Amended in Assembly April 14, 2015

Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 484


Introduced by Assembly Member Gipson

February 23, 2015


An act to amend Sections 63088.5 and 63089.5 of,begin delete to add Chapter 2.6 (commencing with Section 13996.85) to Part 4.7 of Division 3 of Title 2 of,end deletebegin insert andend insert to add Article 8.5 (commencing with Section 63089.85) to Chapter 6 of Division 1 of Title 6.7 of,begin delete and to add Chapter 7 (commencing with Section 63090) to Division 1 of Title 6.7 of,end delete the Government Code, relating to state government, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

AB 484, as amended, Gipson. begin deleteTrade promotion of California ports: California Export Finance Office. end deletebegin insertCalifornia Infrastructure and Economic Development Bank: insurance.end insert

begin delete

(1) Existing law requires the Director of the Governor’s Office of Business and Economic Development, known as GO-Biz, to provide to the Legislature, not later than February 1, 2019, a strategy for international trade and investment that, at a minimum, includes specified information, goals, objectives, and actions related to the promotion of trade.

end delete
begin delete

The bill would require the director to convene, no later than February 1, 2016, 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.

end delete
begin delete

(2) The

end delete

begin insertTheend insert Bergeson-Peace Infrastructure and Economic Development Bank Act authorizes the California Infrastructure and Economic Development Bank, withinbegin insert the Governor’s Office of Business and Economic Development, known asend insert 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 bank administers the California Small Business Finance Center that administers programs to assist businesses seeking new capital resources. The Small Business Financial Assistance Act of 2013 continues in existence the California Small Business Expansion Fund (expansion fund), a continuously appropriated fund which includes General Fund moneys, and authorizes all or a portion of the funds in the expansion fund to be paid out to a financial institution or financial company that will establish a trust fund and act as a trustee of the funds, as specified. The Small Business Financial Assistance Act of 2013 authorizes the program manager, as defined, to create one or more accounts in the expansion fund and the trust fund for corporations participating in one or more specified programs.

The Small Business Financial Assistance Act of 2013 authorizes the bank board to continue programs funded by the expansion fund or to establish one or more programs administered by the bank or under contract with small business financial development corporations. Existing law further authorizes those programs to include specific types of financial products, including loan guarantees and surety bond guarantees. The expansion fund may be used to pay defaulted loan guarantee or surety bond losses, or other financial product defaults or losses, to fund direct loans and other debt instruments, to pay administrative costs of corporations, to pay state support and administrative costs, and to pay costs to protect a real property interest in a financial product default.

This bill would authorize the bank to include insurance, coinsurance, and other forms of surety among the types of financial products included in programs administered by the bank, as prescribed. The bill would authorize the 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 bank that are funded by continuous appropriation from the expansion fund, this bill would make an appropriation.

begin delete

The bill would establish the California Export Finance Office (office) within the California Small Business Finance Center, 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 coordinate state export activities with international, federal, and other state entities and disseminate information to California exporters.

end delete
begin delete

The bill would also establish within the office an 11-member California Export Finance Advisory Board (export advisory 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 export advisory board, among other duties, to advise on specified export-related programs and issue an annual report.

end delete
begin delete

The bill would require the office to comply with existing laws relating to open and public meetings and access to public records.

end delete

Vote: 23. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

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

P3    1

SECTION 1.  

The Legislature finds and declares all of the
2following:

3(a) Trade is critical to California’s prosperity by fueling
4economic growth, supporting and creating jobs, and raising living
5standards. In 2012, California’s three customs districts led the
6nation by processing $579 billion in two-way trade value. Exports
7have been the second largest contributor to our nation’s gross
8domestic product since the recession ended.

9(b) California’s success as a trade leader cannot be taken for
10 granted, given the weakening of the national and global economies,
11the European debt crisis, and the increased competition of Gulf
12Coast, East Coast, and Mexican ports preparing to compete with
13California’s market share as the expanded Panama Canal becomes
14operational in 2015.

P4    1(c) There are substantial opportunities that can strengthen and
2grow California’s trade sector and increase jobs. As the gateway
3to China, India, and emerging countries, California is well
4positioned to access China, India, and emerging nations that are,
5or are becoming, large markets for exported goods and services.

6(d) Exports support jobs for California workers and more than
7one million direct and indirect jobs. Exports sustain nearly 60,000
8businesses in the state, of which 96 percent are small- to
9medium-sized businesses.

10(e) Many small- and medium-sized California businesses and
11agricultural enterprises, both those that are already exporting and
12want to expand their business and those that are new to exporting,
13would benefit from financing and technical assistance.

begin delete

14(f) California-based small- and medium-sized exporters were
15assisted from 1985 to 2003, inclusive, under a state program
16designed to work with federal, state, and private institutions to
17provide California exporters with information, technical assistance,
18and financial resources, but the state program ceased when the
19Technology, Trade, and Commerce Agency was eliminated for
20budgetary reasons in 2004 by Chapter 229 of the Statutes of 2003.

21(g) Reestablishing the state program will expand job
22opportunities for California’s workforce by increasing exports of
23California goods, services, and agricultural commodities through
24the provision of information, technical assistance, and financial
25support to California exporters.

end delete
begin delete
26

SEC. 2.  

Chapter 2.6 (commencing with Section 13996.85) is
27added to Part 4.7 of Division 3 of Title 2 of the Government Code,
28to read:

29 

30Chapter  2.6. Trade Promotion of California Ports
31

 

32

13996.85.  

The Director of the Governor’s Office of Business
33and Economic Development shall convene, no later than February
341, 2016, a statewide business partnership for promotion of trade
35for California ports and to explore greater utilization of California
36ports, as follows:

37(a) The business partnership shall include, but is not limited to,
38representatives from ports of entry, ocean carriers, marine terminal
39operators, warehouse operators, railroads, trucking companies,
40labor representatives, and foreign trade zones, representatives of
P5    1environmental groups, and shippers, specifically including
2agricultural exporters, manufacturers, postconsumer secondary
3material handlers, and retailers.

4(b) The business partnership shall advise the Director of the
5Governor’s Office of Business and Economic Development on
6promoting trade for California ports while increasing the use of
7California ports of entry, and ways to increase the opportunity for
8growth and trade activity.

end delete
9

begin deleteSEC. 3.end delete
10begin insertSEC. 2.end insert  

Section 63088.5 of the Government Code is amended
11to read:

12

63088.5.  

(a) There is within the Governor’s Office of Business
13and Economic Development the California Infrastructure and
14Economic Development Bank, which shall, among other things,
15administer the California Small Business Finance Center that
16administers programs to assist businesses seeking new capital
17resources, including, but not limited to, the Small Business Loan
18Guarantee Program.

19(b) Pursuant to this chapter and Chapter 1 (commencing with
20Section 14000) of Part 5 of Division 3 of Title 1 of the
21Corporations Code, the bank board may continue programs funded
22by the California Small Business Expansion Fund or establish one
23or more programs administered by the bank or under contract with
24small business financial development corporations. Programs
25established pursuant to this chapter or Chapter 1 (commencing
26with Section 14000) of Part 5 of Division 3 of Title 1 of the
27Corporations Code may include the following types of financial
28products:

29(1) Loan guarantees and other credit enhancements.

30(2) Direct loans and other debt instruments.

31(3) Disaster loan guarantees.

32(4) Surety bond guarantees.

33(5) Insurance, coinsurance, and other forms of surety.

34(c) In all of their state-funded programs, the corporations shall,
35to the extent practicable, be complementary to, and not competitive
36with, commercial lenders and other state and federal programs.

37(d) In carrying out this chapter the program manager, the
38executive director, and the bank board may call on the California
39Small Business Board for advice and recommendations. All actions
40by the California Small Business Board are advisory.

P6    1(e) The California Small Business Board may also advise the
2Governor and the Small Business Advocate regarding issues and
3programs affecting California’s small business community,
4including, but not limited to, business innovation and expansion,
5export finance, state procurement, management and technical
6assistance, venture capital, and financial assistance.

7

begin deleteSEC. 4.end delete
8begin insertSEC. 3.end insert  

Section 63089.5 of the Government Code, as added
9by Section 4 of Chapter 537 of the Statutes of 2013, is amended
10to read:

11

63089.5.  

(a) There is hereby continued in existence in the State
12Treasury the California Small Business Expansion Fund. All or a
13portion of the funds in the expansion fund may be paid out, with
14the approval of the Department of Finance, to a financial institution
15or financial company that will establish a trust fund and act as
16trustee of the funds.

17(b) The expansion fund and the trust fund shall be used for the
18following purposes:

19(1) To pay defaulted loan guarantee or surety bond losses, or
20other financial product defaults or losses.

21(2) To fund direct loans and other debt instruments.

22(3) To pay administrative costs of corporations.

23(4) To pay state support and administrative costs.

24(5) To pay those costs necessary to protect a real property
25interest in a financial product default.

26(c) The expansion fund and trust fund are created solely for the
27purpose of receiving state, federal, or local government moneys,
28and other public or private moneys to make loans, guarantees, and
29other financial products that the California Small Business Finance
30Center or a financial development corporation is authorized to
31provide. The program manager shall provide written notice to the
32Joint Legislative Budget Committee and to the Chief Clerk of the
33 Assembly and the Secretary of the Senate who shall provide a copy
34of the notice to the relevant policy committees within 10 days of
35any nonstate funds being deposited in the expansion fund. The
36notice shall include the source, purpose, timeliness, and other
37relevant information as determined by the bank board.

38(d) (1) One or more accounts in the expansion fund and the
39trust fund may be created by the program manager for corporations
40participating in one or more programs authorized under this chapter
P7    1and Section 8684.2. Each account is a legally separate account,
2and shall not be used to satisfy loan guarantees or other financial
3product obligations of another corporation except when the
4expansion fund or trust fund is shared by multiple corporations.

5(2) The program manager may create one or more holding
6accounts in the expansion fund or the trust fund, or in both, to
7accommodate the temporary or permanent transfers of funds
8pursuant to Section 63089.3.

9(e) The amount of guarantee liability outstanding at any one
10time shall not exceed five times the amount of funds on deposit in
11the expansion fund plus any receivables due from funds loaned
12from the expansion fund to another fund in state government as
13directed by the Department of Finance pursuant to a statute enacted
14by the Legislature, including each of the trust fund accounts within
15the trust fund.

16(f) The amount of insured export transaction liability outstanding
17at any one time shall be secured by no less than a 25-percent
18reserve amount of funds on deposit in the expansion fund plus any
19receivables due from funds loaned from the expansion fund to
20another fund in state government as directed by the Department
21of Finance pursuant to a statute enacted by the Legislature,
22including each of the trust fund accounts within the trust fund.

23(g) This section shall remain in effect only until January 1, 2018,
24and as of that date is repealed, unless a later enacted statute, that
25is enacted before January 1, 2018, deletes or extends that date.

26

begin deleteSEC. 5.end delete
27begin insertSEC. 4.end insert  

Section 63089.5 of the Government Code, as amended
28by Section 8 of Chapter 132 of the Statutes of 2014, is amended
29to read:

30

63089.5.  

(a) There is hereby continued in existence in the State
31Treasury the California Small Business Expansion Fund. All or a
32portion of the funds in the expansion fund may be paid out, with
33the approval of the Department of Finance, to a financial institution
34or financial company that will establish a trust fund and act as
35trustee of the funds.

36(b) The expansion fund and the trust fund shall be used for the
37following purposes:

38(1) To pay defaulted loan guarantee or surety bond losses, or
39other financial product defaults or losses.

40(2) To fund direct loans and other debt instruments.

P8    1(3) To pay administrative costs of corporations.

2(4) To pay state support and administrative costs.

3(5) To pay those costs necessary to protect a real property
4interest in a financial product default.

5(c) The expansion fund and trust fund are created solely for the
6purpose of receiving state, federal, or local government moneys,
7and other public or private moneys to make loans, guarantees, and
8other financial products that the California Small Business Finance
9Center and a small business financial development corporation are
10authorized to provide.

11(d) One or more accounts in the expansion fund and the trust
12fund may be created by the program manager for corporations
13participating in one or more programs authorized under this chapter
14and Section 8684.2. Each account is a legally separate account,
15and shall not be used to satisfy loan guarantees or other financial
16product obligations of another corporation except when the
17expansion fund or trust fund is shared by multiple corporations.

18(e) The amount of guarantee liability outstanding at any one
19time shall not exceed four times the amount of funds on deposit
20in the expansion fund plus any receivables due from funds loaned
21from the expansion fund to another fund in state government as
22directed by the Department of Finance pursuant to a statute enacted
23by the Legislature, including each of the trust fund accounts within
24the trust fund.

25(f) The amount of insured export transaction liability outstanding
26at any one time shall be secured by no less than a 25-percent
27reserve amount of funds on deposit in the expansion fund plus any
28receivables due from funds loaned from the expansion fund to
29another fund in state government as directed by the Department
30of Finance pursuant to a statute enacted by the Legislature,
31including each of the trust fund accounts within the trust fund.

32(g) This section shall become operative on January 1, 2018.

33

begin deleteSEC. 6.end delete
34begin insertSEC. 5.end insert  

Article 8.5 (commencing with Section 63089.85) is
35added to Chapter 6 of Division 1 of Title 6.7 of the Government
36Code
, to read:

 

P9    1Article 8.5.  Insurance, Coinsurance, and Other Forms of Surety
2

 

3

63089.85.  

(a) The bank or its delegate may utilize funds for
4offering insurance or coinsurance to businesses with less than 250
5employees that export or plan to export pursuant to the directives
6and requirements.

7(b) The amount of funds available for insurance, coinsurance,
8and other forms of surety shall be determined by the directives
9and requirements.

10(c) The bank or its delegate shall not issue insurance,
11coinsurance, and other forms of surety unless and until it
12determines that all of the following conditions are satisfied:

13(1) The insurance, coinsurance, and other forms of surety
14assistance would not be granted by an insurer under reasonable
15terms and conditions and the business has demonstrated a
16reasonable prospect of repayment.

17(2) The insurance will be extended exclusively to support the
18export of goods, services, and agricultural commodities produced
19or grown primarily in California by companies or agricultural
20enterprises that have California as the principal place from which
21their trade or business is directed or managed.

22(3) The business has a minimum equity interest in the business
23as determined by the directives and requirements.

24(4) As a result of the insurance, coinsurance, and other forms
25of surety instruments, the jobs generated or retained demonstrate
26reasonable conformance to any directives and requirements
27specifying employment criteria.

28(d) The maximum direct insurance, coinsurance, and other forms
29of surety instrument amount to a small business shall be set by the
30directives and requirements.

31(e) The bank shall establish directives and requirements for the
32formation, operation, and responsibilities of an insurance review
33committee, that, at a minimum, requires the following:

34(1) An insurance review committee shall be comprised of at
35least five or more persons, a majority of whom shall be experienced
36in insurance and export finance.

37(2) An insurance review committee shall expeditiously act to
38accept or reject loan applications.

39(3) A person who has a financial interest related to a matter over
40which the insurance review committee has authority shall not
P10   1make, participate in making, or in any way attempt to influence
2that matter.

3(f) The bank board shall adopt collateral or security requirements
4to ensure the solvency of any insurance, coinsurance, or surety
5extended under this chapter and to assist in evaluating the program
6authorized by this chapter.

7(g) The bank may charge the applicant or financial institution
8an insurance origination fee or other fee on all insurance made by
9the bank or its insurance provider to defray the operating expenses
10of the program. The amount of the fee shall be determined by the
11directives and requirements.

12

63089.86.  

The bank may do any of the following:

13(a) Act as an agent for creditworthy California growers,
14manufacturers, and other exporters to sell accounts receivable that
15are approved by the office and insured by the Foreign Credit
16Insurance Association or an acceptable private insurer, to qualified
17parties.

18(b) Function as a clearinghouse for the collection and
19disbursement of funds relative to those sales through the use of a
20segregated bank account.

21(c) Take any other related actions as may be appropriate and
22necessary to facilitate the sale of export accounts receivable for
23California exporters.

begin delete
24

SEC. 7.  

Chapter 7 (commencing with Section 63090) is added
25to Division 1 of Title 6.7 of the Government Code, to read:

26 

27Chapter  7. California Export Finance
28

 

29

63090.  

As used in this chapter:

30(a) “California Export Finance Advisory Board” or “export
31advisory board” means the California Export Finance Advisory
32Board established by Section 63090.7.

33(b) “California Export Finance Office” or “office” means the
34entity created by Section 63090.1.

35(c) “Small-size and medium-size businesses” mean firms with
36less than 250 employees.

37

63090.1.  

(a) The California Export Finance Office is hereby
38created within the California Small Business Finance Center, within
39the bank.

P11   1(b) The purpose of the office is to expand employment and
2income opportunities for Californians through increased exports
3of California goods, services, and agricultural commodities by
4providing actual and potential California exporters, specifically
5small- and medium-sized exporters, with information and technical
6assistance on export opportunities, exporting techniques, and
7financial assistance in support of export transactions.

8

63090.2.  

The executive director, or his or her designee, shall
9be the director of the California Export Finance Office and shall
10administer the programs of the California Export Finance Office
11and perform any duties delegated by the bank board.

12

63090.3.  

The executive director, or his or her designee, upon
13approval of the bank board, may do all of the following:

14(a) Contract for services.

15(b) Hold public hearings.

16(c) Call upon and reimburse for services any state agency or
17department for assistance in carrying out the objectives of this
18chapter.

19(d) Participate with government or private industry in programs
20for technical assistance, technology, transfer, or any other programs
21related to this chapter.

22(e) Undertake or commission studies on methods to increase
23financial resources to expand the exports of California goods,
24services, and agricultural commodities.

25(f) Exercise any other power as may be necessary to carry out
26the purposes of this chapter.

27(g) Provide or facilitate the provision of export finance training
28for staff and other individuals involved in export finance assistance,
29including, but not limited to, training sessions provided by the
30federal government and other public and private organizations.

31

63090.4.  

The office may do all of the following:

32(a) Coordinate state export activities with international, federal,
33and other state entities that provide programs or services that are
34designed to provide export assistance and export-related financing.

35(b) Establish a network of contacts among public and private
36organizations that provide information, technical assistance, and
37financial support of exporting.

38(c) Assemble, publish, and disseminate information to California
39exporters on export opportunities, techniques of exporting, sources
P12   1of public and private export assistance, and sources of
2export-related financing.

3(d) Organize, host, and participate in seminars and other forums
4designed to disseminate information and technical assistance on
5exporting and export-related financing to actual and potential
6California exporters.

7(e) Provide small-size and medium-size businesses, including
8individual firms and agricultural enterprises, with information and
9technical assistance relating to exporting and export financing.

10

63090.5.  

The office shall comply with the Bagley-Keene Open
11Meeting Act (Article 9 (commencing with Section 11120) of
12Chapter 1 of Part 1 of Division 3 of Title 2) and the California
13Public Records Act (Chapter 3.5 (commencing with Section 6250)
14of Division 7 of Title 1).

15

63090.7.  

(a) The California Export Finance Advisory Board
16is established within the bank. The export advisory board shall
17consist of 11 members as follows:

18(1) The Secretary of Food and Agriculture, or his or her
19designee.

20(2) The executive director, or his or her designee.

21(3) One individual appointed by the Governor who shall be
22knowledgeable of, and experienced in, the exporting and export
23needs of California agriculture.

24(4) Three individuals appointed by the Governor and one
25individual appointed by the Speaker of the Assembly, each of
26whom shall be experienced in exporting, knowledgeable of the
27needs and problems of small and entrepreneurial exporters, and
28actively employed with an exporting firm, export trading company,
29or export management company.

30(5) One person appointed by the Governor and one person
31appointed by the Senate Committee on Rules, each of whom shall
32be experienced in export financing, knowledgeable of the export
33financing needs and problems of small and entrepreneurial
34exporters, and actively employed by a financial institution.

35(6) One person appointed by the Controller and one person
36appointed by the Treasurer, each of whom shall be an accomplished
37credit evaluation representative experienced in analyzing financial
38statements, including, but not limited to, loan applications, and in
39evaluating the creditworthiness of firms that are likely to seek
40insurance or loan guarantees from the office.

P13   1(b) The members shall serve two-year terms at the pleasure of
2the appointing authority. Vacancies shall be filled by the appointing
3authority.

4(c) Export advisory board members who are not employees of
5the state shall receive the per diem authorized in Section 11564.5
6for each day they attend export advisory board or export advisory
7board subcommittee meetings. In addition, these members shall
8be reimbursed for their expenses in accordance with the rules of
9the Department of Personnel Administration when attending export
10advisory board and export advisory board subcommittee meetings
11and conducting export advisory board business as determined by
12the export advisory board.

13

63090.8.  

The export advisory board shall do all of the
14following:

15(a) Elect a chair and vice chair from among its members. The
16chair shall preside at meetings of the export advisory board.

17(b) Advise on the export-related programs authorized by Chapter
186 (commencing with Section 63088) and this chapter.

19(c) Adopt bylaws as are necessary to govern the conduct and
20operation of the export advisory board.

21(d) Provide for the appointment of advisory subgroups necessary
22to inform and deliberate on issues of significance to the export
23advisory board.

24(e) Hold regularly scheduled meetings, at least quarterly, in
25order to carry out the objectives and responsibilities of the export
26advisory board.

27(f) Issue an annual report critiquing California’s export-related
28programs, services, and other activities, and recommended changes.
29The report shall include an evaluation of how these activities
30impact all of the following:

31(1) Participation of financial institutions in export financing
32programs.

33(2) Access of California firms to federal export financing
34programs.

35(3) Export volume of California firms.

36(4) Economic and social benefits of exports to the state.

end delete


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