BILL ANALYSIS Ó
AB 2841
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Date of Hearing: May 4, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2841 (Travis Allen) - As Amended April 6, 2016
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|Policy |Jobs, Economic Development, |Vote:|9 - 0 |
|Committee: |and the Economy | | |
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| |Local Government | |8 - 0 |
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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,
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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
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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
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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
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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.
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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