BILL ANALYSIS �
AB 700
Page 1
GOVERNOR'S VETO
AB 700 (Blumenfield)
As Amended June 28, 2011
2/3 vote
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|ASSEMBLY: |72-3 |(June 1, 2011) |SENATE: |37-0 |(August 30, 2011) |
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|ASSEMBLY: |67-10|(September 6, | | | |
| | |2011) | | | |
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Original Committee Reference: J., E.D. & E.
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.
The Senate amendments require the I-Bank to annually report on
its progress in meeting its measurable goals and objectives, as
well as making other clarifying changes.
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 Senate Appropriations
Committee, the I-Bank will incur additional administrative
expenses of approximately $100,000 to implement 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
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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
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
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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
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)]; require the I-Bank to evaluate the
economic development impact of its financing activities �AB 696
(Hueso)]; require the I-Bank to provide technical assistance to
small and rural communities �AB 893 (V. Manuel P�rez)]; and,
expand the membership of the I-Bank board to include legislative
members �AB 1094 (John A. P�rez)].
GOVERNOR'S VETO MESSAGE :
"This bill takes the state's Infrastructure Bank (I-Bank) out of
the Business, Transportation and Housing Agency and makes it a
stand-alone agency reporting directly to the Governor.
"I agree with the author that the I-Bank can be better situated
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so that it operates more effectively. Toward that end, I will
propose a reorganization plan in connection with the upcoming
budget that will include changes in the I-Bank. I hope to work
with the author to achieve our mutual goals."
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090
FN: 0002964