BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 700 HEARING: 6/22/11
AUTHOR: Blumenfield FISCAL: Yes
VERSION: 6/15/11 TAX LEVY: No
CONSULTANT: Ewing
INFRASTRUCTURE BANK'S GOVERNANCE
Makes the Infrastructure Bank independent under the
Governor
Background and Existing Law
The California Infrastructure and Economic Development Bank
(I-Bank) supports infrastructure investments and private
development through its authority to issue bonds, make
loans and provide credit enhancements. The Bank generally
supports two types of projects, public development
facilities, which are municipal in nature, such as sewers,
roadways and ports, etc., and economic development
facilities, which are not municipal in nature, such as
industrial or commercial facilities. These two types of
projects supported by the I-Bank reflect the consolidation
of the California Economic Development and Financing
Authority (CEDFA) into the Infrastructure and Economic
Development Bank under SB 1184 (M. Thompson, 1998).
Prior to consolidation, the I-Bank was established to
support public infrastructure development, and the CEDFA
was established to support private infrastructure
development. Consolidation was intended to result in a
"one-stop shop" for infrastructure investments. Despite
the consolidation, state law establishes different criteria
for public versus private infrastructure projects.
The I-Bank's activities are organized into the following
programs:
The Infrastructure State Revolving Fund Program
(ISRF) provides low-cost financing to local agencies
for public infrastructure projects.
The Industrial Development Revenue Bond Program
(IDB) provides tax-exempt revenue bond financing for
AB 700 -- 6/15/11 -- Page 2
eligible manufacturing companies.
The 501(c)(3) Revenue Bond Program offers
tax-exempt revenue bond financing for certain
nonprofit, public benefit corporations.
The State School Fund Apportionment Lease Revenue
Bond Program offers tax-exempt revenue bond financing
for school districts needing emergency apportionment
loans.
The Public Agency Revenue Bond Program provides
tax-exempt revenue bond financing for governmental
entities.
The Infrastructure Guarantee Program guarantees
bonds issued by other governmental entities.
Housed within the Business Transportation and Housing
Agency (BTH), the I-Bank has a five-member board of
directors that approves projects. The board includes the
BTH Secretary, who serves as the chair, State Treasurer,
director of the Department of Finance, Secretary of the
State and Consumer Services Agency and an appointee of the
Governor.
The I-Bank does not receive direct state funding. Funding
comes from fees, interest income, and revenues tied to
financing activities.
In addition to the I-Bank, BTH oversees and coordinates 13
departments and several economic development and finance
programs, including the California Housing Finance Agency,
Department of Housing & Community Development, California
Film Commission, California Travel & Tourism Commission,
International Trade Promotion, and the Small Business Loan
Guarantee Program.
The I-Bank's Executive Director is appointed by the
Governor and confirmed by the Senate. The director manages
a staff of 24 and receives support for personnel and
related administrative functions through the BTH Agency.
The I-Bank must submit to the Governor and Legislature an
annual report itemizing projects applications and
approvals, the amount of leveraged private funding,
revenues and expenditures, and related information.
Proposed Law
AB 700 -- 6/15/11 -- Page 3
Assembly Bill 700 makes the following changes in statute to
establish the independence of the I-Bank:
Moves the I-Bank from the jurisdiction of the
Business, Transportation & Housing Agency and
establishes it as a stand-alone entity under the
executive branch,
Changes the designation of its lead staff from
"executive director" to "chief executive officer,"
Shifts the role of chair from the BTH Secretary to
the director of the Department of Finance,
Authorizes the I-Bank to contract with another
state agency for administrative services, such as
personnel services.
AB 700 also establishes the following planning and
reporting requirements:
Requires the I-Bank to establish a set of two-year
goals and measureable objectives and develop an annual
work plan for its public infrastructure projects,
Requires those goals, objectives and work plans to
be consistent with the State Environmental Goals and
Policy Report, state-level infrastructure plans, and
the California Economic Development Strategic Plan,
unless those plans are more than two years overdue.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . AB 700 improves the I-Bank's
organizational structure and enhances its efficiency.
Establishing the I-Bank as an independent entity will equip
the Bank to work directly with the Governor's Office and
Legislature, improve its operational efficiencies, and
enhance its effectiveness. The bill requires the I-Bank to
establish two-year goals, measureable outcomes and annual
work plans to meet those goals. These changes ensure that
the I-Bank can advance infrastructure projects of state and
regional significance and improve accountability.
2. What value coordination ? AB 700 severs the I-Bank from
AB 700 -- 6/15/11 -- Page 4
the Business Transportation & Housing Agency. The state
has numerous financing and economic development entities,
including the programs within BTH, the Governor's Office
for Economic Development, the Employment Training Panel,
and programs through the community colleges. AB 700
provides the I-Bank with no additional authority. Moving
the I-Bank out of the Agency could impair coordination and
hamper the state's ability to fully leverage each of its
economic development tools.
3. Plans anyone ? AB 700 requires the activities of the
I-Bank to be consistent with state environmental,
infrastructure and economic development plans, but only for
its public infrastructure projects. The bill's requirement
for the establishment of goals, objectives and work plans
applies only to its public infrastructure projects.
Private infrastructure projects are not constrained by
public priorities as reflected in those plans, nor would
must the Bank's goals and work plans reflect those
activities. I-Bank staff point out that entities seeking
conduit financing can seek that financing through other
state and local entities. Requiring the I-Bank to focus on
priorities established in state planning documents, would
create a competitive disadvantage in comparison to other
financing entities that don't face similar constraints.
The Committee may wish to consider amending AB 700 to
require that both the public and private infrastructure
activities of the I-Bank be consistent with state
priorities and require that the I-Bank's goals, objectives
and work plans reflect all of its activities.
4. Double-jointing . Both AB 700 and AB 1094 (John A.
P�rez) amend Government Code � 63021.5 but in different
ways. If both bills pass out of the Senate policy
committees, the Senate Appropriations committee should be
prepared to address the potential chaptering problem with
double-jointing amendments.
5. Related Legislation . AB 700 is not the only bill that
would affect the I-Bank.
AB 696 (Hueso) directs the I-Bank to establish a
methodology for determining the economic benefits of
projects under consideration and, as of January 1,
2013, restricts the I-Bank to approve only those
projects that provide economic benefits and meet land
AB 700 -- 6/15/11 -- Page 5
use criteria.
AB 893 (V. Manuel P�rez) directs the I-Bank to enhance
outreach and technical assistance to small and rural
communities to obtain financing for infrastructure
projects.
AB 1094 (John A. P�rez) establishes the I-Bank as the
primary state agency to secure funding through any
federal infrastructure financing authority, expands
the I-Bank's board from five members to seven.
Assembly Actions
Assembly Jobs, Economic Development & the Economy:5-0
Assembly Appropriations: 13-4
Assembly Floor: 72-3
Support and Opposition (6/16/11)
Support : Bay Area Council; Los Angeles County Economic
Development Corporation; North Bay Leadership Council; San
Francisco Chamber of Commerce; Greater Antelope Valley
Economic Alliance; Los Angeles Area Chamber of Commerce;
Orange County Business Council; San Gabriel Valley Economic
Partnership; San Diego Regional Economic Development
Corporation; Inland Empire Economic Partnership
Opposition : Unknown.