BILL ANALYSIS �
AB 696
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Date of Hearing: May 27, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 696 (Hueso) - As Amended: May 10, 2011
Policy Committee: JEDE Vote:4-2
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 only be
funded if the project meets specified land use and economic
development criteria. Specifically, this bill:
1)Adds a new eligibility threshold for ISRF applications by
requiring the I-Bank to select projects that have an economic
benefit and that meet land use criteria, as determined by the
I-Bank.
2)Defines economic development benefit to mean, in the
determination of the California Infrastructure Bank (I-Bank),
that the project would provide some quantitative level of
economic benefit including, but not limited to, the creation
or retention of jobs, growth of the property tax base, or
growth of sales tax base.
3)Authorizes the I-Bank to establish advisory groups and host
meetings to discussing innovative financing techniques.
FISCAL EFFECT
The I-Bank will incur additional administrative costs of
approximately $250,000 to either hire staff or hire consultants
to meet the requirements of calculating economic benefits and
ensuring projects meet land use criteria.
COMMENTS
1)Purpose. This bill would provide further direction to the
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I-Bank on achieving the objectives of the Infrastructure State
Revolving Fund Program. This will ensure that loans from the
ISFR are made to projects that statutorily mandate objectives
for economic development and land use.
2)The I-Bank. I-Bank activities are governed by a five-member
board of directors comprised of the BTH Secretary (chair),
State Treasurer, Director Department of Finance, Secretary of
the State and Consumer Services Agency, and a Governor's
appointee. The day-to-day operations of the I-Bank are
directed by the Executive Director who is an appointee of the
Governor and is subject to confirmation by the California
State Senate. Currently, the I-Bank has authority for 24
staff members.
The I-Bank is operated on a revolving fund basis and thereby
generates continuous funding for new project investments. The
I-Bank does not receive any ongoing General Fund support for
loan or bond financing, and according to its 2009-10
independent audit, its program continues to provide sufficient
revenues to support all operating expenses.
1)Infrastructure State Revolving Fund (ISRF). The ISRF Program
provides low-cost financing to public agencies for a wide
variety of infrastructure projects. The ISRF Program was
established through an initial $182 million capitalization,
and it is maintained through the use of a leverage loan
program, whereby bonds are issued to raise upfront program
capital and the loan repayments are committed toward the
repayment of bonds. Using the leverage loan program has
allowed the I-Bank to maintain a somewhat steady flow of eight
to 10 new loans each year. Eligible applicants include local
government entities, including cities, counties, redevelopment
agencies, special districts, assessment districts, joint
powers authorities and non-profit corporations formed on
behalf of a local government.
Eligible project categories include city streets, county
highways, state highways, drainage, water supply and flood
control, educational facilities, environmental mitigation
measures, parks and recreational facilities, port facilities,
public transit, sewage collection and treatment, solid waste
collection and disposal, water treatment and distribution,
defense conversion, public safety facilities, and power and
communications facilities.
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2)LAO Analysis. In its 2008-09 analysis of the state budget,
the LAO raised concerns over the projects being funded under
the ISRF Program. The LAO noted that the current scoring
system does not effectively target funds to projects to
provide economic development and promote better land use.
Specifically, a review of approved ISRF loans indicates (a)
the majority of projects that received loans have little or no
economic development impact, and (b) projects do not need to
have much impact on improving land use to receive loan funds.
3)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081