"Cap and Trade" Pollution Permits May Provide New Housing Funding Source
Wednesday, February 15, 2012
By: Julie Snyder

Assembly Speaker Perez Introduces AB 1532

Last fall, Housing California, Transform, and the Planning and Conservation League began developing a joint proposal to use new state revenues to reduce greenhouse gas emissions through expanded transit and affordable homes built in the right locations. In January, we introduced the concept to legislators and Assembly Speaker John Pérez, D-Los Angeles, decided to make a key piece of his AB 1532.

The anticipated new revenue is generated by the "Cap-and-Trade Program," under which polluting entities must buy allowances if they emit more than a specified amount of greenhouse gases (GHGs). The state Air Resources Board created the program in order to reduce GHG emissions pursuant to the state's 2006 landmark GHG reduction law.

Governor Jerry Brown's draft 2012-13 budget estimates the Cap-and-Trade Program will raise approximately $1 billion in the first year. By 2020, it may bring in as much as $10 billion annually. Under legal nexus rules, these funds must be used to reduce GHG emissions.

Brown proposes funding "sustainable infrastructure development, including transportation and housing," among other uses. While the administration is in the very early stages of fleshing out what this means, staff privately say our proposal appears to fit within their broad vision.

How will more affordable homes and expanded transit reduce GHG emissions?

According to the Air Resources Board, the transportation and land-use sector is responsible for more than 40% of GHG emissions in the state. These emissions are caused primarily by burning fuel in motor vehicles.

Reducing the distances Californians drive is one of three key ways to burn less fuel. The only way to reduce driving distances is to greatly increase the affordable transportation and housing options in every community. SB 375 created a new joint transportation and housing planning scheme in recognition of this fact.

Our proposal

California can achieve demonstrable GHG emission reductions, benefit disadvantaged communities, and create good jobs by allocating a significant portion of cap-and-trade revenues to targeted transportation and land-use investments. These investments include:

1. Compact transit-oriented housing options that are affordable at all income levels,
2. Other housing opportunities that improve the "fit" between rents/mortgages and the wages paid in the community, and
3. Expanded and improved transit, bicycle, and pedestrian facilities within developed areas.

Investing in these areas is the next step in on-the-ground implementation of SB 375 and is essential for California communities to realize the benefits of SB 375's planning scheme. It is especially important for disadvantaged communities and individuals whose high transportation and housing costs consume the vast majority of their modest budgets.

Next Steps

We continue to work with Speaker Pérez's office to craft the specific language for AB 1532 before its first hearing in April. Please watch for an action alert in March and join us in supporting this exciting opportunity to generate state funding for affordable-home development. 

Contact: Julie Snyder, 916.447.0503 x 102 or jsnyder@housingca.org.