BILL ANALYSIS �
AB 796
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Date of Hearing: May 2, 2011
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 796 (Blumenfield) - As Amended: April 25, 2011
SUBJECT : Financial assistance
SUMMARY : Increases the amount of money a bank may deposit into
a Capital Access Loan Program for Small Businesses (CalCAP) loan
loss reserve account from $100,000 to $200,000 over a three-year
period. Creates the Clean Energy and Jobs Incentive Program
(Program), which is modeled off of CalCAP, to encourage banks to
make loans to renewable energy businesses.
EXISTING LAW :
1)Establishes CalCAP, which is administered by the California
Pollution Control Financing Authority (Authority), to
encourage banks and other financial institutions to make loans
to small businesses that fall just outside of most banks'
conventional underwriting standards.
2)Requires the Authority to establish a loan loss reserve
account for each financial institution with which the
Authority makes a contract. The combined amount to be
deposited by the participating financial institution into any
individual loan loss reserve account over a three-year period,
in connection with any single borrower or any group of
borrowers among which a common enterprise exists, shall be not
more than $100,000. The Authority may also contribute to the
loan loss reserve account up to 150% of the amount paid by the
financial institution.
3)Establishes the California Alternative Energy and Advanced
Transportation Financing Authority (CAEATFA), which provides
bond financing for facilities that use alternative energy
sources.
THIS BILL :
1)Increases, under CalCAP, the combined amount that a
participating financial institution may deposit into any
individual loan loss reserve account over a three-year period
to $200,000 if the matching contribution made by the Authority
AB 796
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is funded exclusively from funds made available pursuant to
the federal Small Business Jobs Act of 2010 (Public Law
111-240).
2)Creates the Program administered by the CAEATFA for the
development and expansion of manufacturing facilities or the
installation of specified energy technologies. The Program
shall provide a loan loss reserve account to a participating
loan institution that would be responsible for the overall
financial structure of the financial assistance for clean
technology manufacturing development and expansion.
FISCAL EFFECT : Unknown
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COMMENTS :
1)Background. CalCAP was established by legislation enacted in
1994. The program assists small businesses in obtaining loans
through participating financial institutions. For eligible
businesses, CalCAP matches loan loss reserve account premiums
paid by borrowers and lenders on loans-a loan loss reserve is
the money set aside to cover losses from loan defaults or
slowed payment on loans. The participating financial
institutions are entirely liable for loan losses, which can be
reimbursed through each lender's CalCAP loan loss reserve
fund. The bill will lead to increased balances in loan loss
reserve accounts and thus allow for larger loans to small
businesses. According to the author, the State Treasurer's
office suggested authorizing the increase in the loan loss
reserve account.
The bill also creates a loan loss reserve program to support
companies manufacturing or installing eligible energy
technologies in California. According to the author, it is in
the state's best interest to immediately incentives
California-based clean technology companies as out-of-state
and overseas incentives grow. This program is based in part
on the CAEATFA Act (commencing with Section 26000 of the
Public Resources Code), but eligibility is broader than
similar provisions in the Act, extending beyond renewable
energy technologies to include natural gas-fueled distributed
generation and advanced transportation vehicles, fuels, or
infrastructure.
2)Potential mismatch between funding and eligibility. The bill
authorizes CAEATFA to use funds from the renewable energy
public goods charge, among other sources. However,
eligibility for the program includes non-renewable
technologies. The author and the committee may wish to
consider amending the bill to provide that renewable energy
funds may only be used to fund renewable energy technologies.
REGISTERED SUPPORT / OPPOSITION :
Support
CALSTART
Environmental Defense Fund
Mohr-Davidow Ventures
AB 796
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Nanosolar
Simbol Materials
Opposition
None on file
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092