Bill Text: CA AB964 | 2017-2018 | Regular Session | Amended

California Assembly Bill 964 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Economic development: Capital Access Loan Program: California Affordable Clean Vehicle Program.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Engrossed - Dead) 2017-08-29 - In committee: Set, first hearing. Hearing canceled at the request of author. [AB964 Detail]

Download: California-2017-AB964-Amended.html

Amended IN Assembly May 30, 2017

Amended IN Assembly April 27, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill

No. 964

Introduced by Assembly ~~Member Gomez~~ Members Gomez, Calderon, and Gonzalez Fletcher

February 16, 2017

An act to amend Sections 44559.1 and 44559.4 of, to amend the heading of Article 8 (commencing with Section 44559) of Chapter 1 of Division 27 of, and to add and repeal Section 44559.15 to of, the Health and Safety Code, relating to low-emission ~~vehicles, and making an appropriation therefor.~~ vehicles.

LEGISLATIVE COUNSEL'S DIGEST

AB 964, as amended, Gomez. Economic development: Capital Access Loan Program: low-emission vehicles.

Existing law establishes the Capital Access Loan Program to assist qualified small businesses in financing the costs of complying with environmental mandates and the remediation of contamination on their ~~properties, as specified.~~ properties, which is administered by the California Pollution Control Financing Authority. Under the program, the authority may enter into contracts with participating financial institutions and is required to establish a loss reserve account with participating financial institutions. Under existing law, a participating financial institution that experiences a default on a qualified loan enrolled in the Capital Access Loan Program may obtain reimbursement from the authority by submitting a claim for reimbursement for a specified amount of the loss covered by that loan, subject to certain procedures. Existing law establishes within the program the California Americans with Disabilities Act Small Business Capital Access Loan Program to assist small businesses in financing the costs of projects that alter or retrofit existing small business facilities to comply with the federal Americans with Disabilities Act. Existing law also establishes within the Capital Access Loan Program the California Seismic Safety Capital Access Loan Program to assist residential property owners and small business owners in seismically retrofitting residences and small businesses by covering losses on qualified loans for those purposes. Under existing law, the California Pollution Control Financing Authority (authority) administers all of these programs and is authorized to establish small business assistance funds for certain purposes, including, among others, funding the programs.

This ~~bill~~ bill, until January 1, 2027, would create the California Affordable Clean Vehicle Program to assist low-income ~~or high financial risk~~ individuals in the purchase or lease of ~~low-emission vehicles. The bill would require the authority to adopt regulations, subject to the approval of the State Air Resources Board, to implement the program.~~ zero emission or plug-in vehicles for personal or commercial use, and other eligible projects. The bill would require the authority to administer the program in consultation with the State Air Resources Board and consistent with the requirements of the Capital Access Loan Program and other related programs related to financing of clean energy vehicles. The bill would authorize the authority, to the extent funds are available, to offer financing mechanisms to low-income individuals under the program, including establishing a loss reserve account, providing funds to financial institutions to reduce the interest rates charged on qualified loans, and any other mechanism that the authority establishes to increase participation rates of low-income individuals in qualified loans. The bill would establish the California Affordable Clean Vehicle Program Fund, a continuously appropriated fund, for purposes of the program. The bill would require annual reports by the authority to be submitted to the Legislature regarding the finance programs administered pursuant to the provisions of the bill. Fund, and would authorize the authority to utilize the funds, upon appropriation by the Legislature, for purposes of the program. The bill would require the authority to adopt regulations to implement the provisions of this bill.

Vote: MAJORITY Appropriation: ~~YES~~NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

The heading of Article 8 (commencing with Section 44559) of Chapter 1 of Division 27 of the Health and Safety Code is amended to read:

Article 8. Capital Access Loan Program for Small Businesses

SEC. 2.

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.

(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) (1) “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)~~

(A) 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)~~

(B) It has its primary business location within the boundaries of the state.

(2) For purposes of the California Affordable Clean Vehicle Program established pursuant to Section 44559.15, “qualified business” also shall mean a low-income individual as defined in that section.

(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.

(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.

SEC. 3.

Section 44559.4 of the Health and Safety Code, as amended by Section 192 of Chapter 86 of the Statutes of 2016, is amended to read:

44559.4.

(a) If a financial institution that is participating in the Capital Access Loan Program established pursuant to this article decides to enroll a qualified loan under the program in order to obtain the protection against loss provided by its loss reserve account, it shall notify the authority in writing on a form prescribed by the authority, within 15 days after the date on which the loan is made, of all of the following:

(1) The disbursement of the loan.

(2) The dollar amount of the loan enrolled.

(3) The interest rate applicable to, and the term of, the loan.

(4) The amount of the agreed upon premium.

(b) The executive director may authorize an additional five days for a financial institution to submit the written notification described in subdivision (a) to the authority on a loan-by-loan basis for a reason limited to conditions beyond the reasonable control of the financial institution.

(c) The financial institution may make a qualified loan to be enrolled under the program to an individual, or to a partnership or trust wholly owned or controlled by an individual, for the purpose of financing property that will be leased to a qualified business that is wholly owned by that individual. In that case, the property shall be treated as meeting the requirements of subparagraph (A) of paragraph (1) of subdivision (i) of Section 44559.1.

(d) When making a qualified loan that will be enrolled under the program, the participating financial institution shall require the qualified business to which the loan is made to pay a fee of not less than 2 percent of the principal amount of the loan, but not more than 3¹/₂ percent of the principal amount. The financial institution shall also pay a fee in an amount equal to the fee paid by the borrower. The financial institution shall deliver the fees collected under this subdivision to the authority for deposit in the loss reserve account for the institution. The financial institution may recover from the borrower the cost of its payments to the loss reserve account through the financing of the loan, upon the agreement of the financial institution and the borrower. The financial institution may cover the cost of borrower payments to the loan loss reserve account.

(e) When depositing fees collected under subdivision (d) to the credit of the loss reserve account for a participating financial institution, the authority shall do the following:

(1) If matching funds are not available under a federal capital access program or other source, the authority shall transfer to the loss reserve account an amount that is not less than the amount of the fees paid by the participating financial institution. However, if the qualified business is located within a severely affected community, the authority shall transfer to the loss reserve account an amount not less than 150 percent of the amount of the fees paid by the participating financial institution.

(2) If matching funds are available under a federal capital access program or other source, the authority shall transfer, on an immediate or deferred basis, to the loss reserve account the amount required by that federal program or other source. However, the total amount deposited into the loss reserve account shall not be less than the amount which would have been deposited in the absence of matching funds.

(f) This section shall become operative on April 1, 2017.

SEC. 4.

Section 44559.15 is added to the Health and Safety Code, to read:

44559.15.
(a) It is the intent of the Legislature in this section to create and fund the California Affordable Clean Vehicle Program to assist low-income individuals in the purchase or lease of zero emission and plug-in electric vehicles for personal or commercial use by providing access to affordable financing mechanisms.
(b) For purposes of this section:
(1) “Board” means the State Air Resources Board.
(2) “Clean vehicle program” means the California Affordable Clean Vehicle Program established by this section.
(3) “Eligible project” means both of the following:
(A) The purchase or lease of zero emission or plug-in electric vehicles for personal or commercial use.
(B) The purchase and installation of Electric Vehicle Supply Equipment, in multiunit dwellings or other location to support zero emission and plug-in electric vehicle deployment in low-income and disadvantaged communities.
(4) “Low-income individual” has the same meaning as “low-income motor vehicle owner” in subdivision (h) of Section 44062.1 of the Health and Safety Code.
(5) “Qualified loan” means a loan or portion of a loan made by a participating financial institution to a low-income individual for an eligible project. A qualified loan made under the clean vehicle program may be made with the interest rates, fees, and other terms and conditions agreed upon by the participating financial institution and the borrower.
(c) The California Pollution Control Financing Authority shall administer the program in consultation with the board, and shall follow the terms and conditions for the Capital Access Loan Program in this article with the additional clean vehicle program requirements specified under this section, including the following:
(1) The authority shall administer the clean vehicle program consistent with the goals of the Charge Ahead California Initiative (Chapter 8.5 (commencing with Section 44258) of Part 5 of Division 26) described in subdivision (b) of Section 44258.4, and of the programs of that initiative described in paragraph (4) of subdivision (c) of Section 44258.4.
(2) The authority shall collaborate with the State Air Resources Board to ensure that the clean vehicle program is coordinated with existing related programs, including the Enhanced Fleet Modernization Program established pursuant to Section 44125, and financing programs established under the authorities contained in the Charge Ahead Initiative (Chapter 8.5 (commencing with Section 44258) of Part 5 of Division 26) described in subdivision (b) of Section 44258.4, and of the programs of that initiative described in paragraph (4) of subdivision (c) of Section 44258.4.
(3) The authority shall coordinate with other existing light-duty vehicle incentive programs including, but not limited to, the Enhanced Fleet Modernization Program established pursuant to Section 44125 and the Clean Vehicle Rebate Project established as a part of the Air Quality Improvement Program pursuant to Article 3 (commencing with Section 44274) of Chapter 8.9 of Part 5 of Division 26.
(4) The authority may contract with a financial institution for the purpose of allowing the financial institution to participate in the clean vehicle program established by this section by complying with all requirements set out in Section 44559.2 and all applicable requirements of this article.
(d) To the extent funds are available, the clean vehicle program shall provide low-income individuals with financing mechanisms which may include, but are not limited to, the following:
(1) The establishment of a loss reserve account with a participating financial institution to provide a loan or loan-loss reserve credit enhancement program to increase consumer access to zero emissions and plug-in electric vehicle financing and leasing options. The authority shall comply with all requirements in this article when establishing a loss reserve account for this purpose.
(2) Providing funds to participating financial institutions to reduce the interest rates charged on qualified loans for purposes of the clean vehicle program. The authority shall contract with the participating financial institutions to establish reasonable terms and conditions to providing funds under this paragraph.
(3) Other methods established by the authority pursuant to subdivision (g) to increase participation rate among low-income individuals in qualified loans. Any methods established by the authority pursuant to this section shall comply with the goals and objectives described in subdivisions (c) and (e). However, the authority shall not provide grants or loans directly to low-income individuals.
(e) The clean vehicle program shall comply with the following goals and objectives:
(1) Support California’s air quality and climate change goals by reducing greenhouse gas and criteria pollutant emissions through the introduction of zero emission or plug-in electric vehicles to low-income individuals.
(2) Encourage and accelerate the adoption of on-road light duty zero emission and plug in electric vehicles for low-income individuals by providing targeted education and outreach including, but not limited to, financial and vehicle technology training through coordination with, but not limited to, community-based organizations, local air districts, and local school districts.
(f) The California Affordable Clean Vehicle Fund is hereby created within the State Treasury. The authority shall use money in the fund, upon appropriation by the Legislature, to carry out the clean vehicle program described in subdivision (c), as well as administrative costs. The fund shall be the sole funding source of the clean vehicle program. Notwithstanding Section 16304.1 of the Government Code, funds appropriated for these purposes shall be available for encumbrances for three years, and be available for liquidation for six years. Notwithstanding any other provision of law, projects funded under this program may, to the extent funds are available, provide for advance payments.
(g) The authority shall adopt regulations to implement this section. The adoption of regulations by the authority is exempt from the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). However, the authority shall make draft regulations available to the public 45 days before final adoption, and shall hold at least one public meeting to consider public comments before final adoption.
(h) This section does not restrict the authority granted to the board by Section 44258.4 of the Health and Safety Code.
(i) This section shall remain in effect only until January 1, 2027, and as of that date is repealed.

SECTION 1.Section 44559.15 is added to the Health and Safety Code, to read:
44559.15.
(a)It is the intent of the Legislature in this act to create and fund the California Affordable Clean Vehicle Program to assist low-income or high financial risk individuals in the purchase or lease of low-emission vehicles. The program shall be administered by the California Pollution Control Financing Authority and follow the terms and conditions for the Capital Access Loan Program for Small Businesses in this article, as appropriate, with the additional program requirements specified under this section.
(b)The Legislature hereby establishes the California Affordable Clean Vehicle Program. The program shall cover losses on qualified loans by participating lenders to qualified purchasers or lessees, as specified under this section. The program shall be administered by the California Pollution Control Financing Authority, in consultation with the State Air Resources Board, and follow the terms and conditions for the Capital Access Loan Program in this article with the additional program requirements specified under this section. The authority shall administer the program consistent with the goals of the Charge Ahead California Initiative (Chapter 8.5 (commencing with Section 44258) of Part 5 of Division 26) described in subdivision (b) of Section 44258.4, and of the programs of that initiative described in paragraph (4) of subdivision (c) of Section 44258.4.
~~(c)For purposes of this section, unless the context requires otherwise, the following words and terms shall have the following meanings:~~
~~(1)“Interest rate” means an annual interest rate not to exceed 1 percent.~~
~~(2)“Qualified loan” means a loan or portion of a loan, in an amount not to exceed the lower of 100 percent of the sales price or $45,000.~~
~~(3)“Sales price” means the purchase price of vehicle, including sales and use tax and vehicle registration fee, not to exceed $45,000.~~
~~(d)The authority shall establish the definitions of “clean vehicle” and “low-income” in consultation with the California Environmental Protection Agency and the Air Resources Board.~~
(e)The California Affordable Clean Vehicle Program Fund is hereby established in the State Treasury and shall be administered by the authority pursuant to Sections 44548 and 44549. Notwithstanding Section 13340 of the Government Code, all money in the fund is, without regard to fiscal year, continuously appropriated to the authority for carrying out the purposes of this section. The authority may divide the fund into separate accounts. All moneys accruing to the authority pursuant to this section from any source shall be deposited into the fund.
(f)All moneys in the California Affordable Clean Vehicle Program Fund derived from any source shall be held in trust for the life of this program and shall be expended exclusively for the program and costs of administration, as follows:
~~(1)Program expenditures shall include both of the following:~~
~~(A)Contributions paid by the authority in support of qualified loans.~~
~~(B)Reasonable costs to provide education to car buyers and participating lenders about the program, including staff time, contracts with program partners, and travel within the state.~~
~~(2)Administrative expenditures shall be limited to 5 percent of the initial appropriation plus 5 percent of all moneys recaptured, and shall include all of the following:~~
~~(A)Personnel costs.~~
~~(B)Service and vending contracts necessary to administer the program.~~
~~(C)Other reasonable direct and indirect administrative costs.~~
(g)The authority may direct the State Treasurer to invest moneys in the fund that are not required for its current needs in the eligible securities specified in Section 16430 of the Government Code as the authority shall designate. The authority may direct the Treasurer to deposit moneys in interest-bearing accounts in state or national banks or other financial institutions having principal offices located in the state, or alternatively may require the transfer of moneys in the fund to the Surplus Money Investment Fund for investment pursuant to Article 4 (commencing with Section 16470) of Chapter 3 of Part 2 of Division 4 of the Government Code. All interest or other increment resulting from an investment or deposit shall be deposited into the fund, notwithstanding Section 16305.7 of the Government Code. Moneys in the fund shall not be subject to transfer to any other fund pursuant to any provision of Part 2 (commencing with Section 16300) of Division 4 of the Government Code, excepting the Surplus Money Investment Fund.
(h)The authority shall adopt regulations, subject to the approval of the State Air Resources Board, pursuant to Section 44520 to implement the program, including provisions specific to this program as described in this section and further including provisions to do all of the following:
~~(1)Establish a new loss reserve account for each participating lender enrolling loans in this program.~~
(2)Obtain a certification from each participating lender and car dealer upon enrollment of a qualified loan that the proceeds of the loan will be used for acquiring an eligible clean vehicle, as defined by the authority.
~~(3)Contingent on the availability of funds, contribute an additional incentive from the fund for each loan enrolled for a qualified person that resides in a severely affected community.~~
~~(4)Limit the term of loss coverage for each qualified loan to no more than five years.~~
(5)Recapture from the loss reserve account the authority’s contribution for each enrolled loan upon the maturation of such loan or after five years from the date of enrollment, whichever happens first, to be deposited in the fund and applied to future program and administrative expenditures.
~~(6)Provide assistance to low-income or high-financial-risk individuals to gain access to more favorable lease terms.~~
~~(7)Provide consumer protections that include, but are not limited to, the following:~~
~~(A)A review of the applicant’s ability to afford the monthly payment of the loan.~~
(B)A provision prohibiting a participating lender from collecting from an applicant an amount of money for nonpayment that is in excess of the value, at the time of collection, of the clean vehicle purchased or leased with the assistance of the authority.
(i)Notwithstanding Section 10231.5 of the Government Code, commencing in 2018 and annually thereafter, the authority shall submit a report to the Legislature, pursuant to Section 9795 of the Government Code, regarding alternative financing programs administered pursuant to this section.
(j)Notwithstanding any other law, the authority may establish and maintain loss reserve accounts with any financial institution under any policies the authority may adopt, including the policies of other funding sources, pursuant to subdivision (b) of Section 44559.11.
(k)All moneys in a loss reserve account established pursuant to this article are the exclusive property of, and solely controlled by, the authority. Interest or income earned on moneys credited to the loss reserve account shall be deemed to be part of the loss reserve account. The authority may withdraw from the loss reserve account all, or a portion of, the interest or other income that has been credited to the loss reserve account. Any withdrawal made pursuant to this subdivision may be made prior to paying any claim and shall be used for the sole purpose of offsetting costs associated with carrying out the program, including administrative costs and loss reserve account contributions.
(l)The combined amount to be deposited by the participating financial institution into any individual loss reserve account over a three-year period, in connection with any single borrower or any group of borrowers among which a common enterprise exists, shall be not more than an amount determined by the authority.
(m)Provide for a rebate of 5 percent of the purchase price of the vehicle at the end of the five-year term of the loan, or at the time the loan is repaid if the loan is kept for more than three years.