Bill Text: CA SB625 | 2021-2022 | Regular Session | Amended
Bill Title: California Pollution Control Financing Authority: community development financial institutions: grant program.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Engrossed - Dead) 2022-07-29 - August 3 set for first hearing canceled at the request of author. [SB625 Detail]
Download: California-2021-SB625-Amended.html
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Amended
IN
Assembly
June 28, 2022 |
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Amended
IN
Senate
May 28, 2021 |
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Amended
IN
Senate
March 25, 2021 |
CALIFORNIA LEGISLATURE—
2021–2022 REGULAR SESSION
Senate Bill
No. 625
| Introduced by Senators Caballero and Limón (Principal coauthor: Assembly Member Cervantes) (Coauthors: Senators Durazo and Min) |
February 18, 2021 |
An act to add Article 11 Title 10.3 (commencing with Section 63049.75) 91640) to Chapter 2 of Division 1 of Title 6.7 of the Government Code, and to amend, repeal, and add Sections 44504 and 44515 of the Health and Safety Code, relating to economic development.
LEGISLATIVE COUNSEL'S DIGEST
SB 625, as amended, Caballero.
Community California Pollution Control Financing Authority: community development financial institutions: grant program.
Existing law, the Bergeson-Peace Infrastructure and Economic Development Bank Act, establishes the California Infrastructure and Economic Development Bank (I-Bank) in the Governor’s Office of Business and Economic Development under the direction of an executive director appointed by the Governor, subject to confirmation by the Senate, and governed by a board of directors composed of specified persons. Existing law, among other things, authorizes the I-Bank to make loans, issue bonds, and
provide financial assistance for various types of projects that qualify as economic development or public development facilities.
Existing law, the California Pollution Control Financing Authority Act, establishes the California Pollution Control Financing Authority (authority), with specified powers and duties, and authorizes the authority to approve financing for projects or pollution control facilities to prevent or reduce environmental pollution.
Existing federal law establishes the Capital Magnet Fund and makes moneys in that fund available to the United States Secretary of the Treasury to carry out a competitive grant program to attract private capital for, and increase investment in, certain affordable housing and economic development projects by providing grants, as provided, to
Treasury-certified community development financial institutions or nonprofit organizations that meet specified criteria.
Existing federal law, the federal Community Development Financial Institutions Program, provides financial and technical assistance to specified recipients to enhance their ability to provide specified financial products, financial services, and development services to, and in, their target markets in order to promote economic revitalization and community development through investment in, and assistance to, community development financial institutions, as defined and specified.
This bill would authorize the authority to establish the California Investment and Innovation Program, administered by the I-Bank,
Program for the purpose of providing grants to qualified to enhance the capacity of specified community development financial institutions. institutions to provide technical assistance and capital access to economically disadvantaged communities in the state. The bill would establish the California Investment and Innovation Fund and, upon appropriation, appropriation and the authority’s establishment of the program,
require the I-Bank authority to award a grant grants to an eligible recipient, applicants, defined as a community development financial institution
institutions that meets meet specified criteria under the program, as provided. The bill would require eligible applicants, prior to receiving any grant funds, to enter into a grant agreement with the authority containing specified requirements. The bill would specify authorized uses of grant funds, including providing loans, grants, equity investments, or technical assistance within low-income communities or for purposes that have a direct and substantial benefit to lower income households. The bill would also provide criteria for prioritization of grants, and would require the I-Bank to establish guidelines for performance and periodic reporting by grantees.
The bill would also establish the California Investment and Innovation Advisory Committee, which would review and recommend for approval applications for grants, and would provide recommendations to the I-Bank on the successful implementation of the program. increasing working capital for the purpose of funding services and operations that contribute to the overall community development mission of the eligible applicant. The bill would require the authority to adopt, amend, or repeal guidelines for the operation of the program, as specified. The bill would make the authority’s duties under these provisions contingent on the authority establishing the program. The bill would also, beginning on January 1, 2024, change the name of the authority to the California Community Development Financing Authority, as specified.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
The Legislature finds and declares all of the following:(a) Community Development Financial Institutions (CDFIs) are a critical partner of the State of California in addressing short-term and long-term needs of low- and moderate-income communities in the areas of affordable housing, health care, small business lending, economic development, and more.
(b) As mission-driven lenders, grantors, and providers of technical assistance, CDFIs have proven time and again that they can play a valuable role in helping to deploy and leverage public investment quickly and efficiently.
(c) It is the intent of the Legislature in creating the California Investment and Innovation Program to establish a program that creates an ongoing partnership with CDFIs to assist the State of California in efficiently deploying resources to communities in need and establishing an equitable economic recovery that benefits low-income communities and communities of color that have been disproportionately impacted by the economic fallout of the COVID-19 pandemic and by historical and ongoing disinvestment.
(d) In addition to providing an economic jumpstart for those communities through immediate investment, it is the intent of the Legislature that the program created by this legislation will serve as a potential repository for current and future emergency or stimulus funding streams
that would otherwise require the state to start up new programs, thereby slowing the delivery of these funds to those most in need. The program will be a permanent resource for community investment.
SEC. 2.
Title 10.3 (commencing with Section 91640) is added to the Government Code, to read:TITLE 10.3. California Investment and Innovation Program
91640.
For purposes of this(a)“Bank” means the California Infrastructure and Economic Development Bank.
(a) “Administration expenses” means
the reasonable and necessary expenses incurred by the authority in the administration of this title, including, without limitation, the fees and costs of attorneys, consultants, and other individuals.
(b) “Applicant” means an eligible applicant that applies to the authority for a grant pursuant to this title.
(c) “Authority” means the California Pollution Control Financing Authority.
(b)
(d) “Community development financial institution” means any community development financial institution certified
by the federal Community Development Financial Institutions Fund under Part 1805 (commencing with Section 1805.100) of Chapter XVIII of Title 12 of the Code of Federal Regulations.
(c)
(e) “Disadvantaged community” means an area, as defined by the bank pursuant to Section 63049.79,
a census tract in which the median household income is less than 80 percent of the statewide or county annual median household income level. level, whichever is lower.
(d)
(f) “Eligible recipient”
applicant” means a community development financial institution for which either all of the following applies:
(1) The applicant has a current certification pursuant to Section 1805.201 of Title 12 of the Code of Federal Regulations.
(2) The applicant has a minimum net worth of twenty-five thousand dollars ($25,000) as indicated on its financial statements prepared in accordance with generally accepted accounting principles.
(3) Either of the following applies:
(1)
(A) The community development financial institution has its headquarters in this state.
a principal office located in California, the officers of which are domiciled in California.
(2)
(B) The community development financial institution has a record of lending in this state, based on either of the following:
(A)
(i) At least 25 percent of the
community development financial institution’s loan portfolio
portfolio, at the time of the application, provides financial assistance to persons or projects located in this state.
(B)
(ii) The community development financial institution has provided financing assistance in this state totaling at least five
ten million dollars ($5,000,000) over the following time periods: ($10,000,000) in the three years prior to its application.
(i)If the community development financial institution is not a small and emerging community development financial institution, the three years preceding the date of its application for a grant under the program.
(ii)If the community development financial institution is a small and emerging community development financial institution, any time period.
(e)
(g) “Fund” means the California Investment and Innovation Fund created in subdivision (b) of Section 63049.76. 91641.
(f)
(h) “Low-income communities” has the same meaning as defined in Section 39713 of the Health and Safety Code.
(g)
(i) “Lower income household” has the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(h)
(j) “Program” means the California Investment and
Innovation Program that may be established in pursuant to subdivision (a) of Section 63049.76. 91641.
(i)
(k) “Small and emerging community development financial institution”
means a community development financial institution that has less than ten million dollars ($10,000,000) in assets.
(l) “Socially and economically disadvantaged individuals” has the meaning set forth in subsection 18 of Section 5701 of Title 12 of the United States Code.
63049.76.91641.
(a) (1) The authority may establish the California Investment and Innovation Program(2) The bank shall administer the program. If the authority establishes the program pursuant to paragraph (1), the authority shall adopt guidelines for the implementation of this program consistent with this title. The authority shall not commence operation of the program before adopting a resolution finding that there is sufficient money in the California Investment and Innovation Fund, established pursuant to this section, to cover the costs of implementing the program, including, but not limited to, the appropriate costs for oversight and reporting.
(b) The (1) The California Investment and Innovation Fund is created in the State Treasury. Upon appropriation by the Legislature, if the authority establishes the program pursuant to paragraph (1) of subdivision (a), the bank authority shall allocate moneys in the fund to eligible recipients applicants
in accordance with this article.
title.
(2) Notwithstanding any other law, if the authority does not establish the program pursuant to paragraph (1) of subdivision (a), the authority shall not be required to perform the duties specified in Sections 91642 to 91645, inclusive.
(c) The California Investment and Innovation Fund may receive funds made available to the state by from any source, including, but not
limited to, the federal government, philanthropic entities, and
financial institutions. institutions, and state funds appropriated for this purpose.
(d) The authority may access moneys in the fund for administrative costs as necessary to implement the program, subject to conditions, if any, stipulated in the appropriation of the funds.
63049.77.91642.
(a) When funding is available and the resolution has been adopted pursuant to Section(1) Develop a competitive an application process for awarding grants
to eligible applicants pursuant to the program and require each eligible recipient applicant to submit an application in the form and manner prescribed by the bank. authority.
(2) Set aside at least 20 percent of any amount made available in a funding round for purposes of the program for eligible recipients
applicants that are small and emerging community development financial institutions.
(3) Ensure that eligible recipients applicants receiving grants pursuant to the program serve geographically diverse areas, both urban and rural, across this state.
(b) When (1) When funding is available and the resolution has been
adopted pursuant to Section 63049.76,
91641, the bank authority shall make grants available in one or more rounds of funding availability, not to exceed twenty-five fifteen million dollars ($25,000,000) ($15,000,000) in total grants in any calendar year.
(2) Awards shall be announced by February 1 of each year. The first round of funding shall be awarded by February 1, 2024.
(3) Funds shall be available for use by the grantee for a period of two years, as specified in the grant agreement entered into pursuant to Section 91643. Grant funds shall be used as prescribed by this title and the grant agreement for a period of two years. Upon the expiration of that two-year period and that grant agreement, there shall be no limitation on the use of the grant funds.
(4) Any income generated from the grant award during the term of grant agreement entered into pursuant to Section 91643 shall be reinvested by the grantee into activities allowable under the grant agreement.
(c) Pursuant to Section 63049.79, As
part of the application process established in subdivision (a), the bank authority shall determine the maximum amount that any eligible recipient applicant who submits a timely and complete application may receive per calendar year, provided that, in a calendar year, no applicant may receive more than 5 percent of the total grant funds available in that calendar year.
subject to all of the following conditions:
(d)To the extent permissible under state and federal equal protection laws, grants shall be prioritized in accordance with the following criteria:
(1)Providing access to capital for communities and businesses that have historically lacked access to capital, including, but not limited to, the following:
(A)Businesses in which a majority of the business is owned by women, minorities, persons of color, or veterans.
(B)Businesses in rural communities.
(C)Businesses in low-income communities.
(2)Serving communities that are disadvantaged communities or have a disproportionately high rate of poverty or unemployment, low educational attainment, or other disadvantaging factor that limits access to capital and other resources.
(3)Providing access to housing, health care, or education or financial services for households that are very low income as defined in Section 50105 of the Health and Safety Code.
(1) Each eligible applicant that submits a timely and complete application shall receive a grant.
(2) In each round of funding, the authority shall, in announcing the availability of funding, establish a minimum and maximum grant award.
(3) For the purpose of determining the amount of individual grants, the authority shall develop criteria to adjust the size of awards based on the total amount of loans closed by the applicant in the most recently completed fiscal year.
(d) After receiving a grant in one year, a community development financial institution may apply in a future funding round if the community development financial institution has made reasonable progress on the deployment of the previously awarded grant funding.
63049.78.91643.
(a) Prior to receiving any grant funds under this program, an applicant selected by the authority to participate in the program shall enter into a grant agreement with the authority that requires the applicant to do all of the following:(1) Achieve specific performance goals related to capacity building described in subdivision (b).
(2) Provide information requested by the authority to support administration of the program.
(3) Comply with terms and conditions imposed by the authority.
(b) Unless otherwise prohibited by law, an eligible recipient
applicant
that receives grant funds under the program may use those funds for any of the following purposes:
(1)Providing loans, grants, equity investments, or technical assistance within low-income communities or for purposes that have a direct and substantial benefit to lower income households.
(2)Serving investment areas or targeted populations, as those terms are defined in Section 4702 of Title 12 of the United States Code, as that section read as of January 1, 2021, by developing or supporting any of the following:
(A)Commercial facilities that promote revitalization, community stability, or job creation or retention.
(B)Businesses that either provide jobs in low-income communities or enhance the availability of products and services to lower income households.
(C)Community facilities.
(D)The provision of basic financial services.
(E)Housing that is principally affordable to lower income households. Assistance used to facilitate homeownership pursuant to this subparagraph shall be limited to services and lending products that serve lower income households that either are not provided by other lenders in the area or complement the services and lending products provided by other lenders that serve the investment area or target population.
(F)Any other businesses or activities deemed appropriate by the bank and consistent with the purposes of the program.
(b)An eligible recipient that provides loans with grant funds awarded under the program shall provide those loans on a revolving basis.
(1) (A) To increase total net assets for the purpose of increasing the eligible applicant’s capacity to attract additional financing that the
applicant uses to fund loans, establish loan loss reserves, or other means of finance for any of the following:
(i) Commercial facilities that promote revitalization, community stability, or job creation or retention.
(ii) Businesses that provide jobs for low-income persons, are owned by low-income persons, or increase the availability of products and services to low-income persons.
(iii) Facilities providing health care, childcare, educational, cultural, or social services.
(iv) The provision of checking, savings accounts, check cashing, money orders, certified checks, automated teller machines, deposit taking, safe-deposit box services, and other similar services.
(v) Development,
preservation, or renovation of affordable housing.
(vi) Credit building consumer loans with charges that do not exceed the amounts allowed by Sections 22304.5 and Section 22370 of the Financial Code.
(B) For purposes of this section, “total net assets” means the amount of total assets minus total liabilities, as disclosed in an audited financial statement prepared according to generally accepted accounting principles.
(2) To increase working capital for the purpose of funding services and operations that contribute to the overall community development mission of the eligible applicant, including technical assistance, technology, training, and other activities that benefit low-income neighborhoods, undercapitalized business owners, and other socially and economically disadvantaged individuals.
(c) If a grantee is required to be licensed by the State of California and the grantee loses its license, the grant shall be forfeited and returned, in total, to the authority.
63049.79.91644.
The(a)For purposes of this section:
(1)“Committee” means the California Investment and Innovation Advisory Committee.
(2)“Director” means the executive director of the bank.
(b)The director may establish and appoint the committee.
(c)The committee shall consist of the director or the director’s designee and one volunteer from each of the following categories:
(1)A member of the public appointed by the Senate Committee on Rules.
(2)A member of the public appointed by the Speaker of the Assembly.
(3)A representative of a consumer advocacy group.
(4)A member of the public with expertise in affordable housing development or finance.
(5)A member of the public with expertise in community development.
(6)A representative of a financial institution or a community development financial institution.
(7)A member of the public with expertise in small business lending.
(8)A representative of an organization representing the interests of low-income rural communities.
(d)The
committee’s duties shall include all of the following:
(1)Reviewing and recommending for approval applications for grants submitted pursuant to this article.
(2)Providing recommendations to the bank on the successful implementation of the program.
(a)Pursuant to Section 63049.79, the bank shall establish time periods for performance and periodic reporting by grantees.
(b)Pursuant to Section 63049.79, the bank shall adopt guidelines for periodic reporting by grantees. In adopting the guidelines, the bank shall ensure appropriate periodic financial and project reporting, record retention, and audit requirements for the duration of the grant to the grantee to ensure compliance with the limitations and requirements of this section. The guidelines shall also establish reporting that documents the use of funds, the number of persons or households served, the geographic distribution of funds, and other data as determined by the bank to assist the bank in assessing program
outcomes.
91645.
The authority shall do all of the following:(a) Adopt guidelines for annual reporting by grantees that do all of the following:
(1) Require a grantee to annually report on the community development financial institution’s overall activities during the report period, including how the grant specifically contributed to these activities.
(2) Require a grantee to provide an annual financial statement and meet record retention and audit requirements for the duration of the grant to the grantee to ensure compliance with the limitations and requirements of this title.
(3) Require the time period covered by the annual report to align with the report time period of the federal Community Development Financial Institutions Program of the United States Department of Treasury.
(4) For the purpose of tracking the impact of individual grant awards, require the performance period to start no earlier than the date the grant agreement entered into pursuant to Section 91643 is signed and the funding is under the control of the grantee.
(5) Unless otherwise prohibited by law, require a grantee to request that businesses directly served by the grantee to self-identify their gender, race, and ethnicity, and require a grantee to annually report this information to the authority.
(b) (1) By March 1, 2024, and annually thereafter, report to the Legislature on
program activities, including, but not limited to, both of the following:
(A) Based on the information provided by grantees pursuant to subdivision (a), an aggregation of data provided and a summary of community development activities reported in subdivision (a) in low-income areas supported with the capacity building grant.
(B) Any recommendations for improving the effectiveness, transparency, and accountability of public funds deployed to community development financial entities to serve the unmet needs and build inclusive economic prosperity in California’s lower income neighborhoods and among undercapitalized small businesses.
(2) The report submitted pursuant to this subdivision shall be in compliance with Section 9795.
SEC. 3.
Section 44504 of the Health and Safety Code is amended to read:44504.
(a) “Authority” means the California Pollution Control Financing Authority established pursuant to Section 44515 and any board, commission, department, or officer succeeding to the functions thereof or to whom the powers conferred upon the authority by this division shall be given by law.(b) This section shall remain in effect only until January 1, 2024, and as of that date is repealed.
SEC. 4.
Section 44504 is added to the Health and Safety Code, to read:44504.
(a) “Authority” means the California Community Development Financing Authority established pursuant to Section 44515 and any board, commission, department, or officer succeeding to the functions thereof or to whom the powers conferred upon the authority by this division shall be given by law.(b) On and after January 1, 2024, a reference to the “California Pollution Control Financing Authority” or “authority,” as used in a context to refer to the California Pollution Control Financing Authority, shall be deemed to refer to the California Community Development Financing Authority.
(c) This section shall become operative on January 1,
2024.
SEC. 5.
Section 44515 of the Health and Safety Code is amended to read:44515.
(a) There is in the state government the California Pollution Control Financing Authority. The authority constitutes a public instrumentality and a political subdivision of the State of California, and the exercise by the authority of the powers conferred by this division shall be deemed and held to be the performance of an essential public function. The authority shall consist of three members: the Director of Finance, the State Treasurer, and the State Controller.The Director of Finance may designate a deputy or other official in the Department of Finance to act for him or her
them and represent him or her them at all meetings of the authority.
The first meeting of the authority shall be convened by the Director of Finance.
(b) This section shall remain in effect only until January 1, 2024, and as of that date is repealed.
SEC. 6.
Section 44515 is added to the Health and Safety Code, to read:44515.
(a) (1) There is in the state government the California Community Development Financing Authority. The authority constitutes a public instrumentality and a political subdivision of the State of California, and the exercise by the authority of the powers conferred by this division shall be deemed and held to be the performance of an essential public function. The authority shall consist of three members: the Director of Finance, the State Treasurer, and the State Controller.(2) The Director of Finance may designate a deputy or other official in the Department of Finance to act for them and represent them at all meetings of the authority.
(3) The first
meeting of the authority shall be convened by the Director of Finance.
(b) (1) The California Pollution Control Financing Authority shall be renamed the California Community Development Financing Authority.
(2) All powers, duties, responsibilities, and functions of the California Pollution Control Financing Authority and any executive director thereof shall be the powers, duties, responsibilities, and functions of the California Community Development Financing Authority and any executive director thereof, respectively.
(3) The California Community Development Financing Authority and any executive director thereof shall retain all of the rights, property, debts, and liabilities of the California Pollution Control Financing Authority and any executive director thereof, respectively.
(4) The name change shall not affect the validity of any action or proceeding by or against the California Pollution Control Financing Authority or any executive director thereof, or a predecessor authority or executive director, nor the validity of any permit, certificate, license, or any other action taken under the name of the California Pollution Control Financing Authority or any executive director thereof, or a predecessor authority or executive director.
(5) All agreements entered into with, and orders and regulations issued by, the California Pollution Control Financing Authority or any executive director thereof, or a predecessor authority or executive director, shall continue in effect as agreements, orders, and regulations of the California Community Development Financing Authority or any executive director thereof.
(6) A reference in any statute or regulation to the California Pollution Control Financing Authority or any executive director thereof shall be deemed to be a reference to the California Community Development Financing Authority or any executive director thereof, respectively.
(7) The name change of the California Pollution Control Financing Authority to the California Community Development Financing Authority shall not result in any change to the status or authority of the authority.
(c) (1) Notwithstanding the renaming of the authority, as described in subdivision (b), any indebtedness incurred or security issued by the authority before January 1, 2024, under the name of the California Pollution Control Financing Authority, shall be deemed to be indebtedness incurred or securities issued by the
authority under the name of the California Community Development Financing Authority. Any indebtedness incurred or security issued by the authority as described in this paragraph shall be payable in the manner provided in the bonds, notes, or other evidence of indebtedness or security issued by the authority before January 1, 2024, in accordance with this division.
(2) The California Community Development Financing Authority may incur indebtedness or issue securities pursuant to Section 44540 under the name of the California Pollution Control Financing Authority. Any reference to the California Pollution Control Financing Authority in any bond, note, or other evidence of indebtedness or security issued by the authority shall be deemed to refer to the California Community Development Financing Authority, and shall be payable from the revenues of the authority in accordance with this division.
(d) This section shall become operative on January 1, 2024.
