BILL ANALYSIS Ó
AB 893
Page 1
ASSEMBLY THIRD READING
AB 893 (V. Manuel Pérez)
As Amended May 31, 2011
Majority vote
ECONOMIC DEVELOPMENT 4-1 APPROPRIATIONS 12-5
-----------------------------------------------------------------
|Ayes:|V. Manuel Pérez, Beall, |Ayes:|Fuentes, Blumenfield, |
| |Block, Hueso | |Bradford, Charles |
| | | |Calderon, Campos, Davis, |
| | | |Gatto, Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
| | | | |
| | | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Morrell |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
| | | | |
| | | | |
| | | | |
-----------------------------------------------------------------
SUMMARY : Requires the California Infrastructure and Economic
Development Bank (I-Bank) to provide technical assistance to
small and rural communities in obtaining financing for
infrastructure projects. Modifies the annual reporting
requirements to include a list of outreach activities; and,
gives details on the number of new jobs created, retained, and
indirectly impacted.
EXISTING LAW creates the I-Bank within the Business,
Transportation and Housing (BTH) Agency, to promote economic
revitalization, enable future development, and encourage a
health climate for jobs in California. The I-Bank has the
authority to issue tax-exempt and taxable revenue bonds to
underwrite the costs of infrastructure development that meets
certain public purposes.
FISCAL EFFECT : According to Assembly Appropriations Committee,
significant state costs of several hundred thousand annually to
carry out the technical assistance functions.
COMMENTS : This bill is part of a four-bill package designed to
AB 893
Page 2
enhance the ability of the I-Bank to meet infrastructure and
economic development needs of the state. AB 893 (V. Manuel
Pérez) focuses on providing technical assistance to small and
rural communities in obtaining financing for infrastructure
projects.
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 of the 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
program continues to provide sufficient revenues to support all
operating expenses.
The I-Bank administers two categories of programs: 1) the
Infrastructure State Revolving Fund Program 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. An example of how conduit revenue bonds can be used
to raise capital including the financing of the seismic upgrade
of the Bay Bridge, which was repaid through a $1 per vehicle
AB 893
Page 3
surcharge collected on seven Bay Area state-owned toll bridges.
In addition, 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: With California workers and businesses facing
some of the harshest economic conditions since the Great
Depression, the Chairman of the Assembly Jobs, Economic
Development and the Economy (JEDE) Committee has focused the
Committee's efforts during the prior and current legislative
sessions on engaging the public in the recovery dialogue.
Through these events JEDE has found that one of California's
challenges in moving forward is the state's aging infrastructure
and its inability to support the innovation economy that is
fundamental to retaining the state's global competitiveness. In
fact, research shows that California's historical position as a
leader in innovation and technology is being challenged not only
from abroad, but also by other states that are investing in a
range of infrastructure and technology supporting activities.
On March 30, 2011, JEDE held an oversight hearing to examine how
infrastructure development impacted local, state and federal
economic recovery efforts and California's economic position in
post-recession economy. A white paper was prepared for the
hearing and later revised to include information learned at the
hearing, identification of follow-up actions and a summary of
key program-level recommendations. In May 2011, key
recommendations were amended into four previously introduced
I-Bank measures including legislation to: reorganize the I-Bank
as an independent agency ÝAB 700 (Blumenfield)]; enhance the
I-Bank's ability to develop financing methods best suited for
the post-recession economy ÝAB 696 (Hueso)]; and, expand the
membership of the I-Bank board and functions to more broadly
reflect its development and business creation potential ÝAB 893
(V. Manuel Pérez) and AB 1094 (John A. Pérez)].
Analysis Prepared by : Toni Symonds / Mercedes Flores / J.,
E.D. & E. / (916) 319-2090
FN: 0001166
AB 893
Page 4