Local Level Incentive Programs: Funding, Implementation, and Results

1. Running Incentive Programs at the Local Level Kristian Damkier, P.E. Sacramento Metropolitan AQMD June 7, 2007

2. Presentation Overview • Background • Funding History & Challenges • Administration • Implementation Issues • Evaluation & Feedback • Future Plans • Questions & Comments

3. Sacramento Region • Home to over 2 million people in mixed urban, suburban, and rural environments • 7th Worst Air in the United States with AQI>100 over 35 days per year • Little heavy industry but heavily impacted by mobile sources (70% of pollution) • Goods movement, agriculture, construction, and 1.3 million vehicles in a large valley • Summer ozone, winter PM 2.5, yearly TAC

4. Incentive Funding History • 1988 – Added $4 surcharge to DMV registration • 1988 – Sacramento County Measure A Sales Tax • 1991 – Congestion Mitigation & Air Quality (CMAQ) • 1994 – Sacramento SIP with Mobile Source Commitment • 1996 – SMAQMD Heavy-Duty Incentive Program Established • 1998 – Carl Moyer Program Established • 2000 – Sacramento Emergency Clean Air Transportation (SECAT) Program Established • 2002 – SECAT Funding Frozen due to State Budget Crisis • 2004 – Permanent Funding for Carl Moyer Program through 2015 • 2006 – SECAT Funding Re-Released • 2007 – Local Incentive Funding Passes $100 million Mark!

5. Results • Allocated $113 million since 1996 • Saved over $1.4 billion in health and social costs, including over 100 avoided premature deaths • Eliminated over 14,000 tons of NOx and over 1,100 of Diesel Particulate Matter • NOx = 4 Egyptian Pyramids • PM = 11 Railroad Cars of Coal

6. Hard to Get, Easy to Spend • Competing Interests • Case for Action • Public Support • Industry Stakeholders • Value to Society • Identifying New Taxes • Local, State, Federal, Global Requirements

7. Money (That’s What I Want) • Obtaining funding constantly challenges all programs • Very difficult to establish new funding even in favorable political climates • Be creative (i.e. penalties, environmental fees, tire/battery/ hazmat fees, federal & state programs) • Build support with local politicians, industry, and environmental groups to establish new funding • Focus on EROI (Environmental Return on Investment) and cost-effectiveness • Create a business friendly incentive program to gain business and industry support

8. Paging Mr. Smith • Free Market Approach • Cost Effectiveness ($/ton) • Understanding Business • Profit Motive • Economic Evolution • When all stakeholders have a positive financial interest in the program, everyone benefits and participates

9. Relationships • Good relationships are essential to successful programs • Relationships with customers, suppliers & dealers • Build trust and opportunities for new projects • Speeds up the process working with everyone • Take advantage of all networking opportunities • They know more than you do about the industry

10. Team Players • Participants are a major part of any successful incentive program • Cast a wide net and offer something interesting and profitable • Screen applicants to reduce potential for fraud and “bad apples” • Learn about the industry and speak in their terms and forums • Help the participants market the program

11. More Players • Dealers and suppliers can help market your program if encouraged by profit • Make them part of the program! • Use dealer/supplier agreements to keep control of the program and maintain accountability • They know MUCH more than you do

12. Private Sector Industry groups Local businesses Vehicle and equipment manufacturers Public Sector Elected officials State and local environmental agencies Funding partners Even More Players

13. How We Work • First come, first served application process • Fixed cost effectiveness and pre-application funding estimates • Applications come through dealer solicitation, mass mailings, public workshops, and web traffic • Projects funded until funding is exhausted with no major limits on industry, project type, or socioeconomics (unless mandated) • Some funding sources have specific limitations (i.e. on-road, verified technologies, location)

14. Application Process • Fill out Application • Submit Application & Supplemental Info • Initial Evaluation within 3-5 business days • Pre-Inspection by Inspector • Funding Agreements Circulated for Signatures • Project Work Completed • Post-Inspection by Inspector • Participant Invoices for Reimbursement • Funding Check sent to Participant • Participant Reports Operation • Periodic Audits • Final Inspection and Release

15. Project Managers Project assigned to one person throughout application process Evaluates applications and determines project funding amounts Handles all paperwork including contracts and funding invoices Inspectors Perform inspections of equipment for project verification Audit existing projects to show compliance Help with customer outreach and solicit new applications Project Administration

16. Monitoring & Auditing • Vital to ensure real benefits and avoid fraud • Involves reporting, physical audits, and corrective actions • Must have full agency support including potential legal actions • Small portion of projects consume most staff time • Keeps staff busy

17. What Really Works? • Word-Of-Mouth Advertising is sole predictor of success • Industry trusts dealers and participants more than government • Provide solutions that improve profitability • Develop a rigorous application and auditing process to maintain accountability • CUSTOMER SERVICE IS KING!!!!!

18. Measuring Success • Actions subject to several 3rd party audits • Audit results positive with minor corrections • Popular with all stakeholders including finding new funding • Large demand for funding including many pending applications • Ability to easily quantify results including funding & emissions • Happy Participants!

19. Our Electronic Brain • Obtained funding to establish emission tracking database • Tracking database has become a mission critical element and a key to our success • The database does the following: • Track applications, companies, and engines • Calculate emission benefits automatically • Electronic log of all actions including funding • Generate reports with pre-filled data • Generate administrative summaries of emission benefits and detailed funding reports • Migrating from Access to Web-based SQL to allow more tools including on-line applications and reporting and remote access for staff

20. New Concerns • Low Income and Minority Populations • Environmental Justice • Small Businesses • Global Climate Change Concerns • Changing Role of Government • Health Concerns

21. New Horizons • Light Duty Scrappage • Electrification of Stationary Diesel Engines • Early Actions under new California In-Use Diesel Regulations • Goods Movement Projects • Energy Efficiency Projects • Potential for Carbon Reduction Projects

22. Successful Implementation • Identify secure funding sources and watch each dollar • Develop a program that provides real value to all stakeholders • Implement safeguards to screen problem applicants, mitigate future problems, and account for all actions • Establish tracking and monitoring programs to allow stakeholders and staff to easily access general and specific project data • Treat all participants and suppliers as customers and build strong working relationships with both • Be flexible and adapt to changing political landscapes

23. Questions & Comments • Contact Information: Kristian Damkier, P.E. Sacramento Metropolitan AQMD 777 12th St, 3rd Floor Sacramento, CA 95814 (916) 874-4892 kdamkier@airquality.org