or prior to the public agency process; 2. Forwarding a copy of the AIA application (upon determination of completeness), a copy of the AIA approval package (upon approval), and a letter of Final Compliance to the public agency for voluntary review and commenting; 3. Communicating with the public agency when necessary during the application review process; and 4. Incorporating ISR AIA data into the District’s CEQA commenting process. 5. Providing a letter of project status to the public agency upon request.

In addition, the application and approval will be made available to the public.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 23 V. EMISSIONS AND EMISSIONS REDUCTIONS

The District committed to reduce the PM10 and NOx emissions from indirect sources in the 2003 PM10 Plan and the Extreme Ozone Attainment Demonstration Plan, which could be achieved by on-site emission reduction and/or emission based fees that would be used to fund off-site emissions reduction projects. Both plans contained emissions reduction commitments from growth that were necessary to demonstrate attainment. Appendix B contains an estimate of total emissions and emissions reductions expected from new development projects by 2010, which are 5.4 tons per day of NOx and 5.8 tons per day of PM10.

The ISR program is expected to achieve the emission reductions committed to in the PM10 and ozone plans. However, the District realizes that those emission reductions may not be achieved for a variety of reasons. If the emission reductions are not achieved because growth becomes less than that forecast in the emission inventories, the District will not need to adjust the program to make up the reductions. This is because the need for emission reductions was based on the projected growth. If growth occurs at a level less than that predicted, then the level of emission reductions needed will similarly be reduced. However, if other circumstances are encountered and the emission reductions are not achieved, the District will have to make a SIP revision, possibly substituting another measure for the remainder of emission reductions required or adjusting the off-site mitigation fee program to obtain greater reductions.

The District based its estimate of emission reductions achievable by the ISR program on total growth in the emission inventory that is subject to the rule accounting for rule mitigation requirements, exemptions and applicability thresholds. The District considered using a bottoms-up estimate of emissions based on the number of projects and units expected each year. Statistics on residential development were available for this type of analysis; however, due to the wide variety of uses and limited data on the numbers and sizes of non-residential uses, a comprehensive bottom-up analysis was

not feasible.

VI. COST EFFECTIVENESS – OFF-SITE EMISSION REDUCTION PROJECTS

District staff has prepared a draft cost effectiveness analysis of the estimated costs of emission reductions required in the proposed Draft Rule 9510. The cost effectiveness analysis is attached to this staff report and labeled Appendix E. This analysis details the types, quantities and costs of projects available for funding from the off-site fees collected by the District, and provides an example mix of projects to demonstrate how the fees may be used. The District shall use 100% of the off-site funds received forSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 24 emission reduction projects. No off-site funds may be used for the District’s budget, staffing or other administration.

Off-Site fund use accountability is written into the Draft Rule 9510. The District shall provide annual reporting per draft Rule 9510 Section 10.4. Annual reports shall include, at a minimum: the total amount of off-site fees received; the total monies spent; total monies remaining; any refunds distributed; a list of all projects funded; the total emission reductions realized, and; the overall cost-effectiveness factor for the projects funded. Annual reports shall be made available to the public.

For off-site emission reduction projects, the duration of the contract will vary depending on the project. Some contracts will be completed upon installation, while others may require reporting for 5 years or longer. For example, a road-paving project would have a contract that is completed upon installation, whereas an engine contract typically contains a 5-year reporting requirement.

VII. SOCIOECONOMIC IMPACT ANALYSIS

Pursuant to state law, the District is required to analyze the socioeconomic impacts of any proposed rule or rule amendment that significantly affects air quality or strengthens an emission limitation. The provisions of Draft Rules 9510 and 3180 will reduce PM10 and NOx, emissions by requiring pollutant specific mitigation through measures incorporated in to the design of a new project, and/or paying a fee to fund emissions reduction projects; therefore, District staff solicited volunteers from affected entities to participate as members of the socioeconomic focus group for these rules. District staff held a focus group meeting, to identify the socioeconomic impacts of the draft rules. District staff will use the socioeconomic analysis to further refine the draft rules. The socioeconomic report was released to the public for comment and review and was presented at the final workshop. The report was incorporated into this staff report as Appendix F. The final socioeconomic report will be presented to the District Governing Board at the public hearing for adopting the proposed rules.

The implementation of ISR fees may have socioeconomic impacts on certain development types that are summarized below and described in the socioeconomic impact analysis. Although impacts may occur, the program has been designed to minimize economic impacts and to allow options to developers that minimize their fees. However, the District recognizes that some businesses and individuals will be impacted, but believes that the impact is justified by the benefits of the rule to the Valley. The rule is designed to reduce emissions of pollutants contributing to poor air quality in the entire air basin and will provide a health benefit through its implementation. The District is required to attain federal air quality standards by specific dates with reductions contained in District attainment plans. These plans rely on reductions from ISR that if not achieved will result in sanctions that would cause a far greater impact to the Valley’s economy thanSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 25 implementing the rule. If ISR were not adopted, rules on other industries with as great or greater economic impacts would still be required.

A. RESULTS

SINGLE-FAMILY RESIDENTIAL. The Socio found a less-than-significant impact on Single-Family Residential project applicants for 2006, 2007 and 2008. The Socio found a minor increase in the price Single-Family Residential buyers would find in the average Valley City for 2006, 2007 and 2008. See Appendix F Tables 19-21 and associated text.

MULTI-FAMILY RESIDENTIAL. The Socio found a less-than-significant impact on MultiFamily Residential project applicants for the average Valley city for 2006, 2007 and 2008. The Socio found a minor increase in the price Multi-Family Residential buyers and renters would find in the average Valley City for 2006, 2007 and 2008. Multi-family residential development in small and medium sized bedroom communities is projected to experience a significant impact in 2007 and 2008. Small rural/farming communities could have a significant impact in 2008. The reason for the greater impact in these particular areas is the lower overall cost of housing in those areas making the fee a higher percentage of the housing cost. This impact is mitigated to some extent by the rule threshold of 50 units and 2 tons per year of emissions. Many projects in those areas are small. Some locations qualifying as bedroom communities are seeing very rapid growth in housing stock that is as expensive or more expensive than in the large urban areas. This trend may also limit the areas of impact. Due to the ability of the developer to pass on or absorb at least part of the cost and for consumers to amortize the cost in a mortgage or through rents, the District believes that this impact is not significant. See Appendix F

Tables 23-25 and associated text.

INDUSTRIAL. The Socio found a less-than-significant impact on industrial project applicants for 2006 and 2008. The Socio found a less-than-significant impact on industrial renters in 2006 and 2008. See Appendix F Tables 28 and 29 and associated

text. OFFICE. The Socio found a less-than-significant impact on office project applicants for 2006 and 2008. The Socio found a less-than-significant impact on office renters in 2006 and 2008. See Appendix F Tables 28 and 29 and associated text.

COMMERCIAL. The Socio found a less-than-significant impact on industrial projectapplicants for 2006, but a significant impact in 2008. The Socio found a less-thansignificant impact on commercial renters in 2006, but a significant impact in 2008. Commercial uses with a small footprint but high trips due to customer turnover experience the greatest impact. Commercial and other development types may reduce their fees with on-site measures. Many measures are available that may be required for other purposes and add no cost to the development, but can add amenities and value to the project. This would provide a mechanism to reduce the impact of the fee. Overall, the District concludes that with mitigation options and the ability to pass costsSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Rule 9510 and Rule 3180 26 on to project tenants, this impact should not be considered significant. See Appendix F

Tables 28 and 29 and associated text.

PROSPECTIVE HOME-BUYERS AND SMALL BUSINESSES. Socio Section 6.4 addresses the impact on small business and includes a discussion of potential disproportionate impact on home-buyers and small business. The socio concludes that the increased costs due to the fees would have a temporary impact while the consumer responds to the costs with changes in purchasing decisions or increases income.

VIII. ENVIRONMENTAL IMPACTS

Pursuant to state law, District staff has conducted an initial study to identify any possible environmental impacts of this program and prepared a proposed negative declaration for draft Rules 9510 and 3180. The 30-day comment period for the proposed negative declaration ends on December 5, 2005. The District Governing Board will consider approving the negative declaration at the December 15, 2005 public hearing for the rules.

IX. RULE CONSISTENCY ANALYSIS

Pursuant to the California Health and Safety Code, Section 40727.2, District staff has prepared a rule consistency analysis of the program and is included in this staff report as Appendix G. The Rule consistency analysis shows the rule is non-duplicative, and consistent with existing District, state and federal rules.

X. REFERENCES

1. California Air Resources Board, Emissions Inventory, www.arb.ca.gov

.

2. California Air Resources Board, Status Report, 1994

3. California Department of Finance, Population Projections, www.dof.ca.gov/HTML/DEMOGRAP/projco.pdf

4. 2003 PM10 Plan, Appendix B

5. South Coast AQMD website, Frequently Asked CEQA Questions, http://www.aqmd.gov/ceqa/faq.html