BILL ANALYSIS Ó AB 2841 Page 1 Date of Hearing: May 4, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2841 (Travis Allen) - As Amended April 6, 2016 ----------------------------------------------------------------- |Policy |Jobs, Economic Development, |Vote:|9 - 0 | |Committee: |and the Economy | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Local Government | |8 - 0 | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill creates a process for a harbor agency to receive project valuations from the California Infrastructure and Economic Development Bank (I-Bank), contingent upon an appropriation for this purpose in the budget act. Specifically, AB 2841 Page 2 this bill: 1)Specifies Legislative intent that seaport infrastructure financing be developed in a manner that: a) improves public port assets, infrastructure, and operations; and b) achieves the public goals of improving the state's waterborne commerce, enhancing economic prosperity, and financing the costs of environmental mitigation and improvement. 2)Requires the I-Bank, after consulting with the appropriate state and local agencies, to establish guidelines for the selection of projects to receive assistance. 3)Allows I-Bank to accept applications for a proposed project valuation consistent with the criteria, priorities, and guidelines adopted by the Board of the harbor agency, and specifies the contents of the application. 4)Requires a harbor agency to adopt a resolution setting forth estimates of the state fiscal and economic impacts that will result from the proposed project, as specified. 5)Requires the I-Bank, upon receipt of the proposed project valuation, to approve, require a modification of, or deny the proposed project valuation, as specified. 6)Prohibits the I-Bank from approving a proposed project valuation, if the State Lands Commission objects to a finding made by a harbor agency that the project to be financed is consistent with state tidelands trust and the terms and conditions of any grant of trust lands to the harbor agency. 7)Requires the I-Bank to provide notice to the Department of Finance (DOF) within 30 days AB 2841 Page 3 of approving a proposed project valuation, and requires that notice include, at a minimum, the dollar amount of the valuation and any other information requested by DOF. Requires DOF to include an amount equal to the approved project valuation in the appropriation for the I-Bank Fund, as specified, in the Governor's proposed annual budget. 8)Requires the I-Bank to remit funding to the harbor agency only upon an appropriation by the Legislature of moneys for that purpose. 9)Allows the I-Bank to require the harbor agency to demonstrate it has sufficient resources to complete the infrastructure development project or install the equipment purchased. 10)Requires the I-Bank to prepare a report on its activities and post that report in its Web site. FISCAL EFFECT: 1)One-time General Fund cost pressures of $750,000 to develop a new program within the I-Bank to provide assistance to harbor agencies. The I-Bank would need to develop the criteria, priorities, and guidelines and set up the organizational structure for the program. Ongoing General Fund cost pressures of $810,000 to manage the new program, including hiring loan officers, a compliance officer and administrative support. There are approximately 12 projects that appear to have an interest in applying for this program. The program established by this bill is contingent upon an appropriation in the budget act. The bill also requires the AB 2841 Page 4 harbor agency to reimburse the I-Bank for expenses incurred for the review and processing of the proposed financing of a project, but it is likely an initial state investment would be needed. 2)Future state cost pressures, likely in the billions of dollars, to provide funding for port investments. Ports anticipate the I-Bank would annually request funds through the budget process based on applications that meet standards developed in the criteria, priorities, and guidelines of the program. COMMENTS: 1)Purpose. This bill is supported by the Pacific Merchant Shippers Association. According to the text of the bill, the state's interest in the reduction of mobile source emissions from the freight sector and supply chain, including those emissions from sources that operate at ports, are matters of statewide significance. In consideration of these environmental matters, the state has a paramount interest in creating incentives that will precipitate early investment by the industry in the newest generation of zero-emission and near-zero-emission equipment, and supporting infrastructure at marine terminals and port facilities. Due to the costs of those investments over and above the use of traditional equipment, this is an infrastructure need that cannot be met by private investment alone, and therefore public financing mechanisms and the implementation of public-private partnerships are required to support this new investment. This bill creates a process for a harbor agency to apply for funding through the I-Bank, and gives the I-Bank the authority to establish criteria, priorities, and guidelines for the AB 2841 Page 5 selection of projects to receive assistance from the I-Bank. 2)Background. Seaports and harbors in California generally do not levy or expend any funds generated by local taxes, as most of their operations are funded directly through fees, tariffs, leases, and other revenue the seaports and harbors generate from their users and tenants, in addition to the occasional state or federal grant. Existing law authorizes the formation of Port Infrastructure and Financing Authorities, which allows two or more local agencies that operate ports or harbors (harbor agencies) to form a joint powers authority to finance specified port and harbor infrastructure projects. These authorities are intended to improve access to ports by allowing for the financing of roads and rail lines, piers, docks, channel improvements, breakwaters, warehouses and storage facilities, parks and recreation facilities, remediation, drainage, wastewater and electric facilities, and other projects. Port or harbor infrastructure projects may be privately operated, but all projects must have a primary or predominant use that is of direct benefit to the port or harbor. The California Infrastructure and Economic Development Bank (I-Bank) was created to finance public infrastructure and private development that promotes economic growth. I-Bank has a broad authority to issue tax-exempt and taxable revenue bonds, provide financing to public agencies, provide credit enhancements, acquire or lease facilities, and leverage state and federal funds. I-Bank's current programs include the infrastructure state revolving fund, 501(c)(3) tax exempt and taxable revenue bond program, industrial development revenue bond program, exempt facility revenue bond program, governmental bond program and the Clean Energy Finance Center (CEFC) and the Statewide Energy Efficiency Program under the CEFC. AB 2841 Page 6 The I-Bank currently does not have any programs that require a general fund appropriation for staff. They I-Bank receives a continuous appropriation and pays for staff via loan fees and interest collected from program users. No General Fund appropriation has been provided for I-Bank for their existing infrastructure programs since 1994. Analysis Prepared by:Misty Feusahrens / APPR. / (916) 319-2081