BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1106
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: Fuentes
VERSION: 8/3/10
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: August 10, 2010 URGENCY: YES
SUBJECT:
AB 118: Alternative and Renewable Fuels and Vehicle Technology
Program
DESCRIPTION:
This bill permits the California Energy Commission to contract
with small business financial development corporations to expend
Alternative and Renewable Fuels and Vehicle Technology Program
funds.
ANALYSIS:
AB 118 (N??ez), Chapter 750, Statutes of 2007, created the
Alternative and Renewable Fuel and Vehicle Technology Program,
which the California Energy Commission (CEC) administers to
provide grants, revolving loans, loan guarantees, loans, or
other appropriate funding measures to public agencies, vehicle
consortia, businesses, consumers, recreational boaters, and
academic institutions to develop and deploy innovative
technologies that transform California fuel and vehicle types to
help attain the state's climate change policies.
Existing law provides, upon appropriation by the Legislature,
approximately $120 million annually through 2015 for this
program comes from additional fees on vehicle registrations,
special identification plates for various vehicles, and vessel
registrations, plus $10 million annually from the Public
Interest Research, Development, and Demonstration Fund, which is
derived from a portion of electric utility rates.
The CEC, through a competitive process, allocates these funds to
alternative fuel and vehicle technology projects. To set
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priorities for the allocation of funds, the CEC must develop an
investment plan in consultation with a wide array of
stakeholders. The CEC adopted its first investment plan at its
April 22, 2009 meeting. It is now in the process of updating
that plan for 2010, which the CEC plans to adopt this month.
Existing law makes the following projects eligible for funding
under the Alternative and Renewable Fuel and Vehicle Technology
Program:
Alternative and renewable fuel infrastructure, fueling
stations, and equipment.
Projects to develop and improve vehicle technology that
provide for better fuel efficiency and lower greenhouse gas
emissions.
Alternative and renewable fuel projects to develop,
improve, demonstrate, deploy, produce, and commercialize
alternative and renewable fuels, plus reduce the overall
carbon footprint of these fuels.
Vehicle retrofit projects to create higher fuel
efficiencies.
Infrastructure projects that promote alternative and
renewable fuel infrastructure development for existing
fleets, public transit, and existing transportation
corridors.
Workforce training programs related to alternative fuels
and vehicle technology.
Block grants administered by not-for-profit technology
consortia for specified purposes.
Analyses and assessments performed by state agencies to
determine the impacts of increasing the use of low-carbon
transportation fuels and technologies.
In addition, AB 109 (N??ez), Chapter 313, Statutes of 2008,
allowed the CEC, until January 1, 2012, to contract with the
Treasurer to expend Alternative and Renewable Fuels and Vehicle
Technology Program funds through programs that the Treasurer
implements, provided the program is consistent with either the
Alternative and Renewable Fuels and Vehicle Technology Program
or another AB 118 program, the Air Quality Improvement Program,
that the Air Resources Board administers.
This bill :
1.Allows the CEC to contract with small business financial
development corporations that the Business, Transportation and
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Housing Agency (BT&H) establishes to expend Alternative and
Renewable Fuels and Vehicle Technology Program funds through
the Small Business Loan Guarantee Program provided that the
expenditure is consistent with all of the requirements of the
program and of AB 118.
2.Deletes obsolete language included in AB 118 and AB 109.
3.Contains an urgency clause.
COMMENTS:
1.Purpose . State law authorizes BT&H under its Small Business
Loan Guarantee Program to establish small business financial
development corporations (FDCs) that provide guarantees for
loans private financial institutions issue to small
businesses. These are loans that banks would not issue without
the loan guarantees. Under the program, loan guarantees cover
a percentage, typically 80 percent, of the loan balance and
interest upon defaults.
FDCs are nonprofit corporations that BT&H designates to market
the program, coordinate the packaging of the loan and loan
guarantee applications between the small business and
financial institution, issue the loan guarantees, and ensure
that lenders have followed required procedures before
requesting payment on defaulted loans. A total of 11 FDCs
operate throughout the state.
Recent state budgets have borrowed or otherwise used for
unrelated purposes moneys in the Small Business Expansion
Fund, which supports the loan guarantees that FDCs make under
the Small Business Loan Guarantee Program. This bill permits
the use of AB 118 funds to restore some of those lost funds.
This bill enables the CEC to contract with the FDCs to use its
AB 118 moneys to fund loan guarantees for small business
borrowing that is consistent with the Alternative and
Renewable Fuels and Vehicle Technology Program and BT&H's
Small Business Loan Guarantee Program.
2.Gut and amend . Until July 15, 2010, this bill related to
private utilities purchasing renewable electricity. While the
bill was pending in the Senate Appropriations Committee, the
author deleted those provisions from the bill and inserted the
current language. These amendments caused the Senate Rules
Committee to withdraw the bill from the Appropriations
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Committee and referred it here for a hearing of the new
language.
3.Suggested amendments . The author or the committee may wish to
make the following amendments:
On page 6, line 3, delete "January 1, 2012" in order to
allow the CEC to exercise its authority to contract with
the Treasurer or the small business financial development
corporations throughout the life of the Alternative and
Renewable Fuels and Vehicle Technology Program, funding for
which sunsets at the end of 2015.
On page 6, line 7, and on page 6, line 12, delete
"chapter" and insert "article" to clarify that expenditures
under these contracts must be consistent with the
Alternative and Renewable Fuels and Vehicle Technology
Program rather than another AB 118-created program that the
Air Resources Board administers.
1.Chaptering amendments . This bill has chaptering conflicts
with SB 1340 (Kehoe). In order to resolve these conflicts,
the author will need to make chaptering amendments either in
committee or at a later date.
Assembly Votes are not relevant.
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
August 4, 2010)
SUPPORT: Association of Financial Development Corporations
OPPOSED: None received.