BILL ANALYSIS �
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CONSENT
Bill No: AB 1247
Author: Medina (D)
Amended: 8/12/13 in Senate
Vote: 27 - Urgency
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 11-0, 6/25/13
AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, Correa,
De Le�n, Galgiani, Hernandez, Lieu, Padilla
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 7/3/13
AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 70-0, 5/16/13 (Consent) - See last page for
vote
SUBJECT : Business investments: Small Business Financial
Assistance Act
of 2013
SOURCE : Author
DIGEST : 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).
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ANALYSIS :
Existing law:
1. Creates the California Small Business Board as an advisory
board to the I-Bank Board; and specifies the duties and
membership of the Board.
2. Creates the California Small Business Expansion Fund solely
for the purpose of receiving state, federal, or local
government monies, and other public or private money to make
loans, guarantees, and restricted investments.
3. Authorizes the formation of small business FDCs to grant
loans from, or guarantee loans made by a financial
institution or financial company, as defined, against, monies
awarded to the corporation from the expansion fund for the
purpose of stimulating small business development.
4. Authorizes a director designated by the Secretary of the BTH
to perform specified duties under the California Small
Business FDC Law.
This bill transfers the administration of the small business FDC
managed programs from the BTH to the I-Bank within GO-Biz.
Specifically, this bill:
1. Repeals and recasts the statutes related to the
establishment, operations and oversight of the FDC managed
programs from BTH to the I-Bank, which is relocated to
GO-Biz. The Governor's Reorganization Plan No. 2 (GRP 2)
directs the transfer of the I-Bank and the FDC administered
programs to GO-Biz.
2. Repeals and recasts the statutes related to the small
business finance programs administered by the FDCs from the
Corporations Code, as overseen by BTH, to the Government
Code, as overseen by the I-Bank. This includes the small
business loan guarantee, disaster loan guarantee, surety bond
guarantee, and the authority to make direct loans.
3. Revises the title of the person responsible for managing the
guarantee and direct loan programs from "director" to
"executive director."
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4. Transfers the California Small Business Board from a
free-standing board at BTH to an advisory board to the I-Bank
Board of directors, the I-Bank executive director, and the
guarantee and direct loan program manager. Modifies and
expands the membership of the California Small Business Board
by two FDC representatives and two additional Governor
appointments.
5. Modifies the designation and appeals process by placing the
I-Bank Board as the final authority rather than the
California Small Business Board.
6. Deletes the requirement for the program manager to approve
amendments to a corporation's articles of incorporation. The
program manager still receives a copy and has the authority
to take action should the amendment cause harm to the
program.
7. Expands the list of eligible financial institutions and
entities, that an FDC may offer a loan guarantee to include
credit unions, community development financial institutions
and microlenders.
8. Shifts finance programs from regulations to directives and
requirements adopted by the I-Bank Board at a public meeting.
This is consistent with other I-Bank activities.
9. Specifies that any prior regulations adopted by BTH will
remain in effect until the I-Bank Board adopts directives and
requirements. In no case, however, can this extension go
beyond June 1, 2015.
10.Clarifies that a corporation that has been suspended from the
state's access to capital programs remains a nonprofit
benefit corporation. This is consistent with existing law.
Adds technical changes requiring an FDC that has been
terminated from administering the programs to amend its
articles of incorporation to reflect its new diminished
status.
11.Exempts the annual contract between the state and the FDCs
from the state's general procurement process. Under the
statute, the FDCs serve as a pre-selected pool of local
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nonprofits to administer the finance programs.
12.Authorizes the I-Bank to make investment decisions about
Expansion Fund monies, which is consistent with existing
I-Bank policy. Currently, the program manager has to get the
Department of Finance approval.
13.Authorizes the I-Bank to adopt other financial products
related to debt instruments and credit enhancements. This is
consistent with existing I-Bank operational practice.
14.Places similar program conditions for direct loans and
disaster guarantees as with loan guarantees.
15.Clarifies that FDCs may make direct loans, regardless of the
geographic area and reduces the minimum loan guarantee
coverage from 90% to 80%, which is consistent with federal
guarantee products. Removes specific statutorily set loan
limit to a limit set by the I-Bank Board through adopted
directives and requirements.
16.Adds the FDC disaster finance programs to the general list of
small business assistance programs the Governor can activate
in case of disaster.
17.Expands the mandatory criteria the program manager uses to
allocate or transfer monies between the FDC trust fund
accounts by allowing the consideration of the number of jobs
created or retained by the FDC's financial activities and the
number and amount of other financial activities. Existing
law only provides for the mandatory consideration of the
FDC's default rate and the number and amount of loans, loan
guarantees, and surety bond guarantee activity of the FDC.
The program manager may include other information in making
the performance based allocation.
18.Allows an exception to the preclusion against mixing separate
FDC trust fund accounts when the program manager has
designated a shared trust fund account with multiple FDCs.
19.Makes other conforming and technical changes in the
definitions and administrative functions of the finance
programs within the I-Bank.
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Background
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.
GO-Biz . 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.
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.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
ASSEMBLY FLOOR : 70-0, 5/16/13
AYES: Achadjian, Alejo, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dahle, Daly, Dickinson, Donnelly, Fong, Fox, Frazier, Garcia,
Gatto, Gomez, Gordon, Gorell, Gray, Hagman, Hall, Harkey,
Roger Hern�ndez, Jones, Jones-Sawyer, Levine, Linder, Logue,
Lowenthal, Maienschein, Mansoor, Medina, Mitchell, Mullin,
Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea,
V. Manuel P�rez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,
Ting, Torres, Wagner, Waldron, Weber, Wieckowski, Wilk,
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Williams, Yamada, John A. P�rez
NO VOTE RECORDED: Allen, Buchanan, Eggman, Beth Gaines, Grove,
Holden, Melendez, Morrell, Stone, Vacancy
MW:d 8/13/13 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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