BILL ANALYSIS Ó
AB 894
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 894 (V. Manuel Perez) - As Amended: April 25, 2011
Policy Committee: JEDE Vote:5-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill creates the California Manufacturing Competitiveness
Loan and Loan Guarantee Program under the authority of the
California Industrial Development Financing Advisory Commission.
Specifically, this bill:
1)Requires the California Industrial Development Financing
Advisory Commission (CIDFAC) to establish the California
Manufacturing Competitiveness Loan and Loan Guarantee Program
for purpose of attracting, retaining and expanding
manufacturing facilities.
2)Allows CIDFAC to make loans or provide lines of credit for the
purpose of acquiring, constructing, or rehabilitating
facilities.
3)Prohibits CIDFAC from commencing operation of the program
until there is sufficient moneys in the Manufacturing Program
Account to pay for the cost of implementation and oversight of
the program.
4)Sunsets this loan program on January 1, 2017.
FISCAL EFFECT
1)One-time costs associated with developing the program would be
approximately $200,000. The bill requires applicants to pay a
fee to fully cover the cost of administering the program. It
is unclear how many manufacturers would ultimately apply to
the program, but if 25 firms applied for funds in a given
year, fees would need to be set at around $8,000 per
application to fully cover estimated ongoing costs of
AB 894
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approximately $200,000.
2)Loan and loan guarantees would be unknown major costs through
to the extent funds are available. These are envisioned to be
federal funds, but could include funds from other public and
private sources. No General Fund moneys may be deposited in
the Manufacturing Program Account.
AB 894
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COMMENTS
1)Purpose. According to the author, "historically, the state's
economic strategy has been to aggressively seize new ideas,
operationalize the idea and birth a new industry or transform
an old industry. Today, however, California manufacturing
faces increased competition from other states and nations,
which requires policy makers to help rethink, retool, and
rebuild the state's manufacturing sector. With potentially
hundreds of millions of dollars becoming available from
federal science, technology and industrial development
programs, California needs to prepare itself to most
effectively compete for these moneys. Approval of AB 894 can
be one piece in overall strategy to regain the state's
manufacturing dominance."
2)Federal funding for manufacturing. The Obama Administration
is continuing to move forward on new manufacturing
initiatives in 2011, following the 2009 release of the
President's "Framework for Revitalizing American
Manufacturing." In 2010 the Administration initiated the $130
million Energy Innovation Hubs for the purpose of spurring
regional economic growth through energy efficiency upgrades.
Seven federal agencies issued the $130 million combined
funding announcement to create a single regional research
center to develop and commercialize new building efficiency
technologies.
The proposed 2012 federal budget continues to reflect the
President's science and technology priorities with key federal
agencies receiving increases,
1)Opposition. The Associated Builders and Contractors oppose AB
894 because they object to priority being given on loans to
applicants that have submitted an application in conjunction
with a union.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081