BILL ANALYSIS
AB 1380
Page 1
Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel Perez, Chair
AB 1380 (Bass) - As Introduced: February 27, 2009
SUBJECT : Infrastructure and Economic Development Bank: board
of directors
SUMMARY : Expands the membership of the board of directors of
the California Infrastructure and Economic Development Bank
(I-Bank) from five to seven members. Of the two additional
members, one each is appointed by the Speaker of the Assembly
and the Senate Committee on Rules. The two new members serve as
nonvoting members.
EXISTING LAW :
1)Creates the I-Bank, within the Business, Transportation and
Housing (BTH) Agency to promote economic revitalization,
enable future development, and encourage a healthy climate for
jobs in California.
2)Authorizes the I-Bank to issue tax-exempt and taxable revenue
bonds for the purpose of underwriting the cost of the
infrastructure development that meets a specified public
purpose.
3)Provides that the board of directors is comprised of five
specified people, defines a quorum at three people and
specifies that an affirmative vote of three people is required
on any action taken by the board.
4 Specifies that the I-Bank board of directors shall consist of
the following:
a) The Director of Finance or designee;
b) The Treasurer or designee;
c) Secretary of Business, Transportation and Housing or
designee;
d) Governor's appointee; and
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e) Secretary of State Consumer Services Agency or designee.
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose : According to the author's office, this bill is
intended to allow the legislative branch to participate in
critical decisions affecting the I-Bank. Given the I-Bank's
integral role in issuing tax-exempt and taxable revenue bonds,
providing financing to public agencies, and leveraging State
and Federal funds, it is important that the Legislature have
input on how those decisions are made.
2)Structure and operation of the I-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 BTH and is managed by a five-member board of directors
comprised 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 Infrastructure State
Revolving Fund Program; the Industrial Development Revenue
Bond Program; the Infrastructure & Community 501(c)(3) Revenue
Bond Program; and, the Exempt Facility Revenue Bond Program.
Chart 1 shows recent budget information for the I-Bank.
------------------------------------------------------------
| Chart #1 - Infrastructure and Economic Development Bank* |
------------------------------------------------------------
|--------+------------+------------+-------------+------------|
| Fiscal| Staffing | Total | Administrat| Local |
| Year | (PYs) | Funding | ive** | Assistance|
| | | | | *** |
|--------+------------+------------+-------------+------------|
| | | (in | | (in |
| | | thousands)| | thousands)|
|--------+------------+------------+-------------+------------|
| | 20 | $5,425| $3,248| $2,177|
AB 1380
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| 2005/0| | | | |
| 6 | | | | |
| | | | | |
|--------+------------+------------+-------------+------------|
| | | | | |
|--------+------------+------------+-------------+------------|
| | 20 | $5,244| $3,067| $2,177|
| 2006/0| | | | |
| 7 | | | | |
| | | | | |
|--------+------------+------------+-------------+------------|
| | | | | |
|--------+------------+------------+-------------+------------|
| | 20 | $5,360| $3,183| $2,177|
| 2007/0| | | | |
| 8 | | | | |
| | | | | |
|--------+------------+------------+-------------+------------|
| | | | | |
|--------+------------+------------+-------------+------------|
| 2008/0| 25 | $6,267| $4,090| $2,177|
| 9 | | | | |
|--------+------------+------------+-------------+------------|
| | | | | |
|--------+------------+------------+-------------+------------|
| 2009/1| 25 | $6,320| $4,143|$2,177 |
| 0 | | | | |
-------------------------------------------------------------
*All amounts are from adopted budgets.
***Annually appropriated to BTH Agency for I-Bank
administration expenditures
**Continuously appropriated. Amounts used to fund ISRF
Program loan Disbursements.
Actual disbursements amounts were higher than amounts shown in
the budget
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 I-Bank program is off-set by these moneys. 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
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related revenue bonds, and has developed a level of expertise
in the implementation of successful local infrastructure
programs.
3)Board Structure : The I-Bank's board of directors is currently
comprised of five members, four of which are state public
officials. Each of the public officials either has specific
program related expertise or has access to experts within
their respected departments or agencies.
Under existing law, the Governor has the authority to appoint
one public member to the board. This public member is not
required to have any particular skill set or represent a
particular stakeholder group other than the public-at-large.
A question has arisen as to whether the two additional members
proposed to be added by AB 1380 should be public
representatives or provide some particular professional
experience or stakeholder perspective. As Chart 2 - Board
Structures from Selected Economic and Workforce Development
Entities details, there is no set board appointment structure.
-------------------------------------------------------------
| Chart 2 - Board Structures from Selected Economic and |
| Workforce Development Entities |
-------------------------------------------------------------
|-------+----+-----+-----+-----+-------------------------------|
| |Tota| Gov |Speak|Senat| Other Information |
| | l |Appts| er | e | |
| |Mem-| |Appts|Rules| |
| |bers| | | | |
| | | | |Appts| |
| | | | | | |
|-------+----+-----+-----+-----+-------------------------------|
|Waste | | | | |Four Public Members: Four |
|Managem| 6 | 4 | 1 | 1 |members are appointed by the |
|ent | | | | |Governor, two of whom |
|Board | | | | |represent the public, one |
|and | | | | |member with industry |
|the | | | | |expertise, and one with |
|Recycli| | | | |expertise in the environmental |
|ng | | | | |field. One member is appointed |
|Market | | | | |by the Senate Committee on |
|Develop| | | | |Rules and one is appointed by |
|ment | | | | |the Speaker of the Assembly to |
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|Zones | | | | |represent the public. |
| | | | | |Reference: PRC 404001 |
|-------+----+-----+-----+-----+-------------------------------|
|Employ-| | | | |One Public Member: The |
|ment | 7 | 3 | 2 | 2 |Speaker and President pro |
|Trainin| | | | |Tempore each appoint two |
|g | | | | |members, one being a private |
|Panel | | | | |sector labor representative |
| | | | | |and the other being a business |
| | | | | |representative. Gov appoints |
| | | | | |three members, one being a |
| | | | | |private sector labor |
| | | | | |representative, one being a |
| | | | | |business representative, and |
| | | | | |one public member. |
| | | | | |Reference: UIC 10202.5 |
|-------+----+-----+-----+-----+-------------------------------|
|Workfor| | | | |There is no statutory limit on |
|ce | No | No | 2 | 2 |the number of people who may |
|Invest-|limi|limit| | |serve on the board. A |
|ment | t | | | |majority of Gov appointments |
|Board | | | | |are from business, including |
| | | | | |small business. At least 15% |
| | | | | |of the Gov appointments shall |
| | | | | |be from labor organizations |
| | | | | |nominated by state labor |
| | | | | |federations. In addition to |
| | | | | |these appointments the Gov may |
| | | | | |place an unlimited number of |
| | | | | |state officials and state |
| | | | | |government representatives. |
| | | | | |Legislative appoints two |
| | | | | |public members each. |
| | | | | |Reference: UIC 14012 |
|-------+----+-----+-----+-----+-------------------------------|
|Califor| | | | |Two public members: Secretary |
|nia | 11 | 7 | 2 | 2 |of BTH serves as chair. Gov |
|Small | | | | |appoints six members from |
|Busines| | | | |small business community. |
|s | | | | |Between the Assembly and the |
|Board | | | | |Senate one business and one |
| | | | | |agriculture representative is |
| | | | | |appointed. Plus, one |
| | | | | |Assemblymember and one Senator |
| | | | | |to serve on the board. |
AB 1380
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| | | | | |Reference: Corp 14021 |
| | | | | | |
--------------------------------------------------------------
4 The federal stimulus package : In February, the President
signed the American Recovery and Reinvestment Act (ARRA),
which provides $787 billion in assistance to state, local
governments, workers, families, and businesses. The ARRA
includes $288 billion in tax relief and $499 billion in
spending including:
$144 billion in state and local fiscal relief;
$111 billion for infrastructure and science related
investments;
$81 billion for protecting the vulnerable including
extending unemployment benefits;
$59 billion for health care;
$53 billion for education and training; and
$43 billion for energy related investments.
Overall, the programs and funding included within the ARRA are
designed to serve many purposes, including preserving and
creating jobs, assisting those impacted by the recession, and
providing investments to spur technological advances in
science, health, and environmental protection.
According to the Governor's Office, California is expected to
receive $85 billion of the $787 billion; with $11 billion of
that available to go toward programs and services impacted by
the state's current and budget year.
New infrastructure development is expected to play an
important role in the creation and retention of the nearly
400,000 California jobs. Key infrastructure expenditures
include over $3 billion for transportation and water projects.
5)General Purpose Financing Authority : In addition to the
programs discussed above, the I-Bank also serves as the
state's only general purpose financing authority with broad
statutory powers to issue revenue bonds and act on the state's
behalf in certain statutorily authorized circumstances. AB
1380 provides for a greater collaboration between the
Legislature and the Administration on I-Bank activities, which
could lead to a better utilization of the program in
leveraging federal stimulus dollars. Below is a list of
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examples of the types of financing by the I-Bank in support of
various State entities and programs.
a) Energy Efficiency Bonds. In April 2003, the California
Consumer Power and Conservation Financing Authority (CPA)
issued $28,005,000 in energy efficiency bonds on behalf of
the California Energy Commission (CEC). On October 25,
2004, the CPA assigned its rights and responsibilities for
these bonds to the I-Bank when the CPA's operations were
closed down as a result of budget elimination. In May
2005, the I-Bank issued a second series of revenue bonds in
the amount of $37 million to provide additional funding for
the CEC's Energy Efficiency Financing (EEF) Program, which
provides low-cost loans up to $3 million to schools,
hospitals and local governments for the installation of
energy-saving measures. The bonds are repaid from
previously approved EEF loans. Eligible projects include
heating, ventilating, air conditioning, equipment control,
small co-generation and photovoltaic systems.
b) California Insurance Guarantee Association Bonds. In
August 2004, the I-Bank issued $750 million of revenue
bonds for the California Insurance Guarantee Association
(CIGA) pursuant to authorization contained in Chapter 645,
Statues of 2003 (AB 227). CIGA is an organization created
by the California Legislature in 1969 to pay claims of
insolvent insurance carriers that are licensed to do
business in the State of California. The proceeds of the
bonds were used by CIGA to pay claims and related expenses
that arose as a result of the insolvencies of insurance
companies providing workers' compensation insurance. The
bonds are repaid solely from special and regular premium
assessments on worker's compensation premiums paid by
insurance companies to CIGA.
c) Toll Bridge Seismic Retrofit Bonds. In August 2003, the
I-Bank issued $1.16 billion of long-term fixed rate revenue
bonds for Caltrans pursuant to authorization in Chapter
907, Statutes of 2001 (AB 1171). The bonds were rated in
the "AA" category by all three rating agencies and were
repaid solely from revenues and related interest earnings
generated by the $1 per vehicle seismic retrofit surcharge
collected on the seven Bay Area State-owned toll bridges.
Caltrans used the bond proceeds to fund a portion of the
construction of the new East Span of the San
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Francisco-Oakland Bay Bridge.
d) Clean Water State Revolving Fund (CWSRF) Bonds. In
August 2002, the I-Bank issued $300 million of fixed-rate
revenue bonds to provide additional funding for the CWSRF
Program. The CWSRF, which is administered by the State
Water Resources Control Board (SWRCB), provides low-cost
loans up to $25 million per year to local agencies,
throughout the State, for the construction of wastewater
treatment and water recycling facilities. The bonds, which
are repaid by 98 previously-approved CWSRF loans from 50
different borrowers, received natural "AAA" ratings from
all three rating agencies. The bond issuance represented
the first time the State leveraged a federally funded state
revolving fund program, and joined over 20 other states
that have utilized this innovative financing technique to
expand lending capacity.
In addition to the above programs, the I-Bank has also been
involved in other unique financings including Tobacco
Securitization Bonds, Tribal Compact Asset Securitization
Bonds, and Imperial Irrigation District Preliminary Loan
Guarantees.
6)Related Legislation : Below is a list of related legislation.
a) AB 507 (Arambula) : This bill requires projects selected
for funding under the Infrastructure Revolving Loan program
only to be funded if the project meets specified land use
and economic development criteria. Status: Hearing
scheduled in the Assembly Committee on Jobs Economic
Development, and the Economy on April 21, 2009.
b) 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 infrastructure
projects. Status: Hearing scheduled in the Assembly
Committee on Jobs, Economic Development, and the Economy on
April 21, 2009.
c) AB 1272 (Arambula) : This bill established a local
assistance program, within the I-Bank, to assist small and
rural communities obtain bond financing for infrastructure
projects. Status: Died pursuant to Article IV, Sec. 10(c)
of the California Constitution in 2008.
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d) AB 1410 (Bass): This bill authorizes the I-Bank to use
certain federal Community Development Block Grant moneys
provided through the federal American Recovery and
Reinvestment Act to create credit enhancements, loan
guarantees and low-interest loans. Status: Hearing
scheduled in the Assembly Committee on Jobs, Economic
Development, and the Economy on April 21, 2009.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090