Bill Text: CA AB2749 | 2013-2014 | Regular Session | Chaptered
Bill Title: Economic development.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Passed) 2014-07-16 - Chaptered by Secretary of State - Chapter 132, Statutes of 2014. [AB2749 Detail]
Download: California-2013-AB2749-Chaptered.html
BILL NUMBER: AB 2749 CHAPTERED
BILL TEXT
CHAPTER 132
FILED WITH SECRETARY OF STATE JULY 16, 2014
APPROVED BY GOVERNOR JULY 16, 2014
PASSED THE SENATE JULY 3, 2014
PASSED THE ASSEMBLY MAY 15, 2014
AMENDED IN ASSEMBLY APRIL 10, 2014
INTRODUCED BY Committee on Jobs, Economic Development, and the
Economy (Medina (Chair), Campos, Fong, Fox, and V. Manuel Pérez)
MARCH 11, 2014
An act to amend and renumber Sections 13997.2 and 13997.7 of, to
amend Sections 12098.3, 63035, 63040, 63056, and 63089.5 of, and to
add the heading of Article 6.5 (commencing with Section 12100) to
Chapter 1.6 of Part 2 of Division 3 of Title 2 of, the Government
Code, and to amend Section 44559.1 of the Health and Safety Code,
relating to economic development.
LEGISLATIVE COUNSEL'S DIGEST
AB 2749, Committee on Jobs, Economic Development, and the Economy.
Economic development.
(1) Existing law defines specified terms relating to economic
development and authorizes the Business, Transportation and Housing
Agency and its secretary to expend specified funds.
This bill would renumber these provisions, and would instead
authorize the Governor's Office of Business and Economic Development
and its director to expend these funds.
(2) The Bergeson-Peace Infrastructure and Economic Development
Bank Act establishes the Infrastructure and Economic Development Bank
within the Governor's Office of Business and Economic Development,
governed by a board of directors composed of 5 members. The act
requires the bank to annually submit to the Governor and the Joint
Legislative Budget Committee a report of its activities for the
preceding fiscal year. The act also requires the bank to establish
criteria, priorities, and guidelines for the selection of projects to
receive its assistance that includes compliance with the State
Environmental Goals and Policy Report, or its successor. Existing law
prohibits review of the expenditures of the bank's infrastructure
bank fund, except for by the Legislature, as specified.
This bill would modify the bank's annual reporting requirement to,
among other requirements, be instead transmitted to the Governor and
the Legislature, and require the executive director of the bank to
post the report on the bank's Internet Web site. This bill would
waive compliance with the State Environmental Goals and Policy
Report, or its successor, as a factor for receiving the banks's
assistance, if the report has not been updated, as specified. This
bill would modify the Legislature's review of the bank relating to
the infrastructure bank fund, to among other things, include the
amount of credit and liabilities of the fund, based on an audit of
the fund at the close of the prior fiscal year.
(3) Existing law, the Small Business Financial Assistance Act of
2013, until January 1, 2018, continues in existence the California
Small Business Expansion Fund, a continuously appropriated fund which
includes General Fund moneys, and authorizes all or a portion of the
funds in the expansion fund to be paid out to a financial
institution or financial company that will establish a trust fund and
act as a trustee of the funds, as specified. Existing law authorizes
the program manager, as defined, to create one or more accounts in
the expansion fund and the trust fund for corporations participating
in one or more programs authorized by the Small Business Financial
Assistance Act of 2013 and the California Disaster Assistance Act, as
specified. Existing law, on and after January 1, 2018, eliminates
the authorization to utilize funds in the expansion fund and the
trust fund for corporations participating in one or more programs
pursuant to the California Disaster Assistance Act.
This bill would continue the authorization to utilize funds in the
expansion fund and the trust fund for corporations participating in
one or more programs pursuant to the California Disaster Assistance
Act, as specified.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 12098.3 of the Government Code is amended to
read:
12098.3. (a) The Director of the Office of Small Business
Advocate shall be appointed by, and shall serve at the pleasure of,
the Governor.
(b) The Governor shall appoint the employees who are needed to
accomplish the purposes of this article.
(c) The duties and functions of the advocate shall include all of
the following:
(1) Serve as the principal advocate in the state on behalf of
small businesses, including, but not limited to, advisory
participation in the consideration of all legislation and
administrative regulations that affect small businesses, and advocacy
on state policy and programs related to small businesses on disaster
preparedness and recovery including providing technical assistance.
(2) Represent the views and interests of small businesses before
other state agencies whose policies and activities may affect small
business.
(3) Enlist the cooperation and assistance of public and private
agencies, businesses, and other organizations in disseminating
information about the programs and services provided by state
government that are of benefit to small businesses, and information
on how small businesses can participate in, or make use of, those
programs and services.
(4) Consult with experts and authorities in the fields of small
business investment, venture capital investment, and commercial
banking and other comparable financial institutions involved in the
financing of business, and with individuals with regulatory, legal,
economic, or financial expertise, including members of the academic
community, and individuals who generally represent the public
interest.
(5) Seek the assistance and cooperation of all state agencies and
departments providing services to, or affecting, small business,
including the small business liaison designated pursuant to Section
14846, to ensure coordination of state efforts.
(6) Receive and respond to complaints from small businesses
concerning the actions of state agencies and the operative effects of
state laws and regulations adversely affecting those businesses.
(7) Counsel small businesses on how to resolve questions and
problems concerning the relationship of small business to state
government.
(8) Maintain, publicize, and distribute an annual list of persons
serving as small business ombudsmen throughout state government.
SEC. 2. The heading of Article 6.5 (commencing with Section 12100)
is added to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the
Government Code, to read:
Article 6.5. Local Economic Development
SEC. 3. Section 13997.2 of the Government Code is amended and
renumbered to read:
12100. (a) The Legislature finds and declares all of the
following:
(1) California's economic development organizations and
corporations are an integral component of the state job creation
effort because they are a critical link between state economic
development activities and the statewide business community,
providing an excellent opportunity to leverage state resources.
(2) Economic development corporations and organizations provide
broad public benefits to the residents of this state by alleviating
unemployment, encouraging private investment, and diversifying local
economies.
(3) Economic development corporations engage in a wide range of
programs and strategies to attract, retain, and expand businesses,
including marketing the community, small business lending, and other
financial services, a wide range of technical assistance to small
business, preparation of economic data, and business advocacy.
(4) By using public sector resources and powers to reduce the
risks and costs that could prohibit investment, the public sector
often sets the stage for employment-generating investment by the
private sector.
(b) For purposes of this chapter, all of the following definitions
apply:
(1) "Local economic development organization" means a public or
public-private job creation activity recognized by cities and
counties as the lead agency within that city or county for planning
and implementation of job creation involving business expansion,
business retention, and new business development.
(2) "Regional economic development organization" means an
organization comprised of any of the following:
(A) A single county.
(B) More than one county.
(C) A subregion within a county established by the cities and
county within that subregion.
(D) An economic development corporation.
(3) "Economic development corporation" means a local or regional
nonprofit public-private economic development organization recognized
in a defined region by the public and private sector as the lead
agency for the planning and implementation of job creation involving
business retention and new business development.
(4) "Regional economic development corporation" means a
corporation comprised of any of the following:
(A) A single county.
(B) More than one county.
(C) A subregion within a single county established by a group of
cities and counties.
(5) "Economic development" means any activity that enhances the
factors of productive capacity, such as land, labor, capital, and
technology, of a national, state, or local economy. "Economic
development" includes policies and programs expressly directed at
improving the business climate in business finance, marketing,
neighborhood development, small business development, business
retention and expansion, technology transfer, and real estate
redevelopment. "Economic development" is an investment program
designed to leverage private sector capital in such a way as to
induce actions that have a positive effect on the level of business
activity, employment, income distribution, and fiscal solvency of the
community.
(6) "Local economic development" is a process of deliberate
intervention in the normal economic process of a particular locality
to stimulate economic growth of the locality by making it more
attractive, resulting in more jobs, wealth, better quality of life,
and fiscal solvency. Prime examples of economic development include
business attraction, business expansion and retention, and business
creation.
(7) "Emerging domestic market" means people, places, or business
enterprises with growth potential that face capital constraints due
to systemic undervaluations as a result of imperfect market
information. These markets include, but are not limited to,
ethnic-owned and women-owned firms, urban and rural communities,
companies that serve low-income or moderate-income populations, and
other small- and medium-sized businesses.
(8) "Financial intermediary" means an institution, firm,
organization, or individual who performs intermediation between two
or more parties in a financial context, such as connecting sources of
funds with users of funds. A financial intermediary is typically an
entity that facilitates the channeling of funds between lenders,
investors, foundations, or other entities that have money and are
interested in connecting with businesses or communities where their
money can be deployed. Financial intermediaries include, but are not
limited to, banks, financial development corporations, economic
developers, microbusiness lenders, and community development
organizations.
(9) "Community development intermediary" means an institution,
firm, organization, or individual that performs intermediation
between two or more parties in a community development context, such
as connecting people and organizations that have a stake in the
future well-being of communities and individuals who may not easily
have access to these stakeholders. A community development
intermediary is typically an entity that channels financial and
nonfinancial resources between government and foundations and other
nonprofit organizations that have resources and are interested in
connecting with small- and medium-size businesses and low- and
moderate-income households and communities. Community development
intermediaries include, but are not limited to, community development
corporations, microbusiness lenders, and community development
financial institutions.
(10) "Triple bottom line" means the economic, environmental, and
social benefits arising from a project, investment, or community and
economic development activity.
(11) "Small businesses" means a business with less than 100
employees and with a gross revenue of less than five million dollars
($5,000,000), or a business that is otherwise targeted by or
participating in a federal or state program engaged in programs or
services for small businesses. Application of this definition may
only be used pursuant to a direct reference.
(12) "Community development" means a process designed to create
conditions of economic and social prosperity for the whole community,
or a targeted subset of the whole community, with the fullest
possible reliance on the community's initiative and active
participation.
(13) "Financial institution capital" means resources of a
financial institution, including, but not limited to, a bank or
credit union, that are legally available to be used to generate
wealth for the financial institution.
(14) "California Council on Science and Technology" means the
council established by California academic research institutions,
including the University of California, the University of Southern
California, the California Institute of Technology, Stanford
University, and the California State University, in support of
Assembly Concurrent Resolution No. 162 (Res. Ch. 148, Stats. 1988).
(15) "Microbusiness lender" means a nonprofit or nonbank lender
that serves very small businesses in low- and moderate-income
communities that experience barriers in accessing capital. These
businesses are often owned by minorities, immigrants, women, and
persons with disabilities. Microbusiness lenders generally provide
loans under fifty thousand dollars ($50,000) and offer business
technical assistance, both preloan and postloan, to improve an
applicant's ability to qualify and successfully repay a loan.
SEC. 4. Section 13997.7 of the Government Code is amended and
renumbered to read:
12098.7. (a) Notwithstanding any other law, effective January 1,
2008, the Economic Adjustment Assistance Grant funded through the
United States Economic Development Administration under Title IX of
the Public Works and Economic Development Act of 1965 (Grant No.
07-19-02709 and 07-19-2709.1) shall be administered by the director,
and, for the purpose of state administration of this grant, the
director shall be deemed to be the successor to the former Secretary
of Business, Transportation and Housing and the former Secretary of
Technology, Trade and Commerce. The director may assign and contract
administration of the grant to a public agency created pursuant to
Chapter 5 (commencing with Section 6500) of Division 7 of Title 1.
(b) On January 1, 2008, all federal moneys held in the Sudden and
Severe Economic Dislocation Grant Account within the Special Deposit
Fund are hereby transferred to the Small Business Expansion Fund
created pursuant to Section 14030 of the Corporations Code for
expenditure by the office pursuant to Article 9 (commencing with
Section 14070) of the Corporations Code for purposes of the Sudden
and Severe Economic Dislocation Grant program, or other purposes
permitted by the cognizant federal agency.
(c) All loan repayments received on or after January 1, 2008, for
the Sudden and Severe Economic Dislocation Grant program loans issued
pursuant to former Section 15327 (repealed by Section 1.8 of Chapter
229 of the Statutes of 2003 (AB 1757)) and this section, shall be
deposited into the Small Business Expansion Fund and shall be
available to the office for expenditure pursuant to the provisions of
Article 9 (commencing with Section 14070) of the Corporations Code
for the Sudden and Severe Economic Dislocation Grant program, or
other purposes permitted by the cognizant federal agency.
SEC. 5. Section 63035 of the Government Code is amended to read:
63035. The bank shall, not later than November 1 of each year,
submit to the Governor and the Legislature, pursuant to Section 9795,
a report for the preceding fiscal year ending on June 30 containing
information on the bank's activities relating to the infrastructure
bank fund and programs. The report shall include all of the
following:
(a) (1) Information on the infrastructure bank fund, including,
but not limited to, its present balance, moneys encumbered, moneys
allocated, repayments, and other sources of revenues received during
the fiscal year.
(2) Information on the impact of the activities funded by the
infrastructure bank fund moneys, including, but not limited to, the
number of jobs created and retained, the environmental impact that
resulted, and economic value provided to the state.
(b) A specification of conduit and revenue bonds sold and interest
rates thereon, including, but not limited to, the use of the bond
proceeds.
(c) The amount of other public and private funds leveraged by the
assistance provided.
(d) A report of revenues and expenditures for the preceding fiscal
year, including all of the bank's costs. The information provided
pursuant to this subdivision shall include, but need not be limited
to, both of the following:
(1) The amount and source of total bank revenues. Revenues shall
be shown by main categories of revenues, including the General Fund,
special funds, federal funds, interest earnings, fees collected, and
bond proceeds, for each bank program.
(2) The amount and type of total bank expenditures. Expenditures
shall be shown by major categories of expenditures, including loans
provided, debt service payments, and program support costs, for each
bank program.
(e) A projection of the bank's needs and requirements for the
coming year.
(f) Recommendations for changes in state and federal law necessary
to meet the objectives of this division.
(g) The executive director shall post the report on the bank's
Internet Web site.
SEC. 6. Section 63040 of the Government Code is amended to read:
63040. (a) Following consultation with appropriate state and
local agencies, the bank shall establish criteria, priorities, and
guidelines for the selection of projects to receive assistance from
the bank. Projects shall comply with the criteria, priorities, and
guidelines adopted by the bank.
(b) The criteria, priorities, and guidelines shall, at a minimum,
be based upon the following:
(1) The State Environmental Goals and Policy Report, or its
successor, approved pursuant to Article 5 (commencing with Section
65041) of Chapter 1.5 of Division 1 of Title 7. If the State
Environmental Goals and Policy Report, or its successor, has not been
adopted within two years of a statutorily required update,
compliance with this paragraph is not required until the report is
updated.
(2) If the sponsor is a state agency, board, commission, or
department, the Capital and Infrastructure Project Planning Report,
prepared by the Director of Finance pursuant to Article 2 (commencing
with Section 13100) of Chapter 2 of Part 3 of Division 3 of Title 2.
(c) When the bank establishes or makes changes to the criteria,
priorities, and guidelines, the bank shall notify the Governor, the
fiscal and policy committees of the Legislature that exercise
legislative oversight of the bank, and appropriate state and local
agencies.
(d) The resolution required in Section 63041 shall have been
adopted prior to the project's selection by the bank.
SEC. 7. Section 63056 of the Government Code is amended to read:
63056. (a) Notwithstanding Chapter 2 (commencing with Section
12850) of Part 2.5 of Division 3 of Title 2 and Article 2 (commencing
with Section 13320) of Chapter 3 of Part 3 of Division 3 of Title 2,
expenditures of the infrastructure bank fund shall not be subject to
the supervision or approval of any other officer or division of
state government, with the exception of the Legislature. However, the
bank's budget shall be prepared and reviewed not later than November
1 of each year and the bank shall submit to the Legislature a report
of its activities for the prior fiscal year, as specified in Section
63035.
(b) The bank's budget regarding the infrastructure bank fund shall
include the amount of credit and liabilities of the fund, based on
an audit of the fund at the close of the prior fiscal year. The bank'
s operating budget shall be subject to review and appropriation in
the annual Budget Act.
SEC. 8. Section 63089.5 of the Government Code, as added by
Section 4 of Chapter 537 of the Statutes of 2013, is amended to read:
63089.5. (a) There is hereby continued in existence in the State
Treasury the California Small Business Expansion Fund. All or a
portion of the funds in the expansion fund may be paid out, with the
approval of the Department of Finance, to a financial institution or
financial company that will establish a trust fund and act as trustee
of the funds.
(b) The expansion fund and the trust fund shall be used for the
following purposes:
(1) To pay defaulted loan guarantee or surety bond losses, or
other financial product defaults or losses.
(2) To fund direct loans and other debt instruments.
(3) To pay administrative costs of corporations.
(4) To pay state support and administrative costs.
(5) To pay those costs necessary to protect a real property
interest in a financial product default.
(c) The expansion fund and trust fund are created solely for the
purpose of receiving state, federal, or local government moneys, and
other public or private moneys to make loans, guarantees, and other
financial products that the California Small Business Finance Center
and a small business financial development corporation are authorized
to provide.
(d) One or more accounts in the expansion fund and the trust fund
may be created by the program manager for corporations participating
in one or more programs authorized under this chapter and Section
8684.2. Each account is a legally separate account, and shall not be
used to satisfy loan guarantees or other financial product
obligations of another corporation except when the expansion fund or
trust fund is shared by multiple corporations.
(e) The amount of guarantee liability outstanding at any one time
shall not exceed four times the amount of funds on deposit in the
expansion fund plus any receivables due from funds loaned from the
expansion fund to another fund in state government as directed by the
Department of Finance pursuant to a statute enacted by the
Legislature, including each of the trust fund accounts within the
trust fund.
(f) This section shall become operative on January 1, 2018.
SEC. 9. Section 44559.1 of the Health and Safety Code is amended
to read:
44559.1. As used in this article, unless the context requires
otherwise, all of the following terms have the following meanings:
(a) "Authority" means the California Pollution Control Financing
Authority.
(b) "California Capital Access Fund" means a fund created within
the authority to be used for purposes of the program.
(c) "Executive director" means the Executive Director of the
California Pollution Control Financing Authority.
(d) (1) "Financial institution" means a federal- or
state-chartered bank, savings association, credit union,
not-for-profit community development financial institution certified
under Part 1805 (commencing with Section 1805.100) of Chapter XVIII
of Title 12 of the Code of Federal Regulations, or a consortium of
these entities. A consortium of those entities may include a
nonfinancial corporation, if the percentage of capitalization by all
nonfinancial corporations in the consortium does not exceed 49
percent.
(2) (A) "Financial institution" also includes a lending
institution that has executed a participation agreement with the
Small Business Administration under the guaranteed loan program
pursuant to Part 120 (commencing with Section 120.1) of Chapter I of
Title 13 of the Code of Federal Regulations and meets the
requirements of Section 120.410 of Chapter I of Title 13 of the Code
of Federal Regulations, a small business investment company licensed
pursuant to Part 107 (commencing with Section 107.20) of Chapter I of
Title 13 of the Code of Federal Regulations, and a small business
financial development corporation, as defined in Chapter 1
(commencing with Section 14000) of Part 5 of Division 3 of Title 1 of
the Corporations Code, or microbusiness lender, as defined in
Section 12100 of the Government Code, that meets standards that shall
be established by the authority. For loans where all or part of the
fees and matching contributions are paid by an entity participating
in the program pursuant to subdivision (e) of Section 44559.2,
"financial institution" also includes financial lenders, as defined
in Section 22009 of the Financial Code, making commercial loans, as
defined in Section 22502 of the Financial Code.
(B) A financial institution described in this paragraph shall be
domiciled or have its principal office in the State of California.
(3) "Financial institution" also includes an insured depository
institution, insured credit union, or community development financial
institution, as these terms are defined in Section 4702 of Title 12
of the United States Code.
(e) "Loss reserve account" means an account in the State Treasury
or any financial institution that is established and maintained by
the authority for the benefit of a financial institution
participating in the Capital Access Loan Program established pursuant
to this article for the purposes of the following:
(1) Depositing all required fees paid by the participating
financial institution and the qualified business.
(2) Depositing contributions made by the state and, if applicable,
the federal government or other sources.
(3) Covering losses on enrolled qualified loans sustained by the
participating financial institution by disbursing funds accumulated
in the loss reserve account.
(f) "Participating financial institution" means a financial
institution that has been approved by the authority to enroll
qualified loans in the program and has agreed to all terms and
conditions set forth in this article and as may be required by any
applicable federal law providing matching funding.
(g) "Passive real estate ownership" means ownership of real estate
for the purpose of deriving income from speculation, trade, or
rental, but does not include any of the following:
(1) The ownership of that portion of real estate being used or
intended to be used for the operation of the business of the owner of
the real estate.
(2) The ownership of real estate for the purpose of construction
or renovation, until the completion of the construction or renovation
phase.
(h) "Program" means the Capital Access Loan Program created
pursuant to this article.
(i) "Qualified business" means a small business concern that meets
both of the following criteria, regardless of whether the small
business concern has operations that affect the environment:
(1) It is a corporation, partnership, cooperative, or other
entity, whether that entity is a nonprofit entity or an entity
established for profit, that is authorized to conduct business in the
state.
(2) It has its primary business location within the boundaries of
the state.
(j) (1) "Qualified loan" means a loan or a portion of a loan made
by a participating financial institution to a qualified business for
any business activity that has its primary economic effect in
California. A qualified loan may be made in the form of a line of
credit, in which case the participating financial institution shall
specify the amount of the line of credit to be covered under the
program, which may be equal to the maximum commitment under the line
of credit or an amount that is less than that maximum commitment. A
qualified loan made under the program may be made with the interest
rates, fees, and other terms and conditions agreed upon by the
participating financial institution and the borrower.
(2) "Qualified loan" does not include any of the following:
(A) A loan for the construction or purchase of residential
housing.
(B) A loan to finance passive real estate ownership.
(C) A loan for the refinancing of an existing loan when and to the
extent that the outstanding balance is not increased.
(D) A loan, the proceeds of which will be used in any manner that
could cause the interest on any bonds previously issued by the
authority to become subject to federal income tax.
(k) "Severely affected community" means any area classified as an
enterprise zone pursuant to the Enterprise Zone Act (Chapter 12.8
(commencing with Section 7070) of Division 7 of Title 1 of the
Government Code), any area, as designated by the executive director,
contiguous to the boundaries of a military base designated for
closure pursuant to Section 2687 of Title 10 of the United States
Code, as amended, and any other comparable economically distressed
geographic area so designated by the executive director from time to
time.
(l) "Small Business Assistance Fund" means a fund created within
the authority pursuant to Section 44548.
(m) "Small business concern" has the same meaning as in Section
632 of Title 15 of the United States Code, or as otherwise provided
in regulations of the authority.
