BILL ANALYSIS                                                                                                                                                                                                    


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                                 THIRD READING

          Bill No:  AB 1106
          Author:   Fuentes (D), et al
          Amended:  8/17/10 in Senate
          Vote:     27 - Urgency

           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  
                      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,  


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          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

            alternative and renewable fuels, plus reduce the overall  
            carbon footprint of these fuels.

           Vehicle retrofit projects to create higher fuel  

           Infrastructure projects that promote alternative and  
            renewable fuel infrastructure development for existing  
            fleets, public transit, and existing transportation  

           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

             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).


           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)


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           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  

          Loan guarantees     unknown potential redirection of funds  
          to                  Special*
                              FDCs for loan guarantees that would  
                              wise be used for other projects

          * Alternative and Renewable Fuel and Vehicle Technology  

           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

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