Amended in Assembly May 19, 2014

Amended in Senate January 22, 2014

Amended in Senate January 6, 2014

Amended in Senate April 30, 2013

Amended in Senate April 1, 2013

Senate Bill No. 511

Introduced by Senator Lieu

February 21, 2013

An act to add Chapter 2.6 (commencing with Section 13996.85) to Part 4.7 of Division 3 of Title 2 of begin insert , end insert begin insert and to add Chapter 7 (commencing with Section 63090) to Division 1 of Title 6.7 of, end insert the Government Code, relating to state begin delete government. end delete begin insert government, and making an appropriation therefor. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 511, as amended, Lieu. Trade promotion of California begin delete ports. end delete begin insert ports: California Export Finance Office end insert begin insert . end insert

begin delete

Existing

end delete

begin insert (1) end insert begin insert   end insert begin insert Existing end insert law requires the Director of the Governor’s Office of Business and Economic begin delete Development end delete begin insert Development, known as GO-Biz, end insert to provide to the Legislature, not later than February 1, 2014, a strategy for international trade and investment that, at a minimum, includes specified information, goals, objectives, and actions related to the promotion of trade.

The bill would require the director to convene, no later than February 1, 2015, a statewide business partnership for the promotion of trade for California ports and to explore greater utilization of California ports, that would be required to advise the director for those purposes, as prescribed.

begin insert

(2) The Bergeson-Peace Infrastructure and Economic Development Bank Act authorizes the California Infrastructure and Economic Development Bank, within GO-Biz, to make loans and provide other assistance to public and private entities for various types of economic development projects, among other things. The bank is governed by a board of directors and under the direction of an executive director. The activities of the bank under these provisions are funded from the California Infrastructure and Economic Development Bank Fund, which is continuously appropriated for these purposes.

end insert begin insert

This bill would establish the California Export Finance Office (office) within the bank, to be headed by the executive director, for the purpose of expanding employment and income opportunities for Californians through increased exports of California goods, services, and agricultural commodities. The bill would authorize the office to insure, coinsure, and guarantee loans for qualified export transactions, disseminate information to California exporters, and act as an agent for creditworthy California growers, manufacturers, and other exporters.

end insert begin insert

The bill would establish the Export Finance Fund as a continuously appropriated fund, to receive, among other moneys, state, federal, and private funds, fees and collections made by the office, and the returns on investments made pursuant to these provisions. By establishing a continuously appropriated fund and authorizing deposits into that fund, the bill would make an appropriation.

end insert begin insert

The bill would also establish within the office an 11-member California Export Finance Board (finance board), composed of specified state officers and individuals appointed by the Governor and the Legislature, to serve 2-year terms at the pleasure of their appointing authority, as specified. The bill would require the finance board, among other duties, to oversee the program authorized by these provisions, including, but not limited to, promulgating regulations establishing programs to insure, coinsure, and provide loan guarantees to support expert transactions. The bill would authorize the finance board to delegate the approval or extension of insurance, coinsurance, or loan guarantees, as specified.

end insert begin insert

The bill would require the office to comply with existing laws relating to open and public meetings and access to public records, except, under certain circumstances, for records containing the financial data of applicants seeking financial assistance from the board, and telephone or cellular phone conferences or meetings of the board relating to its approval of an application for that financial assistance in the form of loan guarantees, as specified.

end insert begin insert

(3) Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest. This bill would make legislative findings to that effect.

end insert

Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation:  begin delete no end delete begin insert yes end insert . Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert begin insert

The Legislature finds and declares all of the
following:

end insert begin insert

(a) Trade is critical to California’s prosperity by fueling
economic growth, supporting and creating jobs, and raising living
standards. In 2012, California’s three customs districts led the
nation by processing $579 billion in two-way trade value. Exports
have been the second largest contributor to our nation’s gross
domestic product since the recession ended.

end insert begin insert

(b) California’s success as a trade leader cannot be taken for
granted, given the weakening of the national and global economies,
the European debt crisis, and the increased competition of Gulf,
East Coast, and Mexican ports preparing to compete with
California’s market share as the expanded Panama Canal becomes
operational in 2015.

end insert begin insert

(c) There are substantial opportunities that can strengthen and
grow California’s trade sector and increase jobs. As the gateway
to China, India, and emerging countries, California is well
positioned to access China, India, and emerging nations that are,
or are becoming, large markets for exported goods and services.

end insert begin insert

(d) Exports support jobs for California workers and more than
one million direct and indirect jobs. Exports sustain nearly 60,000
businesses in the state, of which 96 percent are small- to
medium-sized businesses.

end insert begin insert

(e) Many small- and medium-sized California businesses and
agricultural enterprises, both those that are already exporting and
want to expand their business and those that are new to exporting,
would benefit from financing and technical assistance.

end insert begin insert

(f) California-based small- and medium-sized exporters were
assisted from 1985 to 2003, inclusive, under a state program
designed to work with federal, state, and private institutions to
provide California exporters with information, technical assistance,
and financial resources, but the state program ceased when the
Technology, Trade and Commerce Agency was eliminated for
budgetary reasons in 2004 by Chapter 229 of the Statutes of 2003.

end insert begin insert

(g) Reestablishing the state program will expand job
opportunities for California’s workforce by increasing exports of
California goods, services, and agricultural commodities through
the provision of information, technical assistance, and financial
support to California exporters.

end insert

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

Chapter 2.6 (commencing with Section 13996.85) is
added to Part 4.7 of Division 3 of Title 2 of the Government Code,
to read:

 

Chapter  2.6. Trade Promotion of California Ports

 

13996.85.  

The Director of the Governor’s Office of Business
and Economic Development shall convene, no later than February
1, 2015, a statewide business partnership for promotion of trade
for California ports and to explore greater utilization of California
ports, as follows:

(a) The business partnership shall include, but is not limited to,
representatives from ports of entry, ocean carriers, marine terminal
operators, warehouse operators, railroads, trucking companies,
labor representatives, and foreign trade zones, representatives of
environmental groups, and shippers, specifically including
agricultural exporters, manufacturers, postconsumer secondary
material handlers, and retailers.

(b) The business partnership shall advise the Director of the
Governor’s Office of Business and Economic Development on
promoting trade for California ports while increasing the use of
California ports of entry, and ways to increase the opportunity for
growth and trade activity.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Chapter 7 (commencing with Section 63090) is added
to Division 1 of Title 6.7 of the end insert begin insert Government Code end insert begin insert , to read: end insert

begin insert

 

Chapter   begin insert 7. end insert California Export Finance

 

begin insert 63090. end insert   

As used in this chapter:

begin insert 63090. end insert   

(a) “California Export Finance Board” or “finance
board” means the California Export Finance Board established
by 63090.7.

(b) “California Export Finance Office” or “office” means the
entity created by Section 63090.1.

(c) “Financial institution” means a bank or savings and loan
association regulated by the state or federal government, an
insurance company authorized to transact business in California,
a personal property broker or industrial loan company that is
regulated by the state, and a person whose primary business is
lending money and is regulated by the state.

begin insert 63090.1 end insert   

(a) The California Export Finance Office is hereby
created within the bank.

(b) The purpose of the office is to expand employment and
income opportunities for Californians through increased exports
of California goods, services, and agricultural commodities by
providing actual and potential California exporters, specifically
small- and medium-sized exporters, with information and technical
assistance on export opportunities, exporting techniques, and
financial assistance in support of export transactions.

begin insert 63090.2. end insert   

The executive director, or his or her designee, shall
be the director of the California Export Finance Office and shall
administer the programs of the California Export Finance Office
and perform any duties delegated by the finance board.

begin insert 63090.3. end insert   

The executive director, or his or her designee, upon
approval of the finance board, may do all of the following:

(a) Contract for services.

(b) Hold public hearings.

(c) Call upon and reimburse for services any state agency or
department for assistance in carrying out the objectives of this
chapter.

(d) Participate with government or private industry in programs
for technical assistance, loans, technology, transfer, or any other
programs related to this chapter.

(e) Undertake or commission studies on methods to increase
financial resources to expand the exports of California goods,
services, and agricultural commodities.

(f) Exercise any other power as may be necessary to carry out
the purposes of this chapter.

(g) Provide export finance training for staff and other
individuals involved in export finance assistance, including, but
not limited to, training sessions provided by the Export-Import
Bank of the United States or other organizations.

begin insert 63090.4. end insert   

The office is authorized to do all of the following:

(a) Insure, coinsure, and guarantee loans related to qualified
export transactions pursuant to regulations adopted by the finance
board.

(b) Coordinate to the maximum extent possible the efforts of
the California Export Finance Office with program and goals of
the Export-Import Bank of the United States, the International
Trade Administration of the United States Department of
Commerce, the Foreign Credit Insurance Association, and other
public and private programs designed to provide export assistance
and export-related financing.

(c) Establish a network of contacts among public and private
organizations that provide information, technical assistance, and
financial support of exporting.

(d) Assemble, publish, and disseminate information to California
exporters on export opportunities, techniques of exporting, sources
of public and private export assistance, and sources of
export-related financing.

(e) Organize, host, and participate in seminars and other forums
designed to disseminate information and technical assistance on
exporting and export-related financing to actual and potential
California exporters.

(f) Provide individual firms and agricultural enterprises with
information and technical assistance relating to exporting and
export financing.

begin insert 63090.5. end insert   

(a) The office shall comply with the Bagley-Keene
Open Meeting Act (Article 9 (commencing with Section 11120) of
Chapter 1 of Part 1 of Division 3 of Title 2) and the California
Public Records Act (Chapter 3.5 (commencing with Section 6250)
of Division 7 of Title 1), except as specified in subdivision (b).

(b) (1) Notwithstanding any other law, if the executive director
determines that disclosure of financial data would be competitively
injurious to an applicant, the disclosure of financial data contained
in applications for financial assistance from the finance board
shall not be required. For this purpose, financial data includes,
but shall not be limited to, financial statements, details of accounts
receivable and accounts payable, income tax returns, owner-officer
compensation records, collateral details, cashflow analysis, orders,
contracts and letters of credit, and other documents that would
disclose specific names or addresses of customers or would-be
customers.

(2) Notwithstanding any other law, the finance board or a
subcommittee of the finance board may review and approve loan
guarantee requests by means of a telephone or cellular phone
conference or in a meeting not open to the public.

begin insert 63090.6. end insert   

The office may do any of the following:

(a) Act as agent for creditworthy California growers,
manufacturers, and other exporters to sell accounts receivable
that are approved by the office and insured by the Foreign Credit
Insurance Association or an acceptable private insurer, to qualified
parties.

(b) Function as a clearing house for the collection and
disbursement of funds relative to those sales through the use of a
segregated bank account.

(c) Take any other related actions as may be appropriate and
necessary to facilitate the sale of export accounts receivable for
California exporters.

begin insert 63090.7. end insert   

(a) The California Export Finance Board is
established within the bank. The finance board shall consist of 11
members as follows:

(1) The Secretary of Food and Agriculture, or his or her
designee.

(2) The executive director, or his or her designee.

(3) One individual appointed by the Governor who shall be
knowledgeable of, and experienced in, the exporting and export
needs of California agriculture.

(4) Three individuals appointed by the Governor and one
individual appointed by the Speaker of the Assembly, each of whom
shall be experienced in exporting, knowledgeable of the needs and
problems of small and entrepreneurial exporters, and actively
employed with an exporting firm, export trading company, or
export management company.

(5) One person appointed by the Governor and one person
appointed by the Senate Committee on Rules, each of whom shall
be experienced in export financing, knowledgeable of the export
financing needs and problems of small and entrepreneurial
exporters, and actively employed by a financial institution.

(6) One person appointed by the Controller and one person
appointed by the Treasurer, each of whom shall be an
accomplished credit evaluation representative experienced in
analyzing financial statements, including, but not limited to, loan
applications, and in evaluating the creditworthiness of firms that
are likely to seek insurance or loan guarantees from the office.

(b) The members shall serve two-year terms at the pleasure of
the appointing authority. Vacancies shall be filled by the appointing
authority.

(c) Finance board members who are not employees of the state
shall receive the per diem authorized in Section 11564.5 for each
day they attend finance board or finance board subcommittee
meetings. In addition, these members shall be reimbursed for their
expenses in accordance with the rules of the Department of
Personnel Administration when attending finance board and
finance board subcommittee meetings and conducting finance
board businesses as determined by the finance board.

begin insert 63090.8. end insert   

The finance board shall do all of the following:

(a) Elect a chair and vice chair from among its members. The
chair shall preside at meetings of the finance board.

(b) Oversee the program authorized by this chapter, promulgate
rules and regulations that are necessary to carry out the
responsibilities under this chapter, including, but not limited to,
establishing programs to insure, coinsure, and provide loan
guarantees to support export transactions. The finance board shall
ensure that these programs conform to international trade
agreements of the United States. The rules and regulations of the
finance board shall be adopted in accordance with Article 5
(commencing with Section 11346) of Chapter 3.5 of Part 1 of
Division 3 of Title 2.

(c) Adopt bylaws as are necessary to govern the conduct and
operation of the finance board.

(d) Provide for the appointment of advisory groups necessary
to carry out the powers and duties of the finance board.

(e) Hold regularly scheduled meetings, at least quarterly, in
order to carry out the objectives and responsibilities of the finance
board.

(f) Issue an annual report critiquing the program, its needs, and
recommended changes. The report shall include an evaluation of
the program’s impact on all of the following:

(1) Participation of financial institutions in export financing
programs.

(2) Access of California firms to federal export financing
programs.

(3) Export volume of California firms.

(4) Economic and social benefits of exports to the state.

(g) Adopt criteria establishing which exports and export
transactions are eligible for the insurance, coinsurance, and loan
guarantees as may be extended by the finance board. Pursuant to
this subdivision, the finance board shall adopt regulations to ensure
that all of the following criteria are met:

(1) Borrowers have a minimum equity interest in the business
as determined by the finance board.

(2) Loan guarantees, insurance, and coinsurance are extended
exclusively to support the export of goods, services, and
agricultural commodities produced or grown primarily in
California by companies or agricultural enterprises that have
California as the principal place from which their trade or business
is directed or managed.

(3) Financing assistance backed by or using funds from the
Export Finance Fund shall be extended only for any of the
following circumstances:

(A) As part of a state match that may be required to secure
participation of California firms or agricultural enterprises in
federal, state, or private financing programs.

(B) If adequate financing assistance is not readily available
from public or private sources in a timely manner.

(h) Adopt collateral or security requirements to ensure the full
repayment of loan guarantees and solvency of any insurance and
coinsurance program extended under this chapter and to assist in
evaluating the program authorized by this chapter.

(i) Approve any and all extensions of insurance, coinsurance,
or loan guarantees under this chapter.

(1) The finance board may elect to delegate the approval
authority to a committee consisting of at least three members of
the finance board.

(2) The finance board may elect to delegate this approval to an
office loan committee if the financial exposure to a borrower or
insured does not exceed an aggregate of one hundred thousand
dollars ($100,000). The office loan committee shall be composed
of the director of the office and two others who shall be selected
by, and who shall be responsible to, the finance board.

(3) All approvals delegated pursuant to paragraphs (1) and (2)
shall be reported to, and shall be reviewed by, the finance board
at the next regular finance board meeting.

(j) Work with and seek assistance from the Export-Import Bank
of the United States, the International Trade Administration of the
United States Department of Commerce, the Foreign Credit
Insurance Association, and other public and private programs
designed to provide export assistance and export-related financing.

(k) Develop a streamlined application and review process.

begin insert 63090.9. end insert   

There is hereby created in the State Treasury the
Export Finance Fund. The purpose of the Export Finance Fund
is to receive all of the following moneys for purposes of this
chapter:

(a) State, federal, and private funds.

(b) Insurance premiums and other fees earned by the office.

(c) Recoveries and collections on claims paid by the office.

(d) Funds received from the return of investments pursuant to
this chapter.

begin insert 63090.10. end insert   

Notwithstanding Section 13340, all funds deposited
in the Export Finance Fund are hereby continuously appropriated,
without regard to fiscal years, for the purposes of this chapter.

begin insert 63090.11. end insert   

The state shall not be liable or obligated in any way
beyond the state funds that are allocated and deposited in the
Export Finance Fund from state funds that are appropriated for
those purposes.

begin insert 63090.12. end insert   

The Treasurer, with the approval of the finance
board, may cause funds in the Export Finance Fund to be invested
and reinvested, from time to time, in the Surplus Money Investment
Fund as provided in Article 4 (commencing with Section 16470)
of Chapter 3 of Part 2 of Division 4 of Title 2. Funds in the Export
Finance Fund and not so invested may be deposited from time to
time in financial institutions authorized by law to receive deposits
of public funds. Returns from investments and interest on deposits
shall be deposited in the Export Finance Fund.

begin insert 63090.13. end insert   

Funds in the Export Finance Fund shall be paid out
by the Treasurer on warrants drawn by the Controller upon order
of the finance board in furtherance of the purposes of this chapter,
including, but not limited to, the payment of operating expenses,
principal and interest on bonds, claims under loan guarantee and
insurance and coinsurance programs, payments for reinsurance,
and payments required by state, federal, or private export
programs conducted by the finance board.

begin insert 63090.14. end insert   

The office may charge fees for its loan guarantees,
insurance, coinsurance, and other services, the amount of which
shall be determined by the finance board.

begin insert 63090.15. end insert   

Loan guarantees and insured export transactions
made by the office shall be secured by no less than a 25 percent
reserve in the Export Finance Fund. The finance board may elect
to require a higher reserve. The finance board shall adopt
regulations on the terms and limits for loan guarantees, but a loan
guarantee shall not exceed any of the following:

(a) Ninety percent of the required financing.

(b) Nine hundred thousand dollars ($900,000).

(c) The lesser of five years or the useful life of the product.

begin insert 63090.16. end insert   

The executive director shall submit an annual
budget, as part of the budget of the bank, for inclusion in the
annual budget.

begin insert 63090.17. end insert   

If any provision of this chapter or the application
thereof to any person or circumstance is held invalid, that invalidity
shall not affect any other provision or application of this chapter
that can be given effect without the invalid provision or application,
and to this end the provisions of this chapter are severable.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert begin insert

The Legislature finds and declares that Section 3 of
this act, which adds Section 63090.5 to the Government Code,
imposes a limitation on the public’s right of access to the meetings
of public bodies or the writings of public officials and agencies
within the meaning of Section 3 of Article I of the California
Constitution. Pursuant to that constitutional provision, the
Legislature makes the following findings to demonstrate the interest
protected by this limitation and the need for protecting that
interest:

end insert begin insert

Disclosure of financial data would be competitively injurious
to California businesses.

end insert