AB 1447 — Assembly Committee on Jobs, Economic Development, and the Economy (Date of Hearing: April 27, 2021)
Summary
Analysis of AB 1447 (Cooley and Bigelow) for the April 27, 2021 hearing of the Assembly Committee on Jobs, Economic Development, and the Economy, Sabrina Cervantes, Chair. The subject is The Rural California Infrastructure Act. It states that the bill establishes the Act for the purpose of awarding $1 billion in grants to local agencies for rural infrastructure projects, including fairground maintenance, disaster preparedness, and highway or street maintenance or repair, and establishes the seven-member Rural California Infrastructure Committee. The policy analysis includes a recommendation to transfer administration of the bill to the California Infrastructure and Economic Development Bank (IBank). Registered support lists the California State Association of Counties.
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AB 1447
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Date of Hearing: April 27, 2021
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT, AND THE ECONOMY
Sabrina Cervantes, Chair
AB 1447 (Cooley and Bigelow) – As Introduced February 19, 2021
SUBJECT: The Rural California Infrastructure Act
POLICY FRAME: According to the California Department of Forestry and Fire Protections the 2020
Fire Season was among the most severe in the nation’s history. The 2020 Fire Siege, alone, claimed the
lives of 28 civilians and three firefighters, destroyed 9,248 structures and consumed 4.2 million acres.
Watersheds were eradicated, communities decimated, and the quality of life for 40 million Californians
temporarily diminished.
This all occurring at a time when rural community resources were strained under the need to provide
enhanced services during the COVID-19 pandemic. AB 1447 establishes the Rural California
Infrastructure Act which appropriates $1 billion in funds for grants to special districts, independent fire
districts, or local governments in counties with populations less than 300,000 for rural infrastructure
projects, including fairground maintenance, disaster preparedness, highway or street repairs, and the
rehabilitation of historic and cultural sites that serve as the foundation for local economic development
activities.
AB 1447 was initially heard in the Assembly Committee on Emergency Management, where the policies
related to emergency preparedness, response, and recovery were addressed. The policy analysis focuses
on infrastructure finance and a recommendation to transfer the administration of the bill to the California
Infrastructure and Economic Development Bank (IBank). There is no known opposition to the bill.
Suggested amendments are outlined in Comment 5.
SUMMARY: AB 1447 establishes the Rural California Infrastructure Act for the purpose of awarding $1
billion in grants to local agencies for rural infrastructure projects, including fairground maintenance,
disaster preparedness, highway or street maintenance or repair, and historic or cultural preservation or
repair. Specifically, this bill:
1) Establishes the seven-member Rural California Infrastructure Committee, who are appointed as
follows:
a) One member appointed by the Governor.
b) One member appointed by the Speaker of the Assembly.
c) One member appointed by the Speaker Pro Tempore of the Senate.
d) Two members appointed by the California State Association of Counties who serve as
representatives of that association. One member shall be a representative from Northern California
and one member shall be a representative from Southern California.
e) Two members appointed by the League of California Cities who serve as representatives of that
association. One member shall be a representative from northern California, and one member shall
be a representative from southern California.
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2) Specifies that every member of the Rural California Infrastructure Committee serves a two-year term,
the appointing power has the authority to remove any member of the board from office for neglect of
any duty required by law or for incompetency or unprofessional or dishonorable conduct.
3) Limits per diem and expenses to those that are necessary to carry out their duties on the committee.
4) Requires the Rural California Infrastructure Committee to establish, by July 1, 2022, an application
process for local agencies to apply for grants to fund rural infrastructure projects.
a) Defines a “local agency” to mean a special district, independent fire district, or county, with a
population of less than 300,000 individuals according to the 2020 census data.
b) Defines a “Rural infrastructure project” to mean a project in a local agency’s jurisdiction related to
any of the following:
i) Fairground maintenance.
ii) Disaster preparedness, including creating or maintaining evacuation or shelter areas for
emergency evacuations.
iii) Highway or street maintenance or repair.
iv) Historic or cultural preservation or repair.
5) Requires the Rural California Infrastructure Committee, beginning January 1, 2023, and every two
years thereafter, to award grants to fund rural infrastructure projects to local agencies that complete
the application process.
6) Requires the Rural California Infrastructure Committee to prioritize applications for projects that are
considered shovel ready, as determined by the committee.
7) Authorizes local agencies that are awarded a grant to additionally leverage federal, private funding, or
private-public partnerships to complete the rural infrastructure project the grant was awarded for.
8) Authorizes the Rural California Infrastructure Committee to adopt regulations necessary to carry out
the purposes of this chapter in accordance with the Administrative Procedure Act, as specified.
9) Establishes at the State Treasury the Rural California Infrastructure Fund. Money in the fund is
continuously appropriated without regard to fiscal years for purposes of this chapter. On January 1,
2022, the California State Controller is directed to transfer $1 billion to the Rural California
Infrastructure Fund.
EXISTING LAW:
1) Establishes the IBank within the Governor's Office of Business and Economic Development (GO-Biz)
and authorizes it to undertake a variety of infrastructure related financial activities including, but not
limited to, the administration of the Infrastructure State Revolving Loan Fund (ISRF), oversight of the
Small Business Finance Center, and the issuance of tax-exempt and taxable revenue bonds.
2) Authorizes the IBank to provide financing for economic development facilities by:
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a) Issuing taxable revenue bonds, as specified, to provide financing for economic development
projects. Financed projects are required to be compatible with the public interest, which is defined
as having the project be located in California, those seeking funds are capable of meeting
obligations incurred under the agreement, and in the case of loans or bonds, the amount of the
payments are adequate to pay the related expenses of the IBank.
b) Issuing taxable revenue bonds, as specified, to provide financing for the revolving loan funds and
economic development projects of small business development corporations, local economic
development corporations, community development corporations, and nonprofit organizations in
which revolving loan funds and economic development projects shall be compatible with the
public interest.
c) Issuing tax-exempt revenue bonds, as specified, to provide financing for economic development
facilities as permissible under federal law and in accordance with applicable California law
relating to the distribution of state allocations for private activity bonds. Financed projects are
required to be compatible with the public interest, which is defined as having the project be
located in California, those seeking funds being capable of meeting obligations incurred under the
agreement, and in the case of loans or bonds, the amount of the payments are adequate to pay the
related expenses of the IBank.
d) Issuing tax-exempt revenue bonds, as specified, for economic development facilities of public
sector and nonprofit organizations qualifying for exemption under federal law.
3) Defines an “economic development facility” to mean real and personal property, structures, buildings,
equipment, and supporting components thereof that are used to provide industrial, recreational,
research, commercial, utility, goods movement, or service enterprise facilities, community,
educational, cultural, or social welfare facilities and any parts or combinations thereof, and all
facilities or infrastructure necessary or desirable in connection therewith including provision for
working capital, excluding housing.
4) Defines a “project” to mean designing, acquiring, planning, permitting, entitling, constructing,
improving, extending, restoring, financing, and generally developing public development facilities or
economic development facilities within the state. These projects may be funded through the ISRF.
Projects for the purpose of financing transition costs or the acquisition of transition property, or both,
may be funded through a financing order by the Public Utilities Commission, as specified.
5) Defines a “public development facility” for the purpose of IBank financing, including the ISRF, to
mean real and personal property, structures, conveyances, equipment, thoroughfares, buildings, and
supporting components thereof, excluding any housing, that are directly related to providing the
following:
a) City streets, county highways, and state highways, as specified;
b) Drainage, water supply, and flood control, as specified;
c) Sewage collection and treatment, as specified;
d) Solid waste collection and disposal including, but not limited to, vehicles, transfer stations,
recycling centers, sanitary landfills, and waste conversion facilities;
e) Water treatment and distribution; as specified;
f) Educational facilities including libraries, child care facilities, and employment training facilities;
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g) Environmental mitigation measures, as specified;
h) Public safety facilities including, but not limited to, police stations, fire stations, court buildings,
jails, juvenile halls, and juvenile detention facilities;
i) Parks and recreational facilities, as specified;
j) Port facilities including, but not limited to, airports, land ports, water ports, rail ports, docks,
harbors, ports of entry, piers, ships, and marinas, as specified;
k) Power and communications including facilities for the transmission or distribution of electrical
energy, natural gas, and telephone and telecommunications service.
l) Public transit, including, but not limited to, air and rail transport, airports, passenger stations,
maintenance and storage yards, and related structures, as specified;
m) Defense conversion including, but not limited to, facilities necessary for successfully converting
military bases consistent with an adopted base reuse plan;
n) Military infrastructure, including, but not limited to, facilities on or near a military installation,
that enhance the military operations and mission of one or more military installations in this state;
and
o) Goods movement-related infrastructure including, but not limited to, port facilities, roads, rail, and
other facilities and projects that move goods, energy, and information.
p) Housing-related infrastructure including city streets; drainage, water supply, and flood control;
environmental mitigation measures; power and communications; public transit improvement that
directly supports transit-oriented housing; sewage collection and treatment; and water treatment
and distribution.
FISCAL EFFECT: Unknown
COMMENTS & CONTEXT:
1) Background on the IBank: The IBank was established in 1994 to finance public infrastructure and
private development that promotes a healthy climate for jobs, contributes to a strong economy, and
improves the quality of life in California communities. Housed within GO-Biz, it is governed by a
five-member board of directors comprised of the Director of GO-Biz (chair), the State Treasurer, the
Director of the Department of Finance, the Secretary of the Transportation Agency, and an appointee
of the Governor. The day-to-day operations of the IBank are directed by the Executive Director who
is an appointee of the Governor and is subject to confirmation by the California State Senate.
The IBank is essentially self-funded receiving minimal General Fund support. The IBank uses the
fees, interest income and other revenues that derive from its public and private sector financing
activities, as the foundation of its operations budget. State contracts to small business financial
development corporations (FDCs) are supported through an annual General Fund appropriation of $1
to $2 million.
The IBank administers five core programs:
The Infrastructure State Revolving Fund (ISRF), which provides direct low-cost financing for
public infrastructure projects and economic development facilities.
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The Bond Financing Program, which provides tax-exempt and taxable bond financing for
manufacturing companies, public benefit nonprofit organizations, public agencies and other
eligible entities.
The California Small Business Finance Center, which assists small businesses access private
financing through loan guarantees, direct loans, and performance bond guarantees.
The California Lending for Energy and Environmental Needs Center or CLEEN Center, which
provides financing for environment-related projects to municipal governments, public universities,
schools, and hospitals (MUSH).
The Climate Catalyst Revolving Loan Fund, which is available to receive funds from non-state
governmental entities and private sources for the purpose of financing climate catalyst projects
that further the state’s climate goals. Operationally, the Strategic Growth Council sets the non-
financial program requirements and the IBank serves as the bank. Categories of projects are set by
the Legislature in consultation with the Strategic Growth Council.
Since its inception, the IBank has loaned, financed, or participated in over $40 billion in infrastructure
and economic expansion projects, including $434.8 million in industrial development bonds. This
includes over $822 million to local and state agencies, developing a high-level of expertise in the
financing of public infrastructure.
The IBank also serves as the state's only general-purpose financing authority with broad statutory
powers to issue revenue bonds, make loans, and provide guarantees. There is no pledge of IBank or
state general funds for any of the conduit revenue bonds. Over $8 billion in conduit revenue bonds
have been issued by the IBank since 2015 including $2 billion in green and clean water projects.
The IBank estimated that, since its inception, it has supported the creation and retention of over
462,000 jobs. This includes over 23,000 from the ISRF program, 41,000 from bond financing
activities, and 398,000 through the Small Business Finance Center.
2) Highlights from 2019-20 Annual Report: In November 2020, the IBank issued its annual report for
the 2019-20 fiscal year. Among other activities, the IBank issued more than $880 million through 10
bonds, including two green bonds. Even working remotely due to COVID-19, the IBank was able to
continue issuing bonds. The chart below summaries key aspects of the IBank’s activities in 2019-20.
2019-20 IBank Activities
Financing Financing Amount Amount
IBank Program Jobs(*) Leverage
Approved Closed Approved Closed
ISRF Loans 2 1 0 $24,300,000 $143,300,000 $0
CLEEN Loans 0 0 0 $0 $0 $0
Subtotals 2 1 0 $24,300,000 $14,300,000 0
Industrial Development Bonds 0 0 0 $0 $0 $0
501(c) (3) Bonds 10 9 845 $1,251,370,000 $607,967,259 $8,772,667
Public Agency Revenue Bonds 1 1 2,303 $350,000,000 $272,605,000 $0
Exempt Facility Bonds 1 0 0 $3,250,000,000 $0 $0
ISRF Program Bonds 0 0 0 $0 $0 $0
Subtotals 12 10 3148 $4,851,370,000 $880,572,259 $8,772,667
Fiscal Year Totals 14 11 3148 4,875,670,000 $894,872,259 $8,772,667
*Jobs include the total number full and part-time jobs, including constriction, as reported by borrowers.
Source: IBank 2019-20 Annual Report
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3) Expanding Role of the IBank: Given the flexibility of its financing capabilities, the IBank is playing
an increasing role in the state’s COVID-19 small business recovery efforts, and financer of an
expanding range of clean and green infrastructure and economic development projects. In 2020, the
Legislature approved several budget-related actions that will further expand the IBank’s scope and
capacity which include:
Climate Catalyst Revolving Loan Fund: Establishes a Climate Catalyst Revolving Loan Fund at
the IBank to receive funds from non-state governmental entities and private sources for the
purpose of making loans for climate catalyst projects that further the state’s climate goals. The
money is available for expenditure upon appropriation by the Legislature. The Strategic Growth
Council will advise the Legislature on categories to fund and a report on the projects funded
would be prepared annually.
Expanded and Flexible Debt Authority: Limits the total amount of rate reduction bonds and
bonds issued to finance public development facilities that may be outstanding at any one time to
$15 billion. Currently, the limit for rate reductions bonds is $10 billion, and the limit for bonds to
finance public development is $5 billion. This change does not increase the total authority, rather
it combines the limits allowing for more flexibility between the categories.
These authorities are in addition to the funding for California Rebuilding Fund, recapitalization for the
Small Business Loan Guarantee Program, and activation of the disaster loan guarantee program. In
2021-22, the Governor is proposing two additional programs, utilizing the newly authorized Climate
Catalyst Loan Fund:
Wildfire and Forest Resilience Package: The Governor is proposing $47 million in 2020-21, and
$2 million in 2021-22 as a part of a comprehensive package to increase the pace and scale of forest
health activities and reduce wildfire risk. This initiative is called Climate Catalyst Fund and
Wood Production Innovation, and $16 million was included in the $536 million wildfire
mitigation funding plan that legislative leadership and the Governor announced on April 8, 2021.
Climate Smart Agriculture: The Governor is proposing $50 million to support Climate Smart
Agriculture loans to advance projects that may include but are not limited to: methane reduction,
equipment replacement, water efficiency, healthy soils, circular economies, on-farm bioenergy,
energy efficiency for food processing, and renewable energy systems and energy storage for
agricultural operations.
At the federal level, the $2 trillion Biden Infrastructure Plan is anticipated to provide substantial new
infrastructure funds, including:
$621 billion on roads, bridges, public transit, rail, ports, waterways, airports, and electric vehicles
to improve air quality, reduce congestion, and limit greenhouse gas emissions;
$400 billion to bolster caregiving for aging and disabled Americans;
$300 billion toward boosting manufacturing, specifically semiconductor, medical, and clean
manufacturing;
$111 billion to rebuild water infrastructure and replace all of the nation's lead pipes and service
lines; and
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$100 billion in order to give every American access to affordable, reliable, and high-speed
broadband.
4) The Infrastructure State Revolving Fund: The ISRF provides financing to public entities,
nonprofit organizations, and private entities to assist in the development of a wide variety of
infrastructure and economic development projects. The ISRF Program funding is available in amounts
ranging from $50,000 to $25,000,000, with loan terms of up to 30 years.
Examples of eligible projects include, but are not limited to, drainage, water supply and flood control;
libraries and other educational facilities; environmental mitigation measures; sewage collection and
treatment; educational, cultural and social facilities; industrial, utility and commercial facilities;
military infrastructure and defense conversion; solid waste collection and disposal; water treatment
and distribution; and public safety facilities.
The ISRF has provided more than $720 billion in loans to state and local governmental entities to
support the development of economic and public development facilitates since 1999. Every year, the
ISRF participates in a series of Funding Fairs with other state and federal infrastructure development
programs. At these Funding Fairs, project sponsors are providing briefings of current funding
opportunities and have an opportunity to meet one-on-one with participating programs to discuss their
specific economic and public development facility projects. In addition, the IBank offers technical
support throughout the application and approval process.
In 2019-20, The ISRF approved two projects for $24.3 million in loans for infrastructure and
economic expansion projects.
Here are examples from a busier year. In 2016-17, the ISRF financed $86.6 million in projects, which
were estimated to result in 1,600 new jobs- with 1,500 gained in the construction phase, and the ISRF
leveraged an additional $35.4 million in other funds. Among other projects financed during 2016-17,
the IBank assisted the City of Half Moon Bay with a $5.6 million loan with a 3.44% interest rate to
construct a new pump station, install new pipeline, and replace or renovate existing pipelines. The
City of Santa Cruz received a $25 million loan with a 3.24% interest rate to support the replacement
and upgrade of its water treatment facilities, which leveraged $6.9 million of other dollars.
The ISRF Program operates as a “leveraged loan program,” which means its funding is derived
through the issuance of revenue bonds secured by the repayments received from approved ISRF
Program Financings. The IBank has issued several series of tax-exempt revenue bonds to provide
additional ISRF Program financing. Since inception, the IBank has issued six rounds of tax-exempt
revenue bonds (2004, 2005, 2008, 2014, 2015, 2016) totaling $480,175,000. The ISRF bonds are
repaid solely from repayments received from ISRF borrowers and are neither backed nor guaranteed
by the state or other IBank funds.
5) Proposed Amendments: Below is a list of amendments the committee members may wish to review
when considering the bill.
a) Relocate the Program to the California Infrastructure and Economic Development Bank.
b) Authorize rather than require the establishment of the program. [All the IBank Programs are
drafted this way]
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c) Condition the implementation of the program on the IBank receiving funds, and the IBank board
adopting a resolution that there are sufficient funds to administer the program, including
appropriate administrative costs.
d) Add further detail to the definition of “rural infrastructure” by adding definitions for an economic
development facility, a public development facility, a disaster recovery project, and modifying the
definition of a disaster preparedness project to include fairgrounds.
e) Require no less than 70% of the funds to be used for rural infrastructure projects that address
disaster preparedness and recovery.
f) Modify the trigger date for beginning to accept applications from a specific date to it being within
six months of receiving sufficient funds to operate the program.
g) Require the IBank to administer at least one funding round within both the first and second year of
program implementation.
h) Authorize the IBank to utilize any IBank staff necessary to implement the program, as specified.
i) Authorize the IBank to administer the program through one of its other programs to the extent the
requirements of this Article are met.
j) Require grants to be awarded in a manner that ensures geographic equity.
k) Prohibit grant funds from being released until the local agency can demonstrate that it has the
capacity and the full funding to complete the project.
l) Allow the IBank to charge a fee to apply for a grant to cover some or all of its costs in
administering the program. These fees would be reduced or eliminated to the extent that state
funds are provided.
m) Add annual reporting requirements
6) Related Legislation: Below is a list of bills from the current and prior sessions.
a) AB 78 (Assembly Budget Committee) 2020 IBank Budget Actions: This bill established a
Climate Catalyst Revolving Loan Fund at the IBank to receive funds from non-state governmental
entities and private sources for the purpose of making loans for climate catalyst projects that
further the state’s climate goals, and these moneys are available for expenditure upon
appropriation by the Legislature. Additionally, the bill set a $15 billion cap on the total amount of
rate reduction bonds and bonds issued to finance public development facilities that may be
outstanding at any one time. This bill also authorized the IBank’s board to establish one or more
programs administered by the bank directly, in conjunction with financial companies or financial
institutions, in direct or indirect participation with special purpose entities established for small
business finance or under contract with small business financial development corporations.
Status: Signed by the Governor, Chapter 10, Statutes of 2020.
b) SB 45 (Portantino) Wildfire Prevention, Safe Drinking Water, Drought Preparation, and Flood
Protection Bond Act of 2022: This bill enacts the Wildfire Prevention, Safe Drinking Water,
Drought Preparation, and Flood Protection Bond Act of 2022, which places a $5.595 billion
general obligation bond before voters in the November, 2022, general election, for the purpose of
financing projects for wildfire prevention, safe drinking water, drought preparation, and flood
protection. Status: Pending in the Senate Committee on Appropriations.
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7) Double Referral: The Assembly Committee on Rules has referred this measure to the Assembly
Committee on Emergency Management (EM) and the Assembly Committee on Jobs, Economic
Development, and the Economy. This measure passed EM on a 6 to 0 vote.
REGISTERED SUPPORT / OPPOSITION:
Support
California State Association of Counties
Opposition
None on File
Analysis Prepared by: Toni Symonds / J., E.D., & E. / (916) 319-2090
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