BILL ANALYSIS �
AB 2749
Page 1
Date of Hearing: April 22, 2014
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Jose Medina, Chair
AB 2749 (Jobs, Economic Development, and the Economy) - As Amended:
April 10, 2014
SUBJECT : Economic development
SUMMARY : Makes technical changes to the Government Code relating to
the transfer of economic development related programs from the
Business, Transportation and Housing Agency (BTH) to the Governor's
Office of Business and Economic Development (GO-Biz). Specifically,
this bill :
1)Makes technical corrections to the transfer of the administration of
the Economic Adjustment Assistance Grant and the Sudden and Severe
Economic Dislocation Grant Program from the BTH to GO-Biz.
2)Renumbers within statute the following definitions (no changes have
been made to the definitions):
-------------------------------------------------------------------
| a) Local Economic | b) Financial Intermediary |
| Development Organization | |
|------------------------------+------------------------------------|
| c) Regional Economic | d) Regional Economic Development |
| Development Organization | Corporation |
|------------------------------+------------------------------------|
| e) Regional Economic | f) Small Businesses |
| Development Organization | |
|------------------------------+------------------------------------|
| g) Economic Development | h) Community Development |
| Corporation | |
|------------------------------+------------------------------------|
| i) Triple Bottom Line | j) Financial Institution Capital |
|------------------------------+------------------------------------|
| aa) Economic Development | bb) Community Development |
| | Intermediary |
|------------------------------+------------------------------------|
| cc) Local Economic | dd) Microbusiness Lender |
| Development | |
|------------------------------+------------------------------------|
| ee) Emerging Domestic | ff) California Council on Science |
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| Market |and Technology |
-------------------------------------------------------------------
3)Modifies the annual reporting requirements of the I-Bank including:
consolidating requirements; making submittal of the report to the
Legislature rather than the Joint Legislative Audit Committee;
requiring that aggregate-level reporting be provided on revolving
loan fund activities rather than the current requirement to report,
in detail, on every application received during the reporting
period; and requiring the annual report be posted on its website.
4)Removes the requirement for the Small Business Advocate to consult
with the Department of Transportation on the Small and Emerging
Manager Contractor Technical Assistance Program, a program that
sunseted on January 1, 2013.
5)Makes other technical and conforming changes to the Government Code.
EXISTING LAW :
1)Places the definitions for specified terms relating to economic
development within part 4.7 of division 3 of title 2 of the
California Government Code, concerning Business and Tourism (Ca.
Gov. Code � 13997.2). This is reflective of BTH's previous role as
administrator of economic development programs within the executive
branch of the California government.
2)Establishes the authority of GO-Biz as "the lead entity for economic
strategy and the marketing of California on issues relating to
business development, private sector investment, and economic
growth." (Ca. Gov. Code �12096.3)
3)Designates the Director of GO-Biz as the official state
administrator of the Economic Adjustment Assistance Grant and the
Small Business Expansion Fund. (Ca Gov Code �13997.7 as amended by
SB 820, Chapter 353, Statutes of 2013)
4)Establishes the California Small Business Finance Center within the
I-Bank for the purpose of overseeing programs locally delivered
through a network of small business financial development
corporations (FDCs). (Ca Gov Code � 63088 et sec as established
through AB 1247, Chapter 537, Statutes of 2013)
FISCAL EFFECT : Unknown
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COMMENTS :
1)Author's Purpose : This measure makes a number of technical changes
to conform existing law with previously enacted legislation.
2)Office of Business and Economic Development : In April 2010, the
Governor's Office of Economic Development was established to provide
a One-Stop-Shop for serving the needs of businesses and economic
developers. While initially established through Executive Order
S-01-10, the office was later codified and renamed as the Governor's
Office of Business and Economic Development (GO-Biz), in AB 29,
Chapter 475, Statues of 2010. In 2012, GO-Biz assisted over 5,300
companies which resulted in the creation and/or retention of 9,050
jobs and $1.45 billion in investments. GO-Biz directly assisted
over 6,500 companies in 2013.
Among other programs, GO-Biz provides permits and other technical
assistance for new and expanding businesses, as well as
administering the California Innovation Hub Program in partnership
with the statewide network of 16 regional economic development
partnerships. The Office of the Small Business Advocate is located
at GO-Biz and the state's international trade and foreign investment
activities are coordinated through GO-Biz.
In 2012, the Governor initiated, and the Legislature allowed to
advance, a comprehensive reorganization of the state's
administrative structure [Governor's Reorganizing Plan 2 (GRP2)].
Key changes included the dismantling of the Business, Transportation
and Housing Agency (BTH) and further consolidating GO-Biz' position
as the state's lead in economic development. Effective July 1,
2013, GO-Biz has the administrative authority for more economic
development related programs and services including the Small
Business Loan Guarantee Program and the Infrastructure and Economic
Development Bank.
3)Economic Adjustment Assistance Grant : The federal Economic
Adjustment Assistance Grant program was initially designated to be
administered through the Technology, Trade, and Commerce Agency,
which was eliminated in 2003. Although the State Controller
retained the federal money, no state entity had the legal authority
to actually use the money.
In 2008, BTH was designated as the state administer of the funds and
the moneys were transferred to the California Expansion Fund where
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they could be used under contract through the state's network of
FDCs. Code clean-up to the Governor's GRP 2 transferred the
authority to use the federal funds and the responsibility to oversee
the FDC contracts from BTH to GO-Biz. However, legislation enacted
in 2013, transferred the FDC programs to the I-Bank, a unit within
GO-Biz [AB 1247 (Medina), Chapter 537, Statutes of 2013]. AB 2749,
as proposed to amended in Assembly Appropriations, would give the
executive director of the I-Bank the authority to administer the
federal funds through the FDCs.
4)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 GO-Biz, it is
governed by a five-member board of directors comprised of the
Director of GO-biz (chair), State Treasurer, Director Department of
Finance, Transportation 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 25 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 Comprehensive Annual Financial Report for the
fiscal year ended June 2013, its programs continued to provide
revenues sufficient to cover operating expenses.
The I-Bank administers three programs: (1) the Infrastructure State
Revolving Fund which provides direct low-cost financing to public
agencies for a variety of public infrastructure projects; (2) the
Conduit Bond Program which provides financing for manufacturing
companies, public benefit nonprofit organizations, public agencies
and other eligible entities; and (3) the Small Business Finance
Center which helps small businesses access private financing through
loan guarantees, direct loans, and performance bond guarantees .
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, financed, or
participated in over $344 billion in infrastructure and economic
expansion projects. This includes over $400 million to local and
state agencies, developing a high-level of expertise in the
financing of public infrastructure. The I-Bank also serves as the
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state's only general purpose financing authority with broad
statutory powers to issue revenue bonds, make loans, and provide
guarantees. Over $33 billion in conduit revenue bonds have been
issued by the I-Bank since 2000.
The seismic upgrade of the Bay Bridge is an example of how conduit
revenue bonds can be used to raise capital for infrastructure
projects without impacting the state General Fund. In this example,
the repayment of the bonds was based on a $1 per vehicle surcharge
collected on seven Bay Area state-owned toll bridges. In addition
to this type of bonding activity, 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.
5)Related Legislation : The following is a list of related
legislation.
a) AB 29 (John A. P�rez) Creation of GO-Biz: This bill
established the Office of Economic Development within the
Governor's Office for the purpose of serving as the lead entity
for economic strategy and marketing of California on issues
relating to business development, private sector investment and
economic growth. Status: Signed by the Governor, Chapter 475,
Statutes of 2011.
b) AB 901 (V. Manuel P�rez) Definition of Financial Institutions:
This bill expanded the definition of financial institutions
eligible to participate. Particularly, the bill included a small
business financial development corporation or microenterprise
development organization that met the established standards.
Additionally, it required an annual report to be given to
Governor and the Legislature that included: outstanding loans,
new loans issued since the prior report, total number of
businesses served, jobs created, jobs retained, the geographic
distribution of loans, and the breakdown of businesses served by
industry sector. Status: Signed by the Governor, Chapter 483,
Statutes 2011.
c) AB 192 (Budget Committee) BTH Authority to Administer Grant
Program: This bill, among other things, made the necessary
statutory changes to allow the transfer of $4.3 million in
federal funds held by the State Controller's Office to the
Business Transportation and Housing Agency in order to reactivate
the Sudden and Severe Economic Dislocation Grant Program as was
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approved in the budget. Status: Signed by the Governor, Chapter
312, Statutes of 2007.
d) AB 1247 (Medina and Bocanegra) Small Business Finance Center:
This bill established the California Small Business Finance
Center at the I-Bank, within GO-Biz, and transferred the
authority to administer the small business loan guarantee program
and other related programs to the I-Bank. Status: Signed by the
Governor, Chapter 537, Statutes of 2013.
e) AB 1317 (Frazer) GRP 2 Implementation: This bill made the
necessary statutory changes to reflect the alterations made by
the Governors' Reorganization Plan 2 (GRP 2) as introduced to the
Legislature on May 3, 2012 and made effective on July 3, 2012.
Status: Signed by the Governor, Chapter 352, Statutes of 2013.
f) AB 1399 (Jobs Committee) Code Maintenance: This bill, as it
passed JEDE, would have made a number of technical changes to the
Government Code consistent with the Governor's 2012
Reorganization Plan. Due to delays in passing AB 1317 to the
Governor, the code maintenance provisions were removed in order
to avoid chaptering problems. Status: Pending in the Senate
Governance and Finance Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
None Received
Opposition
None Received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916) 319-2090