Friday, July 19, 2013

Out of PLACE and Running Out of Time…

The California Air Resources Board to consider life support for highly successful program

In 2008 the California Legislature directed a one-time $30 Million appropriation to CARB for implementation of a Truck Loan Assistance Program, specifically directed towards turnover of vehicles ahead of the On-Road Truck and Bus Rule. CARB partnered with the California Pollution Control Financing Authority (CPCFA) in 2009 to develop the program based upon their highly successful small business loan program, the California Capital Access Program or CalCAP that the CPCFA administers through the California State Treasurer’s office.  

The CARB and CPCFA program is officially known as PLACE, or Providing Loan Assistance for California Equipment, and despite a very slow start, the program has been buoyed and supported by local finance companies and banks, growing into the model for public-private financing partnerships for clean equipment purchases. The program could not have come at a better time as the tightening credit markets during the great recession left those with less than stellar credit few, if any options.

The only requirements for PLACE eligibility is having 40 or fewer trucks, less than 100 employees and no more that $10 million dollars of average annual revenue for the past three years with 51% of business occurring in California. For most trucking companies operating in California these requirements were a no brainer and subsequently, as of June 2013, over 3,000 trucks had been funded in the program. This represents approximately $28 Million in truck loan assistance funding that has been leveraged into $187 Million in private financing.

Nevertheless, in spite of its success, the program is running out of money. Thousands of truck operators in California are still facing upgrade requirements. With little or no access to grant money and less than desirable commercial credit history the norm, they are at a Crossroads; upgrade or leave the industry. Adding to the conundrum is the fact that CARB staff has told the CPFCA and the participating lenders that there will be no more Air Quality Improvement Fund money allocated to the program after the final $2 Million is offered as a sacrificial lamb at the July 25, 2013 Board Hearing.
Although up to $5 Million extra or surplus dollars may be available, CARB has given indications that the additional money will be used to fund oversubscribed programs that provide discounts to commuter minded citizens who want to purchase an electric car and other such programs that do not involve financing assistance for the turnover of heavy duty truck tractors.  Heavy duty truck operators with marginal credit will soon lose access to their only refuge for competitive financing in California. With truck prices on the rise, and regulatory requirements baring down on the industry like and unregulated freight train, a perfect storm is on the horizon. The industry in California will need to step up and meet their own daunting financial challenges as state assistance is swept away on Leafs and Volts.

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