BILL ANALYSIS Ó
AB 1545
Page 1
Date of Hearing: May 2, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1545 (V. Manuel Perez) - As Amended: April 25, 2012
Policy Committee: JEDE Vote:4-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill expands the role of the California Infrastructure and
Economic Development Bank (I-Bank) to include facilitating
infrastructure and economic development financing activities
within the California and Mexico border region. Specifically,
this bill:
1)Authorizes the I-Bank to facilitate and finance infrastructure
and economic development projects within the border region.
The border region is defined as the area within 120 miles on
each side of the California-Mexico border, including areas
along the north-south and east-west transportation networks on
both sides of the border.
2)Grants the I-Bank the authority to enter into any agreement
with any federal, state local or foreign economic and
infrastructure authority.
3)Directs the I-Bank to serve a role similar to the North
American Development Bank.
4)Prohibits the use of General Fund moneys from being used to
implement this measure.
FISCAL EFFECT
The costs to the I-Bank are expected to be $250,000 to set up
the program, including developing regulations and establishing
the authority. As the program is established, costs could
diminish, depending on the volume of financing activity. The
I-Bank is financed by fees, interest income and other revenue
from its financing activities.
AB 1545
Page 2
COMMENTS
1)Purpose : According to the author, since Mexico is
California's largest trading partner, the two economies are
highly integrated with a substantial dependence on
cross-border trade. The author argues one barrier to the
expansion of trade and bi-national commerce is the deficit in
border infrastructure, which has not kept pace with increases
in trade and transit since ratification of the North American
Free Trade Agreement. The author states the long-term success
of the bi-national region is dependent on attracting more
private sector investment, but attracting private capital
requires innovative financing structures and a commitment to
the border's economic success, which the I-Bank is qualified
to undertake.
2)The 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. 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 financing
activities.
On March 30, 2012, the governor submitted a reorganization
plan to the Little Hoover Commission, which proposes to
dismantle BTH and relocate the I-Bank in the Governor's Office
of Business and Economic Development (GO-Biz). The Director
of GO-Biz will become the chair as Chair of I-Bank.
3)North American Development (NAD) Bank . The NAD Bank was
created through the enactment of North American Free Trade
Agreement and is jointly financed by the United States and
Mexico. The NAD Bank is authorized to serve communities
located within 100 km (about 62 miles) north of the
international boundary in the four states of Texas, New
Mexico, Arizona and California and within 300 km (about 186
miles) south of the border in the six states of Tamaulipas,
Nuevo Leon, Coahuila, Chihuahua, Sonora, and Baja California.
Ninety percent of NADB's authorized capital, currently $450
million, is used to finance environmental infrastructure
projects in the border region, and 10 percent of the capital
subscribed by each country went to finance community
AB 1545
Page 3
adjustment and investment. As intended in AB 1545, it would
appear the I-Bank would complement the activities of the NAD
Bank, although the language of the bill states that AB 1545 is
intended to recapitalize the NAD Bank.
4)Foreign relations . The bill authorizes the bank to establish
and participate in a binational financing authority, which may
include governmental entities within the border region and to
enter into agreements with any foreign economic and
infrastructure authority. These would seem to be prohibited
activities under the Contracts Clause of the U.S.
Constitution, which specifically prevents states from
exercising powers reserved to Congress, including entering
into treaties. The state could still consult and coordinate
with international entities or still enter into an agreement,
provided it is negotiated subject to Congressional approval.
5)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081