BILL ANALYSIS Ó AB 1533 Page 1 ASSEMBLY THIRD READING AB 1533 (Committee on Jobs, Economic Development, and the Economy) As Amended May 13, 2015 Majority vote ------------------------------------------------------------------- |Committee |Votes |Ayes |Noes | | | | | | | | | | | |----------------+------+--------------------+----------------------| |Jobs |8-0 |Eduardo Garcia, | | | | |Kim, Brough, Brown, | | | | |Chu, Gipson, Irwin, | | | | |Mathis | | | | | | | |----------------+------+--------------------+----------------------| |Appropriations |17-0 |Gomez, Bigelow, | | | | |Bonta, Calderon, | | | | |Chang, Daly, | | | | |Eggman, Gallagher, | | | | | | | | | | | | | | |Eduardo Garcia, | | | | |Gordon, Holden, | | | | |Jones, Quirk, | | | | |Rendon, Wagner, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------- AB 1533 Page 2 SUMMARY: Makes a number of technical changes to the definition section of the code relating to the Infrastructure and Economic Development Bank (I-Bank). In addition, this bill makes conforming changes to the operations of the Small Business Finance Center, administered through the I-Bank, consistent with the Governor's Reorganization Plan 2 (GRP 2) and other legislation from 2013. EXISTING LAW: 1)Establishes the I-Bank within the Governor's Office of Business and Economic Development (GO-Biz) and authorizes it to undertake a variety of infrastructure related financial activities including, but not limited to, the administration of a revolving loan fund, oversight of the Small Business Finance Center, and the issuance of tax-exempt and taxable revenue bonds. 2)Establishes the Small Business Finance Center within the I-Bank for the purpose of assisting businesses seeking capital resources not otherwise available in the private markets including: a) Loan guarantees and other credit enhancements; b) Direct loans and other debt instruments; c) Disaster loan guarantees; and d) Surety bond guarantees. FISCAL EFFECT: According to the Assembly Appropriations Committee, implementation of this measure will result in administrative costs to GO-Biz of an amount that is unlikely to exceed $150,000. AB 1533 Page 3 COMMENTS: This is the I-Bank code maintenance bill from the Assembly Committee on Jobs, Economic Development, and the Economy. This bill contains technical and conforming changes to prior legislative actions. Updating Definitions: Existing law includes an extended list of definitions for the operation of the I-Bank including definitions related to the types of: 1)Financial actions the I-Bank is authorized to undertake including bond purchase agreements, financial assistance, and loan agreements; and 2)Projects the I-Bank is authorized to finance including economic development facilities, education facilities and public development facilities. This bill reorganizes the placement of certain definitions, clarifies some definitions, and updates cross references within the I-Bank's definition code sections. Transferring program authority of federal funds: Over a decade ago, California received $2 million in grants from the federal Economic Development Agency. The funds were provided through the Economic Adjustment Assistance Grant Program, which funds economically-distressed communities, and the Sudden and Severe Economic Dislocation Grant Program, which provides capital to businesses in economically-distressed areas. Until the agency was dissolved in 2003, the funds were under the control of the Technology, Trade, and Commerce Agency. Between 2003 and 2008, the funds were held by the State Controller awaiting statutory direction as to the administrative AB 1533 Page 4 responsibility for the use of the funds. In 2008, the federal funds were transferred to the Small Business Expansion Fund and the Business, Transportation, and Housing Agency (BTH) was given program responsibility. Pursuant to the Governor's Reorganization Plan 2, BTH was eliminated in 2013. Legislation to make the statutory changes to implement the reorganization transferred the California Small Business Expansion Fund (including the federal funds) and program authority to GO-Biz. During the same year, the Legislature approved and the Governor signed AB 1247 (Medina), Chapter 537, Statues of 2013, which transferred the Small Business Expansion Fund to the newly created Small Business Finance Center under the direct authority of the I-Bank. This resulted in the funding and the program authority being only indirectly aligned. This bill proposes a more streamlined organization structure for the federal funds by authorizing the I-Bank to oversee both the money and program implementation responsibility. According to the author, this shift is recommended because the I-Bank already: 1)Operates under the purview of GO-Biz, meaning GO-Biz will still have oversight; 2)Has authority to provide direct loans and guarantees to businesses seeking capital, meaning they are well equipped to appropriately expend the funds; and 3)Has primary responsibility for the funds in the California Small Business Expansion Fund. AB 1533 Page 5 Analysis Prepared by: Toni Symonds / J., E.D., & E. / (916) 319-2090 FN: 0000535