BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 511
                                                                  Page  1

          Date of Hearing:   August 6, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                      SB 511 (Lieu) - As Amended:  July 2, 2014 

          Policy Committee:                             JEDE  Vote:7-0

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

           SUMMARY  

          This bill re-establishes the California Export Finance Office  
          (CEFO) within the California Infrastructure and Economic  
          Development Bank (I-Bank) and requires the Governor's Office of  
          Business and Economic Development (GO-Biz) to convene a  
          statewide business partnership to discuss the promotion and  
          greater utilization of California ports.  Specifically, this  
          bill:   

          1)Requires the director of the GO-BIZ to convene a statewide  
            business partnership for promotion of trade for California  
            ports, no later than February 1, 2015. Specifies the  
            participants of the partnership and requires the partnership  
            to advise the GO-BIZ on promoting trade for California ports  
            and ways to increase the opportunity for growth and trade  
            activity.

          2)Establishes the California Export Finance Office (CEFO) within  
            the California Small Business Finance Center within the  
            I-Bank, for the purpose of expanding employment and income  
            opportunities for Californians through increased exports of  
            California goods, services, and agricultural commodities.   
            Further authorizes the CEFO to coordinate export activities  
            with international, federal, and other state entities and  
            disseminate information to California exporters. Sets forth  
            responsibilities and duties of the executive director of the  
            I-Bank or his or her designee in serving as the director of  
            the CEFO.  

          3)Authorizes the I-Bank to include insurance, coinsurance, and  
            other forms of surety among the types of financial products  
            included in programs administered by the bank.  Further  








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            authorizes the I-Bank to act as agent for creditworthy  
            California exporters, to sell approved and insured accounts  
            receivable to qualified parties and function as a  
            clearinghouse for the collection and disbursement of funds  
            relative to those sales.  

          4)Specifies the amount of insured liability outstanding at any  
            one time shall be secured by no less than a 25% reserve amount  
            of funds on deposit in the California Small Business Expansion  
            Fund plus any receivables due from the funds loaned from the  
            California Small Business Expansion Fund to another fund in  
            state government, as specified.

          5)Establishes an 11-member California Export Finance Board  
            authorized to implement the responsibilities and activities of  
            the CEFO, including the oversight of programs and promulgation  
            of regulations.  The Board is also required to adopt by-laws,  
            appoint advisory committees, hold regularly scheduled  
            meetings, at least quarterly, and issue an annual report of  
            activities.

          6)Requires the CEFO to comply with the Bagley-Keene Open Meeting  
            Act and the California Public Records Act.

           FISCAL EFFECT  

          1)Annual General Fund administrative costs in the range of  
            $350,000 to $470,000 for the I-Bank to administer the  
            California Export Finance Office. The higher cost range  
            assumes activities such as establishing and operating a  
            program for the sale, collection and disbursement of the  
            accounts receivable of eligible California exporters.  

          2)Minor, absorbable costs to GO-Biz to convene a statewide  
            business partnership for promotion of trade for California  
            ports and to explore greater utilization of California ports.   


           COMMENTS  

           1)Purpose.   This bill re-establishes the California Export  
            Finance Office (CEFO) which expired in 2003 with the  
            elimination of the Technology, Trade and Commerce Agency.   
            According to the author, re-establishing the CEFO will help  
            firms, especially medium and small businesses, finance their  








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            export sales of goods, services and California agricultural  
            commodities by providing working capital loan guarantees to  
            support export transactions.  In addition to financial  
            assistance, the CEFO will provide businesses with information  
            and technical assistance on exporting opportunities and  
            techniques.
           
          2)Background  . This bill re-establishes the CEFO under the GO-Biz  
            administrative structure.  GO-Biz is the primary state agency  
            responsible for state trade and foreign investment activity in  
            California.  GO-Biz also administers the Office of the Small  
            Business Advocate, the Permit Assistance Unit, the Office of  
            Foreign Trade and Investment, and the Business Investment  
            Services Unit, the California Travel and Tourism Commission,  
            the I-Bank, the Small Business Loan Guarantee Program, and the  
            California Film Commission.  
                
            3)Continuous appropriation  . This bill authorizes the I-Bank to  
            include insurance, coinsurance, and other forms of surety  
            among the types of financial products included in programs  
            administered by the bank. This bill also authorizes the I-Bank  
            to act as agent for creditworthy California growers,  
            manufacturers, and other exporters, to sell approved and  
            insured accounts receivable to qualified parties, and function  
            as a clearinghouse for the collection and disbursement of  
            funds relative to those sales. By expanding the activities of  
            the I-Bank that are funded through a continuous appropriation  
            (California Small Business Expansion Fund), this bill requires  
            a 2/3 vote of the Legislature. 
           
          4)Prior legislation  .  SB 592 (Lieu) of 2013 contains an  
            identical provision requiring GO-Biz to create a statewide  
            business partnership for promotion of trade for California  
            ports. The bill also required GO-Biz to provide a port trade  
            promotion strategy to the Legislature. This bill was held on  
            the Suspense File in this committee.


           Analysis Prepared by  :    Misty Feusahrens / APPR. / (916)  
          319-2081