BILL ANALYSIS
AB 2518
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Date of Hearing: April 20, 2010
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel Perez, Chair
AB 2518 (V. Manuel Perez) - As Introduced: February 19, 2010
SUBJECT : California Infrastructure and Economic Development
Bank: local assistance program.
SUMMARY : Establishes a local assistance program (program)
within the California Infrastructure and Economic Development
Bank (I-Bank) to assist small and rural communities obtain bond
financing for infrastructure projects. Specifically, this bill :
1)Requires the I-Bank to establish a local assistance program to
provide technical support to small and rural communities. The
I-Bank will select communities for the program based on a
competitive process which considers factors such as
remediation of community health and safety problems, and
economic development. The I-Bank shall provide no fewer than
three professional positions and one staff position to ensure
the implementation of the program.
2)Authorizes the program to assist communities in developing
strategic plans, writing grants, applying for public and
private loans and guarantees, issuing bonds, and other
activities directly related to obtaining funding for
infrastructure programs.
3)Provides that the cost of administering a bond program
pursuant to the State General Obligation Bond Law (G.O. Bond
Law) includes the cost of technical assistance and outreach.
4)Establishes a Technical Assistance Account (TAA) within the
I-Bank. The bill also provides that other non General Fund
moneys may be deposited in the TAA to be used to provide
technical assistance to communities for infrastructure
projects.
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
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jobs in California. The I-Bank has the authority to issue
tax-exempt and taxable revenue bonds to underwrite the costs
of infrastructure development that meets certain public
purposes.
2)Authorizes the issuance of general obligation bonds for five
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. Infrastructure Bonds
construct physical infrastructure improvements for roads,
parks, schools, water resources, sewage treatment, and more.
3)Authorizes the issuance of $980 million in general obligation
bonds under Proposition 3- The Children's Hospital Bond Act of
2008.
4)Establishes the State G.O. Bond Law that authorized proceeds
from the sale of bonds to pay the costs of a state agency for
administering a bond funded program.
5)Defines infrastructure as "Public development facilities"
which means real and personal property, structures,
conveyances, equipment, thoroughfares, buildings, and
supporting components thereof, excluding any housing, that are
directly related to providing city streets; county highways;
drainage, water supply, and floor control; educational
facilities; environmental mitigation measures; parks and
recreational facilities; port facilities; power and
communications; public transit; sewage collection and
treatment; solid waste collection and disposal; water
treatment distribution; defense conversion; public safety
facilities; state highways; and military infrastructure
including but not limited to facilities on or near a military
installation, that enhance the military operations and mission
of one or more military installations in this state. To be
eligible for funding, the project shall be endorsed by the
Office of Military and Aerospace Support established pursuant
to Section 13998.2.
FISCAL EFFECT : Unknown
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COMMENTS :
1)Author's purpose: 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 lack the existing staff or have
difficulty affording additional staff or consultants with the
expertise to respond to bond funded infrastructure
solicitations. This puts such communities at a disadvantage
when 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)Benefits of technical assistance programs : This bill is
modeled after a successful program that operated in the 1970's
and 1980's, the Rural Development Assistance Program (RDAP).
Initially, the RDAP was operated by the Department of Housing
and Community Development (HCD) as a pilot project with the
federal government. Under the program, technical advisors and
loan packagers were assigned to rural communities to assist
them in applying for infrastructure funding.
During the years between 1980 and 1982, the state leveraged
$30 million in housing and community facility construction,
while only investing $272,000 in state and $132,000 in federal
dollars. HCD estimated over $130 million in local economic
activity was generated, 2,379 jobs were created, and over $8
million in local and state taxes were paid as a result of this
program.
3)The I-Bank : The I-Bank was created for the purpose of
assisting private agency's to obtain credit enhancements, and
acquire or lease facilities, as well as, leverage state and
federal funds for infrastructure projects that contribute to
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state and local economic development. The I-Bank is financed
through the California Infrastructure and Economic Development
Bank Fund, which receives fees, interest income and other
revenues from which I-Bank expenses are paid.
Since its creation, approximately a decade ago, the I-Bank has
issued over $348 million to local agencies in infrastructure
related revenue bonds, and has developed a level of expertise
in the implementation of successful local infrastructure
programs. The I-Bank also provides limited technical
assistance to local communities that are applying for I-Bank
funding for infrastructure. This makes the I-Bank a suitable
entity within state government to house the local technical
assistance program this bill creates.
The positions funded by this bill would serve small and rural
communities throughout the state in applying for
infrastructure funding. The I-Bank duties set forth in this
bill are consistent with the I-Bank's mission to encourage
economic development activities.
4)Beyond the Bond Acts of 2006 : The TAA is authorized to
receive funding from other infrastructure financing and
community development programs to support the I-Bank in
providing technical assistance to small and rural communities.
For example, current law authorizes the state to administer
the small cities Community Development Block Grant Program
(CDBG), which provides funding for technical assistance grants
for small counties and cities to conduct studies and develop
proposals for housing, public works, community facilities, and
economic development activities. In 2009 the federal
government authorized a federal stimulus package giving an
additional $10 million to this program, above its annual
baseline allocation. The Federal government may offer a round
two in CDBG federal stimulus dollars.
Pursuant to the provisions of the bill, funding from this, and
other economic development programs, may be deposited in the
TAA. Coordinated state technical assistance through a single
state agency the I-Bank creates efficiencies in small and
rural communities' efforts to obtain community development
funding.
5)California Economic Development Recovery Strategy : In
anticipation of the enactment of the $787 billion federal
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stimulus package, Assemblyman P?rez, Chair of the Assembly
Committee on Jobs, Economic Development and the Economy,
called for the preparation of a 24 month blueprint on how to
most effectively use federal stimulus funds to address the
state's immediate economic and workforce needs, while still
serving as a catalyst for advancing the state's long-term
economic growth. In March 2009, the California Economic
Development Recovery Strategy (Recovery Strategy) was
published.
The Recovery Strategy proposes to use the broadest set of
community, economic, and workforce development tools to link
these new federal resources with the people and organizations
they are designed to serve. In order to accomplish this
important task, the Recovery Strategy recommends that the
state serve as a facilitator to support and enhance each
community's individual initiative to design and implement
policies and programs which best fit their needs. The
recommended actions in the Recovery Strategy are organized
around five community development goals. The five goals are
to:
Goal 1 - Improve business access to business capital
Goal 2 - Target infrastructure projects that link to
economic development
Goal 3 - Expedite workforce services and training
opportunities
Goal 4 - Enhance local and regional community development
capacity
Goal 5 - Ensure that the state's recovery strategy is a
plan for all Californians.
Each of these goals includes a list of specific action items,
including actions that should start immediately, to actions
proposed in the next six-to-12 months and, finally, those
actions which will help to fortify the economy as the state
begins to move out of the recession in the next 12-to-18
months. In the past year, 25 of the 45 recommendations in the
Recovery Strategy have been acted upon, and three of the items
were specific to Goal 4.
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The local assistance program proposed in AB 2518 is a specific
recommendation under Goal 4 to have the state help to enhance
local and regional community development capacity.
1)Related legislation : The following is a list of related
bills.
a) AB 507 (Arambula) - Infrastructure and Economic
Development Bank Act : This bill requires projects selected
for funding under the Infrastructure Revolving Loan Program
only be funded if the project meets specified land use and
economic development criteria. Status: Died pursuant to
Article IV, Sec. 10(c) of the California Constitution on
February 2, 2010.
b) AB 1047 (V. Manuel P?rez ): This bill establishes 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 on February 2, 2010.
c) AB 1380 (Bass) - I-Bank: Board of Directors : This bill
expands the membership of the board of directors of the
I-Bank from five to seven members. Status: Pending in
Senate Rules Committee awaiting policy committee referral.
d) AB 1272 (Arambula) GO Bonds: Administration and
Oversight : 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 on February 1, 2008.
REGISTERED SUPPORT / OPPOSITION :
Support
Assembly Committee on Jobs, Economic Development and the
Economy, (sponsor)
California Chambers of Commerce
Regional Council of Rural Counties
Opposition
None received
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Analysis Prepared by : Mercedes Flores / J., E.D. & E. / (916)
319-2090