BILL ANALYSIS Ó
Bill No: AB
893
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
AB 893 Author: V. Manuel Perez
As Amended: May 31, 2011
Hearing Date: June 28, 2011
Consultant: Art Terzakis
SUBJECT
California Infrastructure and Economic Development Bank
DESCRIPTION
AB 893 makes the following substantive changes to the
California Infrastructure and Economic Development Bank Act
of 1994:
1. Adds a new section of law that requires the
California Infrastructure and Economic Development
Bank (I-Bank) to provide "technical support" to small
and rural communities in order to obtain financing for
infrastructure projects.
2. Defines "technical support" to mean assisting
communities in developing strategic plans, writing
grants, applying for public/private loans and
guarantees, issuing bonds, and other activities
directly related to obtaining funding for projects.
3. Permits the I-Bank to contract with other state,
local and federal entities for the purpose of
providing technical support.
4. Requires the I-Bank to report its outreach
activities through its annual report and expands the
distribution of that report to include the appropriate
fiscal and policy committees of the Legislature.
EXISTING LAW
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Existing law establishes the I-Bank Fund in the State
Treasury, and requires that moneys in that fund are only
used for specified purposes. Existing law requires the
I-Bank to submit an annual report to the Governor, and the
Joint Legislative Budget Committee, that contains specified
requirements.
BACKGROUND
The I-Bank: To address a growing backlog of public
infrastructure needs, particularly at the local level, the
Legislature enacted the Bergeson-Peace Infrastructure and
Economic Development Bank Act in 1994 (Assembly Bill 1495 -
Peace and Senate Bill 101 - Bergeson). These measures
created the I-Bank to help local communities finance
necessary infrastructure and various community development
projects (e.g., city streets; state and county highways;
drainage, water supply and flood control; educational
facilities; environmental mitigation measures; parks and
recreational facilities; public transit; port facilities;
water treatment and distribution; solid waste collection
and disposal; power and communication; public safety
facilities, including police stations and fire stations;
and, defense conversion projects, among others). The
I-Bank supports economic development and public and private
infrastructure investments through its authority to issue
bonds, make loans and provide credit enhancements.
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, the State
Treasurer, the Director of the Department of Finance, the
Secretary of the State and Consumer Services Agency and an
appointee of the Governor. The I-Bank's Executive Director
is appointed by the Governor and confirmed by the Senate.
The I-Bank does not receive direct state funding. Funding
comes from fees, interest income, and revenues tied to
financing activities.
The I-Bank manages the following programs:
The Infrastructure State Revolving Fund Program
(ISRF) which provides low-cost loan financing to local
agencies for public infrastructure projects.
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The Industrial Development Revenue Bond Program
(IDB) which provides tax-exempt revenue bond financing
for eligible manufacturing companies.
The 501(c)(3) Revenue Bond Program which offers
tax-exempt revenue bond financing for certain
nonprofit, public benefit corporations.
The State School Fund Apportionment Lease Revenue
Bond Program which offers tax-exempt revenue bond
financing for school districts needing emergency
apportionment loans.
The Public Agency Revenue Bond Program which
provides tax-exempt revenue bond financing for
governmental entities.
The Infrastructure Guarantee Program which
guarantees bonds issued by other governmental
entities.
Purpose of AB 893: According to the author's office this
measure is intended to enhance the I-Bank's outreach to
small and rural communities, which often are ill-equipped
to pursue infrastructure and economic development
investments. Improved outreach will ensure that
communities that often most need economic development
assistance get the support they need. AB 893 also enhances
the reporting requirements of the I-Bank, supporting
improved accountability.
Assembly Jobs, Economic Development and the Economy
Oversight Hearing: the author's office notes that 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 session 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
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also by other states that are investing in a range of
infrastructure and technology supporting activities.
On March 30, 2011, the 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 a 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. The committee's recommendations have been included
in the following four bills: AB 700 (Blumenfield); AB 696
(Hueso); AB 893 (V. Manuel Pérez) and AB 1094 (John A.
Pérez).
PRIOR/RELATED LEGISLATION
SB 727 (Berryhill) of 2011-12 Session. Would have removed
the requirement that public works financed under the I-Bank
comply with the prevailing wage requirements. (Held in
Senate Labor and Industrial Relations Committee)
AB 696 (Hueso) 2011-12 Session. Would direct 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 use
criteria. (Pending in Senate Governance & Finance)
AB 700 (Blumenfield) 2011-12 Session. Would require the
I-Bank to adopt two-year goals and measurable objectives,
consistent with state infrastructure, economic development
and environmental plans and authorizes the I-Bank to pursue
streamlined administrative functions. (Pending in Senate
Governance & Finance)
AB 1094 (John A. Pérez) 2011-12 Session. Would establish
the I-Bank as the primary state agency to secure funding
through any federal infrastructure financing authority, and
expands the I-Bank's board from five to seven members.
(Pending in Senate Rules)
AB 1047 (Perez) of 2009-10 Session. Would have established
a new program within the I-Bank that would use bond
proceeds to assist small and rural communities to obtain
bond financing for infrastructure projects. The technical
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support could include drafting of strategic plans, writing
grants, applying for public and private loans and obtaining
funding for infrastructure projects. (Held on the Assembly
Appropriations Committee Suspense File)
AB 1272 (Arambula) of 2009-10 Session. Would have
established a new program within the I-Bank that would use
bond proceeds to assist small and rural communities to
obtain bond financing for infrastructure projects. (Held on
the Assembly Appropriations Committee Suspense File)
AB 1855 (Maze) Chapter 189, Statutes of 2004. Required the
I-Bank to notify the Governor and the appropriate fiscal
and policy committees of the Legislature when changes are
made to criteria, priorities and guidelines for project
selection.
AB 922 (Maze) of 2003-04 Session. Would have codified
existing criteria, priorities and
guidelines adopted by the I-Bank's board of directors for
the selection of projects that receive Infrastructure State
Revolving Fund Program financing from the Bank.
AB 112 (Longville) 2001-02 Session. Would have included
the acquisition of sensitive "wildlife habitat" as an
eligible project for I-Bank financing. (Held in Senate
Appropriations Committee)
AB 31 (Reyes) Chapter 746 of 2001. Established, until
1/1/07, the Central Valley Infrastructure Grant Program for
the purpose of providing grants, for qualifying projects to
rural "small" cities in the Counties of Fresno, Kings,
Kern, Madera, Merced, Stanislaus, San Joaquin and Tulare.
SB 975 (Alarcon) Chapter 938 of 2001. Clarified that all
public works projects financed through the I-Bank's
issuance of industrial development bonds must comply with
certain laws applicable to payment of "prevailing wages."
SCA 4 (Johannessen) 2001-02 Session. Would have created
the California 21st Century Infrastructure Investment Fund
for the purpose of funding capital outlay projects. (Held
in Senate Appropriations)
SB 1758 (Peace) Chapter 1079, Statutes of 2000. Modified
the definition of public development facilities for
purposes of the I-Bank Act, to include property that is
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related to providing "water supply" services.
SB 808 (Peace) Chapter 936, Statutes of 1999. Revised the
definition of "communication" facilities for purposes of
the I-Bank Act, to include electric and gas facilities.
SUPPORT: As of June 24, 2011:
California Association for Local Economic Development
California Chamber of Commerce
CDC Small Business Finance
Northern California Small Business Development Center
Program
Inland Empire Economic Partnership
UC Merced Small Business Development Center Regional
Network
Yuba-Sutter Economic Development Corporation
OPPOSE: None on file as of June 24, 2011.
FISCAL COMMITTEE: Senate Appropriations Committee