BILL NUMBER: AB 2437 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 28, 2010
AMENDED IN ASSEMBLY APRIL 28, 2010
AMENDED IN ASSEMBLY APRIL 5, 2010
INTRODUCED BY Assembly Member V. Manuel Perez
FEBRUARY 19, 2010
An act to amend Sections 91502 and 91558 of, and to add Article 6
(commencing with Section 91600) to Chapter 1 of Title 10 of, the
Government Code, relating to economic development.
LEGISLATIVE COUNSEL'S DIGEST
AB 2437, as amended, V. Manuel Perez. State government: economic
development.
The California Industrial Development Financing Act authorizes
cities, counties, cities and counties, and redevelopment agencies to
establish industrial development authorities that are authorized to
issue industrial development bonds, the proceeds of which may be used
to fund capital projects of private enterprise under terms and
conditions specified in the act. That act establishes the California
Industrial Development Financing Advisory Commission and grants it
various powers relating to industrial development bonds.
This bill, the California Manufacturing Competitiveness Act of
2010, would authorize the commission to establish the California
Manufacturing Competitiveness Loan and Loan Guarantee Program for the
purpose of attracting, retaining, and expanding large manufacturing
facilities, and would require the commission to establish guidelines
for the implementation of the program, as specified. The bill would
require the commission to provide for the development and
administration of the program application and evaluation process, and
would require that applicants to the program demonstrate that they
meet specified requirements. The bill would also require each
applicant to pay a nonrefundable application fee of $5,000 and an
administrative fee equal to 0.5% of the total requested guarantee
amount. The bill would specify that only companies with at least 200
employees are eligible to receive assistance under the program.
The bill would also create the Manufacturing Program Account
within the Industrial Development Fund. The bill would prohibit
General Fund moneys from being deposited in the account. The
bill would prohibit the commission from commencing the program prior
to its adoption of a resolution finding that there is sufficient
money in the account to cover the costs of implementing the program.
The bill would allow moneys in the account to be paid
allocated to a lending institution or financial
company that will act as trustee of the funds, with the approval of
the Department of Finance. The bill would also require the account to
pay for specified direct loans, which the bill would limit to a
maximum amount of $5,000,000 under the program, and defaulted loan
guarantees, which the bill would limit to a maximum amount of
$10,000,000 under the program. The bill would further require the
above-described application fees to be deposited in the account to
ensure that funds are available to the state for the sole purpose of
administration of the program.
The bill would require the commission, beginning October 1, 2012,
and annually thereafter, to post on its Internet Web site and provide
the Legislature with a report on the program's activities and impact
on the manufacturing industry, and on the state's economy generally.
The bill would provide that the above-described provisions
shall be implemented only to the extent that sufficient moneys are
available to the commission to implement the California Manufacturing
Competitiveness Loan and Loan Guarantee Program .
The bill would provide that its provisions only remain in effect
until January 1, 2016, and as of that date are repealed.
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. Section 91502 of the Government Code is amended to
read:
91502. It is the purpose of this title to carry out and make
effective the findings of the Legislature, and to that end, to
provide business with alternative methods of financing in acquiring,
constructing, or rehabilitating facilities, including, but not
limited to, equipment and furnishings, in accordance with the
criteria set forth in Section 91502.1, all to the mutual benefit of
the people of the state and to protect their health, welfare, and
safety.
SEC. 2. Section 91558 of the Government Code is amended to read:
91558. (a) The commission may, upon request of two or more
authorities, in order to share expenses and facilitate bond issuance,
act as a pooling agent to issue bonds on a joint or composite basis
for companies which have applied for financing to the participating
authorities. Authorities shall enter into written agreements with the
commission specifying the projects which are to be delegated to the
commission for financing pursuant to this section.
(b) Prior to issuance of any bonds pursuant to this section, the
authority and public agency shall have completed the procedures
required by Section 91530.
(c) The commission may issue bonds as requested and authorized by
this section. For these purposes, the commission is granted all of
the powers of an authority and may enter into project agreements and
take all steps toward the sale, issuance, and security of bonds in
the same manner as authorities may do. The resolution required by
Section 91537 shall be adopted by the commission rather than by an
authority.
(d) The commission may make loans or lines of credit available to
companies, directly or through a contract with a participating
financial institution, for the purpose of acquiring, constructing, or
rehabilitating facilities or portions thereof, including, but not
limited to, equipment and furnishings, pursuant to Article 6
(commencing with Section 91600), all to the mutual benefit of the
people of the state and to protect their health, welfare, and safety.
SEC. 3. Article 6 (commencing with Section 91600) is added to
Chapter 1 of Title 10 of the Government Code, to read:
Article 6. California Manufacturing Competitiveness Act of
2010
91600. This act may be cited as the California Manufacturing
Competitiveness Act of 2010.
91601. (a) The Legislature finds and declares all of the
following:
(1) California is one of the largest and most diverse economies in
the world, with a state gross domestic product (GDP) of over $1.8
trillion in 2008. Based on figures from the International Monetary
Fund, if California were an independent nation it would rank as the
eighth largest economy in the world.
(2) Historically, the state's significance in the global
marketplace resulted from a variety of factors, including: its
strategic west coast location that provides direct access to the
growing markets in Asia; its economically diverse regional economies;
its large, ethnically diverse population, representing both a ready
workforce and significant consumer base; its access to a wide variety
of venture and other private capital; its broad base of small- and
medium-sized businesses that support the global manufacturing supply
chain; and its culture of innovation and entrepreneurship,
particularly in the area of high technology.
(3) Historically, economic growth in California has outpaced the
economic growth rate of the nation as a whole, and the state has led
the nation in export-related jobs, business startups, and innovation.
However, since the subprime home mortgage crisis in 2007, California
communities have struggled. With the increasing rates of home
foreclosure and the tightening of the credit markets, many businesses
have found their existing lines of credit unaccessible. Significant
drops in consumer spending have led to workforce reductions and
business bankruptcies.
(4) For much of 2009, the number of unemployed workers rose by
40,000 to 60,000 per month, and the year ended with 2.25 million
unemployed California workers. While California may have emerged from
the recession in the final quarter of 2009, unemployment is expected
to remain high throughout 2010 and 2011. Without specific
intervention to support job creation and business expansion, many
regions of California will be very slow to recover.
(5) Further, as California moves forward from this recession, it
is important that the state support the recovery of industries that
provide quality jobs, including manufacturing industries. A robust
manufacturing sector offers many benefits to the state, including
high-wage jobs, a basis for international trade, and one of the
highest multiplier effects on other industries and businesses. It has
been estimated that for every job created in manufacturing, two and
a half jobs are supported in other industry sectors. For instance, in
the electronic computer manufacturing industry, the multiplier
effect is 16 to one.
(6) Manufacturing employers and other large employers in
California, however, face many challenges in maintaining global and
domestic competitiveness, including maintaining a skilled workforce
and cost-effective productivity in the face of lower safety and wage
standards in emerging foreign markets.
(b) It is therefore the intent of the Legislature to strengthen
the manufacturing capacity of California through the implementation
of the California Manufacturing Competitiveness Act of 2010. The act
will provide the framework and focus to retool and expand California'
s manufacturing facilities, support a vibrant logistics network, and
retain and create more quality jobs.
91602. Unless the context requires otherwise, for the purposes of
this article, the following terms shall have the following meanings:
(a) "Administration expenses" means the reasonable and necessary
expenses incurred by a commission in the administration of this
title, including, without limitation, the fees and costs of paying
agents, trustees, attorneys, consultants, and others.
(b) "Commission" means the California Industrial Development
Financing Advisory Commission established pursuant to Article 3
(commencing with Section 91550).
(c) "Company" means a person, partnership, corporation, whether
for profit or not, limited liability company, trust, or other private
enterprise of whatever legal form, for which a project is undertaken
or proposed to be undertaken pursuant to this title or which is in
possession of property owned by an authority, and may include more
than a single enterprise.
(d) "Cost" as applied to any project, may include all of the
following:
(1) The cost of construction, improvement, repair, rehabilitation,
and reconstruction.
(2) The cost of acquisition, including rights in land and other
property, both real and personal and improved and unimproved, and
franchises, and disposal rights.
(3) The cost of demolishing, removing, or relocating any building
or structures on lands so acquired, including the cost of acquiring
any lands to which the buildings or structures may be moved or
relocated.
(4) The cost of machinery, equipment, and furnishings, of
engineering and architectural surveys, plans, and specifications, and
of transportation and storage until the facility is operational.
(5) The cost of agents or consultants, including, without
limitation, legal, financial, engineering, accounting, and auditing
costs, necessary or incident to a project and the determination as to
the feasibility or practicability of undertaking the project.
(6) The cost of acquiring or refinancing existing obligations
incident to the undertaking and carrying out, including the
financing, of a project, and the reimbursement to any governmental
entity or agency, or any company, of expenditures made by or on
behalf of the entity, agency, or company that are costs of the
project hereunder, without regard to whether or not the expenditures
may have been made before or after the adoption of a resolution of
intention with respect to that project by an authority.
(7) The cost of making relocation assistance payments as provided
by Chapter 16 (commencing with Section 7260) of Division 7 of Title
1.
(8) The cost of procuring raw materials and finished goods that
become integral to the property as a result of construction,
improvement, repair, rehabilitation, or reconstruction.
(e) "Governing body" means the board of supervisors, city council,
or board of directors of a redevelopment agency, as the case may be.
(f) "Indenture" means any mortgage, deed of trust, trust
indenture, security agreement, or other instrument relating to
establishing a lien or security interest in, or on, property, any
pledge or other instrument relating to the possession of property,
and any assignment or other instrument relating to establishing any
right, title, or interest in, or related to, property, including the
revenues therefrom, given by an authority to a corporate trustee,
which may be any trust company or bank having the powers of a trust
company within or without the state, or bondholder or agent, for the
security of its bonds and the benefit of the bondholders.
(g) "Manufacturing Program Account" means the account established
within the Industrial Development Fund for moneys which are available
for direct loans and loan guarantees. Moneys in this account are not
subject to Section 91554.
(h) "Project" means the acquisition, construction, improvement,
repair, rehabilitation, and reconstruction of facilities and the
acquisition and rehabilitation of machinery, equipment, and
furnishings, and the acquisition of engineering and architectural
surveys, plans, and specifications, and all other necessary and
related capital expenditures by the issuance of bonds upon the
application of and to be repaid by payments from a company for the
purposes of this title.
(i) "Project agreements" means the agreements between an authority
and a company respecting a project, and may include, without
limitation, leases, subleases, options, and installments or the
contracts of purchase or sale, loan, or guaranty agreements, notes,
mortgages, deeds of trust, and security agreements.
(j) (1) "Property" means any land, air rights, water rights,
disposal rights, improvements, buildings or other structures, and any
personal property, tangible or intangible, and includes, but is not
limited to, machinery and equipment, whether or not in existence or
under construction, and interests in any of the foregoing, or
promissory notes or other obligations of any kind respecting such
interests.
(2) Property also means property suitable for one or more of the
activities or uses described below:
(A) Industrial uses including, without limitation, assembling,
fabricating, manufacturing, processing, or warehousing activities
with respect to any products of agriculture, forestry, mining, or
manufacturing, if these activities have demonstrated job-creation or
retention potential.
(B) Energy development, production, collection, or conversion from
one form of energy to another.
(C) Research and development activities relating to commerce or
industry, including, without limitation, professional,
administrative, and scientific office and laboratory activities or
uses.
(D) Processing or manufacturing recycled or reused products and
materials by manufacturing facilities.
(E) Business activities with the purpose of creating or producing
intangible property.
(F) Airport, dock, wharf, or mass commuting activities, or storage
or training activities related to any of those activities are
prohibited unless the property acquired is suitable for one or more
of the activities described in subparagraphs (A) to (E), inclusive.
(G) Sewage or solid waste disposal activities or electric energy
or gas furnishing activities are prohibited unless the property
acquired is suitable for one or more of the activities described in
subparagraphs (A) to (E), inclusive.
(H) Water furnishing activities are prohibited unless the property
acquired is suitable for one or more of the activities described in
subparagraphs (A) to (E), inclusive.
(k) "Public agency" means any city, county, city and county, or
redevelopment agency.
(l) "Revenues" means all rents, purchase payments, and other
income derived from, or with respect to, the sale, lease, or other
voluntary or involuntary disposition of, or repayment of loans with
respect to, property, bond proceeds, and any receipts derived from
the deposit or investment of any income or proceeds in the account,
but does not include receipts designated to cover administration
expenses.
91603. (a) The commission may establish the California
Manufacturing Competitiveness Loan and Loan Guarantee Program for the
purpose of attracting, retaining, and expanding large manufacturing
facilities. The commission shall establish guidelines for the
implementation of this program consistent with this article. The
commission shall not commence operation of the program prior to
adopting a resolution finding that there is sufficient money in the
Manufacturing Program Account, established pursuant to Section 91604,
to cover the costs of implementing the program, including, but not
limited to, appropriate oversight costs.
(b) In designing the California Manufacturing Competitiveness Loan
and Loan Guarantee Program, the commission shall develop a program
that meets all of the following objectives:
(1) Encourages the development of the state's long-term
manufacturing capacity.
(2) Creates jobs through the support of retooling and expansion of
manufacturing facilities.
(3) Prioritizes assistance to manufacturers who consistently pay
the highest wages based on the average weekly wage rate for their
industry subsector and health benefits.
(4) Allows manufacturers to access funds under terms and
conditions which would not otherwise be available in the private
market.
(5) Prioritizes assistance to applications that are jointly
submitted by management and the union at the facility or the union
pending representation of workers at the facility.
(6) Assists manufacturers to cost effectively respond to energy
efficiency regulations and new technologies.
(c) The commission shall provide for the development and
administration of the application, review, and evaluation process for
the program, including, but not limited to, defining the eligibility
standards, rating and ranking criteria, and other appropriate
policies and procedures for implementing a direct loan and guarantee
program subject to the following provisions:
(1) The maximum loan limit shall be five million dollars
($5,000,000). The maximum loan guarantee amount shall be ten million
dollars ($10,000,000).
(2) Only companies with at least 200 employees shall be eligible
to receive assistance under the program.
(3) All loan and loan guarantee applicants shall demonstrate that
they will have the ability to repay the loans.
(4) Loans may be provided at terms and conditions below market to
the extent that the overall program remains financially viable.
(5) Applicants must demonstrate they are in compliance with
applicable federal, state, and local laws and regulations, or that
the project for which they are requesting funding will bring them
into compliance.
(6) Outstanding loans must be paid in full six months prior to a
relocation of a facility outside of California. If the loan or loan
guarantee included a subsidized amount, that amount must also be
repaid subject to a sliding scale adopted by the commission.
(7) Each applicant must agree to annually report to the commission
on total capital investments made by the company and total
employment, including wage levels by type of work, in the prior year
and the following two years. The applicant shall also estimate the
number of jobs created or retained through the provision of this
state assistance, as well as provide other appropriate performance
data, as determined by the commission.
(d) In addition to any other requirements in this article, each
applicant shall demonstrate that it meets all of the following
requirements:
(1) The facility or facilities where the moneys will be expended
or benefit are located in the state.
(2) The moneys being awarded will be used to create or retain jobs
in the state.
(3) That wages the applicant pays its employees in the state are
on average, equal to or more than the average weekly wage rate for
similar workers in the same industry subsector.
(4) That the applicant provides health insurance benefits for all
full-time employees.
(5) The applicant's turnover rate has not exceeded 20 percent
annually at any facility where moneys obtained through the program
will be used.
(e) Each applicant shall pay a nonrefundable application fee of
five thousand dollars ($5,000) and an administrative fee equal to
one-half of 1 percent of the total requested guarantee amount. These
moneys shall be deposited directly into the Manufacturing Program
Account, established pursuant to Section 91604, for the purpose of
ensuring that funds are available to the state for the sole purpose
of administration of the program.
91604. (a) There is hereby created within the Industrial
Development Fund, an account called the Manufacturing Program
Account. Upon appropriation by the Legislature, all or a
portion of the funds in the account may be allocated by the
commission, with the approval of the Department of Finance, to a
lending institution or financial company that will act as trustee of
the funds. The fund account
shall be used to pay for direct loans and defaulted loan guarantees
issued pursuant to Article 6 (commencing with Section 91600)
this article , administrative costs of the
commission, and those costs necessary to protect a real property
interest in a defaulted loan or guarantee.
(b) All moneys received from the federal government,
foundations, and other public or private funding sources for the
purpose of implementing the California Manufacturing Competitiveness
Loan and Loan Guarantee Program shall be deposited in the
Manufacturing Program Account. All loan repayments, interest,
and royalties shall be deposited back into the Manufacturing Program
Account. No General Fund moneys may be deposited in the
Manufacturing Program Account.
(c) The commission shall not commence operation of the program
prior to adopting a resolution finding that there is sufficient money
in the account to cover the costs of implementing the program,
including, but not limited to, appropriate oversight costs.
(d) Moneys in the account shall not be subject to Section 91554.
(e) Upon appropriation by the Legislature, all or a portion of the
funds in the account may be allocated by the commission, with the
approval of the Department of Finance, to a lending institution or
financial company that will act as trustee of the funds.
91605. (a) Beginning October 1, 2012, and annually thereafter,
the commission shall post on its Internet Web site or provide the
Legislature with a report, whichever is more cost effective, on the
program's activities and impact on the manufacturing industry and on
the state's economy, in general.
(e) At a minimum, the information provided pursuant to subdivision
(a) shall include the following:
(1) The total amount of moneys in the Manufacturing Program
Account, at the beginning of the fiscal year and at the end of the
fiscal year.
(2) The number of projects funded and the number of manufacturers
assisted.
(3) The number of jobs created and the number of jobs retained
through program assistance in each of the fiscal years.
(4) The amount of investments made by the manufacturer in the
prior year to their assistance and next two years.
(5) The amount of federal, state, and local taxes paid by the
companies in aggregate. Information on publicly held companies shall
also be reported separately.
91606. (a) This article shall be implemented only to the
extent that sufficient moneys are available to the commission to
administer the California Manufacturing Competitiveness Loan and Loan
Guarantee Program.
(b) This article shall remain in effect only
until January 1, 2016, and as of that date is repealed, unless a
later enacted statute, that is enacted before January 1, 2016,
deletes or extends that date.