Bill Text: CA SB358 | 2009-2010 | Regular Session | Amended
Bill Title: Indian tribes: economic development.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2010-02-01 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB358 Detail]
Download: California-2009-SB358-Amended.html
BILL NUMBER: SB 358 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 13, 2009
INTRODUCED BY Senator Ducheny
FEBRUARY 25, 2009
An act to amend Section 14030 of, and to add Article 10
(commencing with Section 14077) to Chapter 1 of Part 5 of Division 3
of Title 1 of, the Corporations Code, relating to Indian tribes, and
making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
SB 358, as amended, Ducheny. Indian tribes: economic development.
Existing law, the California Small Business Financial Development
Corporation Law, authorizes the formation of small business financial
development corporations to grant loans or loan guarantees for the
purpose of stimulating small business development and imposes certain
duties with respect thereto on a director designated by the
Secretary of Business, Transportation and Housing. The California
Small Business Expansion Fund, which is created under that law and is
continuously appropriated, provides funds to be used to pay for
defaulted loan guarantees and administrative costs of these
corporations.
This bill would require the secretary to establish the Native
American Business Revolving Loan and Guarantee Program for the
purpose of providing nongaming business loans and loan guarantees to
qualified Indian tribes, as defined. The bill would create the Native
American Business Revolving Loan and Guarantee Program Account
within the California Small Business Expansion Fund, solely for the
purpose of receiving certain state, federal, or local
government moneys, other public or private moneys, and tribal
government contributions. The bill would continuously appropriate the
moneys in the account to the director for the purpose of
implementing and administering the program. By authorizing the
expenditure of funds from a continuously appropriated account, the
bill would make an appropriation. The bill would require that the
program and the steps necessary to implement it and make it operative
not be undertaken until the secretary has determined that funds of a
sufficient amount to create a loan pool and pay program
administrative costs have been received into the account. The bill
would require the director to provide for the development and
implementation of the application review process for the program,
subject to specified requirements. The bill would specify the maximum
amount of a loan or loan guarantee granted under the program and
would require a tribe applying for a loan to provide matching funds
in a specified amount. The bill would create the Native American
Business Finance Council, consisting of 9 members, who are
appointed by, and serve at the pleasure of, the Governor
3 of whom would be appointed by the Senate Committee on Rules,
the Speaker of the Assembly, and the Governor, respectively, as
specified , to provide policy and program guidance regarding
the development and operation of the program. The bill would require
the director to annually report to the secretary on the activities of
the program, to include within that report information pertaining to
the loss experience for loans and loan guarantees made pursuant to
the program, and, no later than January 1, 2011, to report to the
Governor and the Legislature the results of an independent audit of
the program. The bill would enact other related provisions.
Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 14030 of the Corporations Code, as amended by
Section 1 of Chapter 601 of the Statutes of 2007, is amended to read:
14030. (a) There is hereby created 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 lending institution or financial company
that will act as trustee of the funds. The expansion fund and the
trust fund shall be used to pay for defaulted loan guarantees issued
pursuant to Article 9 (commencing with Section 14070), administrative
costs of corporations, and those costs necessary to protect a real
property interest in a defaulted loan or guarantee. The amount of
guarantee liability outstanding at any one time shall not exceed five
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.
(b) There is hereby created in the California Small Business
Expansion Fund the Native American Business Revolving Loan and
Guarantee Program Account. The Native American Business Revolving
Loan and Guarantee Program Account is created solely for the purpose
of receiving state , federal, special fund
moneys, federal or local government moneys, other public or
private moneys, and tribal government contributions, to make loans
and loan guarantees pursuant to Article 10 (commencing with Section
14077).
(c) Notwithstanding Section 13340 of the Government Code, all
moneys in the Native American Business Revolving Loan and Guarantee
Program Account shall be continuously appropriated to the director
for the purposes of implementing and administering the program
established pursuant to Article 10 (commencing with Section 14077).
(d) This section shall remain in effect only until January 1,
2013, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2013, deletes or extends
that date.
SEC. 2. Section 14030 of the Corporations Code, as added by
Section 2 of Chapter 601 of the Statutes of 2007, is amended to read:
14030. (a) There is hereby created 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 lending institution or financial company
that will act as trustee of the funds. The expansion fund and the
trust fund shall be used to pay for defaulted loan guarantees issued
pursuant to Article 9 (commencing with Section 14070), administrative
costs of corporations, and those costs necessary to protect a real
property interest in a defaulted loan or guarantee. The amount of
guarantee liability outstanding at any one time shall not exceed
four five 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, unless the director has permitted a higher leverage
ratio for an individual corporation pursuant to subdivision (b) of
Section 14037.
(b) There is hereby created in the California Small Business
Expansion Fund the Native American Business Revolving Loan and
Guarantee Program Account. The Native American Business Revolving
Loan and Guarantee Program Account is created solely for the purpose
of receiving state, federal, or local government moneys, other public
or private moneys, and tribal government contributions, to make
loans and loan guarantees pursuant to Article 10 (commencing with
Section 14077).
(c) Notwithstanding Section 13340 of the Government Code, all
moneys in the Native American Business Revolving Loan and Guarantee
Program Account shall be continuously appropriated to the director
for the purposes of implementing and administering the program
established pursuant to Article 10 (commencing with Section 14077).
(d) This section shall become operative on January 1, 2013.
SEC. 3. Article 10 (commencing with Section 14077) is added to
Chapter 1 of Part 5 of Division 3 of Title 1 of the Corporations
Code, to read:
Article 10. Native American Business Revolving Loan and
Guarantee Program
14077. For purposes of this article, the following definitions
shall apply:
(a) "Account" means the Native American Business Revolving Loan
and Guarantee Program Account created pursuant to Section 14030.
(b) "Applicant" means an applicant for a loan or loan guarantee
pursuant to this article.
(c) "Council" means the Native American Business Finance Council
created pursuant to Section 14077.4.
(d) "Program" means the Native American Business Revolving Loan
and Guarantee Program established pursuant to Section 14077.1.
(e) "Qualified Indian tribe" means a federally recognized tribe
located in this state that receives payments from the Indian Gaming
Revenue Sharing Trust Fund.
14077.1. (a) The secretary shall establish the Native American
Business Revolving Loan and Guarantee Program for the purpose of
providing business loans and loan guarantees to qualified Indian
tribes.
(b) The program and the steps necessary to implement the program
to make it operative shall not be undertaken until the secretary has
determined that funds of a sufficient amount to create a loan pool
and pay program administrative costs have been received into the
account.
14077.2. (a) The director shall provide for the development and
implementation of the application review process for the program,
including, but not limited to, defining the eligibility standards,
the rating and ranking criteria, and other appropriate policies and
procedures for evaluating direct loans and loan guarantees, subject
to the following requirements:
(1) Loans and loan guarantees provided pursuant to the program
shall be for nongaming business and shall be used to start ,
acquire, or expand a business or to supply working capital to a
business.
(2) An eligible applicant for a loan or loan guarantee under the
program shall be a qualified Indian tribe with a business , or a
qualified Indian tribe that intends to begin a business,
located either on Native American lands of a federally recognized
tribe that is also a qualified Indian tribe or on property within the
state.
(3) The maximum loan limit shall be five hundred thousand
dollars ($500,000) one million dollars ($1,000,000)
. All direct loans shall have a federal guarantee. Loan
guarantees provided by the program shall have sufficient reserves in
the account to guarantee the loan. The maximum loan guarantee shall
be 90 percent of the loan amount, not to exceed five hundred
thousand dollars ($500,000) nine hundred thousand
dollars ($900,000) .
(4) A qualified Indian tribe applying for a loan pursuant to this
article shall provide matching funds in an amount equal to one-half
the amount of the loan requested. The matching funds shall come from
any source of funds within the control of the tribe and may include
in-kind contributions. However, in-kind contributions shall be
limited to one-quarter of the value of the requested loan.
(5) An applicant shall demonstrate that it will have reasonable
access to business and management technical assistance during the
term of the loan or loan guarantee.
(6) The qualified Indian tribe shall be the majority owner of the
business during the term of the loan or loan guarantee.
(7) Loans may be provided at terms and conditions below market
rates to the extent that the overall revolving loan portion of the
program remains financially viable.
(8) A qualified Indian tribe shall not be eligible to apply for
funds pursuant to this article unless any funds previously loaned to
the tribe pursuant to this article have been repaid in full.
(9) Priority for program outreach activities shall be for
qualified Indian tribes that have no existing business enterprise.
(10) In the first year of the program, loans shall be awarded
through a competitive request for proposal process. Applications for
loans shall be rated and ranked based on their ability to meet the
purposes of the program, as described in subdivision (b). In
subsequent years, loans may be awarded through an ongoing evaluation
process to the extent that the purposes of the program, as described
in subdivision (b), can still be achieved.
(b) Loans and loan guarantees provided through the program shall
provide for the general welfare of a qualified Indian tribe and its
members by promoting long-term tribal economic development that
creates or retains jobs, increases incomes, develops work skills and
business management capacity, and serves qualified Indian tribes
that have no existing business enterprise .
(c) The application review process developed pursuant to
subdivision (a) shall be approved by the council created pursuant to
Section 14077.4.
(d) In developing the program, the director shall seek to maximize
the ability of applicants to leverage other public and private
funding opportunities to the extent the addition of these funds
furthers the purposes of the program, as described in subdivision
(b). Key funding partners include, but are not limited to, the United
States Department of Agriculture, the Bureau of Indian Affairs, the
United States Department of Commerce, the United States Department of
Housing and Urban Development, and foundations and other nonprofit
organizations that share a mission to expand entrepreneurship
opportunities for small and medium size businesses and historically
underserved communities.
(e) In addition to other activities, the director shall routinely
seek the advice of the council on matters related to the management
and operation of the program.
(f) The director shall have the authority to administer the
distribution of funds from the account for the purposes of this
article.
14077.3. (a) The agency may contract with one or more
corporations to make loans and loan guarantees pursuant to this
article.
(b) To execute direct loans under the program, the director may
loan funds from the account to a corporation for the purpose of
lending those funds to an approved applicant. The loan authorized by
the director to the corporation shall be on terms similar to the loan
between the corporation and the applicant. The loan between the
agency and the corporation shall be evidenced by a credit agreement.
In the absence of fraud on the part of the corporation, the liability
of the corporation to repay the loan to the agency shall be limited
to the repayment received by the corporation from the applicant,
except in a case where the federal guarantor requires exposure by the
corporation in rule or regulation. Interest and principal received
by the agency from the corporation shall be deposited into the
account.
14077.4. (a) There is hereby created the Native American Business
Finance Council. The purpose of the council is to provide policy and
program guidance regarding the development and operation of the
program.
(b) The management and operation of the council shall meet all of
the following requirements:
(1) The council shall consist of nine members, who are
appointed by, and serve at the pleasure of, the Governor.
(2) The council shall include six members of federally recognized
Indian tribes in California, three of whom shall represent tribes
located in northern California and three of whom shall represent
tribes located in southern California.
(3) The council
shall include at least one member with expertise in each of the
following areas: tribal government, business finance, and economic
development related to the purposes of the program.
appointed as follows:
(A) The Senate Committee on Rules shall appoint three members, two
of whom shall be members of federally recognized Indian tribes in
California. Of the two appointees who are members of federally
recognized Indian tribes in California, one shall represent tribes in
northern California, and the other shall represent tribes in
southern California.
(B) The Speaker of the Assembly shall appoint three members, two
of whom shall be members of federally recognized Indian tribes in
California. Of the two appointees who are members of federally
recognized Indian tribes in California, one shall represent tribes in
northern California, and the other shall represent tribes in
southern California.
(C) The Governor shall appoint three members, two of whom shall be
members of federally recognized Indian tribes in California. Of the
two appointees who are members of federally recognized Indian tribes
in California, one shall represent tribes in northern California, and
the other shall represent tribes in southern California.
(2) Each member of the council shall have expertise in one or more
of the following areas: tribal government, business finance, and
economic development related to the purposes of the program.
(4)
(3) Each member shall serve for a term of four years,
except that in the first round of appointments, three members ,
one of each of the members appointed by the Senate Committee on
Rules, the Speaker of the Assembly, and the Governor, respectively,
shall serve for two years and three other members
, and three other members, one of each of the members
appointed by Senate Committee on Rules, the Speaker of the Assembly,
and the Governor, respectively, shall serve for three years.
Members shall not be reappointed to the council until a minimum of
one year has elapsed.
(5)
(4 ) A member of the council shall not vote
on an application from his or her own tribe.
(6)
(5) Five members of the council shall constitute a
quorum. A vote of the majority of the members present at a meeting at
which there is a quorum shall constitute the
an act of the council. A member prohibited from voting under
paragraph (5) shall not be included in determining whether a quorum
exists for a particular application. In addition, the majority needed
to approve an application shall be reduced by the number of members
prohibited from voting under paragraph (5).
14077.5. (a) The director shall annually report on the activities
of the program to the secretary as part of his or her annual
reporting requirements under Section 14030.2. The director shall
include within that report information pertaining to the loss
experience for loans and loan guarantees made pursuant to the
program.
(b) The director shall, no later than January 1, 2011, submit to
the Governor and the Legislature the results of an audit of the
program undertaken by an independent entity.
