BILL ANALYSIS �
Bill No: SB
1484
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
SB 1484 Author: Pavley
As Amended: April 9, 2012
Hearing Date: April 24, 2012
Consultant: Paul Donahue
SUBJECT
Infrastructure & Economic Development Bank: Governor's
Office
DESCRIPTION
This bill would transfer the California Infrastructure and
Economic Development Bank from the Business, Transportation
& Housing Agency to the Governor's Office of Business and
Economic Development.
EXISTING LAW
The Bergeson-Peace Infrastructure and Economic Development
Bank Act created the California Infrastructure and Economic
Development Bank Fund within the Business, Transportation
and Housing Agency.<1> Among other things, the
Infrastructure Bank Board is empowered to do the following:
1)Acquire and sell land, structures, real or personal
property, rights-of-way, franchises, easements, and other
interests in lands that are located within the state, or
transition property as the bank may deem necessary or
convenient for the financing of an infrastructure
development project, upon terms and conditions that it
considers to be reasonable.
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<1> See Title 6.7 (commencing with Section 63000) of the
Government Code.
SB 1484 (Pavley) continued
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2)Receive and accept loans or contributions from any source
for an infrastructure development project.
3)Make loans to any sponsor or participating party, either
directly or by making a loan to a lending institution, in
connection with the financing of a project, either as a
sole lender or in participation with other lenders.<2>
4)Make loans to any sponsor or participating party, either
directly or by making a loan to a lending institution, to
refinance indebtedness incurred by the sponsor or
participating party in connection with projects
undertaken and completed prior to any agreement with the
bank, or expectation that the bank would provide
financing.
5)Mortgage all or any portion of the bank's interest in a
project and the property on which any project is located,
whether owned or thereafter acquired, including the
granting of a security interest in any property, tangible
or intangible.
6)Make, receive, or serve as a conduit for the making of,
grants, contributions, guarantees, insurance, credit
enhancements or liquidity facilities, or other financial
enhancements to a sponsor or a participating party as
financial assistance for a project.
7)Lease a project being financed to a sponsor or a
participating party, upon terms and conditions that the
bank deems proper but shall not be leased at a loss;
charge and collect rents; terminate any lease upon the
failure of the lessee to comply with any of the
obligations thereof, etc.
8)Enter into any agreement or contract for insurance or any
guarantee.
9)Enter into purchase and sale agreements with all
entities, public and private, including state and local
government pension funds, with respect to the sale or
purchase of bonds or transition property.
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<2>
No loan may exceed the total cost of the project, as
determined by the sponsor or the participating party, and
approved by the bank.
SB 1484 (Pavley) continued
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BACKGROUND
1)The California Infrastructure and Economic Development
Bank (I-Bank) supports economic development through its
authority to issue bonds, make loans and provide credit
enhancements. The I-Bank generally supports two types of
projects, public development facilities, which are
municipal in nature, such as sewers, roadways and ports,
etc., and economic development facilities, which are not
municipal in nature, such as industrial or commercial
facilities. These two types of projects supported by the
I-Bank reflect the consolidation of the California
Economic Development and Financing Authority (CEDFA) into
the Infrastructure and Economic Development Bank.
Prior to consolidation, the I-Bank was established to
support public infrastructure development, and the CEDFA
was established to support private infrastructure in the
interest of promoting economic development.
Consolidation was intended to result in a "one-stop shop"
for infrastructure investments. Despite the
consolidation, state law establishes different criteria
for public versus private infrastructure projects.
2)Author's statement : Under current law, before issuing
loans or otherwise assisting in infrastructure
development for the State, the Infrastructure Bank must
go through multiple layers of regulatory approval, not
only within the Infrastructure Bank itself, but also
through the Business, Transportation and Housing Agency.
This bill would streamline the regulatory process by
moving the Infrastructure Bank under the Governor's
Office of Business and Economic Development (GO Biz).
Last year, the Legislature created GO Biz to coordinate
and promote business development and to encourage
private-sector investment and job growth. This bill
would take full advantage of this new office's capacity
to bring infrastructure jobs to the State. Consolidating
the Infrastructure Bank under GO Biz will give the state
a stronger and more unified ability to promote and
improve the State's economy.
Moreover, while the Governor has submitted a plan to the
Little Hoover Commission that includes the provisions of
this bill, there is no guarantee that the Little Hoover
Commission will recommend this plan to the Legislature.
SB 1484 (Pavley) continued
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This bill ensures that this critical component of the
reorganization plan is codified into law.
3)Governor's Reorganization Plan : On March 30, 2012,
Governor Brown transmitted a Governor's Reorganization
Plan (GRP) to the Little Hoover Commission. According to
the proposal,
"Before Go Biz was created, programs to bring
jobs to the State, enhance exports, and market
California goods were dispersed in various areas
of the government such as the Office of Economic
Development, the Commission on Economic
Development, the former Trade and Commerce
Agency, and other entities.
"This GRP strengthens and expands Go Biz by
incorporating into it other growth-promoting
programs. These include the Infrastructure Bank ,
the Film Commission, the Tourism Commission, the
Small Business Centers, and the Small Business
Guarantee Loan Program. Consolidating these
programs will strengthen GO Biz and give the
state a stronger and more unified ability to
promote and improve the State's economy."
PRIOR/RELATED LEGISLATION
AB 29 (Perez) Chapter 475, Statutes of 2011 . Establishes
the Office of Business and Economic Development within the
Governor's Office to serve as the lead entity for economic
strategy and marketing of California on issues relating to
business development, private sector investment and
economic growth.
SUPPORT:
None on file
OPPOSE:
None on file
FISCAL COMMITTEE: Senate Appropriations Committee
SB 1484 (Pavley) continued
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