BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1106| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1106 Author: Fuentes (D), et al Amended: 8/17/10 in Senate Vote: 27 - Urgency PRIOR VOTES NOT RELEVANT SENATE TRANSPORTATION & HOUSING COMMITTEE : 8-1, 8/10/10 AYES: Lowenthal, Huff, DeSaulnier, Harman, Kehoe, Pavley, Simitian, Wolk NOES: Ashburn SENATE APPROPRIATIONS COMMITTEE : 8-2, 8/12/10 AYES: Kehoe, Alquist, Corbett, Emmerson, Leno, Price, Wolk, Yee NOES: Ashburn, Walters NO VOTE RECORDED: Wyland SUBJECT : AB 118: Alternative and Renewable Fuels and Vehicle Technology Program SOURCE : Author DIGEST : 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 (Nunez), Chapter 750, Statutes of 2007, CONTINUED AB 1106 Page 2 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 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 AB 1106 Page 3 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 (Nunez), Chapter 313, Statutes of 2008, allowed the CEC, until January 1, 2012, to contract with the State Treasurer to expend Alternative and Renewable Fuels and Vehicle Technology Program funds through programs that the State 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 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 AB 1106 Page 4 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 double-jointing language with SB 1340 (Kehoe). Comments Purpose of the bill . 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. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee: Fiscal Impact (in thousands) AB 1106 Page 5 Major Provisions 2010-11 2011-12 2012-13 Fund BT&H administration up to $50, minor ongoing special fund costs General* CEC design program up to $50, ongoing costs are minor General* FDC administration costs would depend on amounts allocated Special* to FDCs, and could be in the range of $500 Loan guarantees unknown potential redirection of funds to Special* FDCs for loan guarantees that would other- wise be used for other projects * Alternative and Renewable Fuel and Vehicle Technology Fund SUPPORT : (Verified 8/16/10) Associated General Contractors of California Associated General Contractors of San Diego Association of Financial Development Corporations California Legislative Conference of the Plumbing, Heating and Piping Industry Construction Employers Association National Electrical Contractors Association OPPOSITION : (Verified 8/16/10) American Subcontractors Association California, Inc. California Special Districts Association JJA:mw 8/16/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****