BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1533 (Committee on Jobs, Economic Development, and the Economy) - Infrastructure financing. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 13, 2015 |Policy Vote: B., P. & E.D. 9 - | | | 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 17, 2015 |Consultant: Robert Ingenito | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 1533 would (1) revise the definition of economic development facilities and port facilities for purposes of the Bergeson-Peace Infrastructure and Economic Development Bank (I-Bank) Act, and (2) authorize the I-Bank to administer and expend certain federal funds. Fiscal Impact: This bill would likely result in increased annual administrative costs to the I-Bank of up to $150,000 (General Fund), to administer grant funds, as specified. AB 1533 (Committee on Jobs, Economic Development, and the Economy) Page 1 of ? Background: The I-Bank was established in 1994 to promote economic revitalization, enable future development, and encourage a healthy climate for jobs in California. Housed within GO-Biz, it is governed by a five-member board, with its day-to-day operations directed by an Executive Director who is an appointee of the Governor and is subject to confirmation by the California State Senate. Currently, the I-Bank has authority for 25 staff. The I-Bank does not receive any ongoing General Fund support, rather it is financed through fees, interest income, and other revenues derived from its various public and private sector financing activities. Budgetary data indicate that its programs provide revenues sufficient to cover operating expenses. The I-Bank administers three programs: (1) the Infrastructure State Revolving Fund, which provides direct low-cost financing to public agencies for a variety of public infrastructure projects, (2) the Conduit Bond Program, which provides financing for manufacturing companies, public benefit nonprofit organizations, public agencies and other eligible entities, and (3) the Small Business Finance Center, which helps small businesses access private financing through loan guarantees, direct loans, and performance bond guarantees. There is no commitment of I-Bank or state funds for any of the conduit revenue bonds. Even in the case of default, the state is not liable. Since its creation, the I-Bank has loaned, financed, or participated in over $344 billion in infrastructure and economic expansion projects, subsequently developing expertise in the financing of public infrastructure. The I-Bank also serves as the State's only general purpose financing authority with broad statutory powers to issue revenue bonds, make loans, and provide guarantees. Over $33 billion in conduit revenue bonds have been issued by the I-Bank since 2000. Proposed Law: This bill would revise the definition of "economic development AB 1533 (Committee on Jobs, Economic Development, and the Economy) Page 2 of ? facilities" to include facilities that are used to provide goods movement and "port facilities" to specifically reference airports, landports, waterports, and railports, for purposes of the I-Bank Act. Additionally, the bill would transfer authority over the federal Economic Development Adjustment Assistance (EDAA) Grant and the Sudden and Severe Economic Dislocation Grant from the Governor's Office of Business and Economic Development (GO-Biz) to the I-Bank. Related Legislation: AB 1537 (Assembly Committee on Jobs, Economic Development and the Economy, Chapter 191, Statutes of 2015) expanded the reporting requirements of the California Small Business Finance Center to include the geographic location of businesses assisted by its programs. Staff Comments: Over a decade ago, California received $2 million in federal funding through the EDAA Grant, which funds economically-distressed communities, and the Sudden and Severe Economic Dislocation Grant Program, which provides capital to businesses in economically-distressed areas. The EDAA was administered by the Business, Transportation and Housing (BTH) Agency through 2013. When BTH was eliminated in 2013, pursuant to the Governor's reorganization plan, the California Small Business Expansion Fund (including the EDAA grant) and the program authority to oversee the EDAA grant, were transferred to GO-Biz. Other 2013 legislation, chaptered after the reorganization bill, transferred the California Small Business Expansion Fund to the I-Bank. This bill would streamline the organization structure for the federal funds by authorizing the I-Bank to oversee both the money and program implementation responsibility. AB 1533 (Committee on Jobs, Economic Development, and the Economy) Page 3 of ? -- END --