BILL ANALYSIS �
AB 1247
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Date of Hearing: May 8, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
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
SUMMARY
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.
COMMENTS
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
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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.
P�rez), 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
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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
committee.
4)Previous Legislation . AB 29 (J. P�rez), 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