BILL ANALYSIS �
AB 796
Page 1
ASSEMBLY THIRD READING
AB 796 (Blumenfield)
As Amended May 11, 2011
Majority vote
NATURAL RESOURCES 6-3 APPROPRIATIONS 17-0
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|Ayes:|Chesbro, Brownley, |Ayes:|Fuentes, Harkey, |
| |Dickinson, Huffman, | |Blumenfield, Bradford, |
| |Monning, Skinner | |Charles Calderon, Campos, |
| | | |Davis, Donnelly, Gatto, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
|-----+--------------------------+-----+--------------------------|
|Nays:|Knight, Grove, Halderman | | |
| | | | |
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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,
which is modeled off of CalCAP, to encourage banks to make loans
to renewable energy businesses. Specifically, 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
California Pollution Control Financing Authority (Authority)
is funded exclusively from funds made available pursuant to
the federal Small Business Jobs Act of 2010 (Public Law
111-240).
2)Creates the Clean Energy and Jobs Incentive Program
administered by the California Alternative Energy and Advanced
Transportation Financing Authority (CAEATFA) for the
development and expansion of manufacturing facilities and the
installation of specified energy technologies. The Clean
Energy and Jobs Incentive 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
AB 796
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development and expansion.
EXISTING LAW :
1)Establishes CalCAP, which is administered by the 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 CAEATFA, which provides bond financing for
facilities that use alternative energy sources.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Doubles the amount of private loans that could benefit from
CalCAP loan insurance, from $2.5 million to $5 million,
provided the authority makes available federal Small Business
Jobs Act monies to match lender deposits.
2)Minor, absorbable costs to the Treasurer's Office to establish
the Clean Energy Jobs Incentive Program (Special fund.).
3)Cost pressure of an unknown amount, but potentially in the
millions of dollars, to provide funds to implement the Clean
Energy Jobs Incentive Program loan loss guarantee program
(Federal funds, General Fund, or special funds.).
COMMENTS : CalCAP was established by legislation enacted in
1994. CalCAP 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
AB 796
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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.
This 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 provide incentives to
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 Public Resources Code Section
26000).
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092
FN: 0001081