Honorable Mayor and Members of the Hermosa Beach City Council Adjourned Regular Meeting of December 17, 2019
Title
RE-AUTHORIZATION/UPDATE TO SUSTAINABILITY REBATES
AND FEE WAIVERS FOR GREEN BUILDING AND
ZERO EMISSIONS VEHICLES INCENTIVES
(Environmental Analyst Leeanne Singleton)
Body
Recommended Action:
Recommendation
Staff recommends that the City Council:
1. Authorize staff to offer the following planning and building related fee waivers, reductions, and incentives to be effective beginning January 1, 2020 through December 31, 2022 to further facilitate community investment in new and innovative technologies:
a. Zero Net Energy Buildings-Rebate 50% of building permit fees for Zero Net Energy buildings as verified through participation in the Savings By Design or California Advanced Homes programs (continued incentive offering).
b. Energy Efficiency Upgrades-Rebate 50% of building permit fees through Energy Upgrade California or HERO program funding (continued incentive offering).
c. Alternative Fuel Infrastructure Upgrade-Rebate 50% of electrical permit fees for 100% alternative fuel vehicles (continued incentive offering).
d. Photovoltaic Installation-Rebate 50% of planning and building permit fees for installation of photovoltaic systems, including 50% of roofing permit fee when roofing permit includes solar tile roofs or green roofs (continued incentive offering).
e. Battery Storage-Rebate 50% of electrical permit fees for battery storage units (continued incentive offering).
f. Multiple Incentives Implemented-Rebate 100% of planning and building permit fees when installation includes at least two of the following: photovoltaic solar or wind, electric vehicle charging, and battery storage (continued incentive offering).
g. Small Wind Energy Systems-Rebate 50% of Planning and Building permit fees associated with installation of a small wind energy systems (continued incentive offering).
h. Demonstration of New Technology-Rebate 50% of fee for Unusual Architectural/Building Review for demonstration of new technology, materials, or construction methods designed to reduce water, waste, or energy use and agreement to share results and feedback (continued incentive offering).
i. Tree Planting Incentive-Waive landscape plan review fee, or equivalent value waived from planning permit fees when application is for a project that includes other planning permits, for installation of trees beyond current code or replacement requirements (continued incentive offering).
2. Provide direction to staff on next steps associated with rebates and incentives associated with the City’s zero emissions vehicle, electric vehicle charging, and parking policies within the following program areas:
a. Residential parking permit
b. Free parking at silver post meters
c. Free charging at EV stations
d. Free parking at EV stations
Body
Executive Summary:
In 2008, the City Council provided direction to staff to waive permit fees associated with the installation of solar photovoltaic systems as a means to encourage businesses and residents to install solar and reduce their energy consumption. These incentives have been regularly reviewed and revised since their initial adoption with the most recent update to the incentive offerings in 2017.
The current incentives have been evaluated and split into two categories: planning and building incentives, and zero emissions vehicle/electric vehicle charging policies, to facilitate focused discussion on each area.
Staff recommends Council continue to offer similar planning and building related sustainability incentives as were authorized in 2017, which would have an estimated fiscal impact of approximately $22,000, annually.
Staff additionally recommends that the City Council discuss and provide further direction on next steps associated with rebates and incentives for zero emissions vehicles and electric vehicle charging and parking policies.
Background:
History of Sustainability Incentives
In 2008, the City Council provided direction to staff to waive permit fees associated with the installation of solar photovoltaic systems as a means to encourage businesses and residents to install solar and reduce their energy consumption.
In 2010, additional incentives to support greater deployment of electric vehicles and energy efficiency projects were recommended by the Green Task Force and adopted by City Council to include:
• Waiving preferential parking permit fees for 100% alternative fuel vehicles
• Waiving building permit fees for service upgrades for 100% alternative fuel vehicles
• Rebate 50% of building permit fees for energy efficiency/LEED or Build-It-Green certification
• Rebate 50% of building permit fees for energy efficiency improvements that qualify for Energy Upgrade California or PACE programs
In 2011, Council further authorized waiving or rebating planning and building permit fees for installation of small wind energy systems. These incentive programs were reviewed, modified, and renewed by Council in 2013, 2015, and 2017, each with direction to staff to return to Council after two years for evaluation.
Building Code Adoption 2019 Cycle
The City of Hermosa Beach is also required to adopt the minimum California Building Code Standards every three years. The California Building Codes include residential, housing, mechanical, plumbing, fire prevention, electrical, green building, and energy codes. As part of the triennial building code updates, the City has the ability to adopt the minimum standards or consider additional local amendments. When the City adopts its building codes, Council must make specific findings required under the Health and Safety Code that allow the City to adopt regulations that are stricter than the uniform codes. Council adopted the 2019 edition of the California Building Code, with local amendments related to the fire code, on November 18, 2019 with the new codes going into effect beginning January 1, 2020. Also, the City Council directed staff to explore whether the City could require new residential construction to be all electric in the next adoption cycle.
Free Parking/Charging for Electric and 100% Alternative Fuel Vehicles
In addition to waiving permit fees associated with residential parking permits for those that live within the impacted area, Council has also previously authorized staff to waive parking meter fees at silver post meters for 100% alternative fuel vehicles and provide complimentary electric vehicle charging at several stations located in commercial areas throughout the City that are available to residents, customers, and visitors. This incentive was initially approved in April 2010 and most recently re-authorized by Council in November 2014.
These incentives have previously been considered separately from the other listed sustainability incentives included in this report. As the City has continued to install electric vehicle charging stations through various grant or rebate programs, the range of electric vehicle charging stations has grown to a total of thirty-seven charging stations for public use at nine City-owned locations (See Table 1). There are an additional 10 City-owned charging stations that are exclusively for use by City staff or City vehicles and other properties in Hermosa Beach, such as Plaza Hermosa (Vons) and Lazy Acres, that have electric vehicle charging stations available to the public while patronizing the businesses in the shopping centers.
Currently, all Level 2 stations in Hermosa Beach are available to charge for free up to two hours, and the Level 3 station on the top floor of the parking structure currently requires payment to charge at a rate of $0.23 to $0.27 per minute. Payments to charge are made directly to EVgo and do not represent revenue to the City. Customers using the Level 3 charger would pay an average of $7.50 for a 30-minute session, which can provide about an 80% charge for most vehicles. Separate from the free charging, EV stations located in Lot A and Lot C (the parking structure) require customers to pay for the cost of parking at the standard rate of $1.25 to $1.50 per hour. All other EV charging stations do not require a fee to park.
Additionally, the City Council has previously authorized those driving a 100% alternative fuel vehicle (electric, hydrogen, CNG) to park at silver-post meters along the City’s commercial zones up to the posted time limit at no charge. The current policy does not have a mechanism to verify that a vehicle meets the criteria, such as a DMV Issued current clean air vehicle decal, making enforcement by Community Service Officers difficult.
Through various budget and EV policy related discussions, City Council has previously expressed interest in considering whether to retain free charging and/or parking associated with EV charging stations or consider adopting a fee that would generate revenue to help offset the City’s electricity and maintenance costs associated with this infrastructure. Additional context on the options and upgrades that would be needed to adjust the City’s policy related to EV charging infrastructure is provided in the Analysis section.
Analysis:
Utilization of Incentive Programs
Since 2008, the City has offered various incentives and rebates to encourage the community to adopt sustainability initiatives. Staff evaluated the extent to which the existing incentives have been used since 2009 (Attachment 1) and considered whether new incentives should be offered, or other incentives modified based on level of use/interest.
The waiving of parking permit fees for the preferential parking program for 100% alternative fuel vehicles (209 in 2018, 244 in 2019) and rebating planning and building permit fees for solar photovoltaic systems (19 in 2018, 13 in 2019) or solar/battery storage/EV installations (24 in 2018, 10 in 2019) are the most frequently used programs.
The fee waiver for electrical circuit upgrades associated with EV charging infrastructure has been used sparingly (1 in 2019), but is expected to increase as more drivers purchase electric vehicles. All other existing incentive programs have not been utilized since they were approved.
State of the Zero Emissions Vehicle Market
The State of California has set an ambitious goal of installing 250,000 electric vehicle charging stations to support a goal of 1.5 million zero emissions vehicles (ZEV) on California roads by the year 2025. The 2018 ZEV Action Plan prepared by the Office of then-Governor Brown provides details on the rapid expansion of ZEVs in California:
• As of July 2018, there were 410,000 ZEVs sold in California, up from 260,000 in 2016.
• As of July 2018, there are 48 passenger ZEV models are available, more than double the number of models available in 2016.
• In 2017, ZEVs constituted 5% of all new car sales, with approximately 13% of all sales being a ZEV or plug-in/hybrid model.
A September 2019 article by the LA Times provided some updates on statistics for the year, with EV sales shooting up 63.7% for the first half of 2019, due in large part to sales of the Tesla Model 3 and ZEVs accounted for approximately 5.5% of all new car sales to bring a total count of 655,000 ZEVs in California.
Locally, Hermosa Beach is ranked among the top 20 cities in California based on the percentage of new car market share accounted for by electric vehicles at just over 10% of all vehicles locally in 2016 and 2017. Neighboring cities Manhattan and Redondo also rank high on the list, indicating the beach cities area has a high propensity of residents and visitors that could make use of the EV charging stations and incentives. As of January 1, 2018, the most recent year in which data is available at a zip code or city level, there were just under 500 zero emissions vehicles in Hermosa Beach and approximately 1,700 alternative fuel vehicles (including hybrid or plug-in hybrid) out of approximately 16,000 registered vehicles.
Anecdotally, staff anticipates that the local share of Zero Emissions Vehicles has grown at or slightly higher than the statewide rate between 2018 and 2019 and will continue to track with statewide growth in ZEVs.
Proposed Updates to Building/Planning Related Incentives Program
Based on the assessment of the existing incentives, staff proposes to retain the previously authorized incentives from 2017 with the exception of the preferential parking permit fee, which is described further in the next section focused on parking and electric vehicle policies and incentives.
Staff seeks Council authorization to offer the following building and planning related fee waivers/rebates to further facilitate community investment in new and innovative technologies:
a. Zero Net Energy Buildings-Rebate 50% of building permit fees for Zero Net Energy buildings as verified through participation in the Savings By Design or California Advanced Homes programs (continued incentive offering).
b. Energy Efficiency Upgrades-Rebate 50% of building permit fees through Energy Upgrade California or HERO program funding (continued incentive offering).
c. Alternative Fuel Infrastructure Upgrade-Rebate 50% of electrical permit fees for 100% alternative fuel vehicles (continued incentive offering).
d. Photovoltaic Installation-Rebate 50% of planning and building permit fees for installation of photovoltaic systems, including 50% of roofing permit fee when roofing permit includes solar tile roofs or green roofs (continued incentive offering).
e. Battery Storage-Rebate 50% of electrical permit fees for battery storage units (continued incentive offering).
f. Multiple Incentives Implemented-Rebate 100% of planning and building permit fees when installation includes at least two of the following: photovoltaic solar or wind, electric vehicle charging, and battery storage (continued incentive offering).
g. Small Wind Energy Systems-Rebate 50% of Planning and Building permit fees associated with installation of a small wind energy systems (continued incentive offering).
h. Demonstration of New Technology-Rebate 50% of fee for Unusual Architectural/Building Review for demonstration of new technology, materials, or construction methods designed to reduce water, waste, or energy use and agreement to share results and feedback (continued incentive offering).
i. Tree Planting Incentive-Waive landscape plan review fee, or equivalent value waived from planning permit fees when application is for a project that includes other planning permits, for installation of trees beyond current code or replacement requirements (continued incentive offering).
Authorization Timeframe
City staff requests Council authorization for these incentives through the end of the 2022 calendar year and direction to staff to return with an update or modifications in conjunction with the next California Building Code cycle. By aligning the sustainability incentive updates with building code cycles, staff can consider changes to the minimum building code requirements in determining whether to continue, modify, or offer new incentives.
Program Options for Alternative Fuel and Electric Vehicle Incentive Programs
Based on the assessment of the ZEV market, evaluation of current EV incentive programs, and understanding to the fiscal impacts associate with the various incentive programs, staff seeks further direction from City Council to improve the implementation of incentives surrounding parking and charging for alternative fuel vehicles in a manner that balances the benefit to residents, customers, and visitors, without a significant fiscal impact to the City associated with lost parking revenue and electric/maintenance charges associated with EV charging stations.
a. Residential Parking Permit-In 2019, the City issued 244 residential parking permits to residents that live within the impacted area and own a 100% alternative fuel or zero emissions vehicle for a total of $9,520 in waived fees. When this incentive was initially implemented in 2011 just 5 permits waivers were issued, with 16 in 2012, and 21 in 2013. The number of waivers issued has grown exponentially as the growth in the ZEV market has expanded in recent years and if local ZEV sales track with state goals, it is estimated that the City could see up to 500 permit waivers requested by 2025 at a cost of nearly $20,000 annually to the City based on current permit fees.
Incentive Options:
• Maintain 100% waiver of preferential parking permit fee for 100% alternative fuel vehicles;
• Waive 50% of preferential parking permit fees for 100% alternative fuel vehicles;
• Offer the full, or some portion of the incentive for Neighborhood Electric Vehicles only and consider allowing for an NEV registered to any address within the City boundaries; or
• Eliminate this incentive at this time or a future date.
b. Free Parking at Silver Post Meters-As noted previously, this incentive currently allows anyone driving a 100% alternative fuel vehicles to park at no charge at silver-post meters in Hermosa Beach, but does not include a sticker or marker to signify a vehicle is eligible, requiring staff to use discretion in determining whether or not a parking meter should have been paid.
Incentive Options:
• Maintain free parking at silver post meters up to the posted time limit with no changes;
• Maintain free parking at silver post meters up to the posted time limit, with a valid Clean Air Vehicle Decal (Attachment 2) or a Neighborhood Electric Vehicle Parking Permit (see discussion in option a above); or
• Eliminate this incentive at this time or a future date.
c. Free Charging at EV Stations-The City currently offers free charging at all Level 2 charging stations operated by the City for public use and a rate of $0.23 to $0.27 per minute (or about $7.50 per charge) is currently charged at the publicly accessible Level 3 charger at the parking structure. The City currently maintains a network of 35 free and publicly accessible charging stations and covers the cost of the equipment, electricity, and any maintenance of these stations. The City’s current network of EV charging infrastructure includes five different vendors or types of equipment and different levels of network connectivity/point of sale capabilities. Additionally, the different stations vary on their electric connectivity, with some infrastructure on separate SCE meters/accounts, and others looped into a meter or account for a larger facility making it difficult to estimate at this time with a high-degree of certainty the direct electricity costs associated with the charging stations. Noting the variability in both the level and time of use, staff has used a conservative estimate of approximately $1,500 in electricity costs per station per year for the Level 2 chargers or an annual cost of approximately $52,500.
Program Options:
• Maintain free charging at Level 2 charging stations and a pay-to-charge model for Level 3 chargers;
• Consider upgrading EV infrastructure to enable network connectivity and point of sale technology and create a fee structure to charge based on kWh used, time at station, time per session, or work with a vendor to establish a monthly or annual subscription fee that would cover a portion of the equipment, electricity, and maintenance costs and staff time to administer. A fee structure could be established to allow for free charging up to two hours and then charging the customer the full rate for any time after two hours; or
• Consider upgrading EV infrastructure to enable network connectivity and point of sale technology and create a fee structure to charge based on kWh used, time at station, time per session, or work with a vendor to establish a monthly or annual subscription fee that would cover ALL equipment, electricity, and maintenance costs and staff time to administer.
d. Free Parking at EV Stations-In addition to the free charging, many of the stations available in the City do not require a fee to park a vehicle. The exception to this is the 13 spaces between Lot A and Lot C (parking structure) where the standard fee to park ($1.25 or $1.50 per hour) is charged. Some EV charging stations are in areas where nearby non-EV spaces are also free to park (18 spaces between City Hall, Community Center, Kiwanis, Greenwood Park), while others are located adjacent to metered parking areas (6 spaces between Pier Avenue and Hermosa Avenue).
Program Options:
• Maintain free parking at all charging stations that are not located in Lot A or Lot C;
• Consider charging an hourly fee for parking at EV stations that are adjacent to other metered parking for non-EV spaces; or
• Consider charging an hourly fee for parking at all EV stations.
These incentives and programs associated with Electric Vehicle parking and charging and some of the associated considerations or options for future policies are presented for Council discussion and further direction to staff.
General Plan Consistency:
PLAN Hermosa, the City’s General Plan, was adopted by the City Council in August 2017. As part of that document, the City set community wide greenhouse gas reduction goals that are consistent with California statewide goals to reduce emissions 66% below 2005 levels by the year 2040. As part of the plan approval process, Council expressed preference for and adopted policies that focus on an incentive and voluntary measures to reducing greenhouse gas emissions rather than mandatory requirements for new buildings.
Continuation and refinement of these green building and sustainability incentives helps to implement the following General Plan goals and policies:
Mobility Element:
• 5.1 Prioritize development of infrastructure. Prioritize the development of roadway and parking infrastructure that encourages private electric and other low carbon vehicle ownership and use throughout the city.
Sustainability + Conservation Element:
• Goal 2. Hermosa Beach is a low-carbon community meeting State greenhouse gas reduction goals by 2040.
• 2.3 Grants and incentives. Seek additional sources of funding to support implementation of greenhouse gas reduction projects for the City, as well as residents and businesses.
• 2.7 Emerging technologies. Regularly evaluate new and emerging technology changes that can help to reduce greenhouse gas emissions and encourage the use of such technology when it is demonstrated to be effective at reducing greenhouse gas emissions and a fiscally responsible investment.
• 3.5 Clean fuels. Support increased local access to cleaner fuels and cleaner energy by encouraging fueling stations that provide cleaner fuels and energy to the community.
• 4.1 Renewable energy generation. Support or facilitate the installation of renewable energy projects on homes and businesses.
• 6.8 Recycled building materials. Where cost effective and structurally feasible, maximize the use of recycled building materials in new construction projects.
Parks + Open Space Element:
• 10.2 Non-invasive landscapes. Encourage the planting of native, non-invasive, and drought-tolerant landscaping and trees, and encourage the planting of edible landscapes and fruit trees.
Fiscal Impact:
In the 2018 calendar, the City waived approximately $22,000 in permit fees associated with the existing incentives for planning and building related programs. An additional $8,000 was waived associated with the residential parking permits in 2018 ($9,520 in 2019 to date), which are discussed separately.
Table 2, provided below, estimates the number of permits to be waived or reduced for each of the identified planning and building incentives. With these incentives, it is estimated that the City would continue to waive approximately $22,000 in permit fees annually.
Since it is unknown exactly how many permits may be issued associated with these incentives, Council could also elect to institute an annual cap on the total amount of fees to be waived to ensure the fiscal impact does not exceed certain levels.
Since the Zero Emissions Vehicle policy considerations are presented for an initial discussion by Council and further direction to staff, the fiscal impact of the various options are unknown at this time. Best efforts to identify potential costs associated with various policy options are presented in the analysis. It is unknown how many 100% alternative fuel vehicles have utilized the option to park for free at silver post meters.
Attachments:
1. City of Hermosa Beach Sustainability Incentives Issued Since 2009
2. California Clean Air Vehicle Decal Program
Respectfully Submitted by: Leeanne Singleton, Environmental Analyst
Concur: Doug Krauss, Environmental Programs Manager
Concur: Ken Robertson, Community Development Director
Noted for Fiscal Impact: Viki Copeland, Finance Director
Legal Review: Mike Jenkins, City Attorney
Approved: Suja Lowenthal, City Manager