BILL ANALYSIS Ó AB 701 Page 1 Date of Hearing: April 17, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair AB 701 (John A. Pérez) - As Introduced: February 21, 2013 Policy Committee: JEDE Vote:6-2 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill authorizes the California Infrastructure and Economic Development Bank (I-Bank) to serve as the primary state agency for applying to any federal infrastructure bank or financing authority and expands the membership of the board of directors from five to seven members by adding two nonvoting members appointed by the Legislature. The bill also establishes that the I-Bank will be the state agency for applying for funds to any federal infrastructure financing entity. FISCAL EFFECT Minor and absorbable costs to the I-Bank. COMMENTS 1)Author's Purpose : According to the author, this bill is intended to allow the Legislature to participate in critical decisions affecting the I-Bank. The author contends, given the I-Bank's integral role in issuing tax-exempt and taxable revenue bonds, providing financing to public agencies and leveraging State and Federal funds, it is important that the Legislature have input on how those decisions are made. The author notes that there is continuing interest in a national bank model and that federal funds may be a new source for California infrastructure and the I-Bank is the logical agency for assuming the lead role. 2)Background on I-Bank : The I-Bank was established in 1994 to promote economic revitalization, enable future development and encourage a healthy climate for jobs in California. Currently housed within BTH, the I-Bank is governed by a five-member AB 701 Page 2 board comprised of the BTH Secretary (chair), State Treasurer, Director Department of Finance, Secretary of the State and Consumer Services Agency, and a Governor's appointee. The I-Bank does not receive any ongoing General Fund support, rather it is financed through fees, interest income and other revenues derived from its public and private sector financing activities. 3)Reorganization : In March 2012, the Governor initiated a reorganization to dismantle the Business, Transportation and Housing Agency (BTH) and the shifting of a number of key programs and services to the Governor's Office of Business and Economic Development (GO-Biz), including the I-Bank. In addition, the Secretary of BTH is replaced by the Director of GO-Biz as Chair of I-Bank and the newly established Secretary of Transportation replaces the Secretary of State and Consumer Services on the I-Bank board. Programmatic approval of the reorganization was granted in July 2012 and will become effective July 2013 4)Related legislation . a) AB 311 (V. Manuel Perez) expands the role of the I-Bank to include facilitating infrastructure and economic development financing activities within the California and Mexico border region. This bill is pending in this committee. b) AB 1272 (Medina) authorizes the I-Bank to formally participate in regional, national and international organizations related to infrastructure financing. This bill is pending in this committee. 5)Previous legislation . AB 1094 (John A. Pérez) would have added a member of the Assembly and a member of the Senate as advisory members to the board of administration of the California Infrastructure and Economic Development Bank. AB 1094 passed the Assembly and was amended in the Senate to deal with an unrelated subject. 6)There is no registered opposition to this bill. Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081 AB 701 Page 3