BILL NUMBER: AB 901	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member V. Manuel Pérez

                        FEBRUARY 17, 2011

   An act to amend Sections 44559.1, 44559.2, and 44559.6 of the
Health and Safety Code, relating to economic development.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 901, as introduced, V. Manuel Pérez. Capital Access Loan
Program for small business.
   Existing law establishes the Capital Access Loan Program, which is
administered by the California Pollution Control Financing
Authority, and defines the term "financial institution," for purposes
of that program. The authority is required to include specified
terms in any contract that the authority enters into with a financial
institution participating in the program, as specified. Existing law
requires the authority to report annually to the Governor and the
Legislature that describes the financial condition and the
programmatic results of the Capital Access Loan Program for small
businesses.
   This bill would revise the definition of the term "financial
institution" to include a small business financial development
corporation or microenterprise development organization that meets
standards that shall be established by the authority.
   This bill would also require that the form contract used by the
authority shall revise the requirement that the financial institution
provide information that the authority may require to include the
number of jobs created and the number of jobs retained. The bill
would also specify, for purposes of the annual report to the Governor
and the Legislature, that programmatic results include, but is not
limited to, the total number of businesses served, jobs created, jobs
retained, the geographic distribution of the loans, and the
breakdown of businesses served by industry sector, as specified.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 44559.1 of the Health and Safety Code is
amended to read:
   44559.1.  As used in this article, unless the context requires
otherwise, all of the following terms have the following meanings:
   (a) "Authority" means the California Pollution Control Financing
Authority.
   (b) "California Capital Access Fund" means a fund created within
the authority to be used for purposes of the program.
   (c) "Executive director" means the Executive Director of the
California Pollution Control Financing Authority.
   (d) (1) "Financial institution" means a federal- or
state-chartered bank, savings association, credit union,
not-for-profit community development financial institution certified
under Part 1805 (commencing with Section 1805.100) of Chapter XVIII
of Title 12 of the Code of Federal Regulations, or a consortium of
these entities. A consortium of those entities may include a
nonfinancial corporation, if the percentage of capitalization by all
nonfinancial corporations in the consortium does not exceed 49
percent.
   (2) "Financial institution" also includes a lending institution
that has executed a participation agreement with the Small Business
Administration under the guaranteed loan program pursuant to Part 120
(commencing with Section 120.1) of Chapter I of Title 13 of the Code
of Federal Regulations and meets the requirements of Section 120.410
of Chapter I of Title 13 of the Code of Federal Regulations,
 and  a small business investment company licensed
pursuant to Part 107 (commencing with Section 107.20) of Chapter I of
Title 13 of the Code of Federal Regulations  , and a small
business financial development corporation or microenterprise
development or   ganization that meets standards that shall
be established by the authority  . For loans where all or part
of the fees and matching contributions are paid by an entity
participating in the program pursuant to subdivision (e) of Section
44559.2, "financial institution" also includes financial lenders, as
defined in Section 22009 of the Financial Code, making commercial
loans, as defined in Section 22502 of the Financial Code.
   (3) A financial institution described in paragraph (2) shall be
domiciled or have its principal office in the State of California.
   (e) "Loss reserve account" means an account in the State Treasury
or any financial institution that is established and maintained by
the authority for the benefit of a financial institution
participating in the Capital Access Loan Program established pursuant
to this article for the purposes of the following:
   (1) Depositing all required fees paid by the participating
financial institution and the qualified business.
   (2) Depositing contributions made by the state and, if applicable,
the federal government or other sources.
   (3) Covering losses on enrolled qualified loans sustained by the
participating financial institution by disbursing funds accumulated
in the loss reserve account.
   (f) "Participating financial institution" means a financial
institution that has been approved by the authority to enroll
qualified loans in the program and has agreed to all terms and
conditions set forth in this article and as may be required by any
applicable federal law providing matching funding.
   (g) "Passive real estate ownership" means ownership of real estate
for the purpose of deriving income from speculation, trade, or
rental, but does not include any of the following:
   (1) The ownership of that portion of real estate being used or
intended to be used for the operation of the business of the owner of
the real estate.
   (2) The ownership of real estate for the purpose of construction
or renovation, until the completion of the construction or renovation
phase.
   (h) "Program" means the Capital Access Loan Program created
pursuant to this article.
   (i) "Qualified business" means a small business concern that meets
both of the following criteria, regardless of whether the small
business concern has operations that affect the environment:
   (1) It is a corporation, partnership, cooperative, or other
entity, whether that entity is a nonprofit entity or an entity
established for profit, that is authorized to conduct business in the
state.
   (2) It has its primary business location within the boundaries of
the state.
   (j) (1) "Qualified loan" means a loan or a portion of a loan made
by a participating financial institution to a qualified business for
any business activity that has its primary economic effect in
California. A qualified loan may be made in the form of a line of
credit, in which case the participating financial institution shall
specify the amount of the line of credit to be covered under the
program, which may be equal to the maximum commitment under the line
of credit or an amount that is less than that maximum commitment. A
qualified loan made under the program may be made with the interest
rates, fees, and other terms and conditions agreed upon by the
participating financial institution and the borrower.
   (2) "Qualified loan" does not include any of the following:
   (A) A loan for the construction or purchase of residential
housing.
   (B) A loan to finance passive real estate ownership.
   (C) A loan for the refinancing of an existing loan when and to the
extent that the outstanding balance is not increased.
   (D) A loan, the proceeds of which will be used in any manner that
could cause the interest on any bonds previously issued by the
authority to become subject to federal income tax.
   (k) "Severely affected community" means any area classified as an
enterprise zone pursuant to the Enterprise Zone Act (Chapter 12.8
(commencing with Section 7070) of Division 7 of Title 1 of the
Government Code), any area, as designated by the executive director,
contiguous to the boundaries of a military base designated for
closure pursuant to Section 2687 of Title 10 of the United States
Code, as amended, and any other comparable economically distressed
geographic area so designated by the executive director from time to
time.
   (l)  "Small Business Assistance Fund" means a fund created within
the authority pursuant to Section 44548.
   (m) "Small business concern" has the same meaning as in Section
632 of Title 15 of the United States Code, or as otherwise provided
in regulations of the authority.
  SEC. 2.  Section 44559.2 of the Health and Safety Code is amended
to read:
   44559.2.  (a)  The authority may contract with any financial
institution for the purpose of allowing the financial institution to
participate in the Capital Access Loan Program established by this
article.
   (b)  For purposes of this section, the authority may contract with
participating financial institutions and shall utilize a standard
form of contract that is reviewed and approved by the Department of
General Services. The standard form of contract shall provide for all
of the following:
   (1)  The creation of a loss reserve account by the authority for
the benefit of the financial institution.
   (2)  The financial institution, qualified business, and the
authority will deposit moneys to the credit of the institution's loss
reserve account when the financial institution makes a qualified
loan to a qualified business.
   (3)  The liability of the state and the authority to the financial
institution under the contract is limited to the amount of money
credited to the loss reserve account of the institution.
   (4)  The financial institution shall provide the information that
the authority may require, including financial information that is
identifiable with, or identifiable from the financial records of a
particular customer who is the recipient of a qualified loan. In
addition to any other information that the authority may require, the
financial institution shall provide the complete  Standard
Industrial Classification (SIC) code   North American
Industry Classification System (NA   ICS   ) 
for the qualified business  , the number of jobs created, the
number of jobs retained,  and information that provides the
precise geographic location of both the qualified business and the
borrower, if different.
   (5)  The financial institution will file a report with the
executive director setting out a full description of the board of
directors, including size, race, ethnicity, and gender.
   (6)  The participating financial institution will require each
borrower, prior to receiving a loan under the program, to sign a
written representation to the participating financial institution
that the borrower has no legal, beneficial, or equitable interest in
the nonrefundable premium charges or any other funds credited to the
loss reserve account established by the authority for the
participating financial institution.
   (7)  Other terms that the authority may require for purposes of
this article.
   (c)  A financial institution is not subject to laws restricting
the disclosure of financial information when the financial
institution provides information to the authority as required by
paragraph (4) of subdivision (b).
   (d)  A credit union operating pursuant to a certificate issued
under the California Credit Union Law (Division 5 (commencing with
Section 14000) of the Financial Code) may participate in the Capital
Access Loan Program established pursuant to this article only to the
extent participation is in compliance with the California Credit
Union Law. Nothing in this article shall be construed to limit the
authority of the Commissioner of Financial Institutions to regulate
credit unions subject to the commissioner's jurisdiction under the
California Credit Union Law.
   (e)  Any individual, company, corporation, institution, utility,
government agency, or other entity, including any consortium of these
persons or entities, whether public or private, may participate in
the Capital Access Loan Program established pursuant to this article
by depositing funds in the California Capital Access Fund under those
terms and conditions as may be deemed appropriate by the authority.
  SEC. 3.  Section 44559.6 of the Health and Safety Code is amended
to read:
   44559.6.  The authority shall annually prepare a report to the
Governor and the Legislature that describes the financial condition
and programmatic results of the capital access loan program for small
businesses authorized under this article.  Programmatic results
shall include, but not be limited to, for all outstanding loans on
the date the report is issued and new loans issued since the report
from the prior year, the total number of businesses served, jobs
created, jobs retained, the geographic distribution of the loans, and
the breakdown of businesses served by industry sector.