BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                  AB 1247
                                                                  Page  1

          Date of Hearing:   May 8, 2013

                                  Mike Gatto, Chair

                   AB 1247 (Medina) - As Amended:  April 17, 2013 

          Policy Committee:                              JEDE Vote:9-0

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No


          This bill transfers the administration of the small business  
          financial development corporation (FDC) managed programs from  
          the Business, Transportation and Housing Agency (BTH) to the  
          California Infrastructure and Economic Development Bank (I-Bank)  
          within the Governor's Office of Business and Economic  
          Development (GO-Biz), and clarifies a number of administrative  
          and programmatic elements to improve program delivery.   
          Specifically, this bill: 

          1)Repeals and recasts the statues related to the establishment,  
            operations and oversight of the FDC managed programs from BTH  
            to the I-Bank, which is relocated to GO-Biz.  No additional  
            substantive changes are proposed.

          2)Expands the list of eligible financial institutions and  
            entities, to which the FDC may offer a loan guarantee, to  
            include credit unions, community development financial  
            institutions and microlenders.

           FISCAL EFFECT  

          Minor and absorbable fiscal impact.


           1)Purpose  .  This measure transfers the authority for the FDC  
            programs to the I-Bank, under the auspices of GO-Biz.  These  
            transfers further consolidate the state's economic development  
            programs into a single location and strengthen the I-Bank's  
            business development tool kit.  The bill also separates the  
            FDC-managed programs from the FDC- incorporation provisions to  


                                                                  AB 1247
                                                                  Page  2

            more effectively leverage the programs within the state's  
            existing network of programs.  

           2)Small Business Loan Guarantee Program  .  The SBLGP enables a  
            small business to obtain a term loan or line of credit when it  
            cannot otherwise qualify for a loan on its own.  The state,  
            working through 11 FDCs, offers direct loans or loan  
            guarantees that a qualifying small business borrower could not  
            otherwise obtain.  

           3)Small Business Jobs Act and Federal Guarantee Program  .  In  
            October 2010, the President signed the Small Business Jobs Act  
            (Act).  Among other things, the Act created the State Small  
            Business Credit Initiative (SSBIC), which is authorized to  
            expend up to $1.5 billion for state sponsored small business  
            finance programs.  Over the life of the program, every federal  
            dollar must be matched by $10 in private sector dollars.   
            September 2017 is the deadline for using the funds.  Funding  
            for the administration, outreach and oversight of the program  
            is primarily the responsibility of the state.
            4)Governor's Office of Business and Economic Development  :   
            GO-Biz was established through the enactment of AB 29 (J.  
            Pérez), Chapter 475, Statutes of 2011, to serve as the primary  
            executive agency responsible for economic development and job  
            creation efforts. GO-Biz offers a range of services to  
            business owners including: attraction, retention and expansion  
            services, site selection, permit streamlining, small business  
            assistance, international trade development and assistance  
            with the government requirements.  Prior to the creation of  
            GO-Biz, economic development programs were administered  
            through a number of state entities including BTH.
            5)Governor's Reorganization Plan 2 (GRP 2)  :  In 2012, Governor  
            Brown proposed, with the approval of the Legislature, a  
            comprehensive reorganization plan (GRP 2) of state agencies  
            and programs.  Among other changes, the GRP 2 reduces the  
            number of state agencies by eliminating five agencies and  
            merging their responsibilities into three new agencies:  
            Government Operations; Business, Consumer Services and  
            Housing; and Transportation.
            6)Related Legislation  .

             a)   AB 201 (Holden) bill requires the names of the financial  


                                                                  AB 1247
                                                                  Page  3

               institutions and financing companies that make direct loans  
               that include credit enhancements offered by FDCs be posted  
               on the website of the Business and Consumer Services  
               Agency.   This bill is pending in this committee.

             b)   AB 780 (Bocanegra) appropriates $2 million from the  
               General Fund for the purpose of providing administrative  
               funding to the FDCs. This bill is pending in this  

        4)Previous Legislation  .  AB 29 (J. Pérez), Chapter 475, Statutes of  
            2011, establishes GO-Biz to serve as the lead entity for  
            economic strategy and marketing of California on issues  
            relating to business development, private sector investment  
            and economic growth.  

           5)There is no registered opposition to this bill.   

           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081