California Legislature—2015–16 Regular Session

Assembly BillNo. 1033


Introduced by Assembly Member Eduardo Garcia

February 26, 2015


An act to amend Section 63010 of, and to add Chapter 7 (commencing with Section 63090) to Division 1 of Title 6.7 of, the Government Code, relating to state government.

LEGISLATIVE COUNSEL’S DIGEST

AB 1033, as introduced, Eduardo Garcia. Infrastructure financing.

The Bergeson-Peace Infrastructure and Economic Development Bank Act establishes the California Infrastructure and Economic Development Bank, within the Governor’s Office of Business and Economic Development, to be governed by a specified board of directors. The act makes findings and declarations, provides definitions, and authorizes the board to take various actions in connection with the bank, including the issuance of bonds, as specified.

This bill, among other things, would revise the definition of economic development facilities to include facilities that are used to provide goods movement and would define goods movement-related infrastructure. The bill would revise the definition of port facilities to specifically reference airports, landports, waterports, and railports, and would expand the definition of a participating party to include an international governmental entity.

This bill would also enact the California Economic Development Infrastructure Act of 2015 to create the California Infrastructure Finance Center to administer the act, as specified, under the oversight of the bank. This bill would authorize the designation of corporations as a California Infrastructure Development Partner, as specified, and would establish requirements for those corporations to secure participation rights, as defined, as part of forming public-private partnerships with the bank in building infrastructure related to economic-related activities. This bill would prove that participation rights include, but are not limited to, a commitment by the state to use the corporation to deliver infrastructure projects and the right to compete for public-private partnership projects, also known as P3 projects. This bill would exempt contracts entered into between the bank and the corporations awarded participation rights under this act from specified public contracting requirements. This bill would authorize the bank to charge a fee related to the cost of designating and overseeing the act, and to borrow from other resources of the bank or the state, if approved by the Legislature, to pay for operational expenses of the first 2 years of the act, as provided. This bill would establish the Infrastructure Development Account in an unspecified fund to accept fees charged by the bank.

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

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

P2    1

SECTION 1.  

(a) The Legislature finds and declares that
2engaging the private sector in building infrastructure related to
3economic-related activities will further the opportunities of
4California businesses and workers.

5(b) Without a modern infrastructure network comprised of roads,
6highways, railroads, and airports, landports, and seaports,
7California will be unable to remain sufficiently connected to the
8global economy.

9(c) Finding appropriate means for partnering with private sector
10infrastructure developers must be undertaken in a thoughtful way
11that ensures workers, residents, and small businesses are not
12negatively impacted or result in an unreasonable ability to
13participate in the broader economy.

14

SEC. 2.  

Section 63010 of the Government Code is amended
15to read:

16

63010.  

For purposes of this division, the following words and
17terms shall have the following meanings unless the context clearly
18indicates or requires another or different meaning or intent:

19(a) “Act” means the Bergeson-Peace Infrastructure and
20Economic Development Bank Act.

P3    1(b) “Bank” means the California Infrastructure and Economic
2Development Bank.

3(c) “Board” or “bank board” means the Board of Directors of
4the California Infrastructure and Economic Development Bank.

5(d) “Bond purchase agreement” means a contractual agreement
6executed between the bank and a sponsor, or a special purpose
7trust authorized by the bank or a sponsor, or both, whereby the
8bank or special purpose trust authorized by the bank agrees to
9purchase bonds of the sponsor for retention or sale.

10(e) “Bonds” means bonds, including structured, senior, and
11subordinated bonds or other securities; loans; notes, including
12bond, revenue,begin delete taxend deletebegin insert tax,end insert or grant anticipation notes; commercial
13paper; floating rate and variable maturity securities; and any other
14evidences of indebtedness or ownership, including certificates of
15participation or beneficial interest, asset backed certificates, or
16lease-purchase or installment purchase agreements, whether taxable
17or excludable from gross income for federal income taxation
18purposes.

19(f) “Cost,” as applied to a project or portion thereof financed
20under this division, means all or any part of the cost of construction,
21renovation, and acquisition of all lands, structures, real or personal
22property, rights, rights-of-way, franchises, licenses, easements,
23and interests acquired or used for a project; the cost of demolishing
24or removing any buildings or structures on land so acquired,
25including the cost of acquiring any lands to which the buildings
26or structures may be moved; the cost of all machinery, equipment,
27and financing charges; interest prior to, during, and for a period
28after completion of construction, renovation, or acquisition, as
29determined by the bank; provisions for working capital; reserves
30for principal and interest and for extensions, enlargements,
31additions, replacements, renovations, and improvements; and the
32cost of architectural, engineering, financial and legal services,
33plans, specifications, estimates, administrative expenses, and other
34expenses necessary or incidental to determining the feasibility of
35any project or incidental to the construction, acquisition, or
36financing of any project, and transition costs in the case of an
37electrical corporation.

38(g) “Economic development facilities” means real and personal
39property, structures, buildings, equipment, and supporting
40components thereof that are used to provide industrial, recreational,
P4    1research, commercial, utility,begin insert goods movement,end insert or service enterprise
2facilities, community, educational, cultural, or social welfare
3facilities and any parts or combinations thereof, and all facilities
4or infrastructure necessary or desirable in connection therewith,
5including provision for working capital, but shall not include any
6housing.

7(h) “Electrical corporation” has the meaning set forth in Section
8218 of the Public Utilities Code.

9(i) “Executive director” means the Executive Director of the
10California Infrastructure and Economic Development Bank
11appointed pursuant to Section 63021.

12(j) “Financial assistance” in connection with a project, includes,
13but is not limited to, any combination of grants, loans, the proceeds
14of bonds issued by the bank or special purpose trust, insurance,
15guarantees or other credit enhancements or liquidity facilities, and
16contributions of money, property, labor, or other things of value,
17as may be approved by resolution of the board or the sponsor, or
18both; the purchase or retention of bank bonds, the bonds of a
19sponsor for their retention or for sale by the bank, or the issuance
20of bank bonds or the bonds of a special purpose trust used to fund
21the cost of a project for which a sponsor is directly or indirectly
22liable, including, but not limited to, bonds, the security for which
23is provided in whole or in part pursuant to the powers granted by
24Section 63025; bonds for which the bank has provided a guarantee
25or enhancement, including, but not limited to, the purchase of the
26subordinated bonds of the sponsor, the subordinated bonds of a
27special purpose trust, or the retention of the subordinated bonds
28of the bank pursuant to Chapter 4 (commencing with Section
2963060); or any other type of assistance deemed appropriate by the
30bank or the sponsor, except that no direct loans shall be made to
31nonpublic entities other than in connection with the issuance of
32rate reduction bonds pursuant to a financing order or in connection
33with a financing for an economic development facility.

34For purposes of this subdivision, “grant” does not include grants
35made by the bank except when acting as an agent or intermediary
36for the distribution or packaging of financing available from
37federal, private, or other public sources.

38(k) “Financing order” has the meaning set forth in Section 840
39of the Public Utilities Code.

P5    1(l) “Guarantee trust fund” means the California Infrastructure
2Guarantee Trust Fund.

3(m) “Infrastructure bank fund” means the California
4Infrastructure and Economic Development Bank Fund.

5(n) “Loan agreement” means a contractual agreement executed
6between the bank or a special purpose trust and a sponsor that
7provides that the bank or special purpose trust will loan funds to
8the sponsor and that the sponsor will repay the principal and pay
9the interest and redemption premium, if any, on the loan.

10(o) “Participating party” means any person, company,
11corporation,begin delete association,end deletebegin insert association;end insert statebegin delete orend deletebegin insert, international, orend insert
12 municipal governmentalbegin delete entity,end deletebegin insert entity;end insert partnership, firm, or other
13entity or group of entities, whether organized for profit or not for
14profit, engaged in business or operations within the state and that
15applies for financing from the bank in conjunction with a sponsor
16for the purpose of implementing a project. However, in the case
17of a project relating to the financing of transition costs or the
18acquisition of transition property, or both, on the request of an
19electrical corporation, or in connection withbegin delete aend delete financing for an
20economic development facility, or for the financing of insurance
21claims, the participating party shall be deemed to be the same
22entity as the sponsor for the financing.

23(p) “Project” means designing, acquiring, planning, permitting,
24entitling, constructing, improving, extending, restoring, financing,
25and generally developing public development facilities or economic
26development facilities within the state or financing transition costs
27or the acquisition of transition property, or both, upon approval of
28a financing order by the Public Utilities Commission, as provided
29in Article 5.5 (commencing with Section 840) of Chapter 4 of Part
301 of Division 1 of the Public Utilities Code.

31(q) “Public development facilities” means real and personal
32property, structures, conveyances, equipment, thoroughfares,
33buildings, and supporting components thereof, excluding any
34housing, that are directly related to providing the following:

35(1) “City streets” including any street, avenue, boulevard, road,
36parkway, drive, or other way that is any of the following:

37(A) An existing municipal roadway.

38(B) Is shown upon a plat approved pursuant to law and includes
39the land between the street lines, whether improved or unimproved,
40and may comprise pavement, bridges, shoulders, gutters, curbs,
P6    1guardrails, sidewalks, parking areas, benches, fountains, plantings,
2lighting systems, and other areas within the street lines, as well as
3equipment and facilities used in the cleaning, grading, clearance,
4maintenance, and upkeep thereof.

5(2) “County highways” including any county highway as defined
6in Section 25 of the Streets and Highways Code, that includes the
7land between the highway lines, whether improved or unimproved,
8and may comprise pavement, bridges, shoulders, gutters, curbs,
9guardrails, sidewalks, parking areas, benches, fountains, plantings,
10lighting systems, and other areas within the street lines, as well as
11equipment and facilities used in the cleaning, grading, clearance,
12maintenance, and upkeep thereof.

13(3) “Drainage, water supply, and flood control” including, but
14not limited to, ditches, canals, levees, pumps, dams, conduits,
15pipes, storm sewers, and dikes necessary to keep or direct water
16away from people, equipment, buildings, and other protected areas
17as may be established by lawful authority, as well as the
18acquisition, improvement, maintenance, and management of
19floodplain areas and all equipment used in the maintenance and
20operation of the foregoing.

21(4) “Educational facilities” including libraries, child care
22facilities, including, but not limited to, day care facilities, and
23employment training facilities.

24(5) “Environmental mitigation measures” including required
25construction or modification of public infrastructure and purchase
26and installation of pollution control and noise abatement
27equipment.

28(6) “Parks and recreational facilities” including local parks,
29recreational property and equipment,begin delete parkwaysend deletebegin insert parkways,end insert and
30property.

31(7) “Port facilities” includingbegin insert airports, landports, waterports,
32railports,end insert
docks, harbors, ports of entry, piers, ships, small boat
33harbors and marinas, and any other facilities, additions, or
34improvements in connectionbegin delete therewith.end deletebegin insert therewith that transport
35good or persons.end insert

36(8) “Power and communications” including facilities for the
37transmission or distribution of electrical energy, natural gas, and
38telephone and telecommunications service.

39(9) “Public transit” including air and railbegin delete transport of goods,end delete
40begin insert transport,end insert airports, guideways, vehicles, rights-of-way, passenger
P7    1stations, maintenance and storage yards, and related structures,
2including public parking facilities,begin insert andend insert equipment used to provide
3or enhance transportation by bus, rail, ferry, or other conveyance,
4either publicly or privately owned, that provides to the public
5general or special service on a regular and continuing basis.

6(10) “Sewage collection and treatment” including pipes, pumps,
7and conduits that collect wastewater from residential,
8manufacturing, and commercial establishments, the equipment,
9structures, and facilities used in treating wastewater to reduce or
10eliminate impurities or contaminants, and the facilities used in
11disposing of, or transporting, remaining sludge, as well as all
12equipment used in the maintenance and operation of the foregoing.

13(11) “Solid waste collection and disposal” including vehicles,
14vehicle-compatible waste receptacles, transfer stations, recycling
15centers, sanitary landfills, and waste conversion facilities necessary
16to remove solid waste, except that which is hazardous as defined
17by law, from its point of origin.

18(12) “Water treatment and distribution” including facilities in
19which water is purified and otherwise treated to meet residential,
20manufacturing, or commercial purposes and the conduits, pipes,
21and pumps that transport it to places of use.

22(13) “Defense conversion” including, but not limited to, facilities
23necessary for successfully converting military bases consistent
24with an adopted base reuse plan.

25(14) “Public safety facilities” including, but not limited to, police
26stations, fire stations, court buildings, jails, juvenile halls, and
27juvenile detention facilities.

28(15) “State highways” including any state highway as described
29in Chapter 2 (commencing with Section 230) of Division 1 of the
30Streets and Highways Code, and the related components necessary
31for safe operation of the highway.

32(16) (A) begin deleteMilitary infrastructure, end deletebegin insert“Military infrastructure” end insert
33including, but not limited to, facilities on or near a military
34installation, that enhance the military operations and mission of
35one or more military installations in this state. To be eligible for
36funding, the project shall be endorsed by the Office ofbegin delete Military
37and Aerospace Support established pursuant to Section 13998.2.end delete

38begin insert Planning and Research.end insert

39(B) For purposes of this subdivision, “military installation”
40means any facility under the jurisdiction of the Department of
P8    1Defense, as defined in paragraph (1) of subsection (e) of Section
22687 of Title 10 of the United States Code.

begin insert

3(17) “Goods movement-related infrastructure” including port
4facilities, roads, rail, and other facilities and projects that move
5goods, energy, and information.

end insert

6(r) “Rate reduction bonds” has the meaning set forth in Section
7840 of the Public Utilities Code.

8(s) “Revenues” means all receipts, purchase payments, loan
9repayments, lease payments, and all other income or receipts
10derived by the bank or a sponsor from the sale, lease, or other
11financing arrangement undertaken by the bank, abegin delete sponsorend deletebegin insert sponsor,end insert
12 or a participating party, including, but not limited to, all receipts
13from a bond purchase agreement, and any income or revenue
14derived from the investment of any money in any fund or account
15of the bank or a sponsor and any receipts derived from transition
16property. Revenues shall not include moneys in the General Fund
17of the state.

18(t) “Special purpose trust” means a trust, partnership, limited
19partnership, association, corporation, nonprofit corporation, or
20other entity authorized under the laws of the state to serve as an
21instrumentality of the state to accomplish public purposes and
22authorized by the bank to acquire, by purchase or otherwise, for
23retention or sale, the bonds of a sponsor or of the bank made or
24entered into pursuant to this division and to issue special purpose
25trust bonds or other obligations secured by these bonds or other
26sources of public or private revenues. Special purpose trust also
27means any entity authorized by the bank to acquire transition
28property or to issue rate reduction bonds, or both, subject to the
29approvals by the bank and powers of the bank as are provided by
30the bank in its resolution authorizing the entity to issue rate
31reduction bonds.

32(u) “Sponsor” means any subdivision of the state or local
33government including departments, agencies, commissions, cities,
34counties, nonprofit corporations formed on behalf of a sponsor,
35special districts, assessment districts, and joint powers authorities
36within the state or any combination of these subdivisions that
37makes an application to the bank for financial assistance in
38connection with a project in a manner prescribed by the bank. This
39definition shall not be construed to require that an applicant have
40an ownership interest in the project. In addition, an electrical
P9    1corporation shall be deemed to be the sponsor as well as the
2participating party for any project relating to the financing of
3transition costs and the acquisition of transition property on the
4request of the electrical corporation and any person, company,
5corporation, partnership, firm, or other entity or group engaged in
6business or operation within the state that applies for financing of
7any economic development facility, shall be deemed to be the
8sponsor as well as the participating party for the project relating
9to the financing of that economic development facility.

10(v) “State” means the State of California.

11(w) “Transition costs” has the meaning set forth in Section 840
12of the Public Utilities Code.

13(x) “Transition property” has the meaning set forth in Section
14840 of the Public Utilities Code.

15

SEC. 3.  

Chapter 7 (commencing with Section 63090) is added
16to Division 1 of Title 6.7 of the Government Code, to read:

17 

18Chapter  7. California Economic Development
19Infrastructure Finance Act of 2015
20

20 

21Article 1.  Introduction
22

 

23

63090.  

(a) This chapter shall be known, and may be cited, as
24the California Economic Development Infrastructure Act of 2015.

25(b) Notwithstanding any other provision of this division, this
26chapter shall not apply to any other activities, powers, and duties
27of the bank under any of the other chapters of this division.

28(c) Infrastructure development, enhancement, and modernization
29is fundamental to the continued economic growth of the state. In
30order to be successful in the integrated global economy, California
31businesses and workers must have access to the necessary
32infrastructure. Some of this infrastructure will be financed with
33state moneys, while other infrastructure is more appropriately
34funded privately.

35(d) It is necessary to authorize the bank to serve as a conduit
36financier, project advisor, and a project facilitator for infrastructure
37that supports private economic development activities that provide
38a meaningful benefit to the people of California.

39(e) This chapter shall not supplant any infrastructure contracting
40authority that a government entity has under a different law. A
P10   1state agency, with the approval of the bank board, may avail itself
2of the process authorized by this chapter.

3 

4Article 2.  Definitions
5

 

6

63091.  

Unless the context otherwise requires, the definitions
7in this section govern the construction of this chapter. The
8definitions in this chapter shall apply only to this chapter and not
9to any other provision of this division.

10(a) “Bank” means the California Infrastructure and Economic
11Development Bank.

12(b) “Bank board” means the Board of Directors of the California
13Infrastructure and Economic Development Bank.

14(c) “California Infrastructure Development Center” means the
15governmental unit within the bank with the administrative
16responsibility for programs and activities authorized pursuant to
17this chapter.

18(d) “Corporation” means any business establishment or groups
19of two or more business establishments that apply for and are
20designated by the bank as a California Infrastructure Development
21Partner.

22(e) “Directives and requirements” means a document adopted
23by the bank board setting forth policy direction as well as rules
24governing a particular subject area.

25(f) “Executive director” means the Executive Director of the
26California Infrastructure and Economic Development Bank.

27(g) “Participation rights” means a commitment by the state to
28use a corporation to deliver infrastructure projects. Participation
29rights include the right to compete for a public-private partnership
30project or projects (P3 projects). If the corporation should be
31chosen to participate, participation rights may include a
32preestablished minimum participation rate in financing the P3
33project or projects.

34(h) “Program manager” means the manager of the California
35Infrastructure Development Center as appointed by the executive
36director of the bank.

37(i) “Spring fed pool” means a list of corporations designated by
38the bank board as a California Infrastructure Development Partner
39through a request for information or request for proposal process.

 

P11   1Article 3.  Purpose
2

 

3

63092.  

The bank shall include the California Infrastructure
4Finance Center that administers the California Economic
5Development Infrastructure Act of 2015.

6 

7Article 4.  Administrative Structure
8

 

9

63093.  

(a) Upon the approval of the board, the bank may award
10the participation rights to a corporation that meets the criteria in
11directives and requirements established pursuant to subdivision
12(f).

13(b) (1) A corporation designated for inclusion within the spring
14fed pool by the board may deliver infrastructure projects that have
15been determined by statute as appropriate for financing through a
16public-private partnership.

17(2) Eligible infrastructure projects include goods movement,
18public transit, solid waste collection and disposal, water treatment
19and distribution, and defense conversion, as defined in Section
2063010.

21(3) The contract awarding the participation rights shall state the
22rights and conditions of the agreement. At a minimum, the
23agreement shall include the right of competition in each and all
24P3 projects the state undertakes during the term of the contract
25relating to the specific type of infrastructure identified in the
26contract. The agreement may include, for projects the corporation
27agrees to participate in, a preestablished minimum participation
28rate in financing each and all P3 projects.

29(4) No agreement shall be for longer than five years.

30(5) The bank may cancel a contract for fraudulent activity and
31poor performance as set forth in the directives and requirements
32adopted pursuant to subdivision (f).

33(c) The award of the participation rights may be reflected as an
34equity investment by the state in either an individual project or the
35corporation.

36(d) The bank may employ consultants and advisers as may be
37necessary in its judgment, in connection with the award of the
38participation rights. Payment for these services shall be reimbursed
39from fees received from an applicant for designation under this
40section.

P12   1(e) The bank may charge a fee to recover the cost of making
2designations and overseeing the act, including, but not limited to,
3the cost of consultants and advisors. Operation costs may be
4recovered from fee revenues upon appropriation by the Legislature
5of the Infrastructure Development Account of the ____ Fund,
6which is hereby established to receive those fee revenues.
7Operation costs for the first two years may be borrowed from other
8resources of the bank or the state, if approved by the Legislature,
9and then repaid once corporations are designated and fees become
10available.

11(f) (1) Section 10295 of the Public Contract Code does not
12apply to agreements entered into by the bank in connection with
13the award of participation rights under this chapter.

14(2) The bank board shall adopt directives and requirements
15concerning the implementation of this chapter. These directives
16and requirements shall include a process for receiving and
17reviewing applications and entering into participation rights
18agreements that meet the requirements of this section.

19(g) The bank shall annually report on its activities related to the
20duties and authorities in this section as part of the bank’s annual
21report, as required in Section 63035.

22

63094.  

The program manager acting under the guidance of the
23executive director shall do all of the following:

24(a) Administer this chapter.

25(b) Enter into participation rights agreements between the bank
26and a corporation for services to be provided by the corporation
27to the state under this chapter.

28(c) Act as a liaison between corporations, other state and federal
29agencies, lenders, and the Legislature.



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