BILL NUMBER: AB 2359 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 18, 2000
AMENDED IN SENATE AUGUST 8, 2000
AMENDED IN SENATE JUNE 29, 2000
AMENDED IN ASSEMBLY MAY 9, 2000
INTRODUCED BY Assembly Member Keeley
(Coauthor: Assembly Member Shelley)
FEBRUARY 24, 2000
An act to add Article 6 (commencing with Section 91600) to Chapter
1 of Title 10 of the Government Code, relating to community
investment.
LEGISLATIVE COUNSEL'S DIGEST
AB 2359, as amended, Keeley. Community Investment Act.
Existing law prescribes the powers and duties of the Treasurer,
and contains various provisions relating to housing and community
development.
This bill would enact the Community Investment Act, which would
establish the Community Development Investment Guarantee Fund. The
fund would be administered by the Treasurer who would have prescribed
powers and duties relating to stimulating private sector lending and
investment, and encouraging community development lending and
investment in very low, low-, and moderate-income communities, as
specified, that would not otherwise be served. The bill would
require the Treasurer to submit an annual written report to the
Legislature, beginning December 31, 2001, on the
performances performance of the fund, as
specified.
The bill would require implementation of the act only to the
extent of funding in the annual Budget Act and to the extent of
moneys available in the Guarantee Fund. The bill would permit the
Treasurer to adopt regulations, as specified, prior to the first
appropriation for the purposes of the act.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Article 6 (commencing with Section 91600) is
added to Chapter 1 of Title 10 of the Government Code, to read:
Article 6. The Community Investment Act
91600. The Legislature finds and declares all of the
following:
(a) There exists throughout the state a seriously inadequate
supply of safe, sanitary, and affordable housing accommodations, and
related retail and small business-provided services, including
community facilities, for persons and families of low and moderate
income.
(b) Uncorrected, these conditions will increase the rate of
abandonment and destruction of housing accommodations and related
retail and other community facilities. Abandonment and destruction,
in turn, erode the local tax base, which deprives cities and counties
of revenues needed for essential services such as police,
sanitation, and firefighting. Failure to fund essential services
could require the state to provide costly financial assistance to
ameliorate the emergency conditions thus created.
(c) It is therefore declared to be a public purpose of the state,
in order to promote the preservation of neighborhoods, especially
those of low and moderate income, to encourage the investment of
capital in residential and commercial real estate and loans to small
businesses situated in those neighborhoods by authorizing the
Treasurer, using the Community Development Investment Guarantee Fund
created by this article, to guarantee qualified loans, investments,
and other debt and security instruments subject to this article.
SEC. 2. Article 6 (commencing with Section 91600) is added to
Chapter 1 of Title 10 of the Government Code, to read:
Article 6. The Community Investment Act
91600. This act shall be known and may be cited as the Community
Investment Act.
91601. For purposes of this article, the following terms have the
following meaning meanings , unless
the context clearly requires a different meaning:
(a) "Community development investment guarantee" means an
obligation of the Guarantee Fund created by Section 91602 to
guarantee the payment of an eligible instrument, as defined in
subdivision (c).
(b) "Community facility" means any real and personal property,
structures, buildings, equipment, and supporting components thereof
that are used to provide recreational, community, educational,
cultural, or social welfare facilities or any combination thereof,
and all facilities and infrastructure necessary or desirable in
connection therewith, but shall not include any single-family or
multifamily dwelling utilized as a residence.
(c) "Eligible instruments" includes loans, investments, and any
other debt, equity, and security instruments made for the purpose of
financing the construction, preservation, or rehabilitation of real
property, including community facilities, or the capital needs of
small businesses. Eligible instruments financing the construction,
preservation, or rehabilitation of housing shall be limited to
instruments financing projects that include a condition that the
housing shall have long-term affordability for lower-income
households, as that term is defined in Section 50079.5 of the Health
and Safety Code. Eligible instruments financing all other types of
projects shall be limited to projects located in or operating in
lower-income neighborhoods.
(d) "Guarantee Fund" means the Community Development Investment
Guarantee Fund created pursuant to Section 91602.
(e) "Lower-income neighborhoods" means census tracts in which the
median household income is equal to or less than 80 percent of area
median income at the time the guarantee is issued.
91602. (a) The Community Development Investment Guarantee Fund is
hereby created.
(b) The Guarantee Fund shall be operated and maintained by the
Treasurer. The Treasurer shall determine what industries or entities
shall constitute a qualified entity for purposes of the Guarantee
Fund. The issuance of each community development investment
guarantee shall be approved in accordance with regulations adopted by
the Treasurer.
91603. The purposes of the Guarantee Fund are as follows:
(a) To stimulate creative private sector lending and investment
activities to increase the supply and lower the cost of eligible
instruments.
(b) To create security mechanisms to allow lenders to sell
eligible instruments in the secondary market.
(c) To encourage community development lending and investment
activities in very low, low-, and moderate-income communities that
would not have taken place or that serve persons who would not have
been served but for the creation of this program.
91604. The Treasurer, for purposes of the Guarantee Fund, may do
all of the following:
(a) Define what projects are eligible for a community development
investment guarantee. Real property may only be financed with a
community development investment guarantee when there is a first
mortgage or deed of trust on the real property financed with private
sector capital.
(b) Issue commitments of the Guarantee Fund to guarantee eligible
instruments and to enter into contracts and agreements related
thereto.
(c) Issue commitments of the Guarantee Fund to qualified entities
to provide guarantees of pools or aggregates of eligible instruments.
(d) Fulfill the obligations and enforce the rights of the
Guarantee Fund under any guarantee furnished pursuant to this
article.
91605. The Guarantee Fund may guarantee up to 40 percent of the
principal amount of (a) any eligible instrument, or (b) any pool or
aggregate of eligible instruments, subject to regulations adopted by
the Treasurer.
91606. The Treasurer shall adopt regulations to do all of the
following:
(a) Establish rates and fees for the issuance of a community
development investment guarantee.
(b) Establish contractual provisions to be included in a community
development investment guarantee for the reimbursement from the
Guarantee Fund in the event of default.
(c) Make the Guarantee Fund self-supporting. The regulations for
this subdivision may provide for the imposition of fees to implement
a self-supporting plan.
91607. (a) There shall be deposited into the Guarantee Fund all
amounts received by the Treasurer, including, but not limited to,
both of the following:
(1) All premiums and other receipts from any applicable contract
or agreement entered into by the Treasurer pursuant to Section 91604.
(2) Any other moneys made available to the Guarantee Fund.
(b) All amounts in the Guarantee Fund shall be used in accordance
with this article to satisfy any valid claim payable from the
Guarantee Fund. Rates, fees, and income from the Guarantee Fund may
be used for the payment of administrative costs incurred in the
management of the Guarantee Fund.
(c) Any amounts in the Guarantee Fund that are not currently
needed to meet the obligations of the Guarantee Fund may be invested
as provided by law in obligations designated by the Treasurer. All
income from those investments shall be deposited in the Guarantee
Fund.
91608. (a) It is the intent of the Legislature that the
Guarantee Fund become self-supporting within 10 years of its initial
funding.
(b) This article shall be implemented to the extent of
funding appropriated in the annual Budget Act for the purposes of
this article and to the extent of moneys available in the Guarantee
Fund. The Treasurer may annually determine and request in the annual
Budget Act funding for the purposes of this article.
(c)
(b) Notwithstanding subdivision (b)
(a) , prior to the first appropriation in the annual Budget Act
for the purposes of this article, the Treasurer may adopt
regulations in accordance with Section 91606.
91609. Funds on deposit in the Guarantee Fund shall be used as
the primary resource to support an obligation under a community
development investment guarantee issued by the Treasurer.
91610. The Treasurer shall submit a written report to the
Legislature on or before December 31 of each year, beginning on
December 31, 2001, on the performance of the Guarantee Fund,
including the number and amount of investments it has generated, the
number of jobs created as a result of these investments, the mean
wage for each of these jobs, and the number of equity positions taken
by the Guarantee Fund.
SEC. 3. It is the intent of the Legislature that the Community
Development Investment Guarantee Fund established by the Community
Investment Act become self-supporting within 10 years of its initial
funding.