Bill No: AB 893
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
AB 893 Author: V. Manuel Perez
As Amended: May 31, 2011
Hearing Date: June 28, 2011
Consultant: Art Terzakis
SUBJECT
California Infrastructure and Economic Development Bank
DESCRIPTION
AB 893 makes the following substantive changes to the California Infrastructure and
Economic Development Bank Act of 1994:
1. Adds a new section of law that requires the California Infrastructure and
Economic Development Bank (I-Bank) to provide “technical support” to small
and rural communities in order to obtain financing for infrastructure projects.
2. Defines “technical support” to mean assisting communities in developing
strategic plans, writing grants, applying for public/private loans and guarantees,
issuing bonds, and other activities directly related to obtaining funding for
projects.
3. Permits the I-Bank to contract with other state, local and federal entities for the
purpose of providing technical support.
4. Requires the I-Bank to report its outreach activities through its annual report and
expands the distribution of that report to include the appropriate fiscal and policy
committees of the Legislature.
EXISTING LAW
Existing law establishes the I-Bank Fund in the State Treasury, and requires that moneys
in that fund are only used for specified purposes. Existing law requires the I-Bank to
submit an annual report to the Governor, and the Joint Legislative Budget Committee,
that contains specified requirements.
BACKGROUND
The I-Bank: To address a growing backlog of public infrastructure needs, particularly at
the local level, the Legislature enacted the Bergeson-Peace Infrastructure and Economic
Development Bank Act in 1994 (Assembly Bill 1495 – Peace and Senate Bill 101 –
AB 893 (V. Manuel Perez) continued
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Bergeson). These measures created the I-Bank to help local communities finance
necessary infrastructure and various community development projects (e.g., city streets;
state and county highways; drainage, water supply and flood control; educational
facilities; environmental mitigation measures; parks and recreational facilities; public
transit; port facilities; water treatment and distribution; solid waste collection and
disposal; power and communication; public safety facilities, including police stations and
fire stations; and, defense conversion projects, among others). The I-Bank supports
economic development and public and private infrastructure investments through its
authority to issue bonds, make loans and provide credit enhancements.
Housed within the Business Transportation and Housing Agency (BTH), the I-Bank has a
five-member board of directors that approves projects. The board includes the BTH
Secretary, who serves as the chair, the State Treasurer, the Director of the Department of
Finance, the Secretary of the State and Consumer Services Agency and an appointee of
the Governor. The I-Bank’s Executive Director is appointed by the Governor and
confirmed by the Senate. The I-Bank does not receive direct state funding. Funding
comes from fees, interest income, and revenues tied to financing activities.
The I-Bank manages the following programs:

The Infrastructure State Revolving Fund Program (ISRF) which provides lowcost loan financing to local agencies for public infrastructure projects.

The Industrial Development Revenue Bond Program (IDB) which provides taxexempt revenue bond financing for eligible manufacturing companies.

The 501(c)(3) Revenue Bond Program which offers tax-exempt revenue bond
financing for certain nonprofit, public benefit corporations.

The State School Fund Apportionment Lease Revenue Bond Program which
offers tax-exempt revenue bond financing for school districts needing emergency
apportionment loans.

The Public Agency Revenue Bond Program which provides tax-exempt revenue
bond financing for governmental entities.

The Infrastructure Guarantee Program which guarantees bonds issued by other
governmental entities.
Purpose of AB 893: According to the author’s office this measure is intended to enhance
the I-Bank’s outreach to small and rural communities, which often are ill-equipped to
pursue infrastructure and economic development investments. Improved outreach will
ensure that communities that often most need economic development assistance get the
support they need. AB 893 also enhances the reporting requirements of the I-Bank,
supporting improved accountability.
Assembly Jobs, Economic Development and the Economy Oversight Hearing: the
author’s office notes that with California workers and businesses facing some of the
harshest economic conditions since the Great Depression, the Chairman of the Assembly
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Jobs, Economic Development and the Economy (JEDE) Committee has focused the
Committee's efforts during the prior and current legislative session on engaging the
public in the recovery dialogue. Through these events JEDE has found that one of
California's challenges in moving forward is the state's aging infrastructure and its
inability to support the innovation economy that is fundamental to retaining the state's
global competitiveness. In fact, research shows that California's historical position as a
leader in innovation and technology is being challenged not only from abroad, but also by
other states that are investing in a range of infrastructure and technology supporting
activities.
On March 30, 2011, the JEDE Committee held an oversight hearing to examine how
infrastructure development impacted local, state and federal economic recovery efforts
and California's economic position in a post-recession economy. Following the hearing,
JEDE released a preliminary list of recommendations to better align the authorities of the
I-Bank with the state's current and future infrastructure needs. The committee’s
recommendations have been included in the following four bills: AB 700 (Blumenfield);
AB 696 (Hueso); AB 893 (V. Manuel Pérez) and AB 1094 (John A. Pérez).
PRIOR/RELATED LEGISLATION
SB 727 (Berryhill) of 2011-12 Session. Would have removed the requirement that
public works financed under the I-Bank comply with the prevailing wage requirements.
(Held in Senate Labor and Industrial Relations Committee)
AB 696 (Hueso) 2011-12 Session. Would direct the I-Bank to establish a methodology
for determining the economic benefits of projects under consideration and, as of January
1, 2013, restricts the I-Bank to approve only those projects that provide economic
benefits and meet land use criteria. (Pending in Senate Governance & Finance)
AB 700 (Blumenfield) 2011-12 Session. Would require the I-Bank to adopt two-year
goals and measurable objectives, consistent with state infrastructure, economic
development and environmental plans and authorizes the I-Bank to pursue streamlined
administrative functions. (Pending in Senate Governance & Finance)
AB 1094 (John A. Pérez) 2011-12 Session. Would establish the I-Bank as the primary
state agency to secure funding through any federal infrastructure financing authority, and
expands the I-Bank’s board from five to seven members. (Pending in Senate Rules)
AB 1047 (Perez) of 2009-10 Session. Would have established a new program within the
I-Bank that would use bond proceeds to assist small and rural communities to obtain
bond financing for infrastructure projects. The technical support could include drafting
of strategic plans, writing grants, applying for public and private loans and obtaining
funding for infrastructure projects. (Held on the Assembly Appropriations Committee
Suspense File)
AB 1272 (Arambula) of 2009-10 Session. Would have established a new program
within the I-Bank that would use bond proceeds to assist small and rural communities to
obtain bond financing for infrastructure projects. (Held on the Assembly
Appropriations Committee Suspense File)
AB 893 (V. Manuel Perez) continued
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AB 1855 (Maze) Chapter 189, Statutes of 2004. Required the I-Bank to notify the
Governor and the appropriate fiscal and policy committees of the Legislature when
changes are made to criteria, priorities and guidelines for project selection.
AB 922 (Maze) of 2003-04 Session. Would have codified existing criteria, priorities and
guidelines adopted by the I-Bank’s board of directors for the selection of projects that
receive Infrastructure State Revolving Fund Program financing from the Bank.
AB 112 (Longville) 2001-02 Session. Would have included the acquisition of sensitive
“wildlife habitat” as an eligible project for I-Bank financing. (Held in Senate
Appropriations Committee)
AB 31 (Reyes) Chapter 746 of 2001. Established, until 1/1/07, the Central Valley
Infrastructure Grant Program for the purpose of providing grants, for qualifying projects
to rural “small” cities in the Counties of Fresno, Kings, Kern, Madera, Merced,
Stanislaus, San Joaquin and Tulare.
SB 975 (Alarcon) Chapter 938 of 2001. Clarified that all public works projects
financed through the I-Bank’s issuance of industrial development bonds must comply
with certain laws applicable to payment of “prevailing wages.”
SCA 4 (Johannessen) 2001-02 Session. Would have created the California 21st Century
Infrastructure Investment Fund for the purpose of funding capital outlay projects. (Held
in Senate Appropriations)
SB 1758 (Peace) Chapter 1079, Statutes of 2000. Modified the definition of public
development facilities for purposes of the I-Bank Act, to include property that is related
to providing “water supply” services.
SB 808 (Peace) Chapter 936, Statutes of 1999. Revised the definition of
“communication” facilities for purposes of the I-Bank Act, to include electric and gas
facilities.
SUPPORT: As of June 24, 2011:
California Association for Local Economic Development
California Chamber of Commerce
CDC Small Business Finance
Northern California Small Business Development Center Program
Inland Empire Economic Partnership
UC Merced Small Business Development Center Regional Network
Yuba-Sutter Economic Development Corporation
OPPOSE: None on file as of June 24, 2011.
FISCAL COMMITTEE: Senate Appropriations Committee