BILL ANALYSIS
AB 2518
Page 1
Date of Hearing: May 12, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2518 (V. Manuel Perez) - As Introduced: February 19, 2010
Policy Committee: Jobs, Econ.
Development & the Economy Vote: 6 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill establishes a local assistance program within the
California Infrastructure and Economic Development Bank
(I-Bank), to help small and rural communities obtain bond
financing for infrastructure projects. Specifically, this bill:
1)Expands the allowable uses for bond proceeds to include an
administering state agency's costs for outreach and technical
assistance directly related to the construction or acquisition
of capital assets.
2)Requires the I-Bank to establish a program to help communities
develop strategic plans, write grants, apply for public and
private loans and guarantees, and issue bonds.
3)Requires the I-Bank to develop a competitive process to select
communities, based on infrastructure need and community
readiness to undertake an infrastructure project.
4)Establishes priorities for the community selection process.
5)Requires the I-Bank to provide no fewer than three
professional positions and one staff position to implement the
program.
6)Requires an unspecified amount of the voter approved 2006
infrastructure bonds be placed in a newly created Technical
Assistance Account in the California Infrastructure Bank Fund
and continuously appropriates the money deposited in the
account for the purposes of this legislation.
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7)Excludes General Fund from being deposited in the Technical
Assistance Account.
8)Requires the I-Bank to individually track each funding source
and its use to ensure that all funding conditions are met and
that only eligible communities and eligible purposes are
authorized.
FISCAL EFFECT
1)On-going costs between $400,000 and $500,000 for the I-Bank to
hire the four staff required by this legislation.
2)Unknown, potentially significant travel costs for program
staff to travel to rural areas of the state to provide the
required technical assistance.
COMMENTS
1)Rationale . According to the author, AB 2518 will assist
communities that have been traditionally underserved by state
programs in obtaining funds for critically needed local
infrastructure projects. The communities this bill seeks to
assist are typically small and rural incorporated and/or
unincorporated areas that have difficulty affording additional
staff or consultants. Generally, these communities are
competing against larger communities for infrastructure funds.
The author believes that communities with critical public
needs or significant potential for local economic development
and job creation should have a reasonable opportunity to
secure infrastructure funding, notwithstanding their
difficulty in affording their own experts. The investment of
state and federal funds in infrastructure improvements will
allow these communities to begin generating economic activity
on their own, which contributes to the overall state economy.
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 BTH and is managed by a five-member board of
directors comprised of the BTH Secretary (chair), State
Treasurer, Department of Finance Director, State and Consumer
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Services Agency Secretary, 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 (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 costs of
administering the programs of the I-Bank are 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)The Infrastructure Bond Acts of 2006 authorized the issuance
of g. o. bonds for five distinct infrastructure programs
including the Proposition 1B transportation bond ($19.9
billion), the Proposition 1C housing bond ($2.9 billion), the
Proposition 1D education bond ($10.4 billion), the Proposition
1E flood control bond ($4.1 billion), and the Proposition 84
natural resources bond ($5.4 billion). Collectively, these
five bonds are known as the Infrastructure Bond Acts of 2006.
The Infrastructure Bond Acts create over 60 funding programs
for the purpose of constructing physical infrastructure
improvements for roads, parks, schools, water resources,
sewage treatment, and more.
4)Constitutional Question . This bill may raise constitutional
issues unless the language of the various bond measures, as
approved by the voters, allowed for subsequent legislation
authorizing bond expenditures in the manner proposed.
5)Related Legislation . In 2009, AB 1057 (V. Manuel Perez), a
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substantially similar bill was held on this committee's
Suspense File.
In 2007, AB 1272 (Arambula), similar to this bill, would have
required the California Infrastructure and Economic
Development Bank (I-Bank) to create a local assistance program
to provide technical assistance to small urban and rural
communities in the state in obtaining financing for local
infrastructure projects from general obligation (g. o.) bond
funding. That bill was held on this committee's Suspense File.
In 2006, AB 237 (Arambula), a substantially similar bill, was
held in the Senate Appropriations Committee.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081