BILL ANALYSIS Ó
AB 701
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ASSEMBLY THIRD READING
AB 701 (John A. Pérez)
As Introduced February 21, 2013
Majority vote
ECONOMIC DEVELOPMENT 6-2 APPROPRIATIONS
12-5
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|Ayes:|Medina, Daly, Fong, Fox, |Ayes:|Gatto, Bocanegra, |
| |V. Manuel Pérez, Brown | |Bradford, |
| | | |Ian Calderon, Campos, |
| | | |Eggman, Gomez, Hall, |
| | | |Holden, Pan, Quirk, |
| | | |Ammiano |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Mansoor, Melendez |Nays:|Harkey, Bigelow, |
| | | |Donnelly, Linder, Wagner |
| | | | |
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SUMMARY : 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. Further, this bill expands the membership of the
board of directors from five to seven members and specifies that
legislative members will be nonvoting members.
EXISTING LAW establishes the I-Bank within the Business,
Transportation and Housing Agency (BTH), and authorizes it to
undertake a variety of infrastructure related financial
activities including, but not limited to, the administration of
a revolving loan fund and the issuance of tax-exempt and taxable
revenue bonds.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, implementation of this measure would be minor and
absorbable.
COMMENTS : This designates the I-Bank as the state's primary
liaison with the federal government on issues related to a
national infrastructure bank and adds legislative members to the
Board of Directors in order to more closely link its activities
to the state's broader development activities.
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Infrastructure and the California economy: World class
infrastructure plays a key role in business attraction, as
multinational companies consistently rank the quality of
infrastructure among their top four criteria in making
investment decisions. Research shows that as United States
(U.S.) infrastructure has been in decline, infrastructure in
other countries is rapidly increasing. The 2010-11 Global
Competitiveness Report by the World Economic Forum places U.S.
infrastructure 23rd in the world, a drop from its rank of 7th in
2000.
California's infrastructure is in a similar state, according to
the American Society of Civil Engineer's report, California
Infrastructure Report Card 2012, estimated a $65 billion a year
investment gap. The impact of this lack of investment is
compounded by the substantial new investments made in other
states and nations, including the expansion of the Panama Canal.
National Infrastructure Bank: Spending on infrastructure by the
federal government has been declining. According to the
Congressional Budget Office, spending on transportation and
water infrastructure as a share of U.S. Gross Domestic Product
(GDP) was 3.1% in 1959 and was only 2.4% in 2007. Not
surprisingly, there has been a national call for renewed
infrastructure investment to support manufacturing, goods
movement, energy production, and broadband deployment, among
other economic and community development purposes.
A National Infrastructure Reinvestment Bank was first proposed
by Senators Christopher Dodd and Chuck Hagel in 2007. President
Barack Obama supported the legislation in 2008 and again in
2010. More recently, in his 2013 State of the Union, President
Obama emphasized the importance on fixing the nation's
infrastructure as part of his "Plan for a Strong Middle Class
and A Strong America" and proposed both a $50 billion "Fix it
First" program from peace dividends and a "Partnership to
Rebuild America" initiative, which would use public policies to
attract private investment in upgrading America's
infrastructure. This bill would specifically designate the
state I-Bank as the primary state agency for applying to the
federal infrastructure bank.
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Background on the 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. Housed
within BTH, it is governed by a five-member board of directors
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.
The I-Bank administers two categories of programs: 1) the
Infrastructure State Revolving Fund which provides direct
low-cost financing to public agencies for a variety of public
infrastructure projects; and, 2) Bond Financed Programs which
provide financing for manufacturing companies, nonprofit
organizations, public agencies and other eligible entities.
There is no commitment of the I-Bank or state funds for any of
the conduit revenue bonds. Even in the case of default, the
state is not liable.
Since its creation in 1994, the I-Bank has loaned over $400
million to local agencies, developing a high-level of expertise
in the financing of public infrastructure. The I-Bank also
serves as the state's only general purpose financing authority
with broad statutory powers to issue revenue bonds. Over $30
billion in conduit revenue bonds have been issued by the I-Bank
since 2000.
Effective July 1, 2013, the I-Bank will be administered through
the Governor's Office of Business and Economic Development
(GO-Biz), pursuant to the 2012 Governor's Reorganization Plan.
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090
FN: 0000213
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