Thank you Mr. Corey. Today, I will be presenting staff’s proposed revisions to the Funding Guidelines for agencies that administer California Climate Investments. I will begin by giving you a brief overview of the Climate Investments programs and how the Funding Guidelines are shaping investments across the State. Then I will discuss the evolution of the program and how we are proposing to improve the guidelines to better serve communities. Proposed Funding Guidelines for Agencies that Administer California Climate Investments July 26, 2018

California Climate Investments Further State’s climate and public health objectives $2 billion for 275,000+ projects Over half benefiting disadvantaged communities 23.3 MMTCO2e reductions For the past five years, California Climate Investments have been reducing greenhouse gas emissions and achieving important economic, environmental, and public health benefits. To date, over $2 billion has gone to projects across the State with over $1 billion benefitting disadvantaged communities. We estimate this funding will reduce over 23 million metric tons of CO2e over the coming years. These reductions are in addition to the greenhouse gas reductions we expect once High-Speed rail is operational. The Investments are wide ranging and cover many of California’s major economic sectors. Among the projects are 180,000 zero-emission and plug-in hybrid vehicle rebates, 2,500 affordable housing units, and 20,000 urban trees planted.

Program Growth Since 2014, the number of programs has grown from 15 to 40. New appropriations include: Community air protection (Assembly Bill 617) Training and workforce development Wildfire response and readiness Wildfire prevention Adaptation planning Coastal resiliency Climate research Since the beginning of the program, the Legislature has greatly expanded the number of state agencies administering California Climate Investments and the types of programs that are funded. Just last year, the Legislature placed additional emphasis on public health by establishing new incentive programs like CARB’s community air protection grants, and created several new programs that address the impacts of climate change through adaptation, resiliency, and wildfire prevention programs. CARB alone administers over a dozen new and existing Climate Investments programs. 3

Funding Guidelines Set guiding principles and investment requirements Facilitate GHG emission reductions Benefit priority populations Used by agencies as they design programs and select projects Support accountability and transparency Annual Report on outcomes Interactive project map and downloadable database Because CARB is required by statute to provide guidance for all agencies that receive money from the Greenhouse Gas Reduction Fund, the expansion and evolution of the program has led to today’s update to the Funding Guidelines. They set guiding principles and identify statutory requirements, including investments minimums for certain populations. We refer to populations identified by statute as “priority populations” which include disadvantaged communities, low‑income communities, and low-income households. The Funding Guidelines provide direction for how agencies can target their investments to priority populations, whether it be locating projects within disadvantaged communities, providing job training for local residents, or enhancing cost savings for low income individuals. The guidelines also contain requirements for transparency and accountability that include reporting on the status and outcomes of funded projects. With the methods and reporting requirements identified in the Funding Guidelines, we has been able to deliver consistent and reliable information to the public and Legislature.

Outreach and Access Agencies are expanding their outreach CARB’s outreach contract raises awareness through a bilingual hotline and dedicated email address: info@caclimateinvestments.ca.gov Outreach is an important component of any incentive program. Through our Funding Guidelines, we provide specific recommendations for how agencies conduct outreach. Agencies have responded by significantly increasing public engagement in program development. CARB is also directly supporting outreach efforts on behalf of all Climate Investments. In 2016, CARB contracted with the Foundation for California Community Colleges to increase on-the-ground outreach and provide a bilingual hotline and e-mail for inquiries.

Legislative Changes Added new priority populations Assembly Bill 1550 Increased investment priorities Assembly Bill 398 Expanded eligible project types In addition to adding new programs, the Legislature has also enacted additional priorities and requirements for the program. In 2016, Assembly Bill 1550 increased the previous investment minimums for projects located within disadvantaged communities and added new investment minimums for low-income communities and households. Assembly Bill 398 identified priorities for future investments that emphasize the importance of project outcomes beyond GHG emission reductions.

Community Feedback Provide jobs and jobs training, and track outcomes Increase technical assistance Support capacity building Encourage community engagement and partnerships Avoid substantial burdens We have also learned a lot from listening to community advocates and residents, and these proposed updates are in response to much of this feedback, which I’ll cover in the following slides. We’ve heard that these investments must foster job creation and job training, and ensure that local businesses and residents are the recipients of employment opportunities. Funds should provide quality jobs and job training that leads to long-term employment. Stakeholders also want data on the jobs and quality outcomes. We’ve heard the need for technical assistance and capacity building in applying for funds. Many programs have rigorous application processes and some project applicants need more help accessing these funds. Another common theme was the importance of meaningful community engagement, building partnerships, and involving local organizations. Finally, across the State, we’ve heard that it’s critical these investments don’t end up causing harm to already vulnerable communities.

Proposed Updates Prioritize Benefits Protect Communities Achieve co-benefits beyond GHG emission reductions Foster job creation and job training Provide outreach and technical assistance Provide benefits to priority populations Identify community needs Enhance community engagement Avoid substantial burdens Today, we are proposing updates to the Funding Guidelines centered on two primary themes. First, prioritizing benefits beyond GHG reductions across the broad portfolio of Climate Investment programs; and Second, enhancing provisions to protect and improve communities. I’ll discuss a few of the changes in more detail.

GHG Emission Reductions & Co-benefits Programs must continue to facilitate GHG emission reductions, and can also: Fund projects that support program goals (job training, outreach, technical assistance) Support complementary priorities (air quality, cost savings) CARB is developing methods to estimate co-benefits Agencies can use methods to select projects, report outcomes, and substantiate benefits to priority populations The first major change relates to how agencies demonstrate that their programs meet the statutory requirements that expenditures facilitate GHG emission reductions. The 2015 Funding Guidelines requires agencies to quantify GHG emission reductions from each project. Agencies are currently doing this and will continue to do so to the extent possible. The proposed revisions require that agencies evaluate how their program as a whole is facilitating GHG emission reductions. This provides agencies flexibility in tailoring programs to meet community needs and ensure outreach and technical assistance are available to those who need it. As example is CARB’s own Community Air Protection Program, as created last year through Assembly Bill 617. Under this approach, the Community Air Protection program can fund a mix of both climate projects and air quality projects. The Community Air Protection Program will still be required to quantify the GHG emission reductions for climate projects, but may also support other efforts like air toxic reductions, technical assistance, and outreach as part of their broader program. To support agencies in assessing and reporting on a range on environmental and health benefits, or “co-benefits”, CARB staff is also developing methods for agencies to estimate co-benefits.

Promote Jobs Require programs to foster job creation and job training Encourage targeted hiring Require programs to report employment data One co-benefit we want to highlight today is jobs. We have updated our guidance on how agencies should foster job creation and job training opportunities, including strategies for targeting hiring. The recommendations also emphasize the importance of job quality. In order to provide information about the employment benefits from Climate Investments, staff is proposing to make reporting on jobs mandatory. Jobs reporting by agencies was previously optional. As we focus more on co-benefits and tell the story of the suite of benefits provided by these billions of dollars, we do not want to miss this critical piece. The emphasis on job creation and job training is also aligned with the legislative direction in Assembly Bill 398, which identifies a need for transitioning our workforce to have the skills for a low-carbon economy. Climate Investments programs can contribute to this objective by supporting jobs within low-carbon sectors and creating opportunities for the necessary training within these sectors.

Focus on Priority Populations Assembly Bill 1550 Disadvantaged communities (25%) Low-income communities and households (5%) Low-income communities and households within ½ mile of disadvantaged communities (5%) Require agencies to evaluate project benefits Connect direct, meaningful, and assured benefits to an important community need In response to Assembly Bill 1550, staff updated the Funding Guidelines to incorporate the new statutory investment minimums for projects benefiting priority populations. Staff updated the benefit criteria tables for each project type, which administering agencies must use to determine whether projects provide benefits to priority populations. Administering agencies must determine if a project meets the criteria for providing benefits and addresses an important community need.

Protect Communities Added avoiding burdens as a guiding principle for all programs Promote consideration early in program design, not just at project selection Agencies are responsible for identifying potential substantial burdens (e.g., displacement; local air toxic exposure) Staff is proposing to add a guiding principle to the Funding Guidelines that requires all agencies to consider and avoid potential substantial burdens of their programs on disadvantaged and low-income communities. All projects are likely to include economic, environmental, or public health trade‑offs that an administering agency will need to consider when designing programs and when selecting projects. This principle is meant to get agencies thinking about impacts early in the process to avoid unintended consequences. The Funding Guidelines provide examples of strategies agencies can use to avoid potential substantial burdens. The Funding Guidelines also emphasize the importance of direct community engagement by agencies and applicants to identify community needs and potential burdens. Increased engagement with communities will result in better projects that meet our State’s climate and air quality goals, and are better aligned with what communities want from these investments.

Public Process Developed 3 versions for public input from 2017 - 2018 Held 13 public events in 8 cities across the State Partnered with community-based organizations Engaged over 500 people, received 51 comment letters Responded to feedback with revisions Many of these changes have been informed by the early years of the program, and from staff’s ongoing engagement with agencies and the public. Since the last Board version, CARB staff held an extensive public process to gather input on the changes in the draft documents and how we can further enhance the guidelines. Staff attended, held, and co-hosted meetings in partner with community- based organizations throughout the State in the Bay Area, Central Valley, Los Angeles Area, San Bernardino County, Imperial Valley, and here in Sacramento.

Next Steps Staff recommends Board approval of Resolution 18-27 CARB staff will: Finalize and publish Funding Guidelines Continue to develop quantification methodologies and guidance materials for agencies Continue to work with communities to increase program awareness and improve funding access Agencies will incorporate into program design to provide multiple benefits and protect communities Today, staff recommends the Board approve Resolution 18-27 and its findings to approve the 2018 Funding Guidelines. As part of our statutory requirements, CARB staff will continue to work with administering agencies to develop quantification methodologies and guidance on reporting outcomes including benefits to priority populations. Staff will also continue ongoing engagement with communities across the State to increase program awareness and improve funding access. Agencies will continue implementing these important dollars in a way that improves the meaningful benefits across California. Thank you for your time today.