BILL ANALYSIS AB 1009 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1009 (V. Manuel Perez) As Amended September 4, 2009 2/3 vote. Urgency ----------------------------------------------------------------- |ASSEMBLY: | |(June 1, 2009) |SENATE: |30-6 |(October 14, | | | | | | |2009) | ----------------------------------------------------------------- (vote not relevant) ----------------------------------------------------------------------- |COMMITTEE VOTE: |(6-0)|(September 26, |RECOMMENDATION: |Concur | | | |2009) | | | ----------------------------------------------------------------------- Original Committee Reference: J.,E.D. & E. SUMMARY : Modifies statute related to the California Debt Limit Allocation Committee (CDLAC) and California Industrial Development Financing Advisory Commission (CIDFAC) to allow these entities to allocate, issue, and collect data on the new types of bonds authorized under the American Recovery and Reinvestment Act of 2009 (ARRA). The Senate amendments delete the prior contents of this bill, and instead: 1)Exclude bonds authorized pursuant to ARRA from the state ceiling on the aggregate amount of private activity bonds that may be annually issued. 2)Authorize CDLAC to reallocate any unused ARRA related bond authority. 3)Require CIDFAC review submissions from industrial development authorities as to whether proposed projects comply with ARRA. CIDFAC is also required to provide specified technical assistance to state and local entities which issue bonds pursuant to the Industrial Development Bond Act. 4)Authorize CIDFAC to establish reserve funds and to provide financial assistance to businesses on behalf of issuers. The reserves may be established and replenished from federal, state, and nonprofits agencies, as specified. AB 1009 Page 2 5)Conform the eligible uses of industrial development bonds to include those authorized under ARRA including, but not limited to, commercial uses within a recovery zone; business activities with the purpose of creating or producing intangible property; or certain airports docks, wharfs, storage, training, or mass commuting facilities within a recovery zone, enterprise community, enterprise zone, or empowerment zone that is suitable for a commercial purpose, as specified. 6)Expand the definition of an eligible project that can be funded with private activity bonds from simply the acquisition of facility to also include the construction, improvement, rehabilitation, and reconstruction of a facility; the acquisition or rehabilitation of machinery, equipment, and furnishings; the acquisition of engineering and architectural surveys, plans, and specifications; and all other necessary and related capital expenditures. 7)Expand the criteria used by CIDFAC in determining whether a public purpose exists and that the project is, therefore eligible for financing from a private activity bond to include an assessment of the economic benefits to the surrounding community or state. 8)Authorize an industrial development authority to pay all or a portion of the cost to issue industrial development bonds. This will help to lower the cost of funds to business. 9)Make other technical and conforming changes 10)Add an urgency clause, allowing this bill to take effect immediately upon enactment. AS PASSED BY THE ASSEMBLY , this bill authorized the establishment of a direct loan program for the purpose of providing loans to qualified small businesses. FISCAL EFFECT : According to the Senate Committee on Appropriations, pursuant to Senate Rule 28.8, negligible fiscal impact. COMMENTS : AB 1009 is sponsored by the California State Treasurer and is intended to update California law in order to best leverage new federal bonding authority. AB 1009 Page 3 The federal stimulus legislation made 30 tax changes that were intended to provide relief to the American taxpayer and spur job growth. Among other economic recovery tools, ARRA established the Recovery Zone Bond and Qualified Energy Conservation Bond. Authority for issuing these bonds sunsets on December 31, 2010. Recovery Zone Bonds include both a public and private purpose component: Economic Development Bonds, referred to as RZ-EDBs, provide financing for economic development related public infrastructure. Economic Development Facility Bonds, referred to as RZ-FCs provide financing for business development costs generally bore by the business. Together, the Recovery Zone Bonds offer a lower-cost finance option for key components of local economic activity, job training, and educational programs. The Qualified Energy Conservation Bonds finance projects that reduce energy consumption including automotive battery technologies that reduce reliance on fossil fuel, renewable energy resources and green community programs. This new ARRA bond authority is limited to financing projects that are "ready to go" in calendar years 2009 and 2010. California has, by far, received the highest allocations of this new bond authority. The nationwide volume cap for the RZ-EDBs is $10 billion and RZ-FCs is $15 billion, with approximately $806 million of RZ-EDB and $1.21 billion of RZ-FCs going to California's cities and counties. California's allocation of the Qualified Energy Conservation Bonds is $381 million of the $3.2 billion nationwide volume cap. Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916) 319-2090 FN: 0003464