BILL ANALYSIS
AB 507
Page 1
Date of Hearing: May 20, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 507 (Arambula) - As Amended: May 5, 2009
Policy Committee: Jobs Vote:5 - 2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires projects selected for funding under the
Infrastructure State Revolving Fund Program (ISRF) to be funded
only if the project meets specified land use and economic
development criteria. Specifically, this bill:
1)Limits eligibility for ISRF money by requiring the California
Infrastructure Bank (I-Bank) to select projects that meet both
of the following criteria:
a) The project has economic development benefits.
b) The project meets land use criteria.
2)Defines economic developmental benefits as projects that
provide some quantitative level of economic benefit,
including, but not limited to, the creation or retention of
jobs, growth of the property tax base, growth of sales tax
revenues, or as otherwise determined by the I-Bank.
FISCAL EFFECT
Unknown costs, likely in excess of $500,000 (I-Bank Fund), for
consulting costs associated with determining the economic
development benefit of all proposed projects and for the I-Bank
to hire staff with planning expertise to determine whether or
not proposed projects meet land use criteria.
COMMENTS
1)Rationale . According to the author's office, the purpose of
the bill is to implement a recommendation from the Legislative
AB 507
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Analyst's Office to provide further direction to the I-Bank to
ensure that loans from ISFR are made to projects that achieve
statutorily mandated objectives for economic development and
land use.
The author states that while the ISRF exists for the specific
purpose of providing infrastructure financing that promotes
economic development and improved land use, the LAO has found
that the program was not meeting those objectives.
2)California Infrastructure and Economic Development Bank . The
I-Bank was established in 1994 to promote economic
revitalization, facilitate future development, and encourage a
healthy climate for job creation and retention. The I-Bank is
organized within the Business, Transportation, and Housing
Agency (BTH) and is managed by a five-member board of
directors composed of the BTH Secretary (chair), State
Treasurer, Director Department of Finance, Secretary, State
and Consumer Services Agency, and a governor's appointee. The
executive director serves at the will of the I-Bank Board and
is responsible for the day-to-day operation of the
organization.
The I-Bank has several programs that it uses to carry out its
mission. These programs include: the ISRF Program, the
Industrial Development Revenue Bond Program, the
Infrastructure & Community 501(c)(3) Revenue Bond Program, and
the Exempt Facility Revenue Bond Program.
The I-Bank is financed through the California Infrastructure
and Economic Development Bank Fund, which receives fees,
interest income and other revenues. The cost of administering
the programs of the I-Bank is off-set by program income. The
I-Bank is operated on a revolving fund basis and thereby
generates continuous funding for new project investments.
Since its creation approximately a decade ago, the I-Bank has
issued over $300 million to local agencies in infrastructure
related revenue bonds, and has developed a level of expertise
in the implementation of successful local infrastructure
programs.
3)Related Legislation . AB 1047 (V.M. Perez): This bill
establishes a local assistance program, within the I-Bank, to
assist small and rural communities obtain bond financing for
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infrastructure projects. That bill is currently pending
before this committee.
AB 1380 (Bass) authorizes the Speaker of the State Assembly
and the Senate Committee on Rules to each appoint one
non-voting member of the public to serve on the board of
directors of the I-Bank. That bill is currently pending before
this committee.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081