BILL ANALYSIS �
AB 700
Page 1
ASSEMBLY THIRD READING
AB 700 (Blumenfield)
As Amended May 10, 2011
Majority vote
ECONOMIC DEVELOPMENT 5-0 APPROPRIATIONS 13-4
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|Ayes:|V. Manuel P�rez, Beall, |Ayes:|Fuentes, Harkey, |
| |Block, Hueso, Morrell | |Blumenfield, Bradford, |
| | | |Charles Calderon, Campos, |
| | | |Davis, Gatto, Hall, Hill, |
| | | |Lara, Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Donnelly, Nielsen, Norby, |
| | | |Wagner |
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SUMMARY : Establishes an independently administered California
Infrastructure and Economic Development Bank (I-Bank) and makes
related administrative changes to ensure accountability,
transparency, and integration within the state's infrastructure
planning and development process.
EXISTING LAW establishes the I-Bank within the Business,
Transportation and Housing Agency (BTH), and authorizes it to
undertake a variety of infrastructure related financial
activities including, but not limited to, the administration of
a revolving loan fund and the issuance of tax-exempt and taxable
revenue bonds.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, the I-Bank will incur additional administrative
expenses of approximately $100,000 to meet the requirements of
the bill.
COMMENTS : This measure is part of a four-bill package designed
to enhance the ability of the I-Bank to meet the infrastructure
and economic development needs of the state. AB 700 focuses on
the administrative changes, as well as encouraging the I-Bank to
help facilitate regionally significant infrastructure projects.
As most infrastructure projects require multiple funding
sources, having a qualified and experienced finance partner
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assist in bringing the deal together should reduce the overall
cost of the project.
Background on I-Bank: The I-Bank was established in 1994 to
promote economic revitalization, enable future development, and
encourage a healthy climate for jobs in California. Housed
within BTH, it is 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 does not receive any ongoing General Fund support,
rather it is financed through fees, interest income and other
revenues derived from its public and private sector financing
activities. According to its 2009-10 independent audit, its
programs continue to provide sufficient revenues to support all
operating expenses.
The I-Bank administers two categories of programs: 1) The
Infrastructure State Revolving Fund (ISRF) which provides direct
low-cost financing to public agencies for a variety of public
infrastructure projects; and, 2) Bond Financed Programs which
provide financing for manufacturing companies, nonprofit
organizations, public agencies and other eligible entities.
There is no commitment of I-Bank or state funds for any of the
conduit revenue bonds. Even in the case of default, the state
is not liable.
Since its creation in 1994, the I-Bank has loaned over $400
million to local agencies, developing a high-level of expertise
in the financing of public infrastructure. The I-Bank also
serves as the state's only general purpose financing authority
with broad statutory powers to issue revenue bonds. Over $30
billion in conduit revenue bonds have been issued by the I-Bank
since 2000.
The seismic upgrade of the Bay Bridge is an example of how
conduit revenue bonds can be used to raise capital for
infrastructure projects without impacting the state General
Fund. In this example, the repayment of the bonds was based on
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a $1 per vehicle surcharge collected on seven Bay Area
state-owned toll bridges. In addition to this type of bonding
activity, 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.
Oversight hearing: On March 30, 2011, the Assembly Jobs,
Economic Development and the Economy (JEDE) Committee held an
oversight hearing to examine how infrastructure development
impacted local, state and federal economic recovery efforts and
California's economic position in the post-recession economy.
Following the hearing, JEDE released a preliminary list of
recommendations to better align the authorities of the I-Bank
with the state's current and future infrastructure needs. Based
on those recommendations, JEDE Members voted to amended four
bills, reflecting more than half the hearing recommendations.
These bills included legislation to: reorganize the I-Bank as
an independent agency �AB 700 (Blumenfield)]; enhance the
I-Bank's ability to develop financing methods best suited for
the post-recession economy �AB 696 (Hueso)]; and expand the
membership of the I-Bank board and functions to more broadly
reflect its development and business creation potential �AB 893
(V. Manuel P�rez) and AB 1094 (John A. P�rez)].
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090
FN: 0001106