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AB-1553 Economic development: Capital Access Loan Program.(2017-2018)

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Date Published: 10/10/2017 09:00 PM
AB1553:v93#DOCUMENT

Assembly Bill No. 1553
CHAPTER 644

An act to amend Sections 44548 and 44559.13 of the Health and Safety Code, relating to economic development, and making an appropriation therefor.

[ Approved by Governor  October 10, 2017. Filed with Secretary of State  October 10, 2017. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 1553, Cervantes. Economic development: Capital Access Loan Program.
Existing law establishes the Capital Access Loan Program to assist small businesses in financing the costs of complying with environmental mandates and the remediation of contamination on their properties, as specified. Existing law establishes within the program the California Americans with Disabilities Small Business Capital Access Loan Program (ADA 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 requires moneys in the ADA program fund, which is continuously appropriated, to be used for contributions in support of qualified loans, costs to educate the small business community and participating lenders about the program, and administrative expenditures, as specified. Existing law, for the purposes of the ADA program, defines a small business as a business that has less than $1,000,000 in total gross annual income and meets other requirements. Under existing law, the California Pollution Control Financing Authority administers these programs and is authorized to establish small business assistance funds for certain purposes, including, among others, funding the programs.
This bill would authorize the use of moneys in the ADA program fund for direct payments to borrowers enrolling loans. The ADA program, as specified, would require the authority to adopt related regulations and would allow small business assistance funds to include nonreimbursable payments made directly to borrowers in furtherance of the ADA program, as specified, administered by the authority as part of the Capital Access Loan Program. This bill would expand the definition of small business for the purposes of the ADA program to include businesses with less than $5,000,000 in total gross annual income, thereby expanding the types of businesses that qualify for funding under the ADA program. By expanding the authorized uses of moneys in a continuously appropriated fund, the bill would make an appropriation. The bill would rename the ADA program the California Americans with Disabilities Act Small Business Capital Access Loan Program.
Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 44548 of the Health and Safety Code is amended to read:

44548.
 (a) (1) Subject to any prior contractual obligations to any of its bondholders, the authority may establish one or more small business assistance funds in order to do any of the following:
(A) Assist small businesses to achieve financing of pollution control facilities.
(B) Assist with the financing of the costs of, among other things, assessment, remedial planning and reporting, technical assistance, cleanup, remediation, and development of brownfield sites, and with other similar or related costs, by providing loans pursuant to subdivision (h) of Section 44526.
(C) Fund a capital access program for small businesses pursuant to Article 8 (commencing with Section 44559), including nonreimbursable payments made directly to borrowers in furtherance of the program described in Section 44559.13.
(2) For the purpose of establishing and maintaining small business assistance funds as it determines to be necessary or desirable to secure its bonds or any issuance thereof or for other authorized purposes, the authority, pursuant to its contracts with participating parties, may levy fees or other charges on, or require deposits from, participating parties receiving financing for a project under this division. The total amount of these fees, charges, and deposits with respect to a single issue of bonds shall not exceed 3 percent of the principal amount of that issue of bonds.
(3) Before levying any fees or charges or requiring deposits, the authority shall adopt regulations for the operation of the small business assistance funds, the amounts and any payment schedule for the fees, charges, or deposits, eligibility standards for small businesses desiring to use or benefit from the small business assistance funds, and any other matters the authority determines to be necessary for the establishment and maintenance of small business assistance funds. The regulations may provide for differential fees from participating parties based upon the size of a project financed by the authority or other factors determined to be relevant by the authority, and the regulations may restrict any benefits to those eligible small businesses specified in the regulations.
(4) The authority may transfer any funds available to it or set aside for its administrative expenses to any small business assistance fund established under this section.
(b) (1) The forms of financial assistance that the authority may provide under this section include, but are not limited to, all of the following:
(A) Payments to reduce, but not eliminate, the interest rate on loans.
(B) Payments of part or all of the cost of acquiring letters of credit.
(C) Payments of part or all of the cost of acquiring insurance.
(D) Payments of part or all of the cost of acquiring guarantees.
(E) Payments of part or all of the cost of acquiring other forms of credit support.
(F) Payments of part or all of the authority’s expenses in issuing revenue bonds or providing other assistance.
(G) Nonreimbursable payments made directly to borrowers in furtherance of the program described in Section 44559.13 and administered pursuant to Article 8 (commencing with Section 44559).
(2) The authority may also pledge any small business assistance fund, on an individual or pooled basis, to repay, directly or indirectly, the principal of, or interest or premium on, any issue of bonds of the authority or any loan made or acquired pursuant to this section.
(3) The authority may also use moneys in a small business assistance fund to assist in the financing of the costs of assessment of, remedial planning and reporting for, technical assistance for, and the cleanup, remediation, or development of, brownfield sites, and of other similar or related costs, by providing loans, pursuant to, and under the terms permitted by, subdivision (h) of Section 44526.
(4) In addition to other purposes set forth in this section, the authority may use moneys in a small business assistance fund to make or acquire loans or guarantee commercial loans to participating parties eligible for assistance from those funds.
(5) Any moneys repaid or returned to the authority in connection with or as a result of any loan or financial assistance made pursuant to this section shall be deposited in the small business assistance fund from which the loan or assistance was originally provided.
(6) The authority may contract with qualified financial institutions, including, but not limited to, banks, investment and mortgage bankers, insurance companies, sureties, and guarantors, to provide any necessary assistance in the granting of credit for these purposes.
(c) Each small business assistance fund established pursuant to this section shall be deposited in a special account that the Controller shall create. Notwithstanding any other law, and subject to any requirements of federal tax law or regulations relative to maintaining the tax-exempt status of the obligations of the authority, all interest or other gains earned by investment or deposit of money in the special account pursuant to any provision of Part 2 (commencing with Section 16300) of Division 4 of Title 2 of the Government Code or pursuant to any other provision of law shall be credited to, and deposited in, the account.
(d) In carrying out this section, the authority shall participate with the air pollution control districts and air quality management districts in providing financial assistance in its lending programs.

SEC. 2.

 Section 44559.13 of the Health and Safety Code is amended to read:

44559.13.
 (a) It is the intent of the Legislature in this act to create and fund the California Americans with Disabilities Act Small Business Capital Access Loan Program to assist small businesses in complying with the Americans with Disabilities Act. It is not the intent of the Legislature to assist the physical expansion of small businesses that includes modifications that comply with the Americans with Disabilities Act. 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 with the additional program requirements specified under this section.
(b) For purposes of this section, unless the context requires otherwise, the following words and terms shall have the following meanings:
(1) “Americans with Disabilities Act” means the federal Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12101 et seq.) and amendments thereto.
(2) “California Americans with Disabilities Act Small Business Capital Access Loan Program Fund” or “fund” means a fund established and administered by the authority pursuant to Sections 44548 and 44549 to be used for purposes of this program.
(3) “Eligible cost” means and includes all or any part of the price of construction, purchase price of real or personal property, the price of demolishing or removing any buildings or structures, the price of all machinery and equipment, the amount of financing charges and interest before, during, and for a period not to exceed the later of one year or one year following completion of construction, as determined by the authority, the price of insurance during construction, the amount of funding or financing noncapital expenses, the amount of reserves for principal and interest and for extensions, enlargements, additions, replacements, renovations, and improvements, the price of engineering, financial, and legal services and other service contracts, the price of plans, specifications, studies, surveys, estimates, administrative expenses, and any other expenses of funding or financing, that are necessary and allocable to the eligible project, and shall not include costs not directly related to physical alterations necessary for compliance with the Americans with Disabilities Act.
(4) “Eligible project” means the physical alterations or retrofits to an existing small business facility of less than 10,000 square feet necessary to ensure that facility is in compliance with the Americans with Disabilities Act, and the financing necessary to pay eligible costs of the project.
(5) “Qualified loan” means a loan or portion of a loan as defined in subdivision (j) of Section 44559.1, where the proceeds of the loan or portion of the loan are limited to the eligible costs for an eligible project under this program, and where the loan or portion of the loan does not exceed fifty thousand dollars ($50,000).
(6) “Small business” or “qualified business” means a business referred to in subdivisions (i) and (m) of Section 44559.1, that meets the following additional criteria:
(A) Fifteen or fewer full-time equivalent employees.
(B) Less than five million dollars ($5,000,000) in total gross annual income from all sources.
(C) Does not provide overnight accommodations.
(c) (1) The California Americans with Disabilities Act Small Business Capital Access Loan Program Fund is established in the State Treasury for, and shall be administered by the authority pursuant to Sections 44548 and 44549 for, this program. Notwithstanding Section 13340 of the Government Code, all money in the fund is 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.
(2) All moneys in the fund derived from any source shall be held in trust for the life of this program, subject to the program expenditures and costs of administering this section, as follows:
(A) Program expenditures shall include all of the following:
(i) Contributions paid by the authority in support of qualified loans.
(ii) Payments made to borrowers enrolling loans to participate in the program, to the extent that moneys other than the initial appropriation are deposited into the fund by the authority and are authorized for that use pursuant to paragraph (3) of subdivision (d).
(iii) Reasonable costs to educate the small business community and participating lenders about the program, including travel within the state.
(B) 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:
(i) Personnel costs.
(ii) Service and vending contracts necessary to carry out the program.
(iii) Other reasonable direct and indirect administrative costs.
(3) The authority may direct the 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. The authority may alternatively 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 Title 2 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 Title 2 of the Government Code, excepting the Surplus Money Investment Fund.
(d) The authority shall adopt regulations pursuant to subdivision (c) of Section 44520 to implement the program, including provisions specific to this program as described in this section and further including provisions to:
(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 small business upon enrollment of a qualified loan that the proceeds of the loan will be used for the eligible costs of an eligible project.
(3) Contribute an additional incentive from the fund for each loan enrolled for a qualified business located in a severely affected community, or make nonreimbursable payments from other moneys to participating borrowers to offset all or a portion of the reasonable costs of architectural inspections obtained from a person who is certified as an access specialist pursuant to the program described in Section 4459.5 of the Government Code.
(4) Restrict the enrollment of a qualified loan in any other Capital Access Loan Program for small business offered by the authority as long as funds are available for this program.
(5) Limit the term of loss coverage for each qualified loan to no more than five years.
(6) 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.