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AB-1547 State finance: financing authorities.(2017-2018)

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Date Published: 06/19/2018 04:00 AM
AB1547:v95#DOCUMENT

Amended  IN  Senate  June 18, 2018
Amended  IN  Senate  May 01, 2018
Amended  IN  Assembly  January 11, 2018
Amended  IN  Assembly  January 03, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 1547


Introduced by Assembly Member Quirk-Silva
(Principal coauthors: Assembly Members Berman, Cervantes, and Rodriguez)

February 17, 2017


An act to amend Sections 91504, 91529, 91560, 91561.3, and 91561.5 of, to amend and renumber the heading of Article 4 (commencing with Section 91560) of Chapter 1 of Title 10 of, to repeal Sections 91531, 91532, 91561, and 91562.5 of, to repeal Article 3 (commencing with Section 91550) of Chapter 1 of Title 10 of, and to repeal Article 5 (commencing with Section 91570) of Chapter 1 of Title 10 of, the Government Code, to amend Sections 44559.13 and 44559.14 of the Health and Safety Code, to amend Sections 26003 26003, 26011.8, and 26061 of the Public Resources Code, and to amend Section 6010.8 of the Revenue and Taxation Code, relating to state finance, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 1547, as amended, Quirk-Silva. State finance: financing authorities.
(1) Existing law, the California Industrial Development Financing Act, authorizes cities, counties, cities and counties, and redevelopment agencies to establish industrial development authorities that are authorized to issue industrial development bonds, the proceeds of which may be used to fund capital projects of private enterprise under terms and conditions specified in the act. The act authorizes an authority to issue tax-exempt bonds, and defines “tax-exempt” for these purposes to mean that the interest on the bonds is excluded from gross income of the holders thereof for federal income tax purposes. The act establishes the California Industrial Development Financing Advisory Commission, and requires the commission to approve the issuance of industrial development bonds pursuant to these provisions. The act also authorizes the commission to carry out other specified powers related to the issuance of industrial development bonds, including authorizing the commission to act as a bond pooling agent.
This bill would abolish the California Industrial Development Financing Advisory Commission, and would make conforming changes to that effect. The bill would also provide that “tax-exempt” for purposes of the act includes that the interest on the bonds is otherwise entitled to any federal tax advantage.
(2) 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. Existing law establishes the California Americans with Disabilities Act Small Business Capital Access Loan Program (ADA program), within the Capital Access Loan 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 defines a small business for purposes of the ADA program to mean a business that meets certain criteria, including that it be a small business concern, as defined under specified federal law, and additionally that it has 15 or fewer full-time employees, has less than $5,000,000 in total gross annual income from all sources, and does not provide overnight accommodations. Existing law establishes the California Americans with Disabilities Act Small Business Capital Access Loan Program Fund as a continuously appropriated fund, and requires the authority to use the fund for specified purposes related to the ADA program.
This bill would modify the definition of a small business for purposes of the ADA program to instead mean a business that is independently owned and operated and not dominant in its field, and that has 30 or fewer full-time employees or that has less than $5,000,000 in total gross annual income from all sources. The bill would thereby expand 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.
(3) Existing law establishes within the Capital Access Loan Program the California Seismic Safety Capital Access Loan Program to assist qualified residential property owners and qualified small business owners in seismically retrofitting qualified buildings by covering losses on qualified loans for those purposes. Existing law defines the term “qualified building” for these purposes to mean a building that is certified by the appropriate local building code enforcement authority as hazardous and in danger of collapse during an earthquake. Existing law requires a “qualified small business” and “qualified residential property owner” to own and occupy the qualified building, and prohibits a qualified loan under the program from being used to finance passive real estate ownership. Existing law requires the California Pollution Control Financing Authority to administer the program, including regulations and funds received for the program, as specified. Existing law establishes the California Seismic Safety Capital Access Loan Program Fund, which is continuously appropriated to the authority to carry out the purposes of the California Seismic Safety Capital Access Loan Program.
This bill would modify the term “qualified building” to mean a residential or commercial building identified by the local building code official as a building in need of seismic retrofitting and is either a building of a type that is potentially vulnerable in the event of a catastrophic earthquake or a building constructed before 1981. This bill would no longer require a “qualified small business” or a “qualified residential property owner” to occupy a qualified building in order to be eligible under the program, and would authorize a qualified loan under the program to be used to finance passive real estate ownership. By expanding the purposes of a continuously appropriated fund, this bill would make an appropriation.
(4) The California Alternative Energy and Advanced Transportation Financing Authority Act establishes the California Alternative Energy and Advanced Transportation Financing Authority (authority). The act authorizes the authority to provide financial assistance to a participating party for a project that utilizes, or is designed to utilize, alternative energy sources, or projects for the development and commercialization of advanced transportation technologies, as defined.
This bill would authorize the authority to additionally provide financial assistance to a participating party for a project that utilizes, or is designed to utilize, water efficiency measures.
(5) The act authorizes, until January 1, 2021, the authority to provide financial assistance in the form of a sales and use tax exclusion for projects, including those that promote California-based manufacturing, California-based jobs, the reduction of greenhouse gases, or the reduction in air and water pollution or energy consumption. The act prohibits the sales and use tax exclusions from exceeding $100,000,000 for each calendar year. The act authorizes the authority, until July 1, 2021, to grant financial assistance in the form of a sales and use tax exclusion for projects that promote the use of advanced manufacturing.
This bill would expand the sales and use tax exemption to include the lease or transfer of a tangible personal project, property, constituting any project, to any contractor for use in the performance of a construction contract that will use the property as an integral part of the approved project.
(6) Existing law requires the authority to establish a Property Assessed Clean Energy (PACE) Reserve program to reduce the overall costs to property owners of a Property Assessed Clean Energy Reserve bond, or PACE bond, issued by an applicant that has established a Property Assessed Clean Energy program, or PACE program, by providing a reserve of no more than 10% of the initial amount of the PACE bond. Existing law requires a PACE program to meet certain requirements in order to receive assistance under the PACE Reserve program, including that the program requires that the improvement financed is for a residential project of 3 units or fewer.
This bill would, instead, require a PACE program seeking assistance under the PACE Reserve program to require that the improvement financed be for a residential project of 4 units or fewer.
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 91504 of the Government Code is amended to read:

91504.
 Unless the context otherwise requires, the definitions in this article shall govern the construction of this title, as follows:
(a) “Acquire” and its variants means acquire, construct, improve, furnish, equip, repair, reconstruct, or rehabilitate.
(b) “Administration expenses” means the reasonable and necessary expenses incurred by an authority in the administration of this title, including, without limitation, fees and costs of paying agents, trustees, attorneys, consultants, and others.
(c) “Authority” means any industrial development authority established pursuant to this title.
(d) “Board” means the board of directors of an authority.
(e) “Bonds” means the revenue obligations, inclusive of principal (premium, if any) and interest authorized to be issued by any authority pursuant to this title, including a single bond, a promissory note or notes, including bond anticipation notes, or other instruments evidencing an indebtedness or obligation.
(f) “Bond proceeds” means all amounts received by an authority upon sale or other disposition of any bonds.
(g) “Company” means a person, partnership, corporation, whether for profit or not, limited liability company, trust, or other private enterprise of whatever legal form, for which a project is undertaken or proposed to be undertaken pursuant to this title or which is in possession of property owned by an authority, and may include more than a single enterprise.
(h) “Cost” as applied to any project, may embrace:
(1) The cost of construction, improvement, repair, rehabilitation, and reconstruction.
(2) The cost of acquisition, including rights in land and other property, both real and personal and improved and unimproved, and franchises, and disposal rights.
(3) The cost of demolishing, removing, or relocating any building or structures on lands so acquired, including the cost of acquiring any lands to which the buildings or structures may be moved or relocated.
(4) The cost of machinery, equipment and furnishings, of engineering and architectural surveys, plans, and specifications, and of transportation and storage until the facility is operational.
(5) The cost of agents or consultants, including, without limitation, legal, financial, engineering, accounting, and auditing, necessary or incident to a project and of the determination as to the feasibility or practicability of undertaking the project.
(6) The cost of issuance of any bonds and of financing, interest prior to, during, and for a reasonable period after completion of a project, and reserves for principal and interest and for extensions, enlargements, additions, repairs, replacements, renovations, rehabilitations, and improvements.
(7) The cost of acquiring or refinancing existing obligations incident to the undertaking and carrying out, including the financing, of a project, and the reimbursement to any governmental entity or agency, or any company, of expenditures made by or on behalf of the entity, agency, or company that are costs of the project hereunder, without regard to whether or not the expenditures may have been made before or after the adoption of a resolution of intention with respect to that project by an authority.
(8) The cost of making relocation assistance payments as provided by Chapter 16 (commencing with Section 7260) of Division 7 of Title 1.
(9) In the case only of taxable bonds, the cost of refunding or refinancing any outstanding debt or obligations with respect to any facilities, or the cost of any other working capital.
(10) Except as provided in paragraph (9), “cost” does not otherwise include working capital.
(i) “Facilities” mean property suitable for any one or more of the activities or uses described in Section 91503 and includes incidental facilities.
(j) “Governing body” means the board of supervisors, city council, or board of directors of a redevelopment agency, as the case may be.
(k)  “Indenture” means any mortgage, deed of trust, trust indenture, security agreement, or other instrument relating to establishing a lien or security interest in, or on, property, any pledge or other instrument relating to the possession of property, and any assignment or other instrument relating to establishing any right, title, or interest in, or related to, property, including the revenues therefrom, given by an authority to a corporate trustee, which may be any trust company or bank having the powers of a trust company within or without the state, or bondholder or agent, for the security of its bonds and the benefit of the bondholders.
(l) “Proceedings” means the actions taken by an authority in undertaking, carrying out, and completing a project, including, without limitation, the project agreements, indenture, bonds, and resolutions.
(m) “Project” means the acquisition, construction, improvement, repair, rehabilitation, and reconstruction of facilities and the acquisition and rehabilitation of machinery, equipment, and furnishings, and the acquisition of engineering and architectural surveys, plans, and specifications, and all other necessary and related capital expenditures by the issuance of bonds upon the application of and to be repaid by payments from a company for the purposes of this title.
(n) “Project agreements” means the agreements between an authority and a company respecting a project, and may include, without limitation, leases, subleases, options, and installment or other contracts of purchase or sale, loan, or guaranty agreements, notes, mortgages, deeds of trust, and security agreements.
(o) “Property” means any land, air rights, water rights, disposal rights, improvements, buildings or other structures, and any personal property, tangible or intangible, and includes, but is not limited to, machinery and equipment, whether or not in existence or under construction, and interests in any of the foregoing, or promissory notes or other obligations of any kind respecting such interests.
(p) “Public agency” means any county, city and county, city, or redevelopment agency.
(q) “Revenues” means all rents, purchase payments, and other income derived by an authority from, or with respect to, the sale, lease, or other voluntary or involuntary disposition of, or repayment of loans with respect to, property, bond proceeds, and any receipts derived from the deposit or investment of any such income or proceeds in any fund or account of an authority, but does not include receipts designated to cover administration expenses.
(r) “Tax-exempt” means, with respect to any bonds, that the interest on the bonds is excluded from gross income of the holders thereof for federal income tax purposes, or is otherwise entitled to any federal tax advantage.
(s) “Taxable” means, with respect to any bonds, that the bonds are not tax-exempt.

SEC. 2.

 Section 91529 of the Government Code is amended to read:

91529.
 Companies may apply for financing pursuant to this article by filing with an authority an application therefor which includes all of the following:
(a) Such financial, legal, and other information as is required by an authority.
(b) An estimate of the amount of bonds proposed to be issued, of the sources of amounts otherwise required for the project, and an itemization of the estimated cost and any other expenses which aggregate not less than the estimated amount of bonds.
(c) Sufficient other information as is necessary to the determinations required to be made by subdivision (c) of Section 91530.
An application may be amended, supplemented, or clarified from time to time, with any information that is required for the making of the determinations desired at the time, in accordance with procedures established by the authority.

SEC. 3.

 Section 91531 of the Government Code is repealed.

SEC. 4.

 Section 91532 of the Government Code is repealed.

SEC. 5.

 Article 3 (commencing with Section 91550) of Chapter 1 of Title 10 of the Government Code is repealed.

SEC. 6.

 The heading of Article 4 (commencing with Section 91560) of Chapter 1 of Title 10 of the Government Code is amended and renumbered to read:
Article  3. Small Business Financing

SEC. 7.

 Section 91560 of the Government Code is amended to read:

91560.
 (a) The Legislature finds and declares that small businesses may have difficulty establishing adequate security for bonds issued by an authority in their behalf; that establishing common reserve funds will help to provide reasonable security for these bonds and will help to make the authority’s services available to various small businesses that may be otherwise unable to use them.
(b) For the purpose of establishing and maintaining the common reserve funds it deems necessary or desirable to secure its bonds or any issuance thereof, an authority, pursuant to its project agreements with companies, may levy fees or other charges on, or require deposits from, companies receiving financing for projects under this title. Before levying any of these fees or charges or requiring deposits, an authority shall adopt regulations for the operation of the common reserve funds and governing the amounts and any payment schedule for the fees, charges, or deposits.
(c) Subject to any prior contractual obligations to any of its bondholders, an authority may establish one or more common reserve funds for any or all of its bonds. Each authority shall establish its liability limits of the common reserve fund with respect to any single issue of bonds issued by the authority.
(d) Each common reserve fund established pursuant to this section shall be deposited in a special account that shall be established by the Controller. Notwithstanding any other provision of law, all interest or other increment earned by investment or deposit of moneys in such an account pursuant to any provision of Part 2 (commencing with Section 16300) of Division 4 of Title 2 or pursuant to any other provision of law shall be credited to, and deposited in, the account.

SEC. 8.

 Section 91561 of the Government Code is repealed.

SEC. 9.

 Section 91561.3 of the Government Code is amended to read:

91561.3.
 Each local authority may enter into joint powers agreements with other local authorities to issue pooled bonds in response to small business loan requests.

SEC. 10.

 Section 91561.5 of the Government Code is amended to read:

91561.5.
 For purposes of this article, “small business” means small business as defined in Section 14837.

SEC. 11.

 Section 91562.5 of the Government Code is repealed.

91561.3.
 (a) Each local authority shall be empowered to enter into joint powers agreements with other local authorities to issue pooled bonds in response to small business loan requests after receiving commission approval, and pursuant to Section 11256.
(b) The commission shall be designated as the agency to administer such agreements pursuant to Section 6506.

SEC. 12.

 Article 5 (commencing with Section 91570) of Chapter 1 of Title 10 of the Government Code is repealed.

SEC. 13.

 Section 44559.13 of the Health and Safety Code, as amended by Section 2 of Chapter 644 of the Statutes of 2017, 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 that is independently owned and operated and not dominant in its field that meets both of the following additional criteria:
(A) It has 30 or fewer full-time equivalent employees, or it has less than five million dollars ($5,000,000) in total gross annual income from all sources.
(B) It 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.

SEC. 14.

 Section 44559.14 of the Health and Safety Code is amended to read:

44559.14.
 (a) (1) It is the intent of the Legislature in enacting the act adding this section to create and fund a program to assist residential property owners and small business owners in seismically retrofitting residences and small businesses with a priority on soft-story buildings and unreinforced brick and concrete buildings. It is not the intent of the Legislature to assist the physical expansion of small businesses and residences.
(2) The Legislature hereby establishes the California Seismic Safety Capital Access Loan Program. The program shall cover losses on qualified loans by participating lenders to qualified residential property owners or qualified small businesses for eligible projects, as specified under this section. The program shall be administered by the California Pollution Control Financing Authority and follow the terms and conditions for the Capital Access Loan Program 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) “Seismic retrofit construction” means alteration performed on or after January 1, 2017, of a qualified building or its components to substantially mitigate seismic damage. “Seismic retrofit construction” includes, but is not limited to, all of the following:
(A) Anchoring the structure to the foundation.
(B) Bracing cripple walls.
(C) Bracing hot water heaters.
(D) Installing automatic gas shutoff valves.
(E) Repairing or reinforcing the foundation to improve the integrity of the foundation against seismic damage.
(F) Anchoring fuel storage.
(G) Installing an earthquake-resistant bracing system for mobilehomes that are registered with the Department of Housing and Community Development.
(H) Strengthening a building’s lateral load resisting system.
(2) “Eligible costs” means the costs paid or incurred on or after January 1, 2017, for an eligible project, including any engineering or architectural design work necessary to permit or complete the eligible project less the amount of any grant provided by a public entity for the eligible project. “Eligible costs” do not include costs paid or incurred for any of the following:
(A) Maintenance, including abatement of deferred or inadequate maintenance, and correction of violations unrelated to the seismic retrofit construction.
(B) Repair, including repair of earthquake damage.
(C) Seismic retrofit construction required by local building codes as a result of addition, repair, building relocation, or change of use or occupancy.
(D) Other work or improvement required by local building or planning codes as a result of the intended seismic retrofit construction.
(E) Rent reductions or other associated compensation, compliance actions, or other related coordination involving the qualified residential property owner or qualified small business and any other party, including a tenant, insurer, or lender.
(F) Replacement of existing building components, including equipment, except as needed to complete the seismic retrofit construction.
(G) Bracing or securing nonpermanent building contents.
(H) The offset of costs, reimbursements, or other costs transferred from the qualified residential property owner or qualified small business to others.
(3) “Eligible project” means seismic retrofit construction that is necessary to ensure that the qualified building is capable of substantially mitigating seismic damage, and the financing necessary to pay eligible costs of the project.
(4) “Qualified building” means a residential or commercial building that is identified by the local building code official for the jurisdiction in which the building is located as a building in need of seismic retrofitting and is either a building of a type that is potentially vulnerable in the event of a catastrophic earthquake or a building constructed before 1981.
(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 two hundred fifty thousand dollars ($250,000).
(6) “Qualified small business” means a business referred to in subdivisions (i) and (m) of Section 44559.1 that owns a qualified building regardless of owner occupancy, notwithstanding the restriction on passive real estate ownership in subparagraph (B) of paragraph (2) of subdivision (j) of Section 44559.1.
(7) “Qualified residential property owner” means either an owner of a residential building that is a qualified building or a qualified small business that owns one or more residential buildings, including a multiunit housing building, that is a qualified building, notwithstanding the restriction on passive real estate ownership in subparagraph (B) of paragraph (2) of subdivision (j) of Section 44559.1.
(c) (1) The California Seismic Safety Capital Access Loan Program Fund is established in the State Treasury and shall be administered by the authority pursuant to Sections 44548 and 44549 for this program. For purposes of this section, the references in Sections 44548 and 44549 to “small business” shall include “qualified residential property owner,” as defined in this section. Notwithstanding Section 13340 of the Government Code, all moneys in the fund are continuously appropriated to the authority for carrying out 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, for program expenditures and costs of administering this section, as follows:
(A) Program expenditures shall include both of the following:
(i) Contributions paid by the authority in support of qualified loans.
(ii) Costs for a qualified expert to validate that the proceeds of the loans are eligible costs, as defined under this section.
(iii) Reasonable costs to educate the small business community, residential property owners, 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, other than program expenditures described in subparagraph (A), that are 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 Section 44520 to implement the program, including, but not limited to, 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 qualified small business or qualified residential property owner 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 small business or qualified residential property owner located in a severely affected community.
(4) Restrict the enrollment of a qualified loan in any other Capital Access Loan Program for a qualified small business or qualified residential property owner 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 10 years.
(6) Recapture from the loss reserve account the authority’s contribution for each enrolled loan upon the maturation of that loan or after 10 years from the date of enrollment, whichever happens first, to be deposited in the fund and applied to future program and administrative expenditures.
(e) The authority may adopt regulations relating to residential property owner or small business financing as emergency regulations in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. For purposes of that Chapter 3.5, including Section 11349.6 of the Government Code, the adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, and general welfare. The regulations shall be repealed 180 days after their effective date, unless the adopting authority or agency complies with that Chapter 3.5.

SEC. 15.

 Section 26003 of the Public Resources Code, as amended by Section 257 of Chapter 86 of the Statutes of 2016, is amended to read:

26003.
 (a) As used in this division, unless the context otherwise requires:
(1) (A) “Advanced manufacturing” means manufacturing processes that improve existing or create entirely new materials, products, and processes through the use of science, engineering, or information technologies, high-precision tools and methods, a high-performance workforce, and innovative business or organizational models utilizing any of the following technology areas:
(i) Microelectronics and nanoelectronics, including semiconductors.
(ii) Advanced materials.
(iii) Integrated computational materials engineering.
(iv) Nanotechnology.
(v) Additive manufacturing.
(vi) Industrial biotechnology.
(B) “Advanced manufacturing” includes any of the following:
(i) Systems that result from substantive advancement, whether incremental or breakthrough, beyond the current industry standard, in the production of materials and products. These advancements include improvements in manufacturing processes and systems that are often referred to as “smart” or “intelligent” manufacturing systems, which integrate computational predictability and operational efficiency.
(ii) (I) Sustainable manufacturing systems and manufacturing technologies that minimize the use of resources while maintaining or improving cost and performance.
(II) Sustainable manufacturing systems and manufacturing technologies do not include those required to be undertaken pursuant to state or federal law or regulations, air district rules or regulations, memoranda of understanding with a governmental entity, or legally binding agreements or documents. The State Air Resources Board shall advise the authority to ensure that the requirements of this clause are met.
(2) (A) “Advanced transportation technologies” means emerging commercially competitive transportation-related technologies identified by the authority as capable of creating long-term, high-value-added jobs for Californians while enhancing the state’s commitment to energy conservation, pollution and greenhouse gas emissions reduction, and transportation efficiency.
(B) “Advanced transportation technologies” does not include those projects required to be undertaken pursuant to state or federal law or regulations, air district rules or regulations, memoranda of understanding with a governmental entity, or legally binding agreements or documents. The State Air Resources Board shall advise the authority regarding projects that are excluded pursuant to this subparagraph.
(3) (A) “Alternative sources” means devices or technologies used for a renewable electrical generation facility, as defined in paragraph (1) of subdivision (a) of Section 25741, a combined heat and power system, as defined in Section 2840.2 of the Public Utilities Code, distributed generation and energy storage technologies eligible under the self-generation incentive program pursuant to Section 379.6 of the Public Utilities Code, as determined by the Public Utilities Commission, or a facility designed for the production of renewable fuels, the efficient use of which reduces the use of fossil or nuclear fuels, and energy efficiency devices or technologies that reduce the need for new electric generation and reduce emissions of toxic and criteria pollutants and greenhouse gases.
(B) “Alternative sources” does not include a hydroelectric facility that does not meet state laws pertaining to the control, appropriation, use, and distribution of water, including, but not limited to, the obtaining of applicable licenses and permits.
(4) “Authority” means the California Alternative Energy and Advanced Transportation Financing Authority established pursuant to Section 26004, and any board, commission, department, or officer succeeding to the functions of the authority, or to which the powers conferred upon the authority by this division shall be given.
(5) “Cost” as applied to a project or portion of the project financed under this division means all or part of the cost of construction and acquisition of all lands, structures, real or personal property or an interest in the real or personal property, rights, rights-of-way, franchises, easements, and interests acquired or used for a project; the cost of demolishing or removing any buildings or structures on land so acquired, including the cost of acquiring any lands to which those buildings or structures may be moved; the cost of all machinery, equipment, and furnishings, financing charges, interest prior to, during, and for a period after, completion of construction as determined by the authority; provisions for working capital; reserves for principal and interest and for extensions, enlargements, additions, replacements, renovations, and improvements; the cost of architectural, engineering, financial, accounting, auditing and legal services, plans, specifications, estimates, administrative expenses, and other expenses necessary or incidental to determining the feasibility of constructing any project or incidental to the construction, acquisition, or financing of a project.
(6) “Financial assistance” includes, but is not limited to, loans, loan loss reserves, interest rate reductions, proceeds of bonds issued by the authority, bond insurance, loan guarantees or other credit enhancements or liquidity facilities, contributions of money, or a combination thereof, as determined by, and approved by the resolution of, the board.
(7) (A) “Participating party” means a person, federal or state agency, department, board, authority, or commission, state or community college, or university, or a city or county, regional agency, public district, school district, or other political entity engaged in the business or operations in the state, whether organized for profit or not for profit, that applies for financial assistance from the authority for the purpose of implementing a project.
(B) (i) For purposes of Section 6010.8 of the Revenue and Taxation Code, “participating party” means an entity specified in subparagraph (A) that seeks financial assistance pursuant to Section 26011.8.
(ii) For purposes of Section 6010.8 of the Revenue and Taxation Code, an entity located outside of the state, including an entity located overseas, is considered to be a participating party and is eligible to apply for financial assistance pursuant to Section 26011.8 if the participating party commits to, and demonstrates that, the party will be opening a manufacturing facility in the state.
(iii) It is the intent of the Legislature by adding clause (ii) to clarify existing law and ensure that an out-of-state entity or overseas entity is eligible to apply for financial assistance pursuant to Section 26011.8.
(8) (A) “Project” means a land, building, improvement to the land or building, rehabilitation, work, property, or structure, real or personal, stationary or mobile, including, but not limited to, machinery and equipment utilized in the state, whether or not in existence or under construction, that meets one of the following:
(i) Utilizes, or is designed to utilize, an alternative source.
(ii) Is utilized for the design, technology transfer, manufacture, production, assembly, distribution, or service of advanced transportation technologies or alternative source components.
(iii) Utilizes, or is designed to utilize, water efficiency measures.
(B) “Project,” for purposes of Section 26011.8 and Section 6010.8 of the Revenue and Taxation Code, is defined in Section 26011.8.
(9) “Revenue” means all rents, receipts, purchase payments, loan repayments, and all other income or receipts derived by the authority from a project, or the sale, lease, or other disposition of alternative source or advanced transportation technology facilities, or the making of loans to finance alternative source or advanced transportation technology facilities, and any income or revenue derived from the investment of money in any fund or account of the authority.
(10) “Water efficiency measures” means equipment designed to increase the efficient use of water.
(b) This section shall remain in effect only until January 1, 2021, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2021, deletes or extends that date.

SEC. 16.

 Section 26003 of the Public Resources Code, as amended by Section 258 of Chapter 86 of the Statutes of 2016, is amended to read:

26003.
 (a) As used in this division, unless the context otherwise requires:
(1) (A)  “Advanced transportation technologies” means emerging commercially competitive transportation-related technologies identified by the authority as capable of creating long-term, high-value-added jobs for Californians while enhancing the state’s commitment to energy conservation, pollution and greenhouse gas emissions reduction, and transportation efficiency.
(B) “Advanced transportation technologies” does not include those projects required to be undertaken pursuant to state or federal law or regulations, air district rules or regulations, memoranda of understanding with a governmental entity, or legally binding agreements or documents. The State Air Resources Board shall advise the authority regarding projects that are excluded pursuant to this subparagraph.
(2) (A) “Alternative sources” means devices or technologies used for a renewable electrical generation facility, as defined in paragraph (1) of subdivision (a) of Section 25741, a combined heat and power system, as defined in Section 2840.2 of the Public Utilities Code, distributed generation and energy storage technologies eligible under the self-generation incentive program pursuant to Section 379.6 of the Public Utilities Code, as determined by the Public Utilities Commission, or a facility designed for the production of renewable fuels, the efficient use of which reduces the use of fossil or nuclear fuels, and energy efficiency devices or technologies that reduce the need for new electric generation and reduce emissions of toxic and criteria pollutants and greenhouse gases.
(B) “Alternative sources” does not include a hydroelectric facility that does not meet state laws pertaining to the control, appropriation, use, and distribution of water, including, but not limited to, the obtaining of applicable licenses and permits.
(3) “Authority” means the California Alternative Energy and Advanced Transportation Financing Authority established pursuant to Section 26004, and any board, commission, department, or officer succeeding to the functions of the authority, or to which the powers conferred upon the authority by this division shall be given.
(4) “Cost” as applied to a project or portion of the project financed under this division means all or part of the cost of construction and acquisition of all lands, structures, real or personal property or an interest in the real or personal property, rights, rights-of-way, franchises, easements, and interests acquired or used for a project; the cost of demolishing or removing any buildings or structures on land so acquired, including the cost of acquiring any lands to which those buildings or structures may be moved; the cost of all machinery, equipment, and furnishings, financing charges, interest prior to, during, and for a period after, completion of construction as determined by the authority; provisions for working capital; reserves for principal and interest and for extensions, enlargements, additions, replacements, renovations, and improvements; the cost of architectural, engineering, financial, accounting, auditing and legal services, plans, specifications, estimates, administrative expenses, and other expenses necessary or incidental to determining the feasibility of constructing any project or incidental to the construction, acquisition, or financing of a project.
(5) “Financial assistance” includes, but is not limited to, loans, loan loss reserves, interest rate reductions, proceeds of bonds issued by the authority, bond insurance, loan guarantees or other credit enhancements or liquidity facilities, contributions of money, or a combination thereof, as determined by, and approved by the resolution of, the board.
(6) (A) “Participating party” means a person, federal or state agency, department, board, authority, or commission, state or community college, or university, or a city or county, regional agency, public district, school district, or other political entity engaged in the business or operations in the state, whether organized for profit or not for profit, that applies for financial assistance from the authority for the purpose of implementing a project.
(B) (i) For purposes of Section 6010.8 of the Revenue and Taxation Code, “participating party” means an entity specified in subparagraph (A) that seeks financial assistance pursuant to Section 26011.8.
(ii) For purposes of Section 6010.8 of the Revenue and Taxation Code, an entity located outside of the state, including an entity located overseas, is considered to be a participating party and is eligible to apply for financial assistance pursuant to Section 26011.8 if the participating party commits to, and demonstrates that, the party will be opening a manufacturing facility in the state.
(iii) It is the intent of the Legislature by adding clause (ii) to clarify existing law and ensure that an out-of-state entity or overseas entity is eligible to apply for financial assistance pursuant to Section 26011.8.
(7) (A) “Project” means a land, building, improvement to the land or building, rehabilitation, work, property, or structure, real or personal, stationary or mobile, including, but not limited to, machinery and equipment utilized in the state, whether or not in existence or under construction, that meets one of the following:
(i) Utilizes, or is designed to utilize, an alternative source.
(ii) Is utilized for the design, technology transfer, manufacture, production, assembly, distribution, or service of advanced transportation technologies or alternative source components.
(iii) Utilizes, or is designed to utilize, water efficiency measures.
(B) “Project,” for purposes of Section 26011.8 and Section 6010.8 of the Revenue and Taxation Code, is defined in Section 26011.8.
(8) “Revenue” means all rents, receipts, purchase payments, loan repayments, and all other income or receipts derived by the authority from a project, or the sale, lease, or other disposition of alternative source or advanced transportation technology facilities, or the making of loans to finance alternative source or advanced transportation technology facilities, and any income or revenue derived from the investment of money in any fund or account of the authority.
(9) “Water efficiency measures” means equipment designed to increase the efficient use of water.
(b) This section shall become operative on January 1, 2021.

SEC. 17.

 Section 26011.8 of the Public Resources Code is amended to read:

26011.8.
 (a) The purpose of this section is to promote the creation of California-based manufacturing, California-based jobs, advanced manufacturing, the reduction of greenhouse gases, or reductions in air and water pollution or energy consumption. In furtherance of this purpose, the authority may approve a project for financial assistance in the form of the sales and use tax exclusion established in Section 6010.8 of the Revenue and Taxation Code.
(b) For purposes of this section, the following terms have the following meanings:
(1) “Project” means tangible personal property if at least 50 percent of its use is either to process recycled feedstock that is intended to be reused in the production of another product or using recycled feedstock in the production of another product or soil amendment, or tangible personal property that is used in the state for the design, manufacture, production, or assembly of advanced manufacturing, advanced transportation technologies, water efficiency measures, or alternative source products, components, or systems, as defined in Section 26003. “Project” does not include tangible personal property that processes or uses recycled feedstock in a manner that would constitute disposal as defined in subdivision (b) of Section 40192.
(2) “Recycled feedstock” means materials that would otherwise be destined for disposal, having completed their intended end use and product lifecycle.
(3) “Soil amendments” may include “compost,” as defined in Section 14525 of the Food and Agricultural Code, “fertilizing material,” as defined in Section 14533 of the Food and Agricultural Code, “gypsum” or “phosphatic sulfate gypsum,” as those terms are defined in Section 14537 of the Food and Agricultural Code, or a substance distributed for the purpose of promoting plant growth or improving the quality of crops by conditioning soils through physical means.
(c) The authority shall publish notice of the availability of project applications and deadlines for submission of project applications to the authority.
(d) The authority shall evaluate project applications based upon all of the following criteria:
(1) The extent to which the project develops manufacturing facilities, or purchases equipment for manufacturing facilities, located in California.
(2) The extent to which the anticipated benefit to the state from the project equals or exceeds the projected benefit to the participating party from the sales and use tax exclusion.
(3) The extent to which the project will create new, permanent jobs in California.
(4) To the extent feasible, the extent to which the project, or the product produced by the project, results in a reduction of greenhouse gases, a reduction in air or water pollution, an increase in energy efficiency, or a reduction in energy consumption, beyond what is required by federal or state law or regulation.
(5) The extent of unemployment in the area in which the project is proposed to be located.
(6) Any other factors the authority deems appropriate in accordance with this section.
(e) At a duly noticed public hearing, the authority shall approve, by resolution, project applications for financial assistance.
(f) Notwithstanding subdivision (j), and without regard to the actual date of any transaction between a participating party and the authority, any project approved by the authority by resolution for the sales and use tax exclusion pursuant to Section 6010.8 of the Revenue and Taxation Code before March 24, 2010, shall not be subject to this section.
(g) The Legislative Analyst’s Office shall report to the Joint Legislative Budget Committee on the effectiveness of this program, on or before January 1, 2019, by evaluating factors, including, but not limited to, the following:
(1) The number of jobs created by the program in California.
(2) The number of businesses that have remained in California or relocated to California as a result of this program.
(3) The amount of state and local revenue and economic activity generated by the program.
(4) The types of advanced manufacturing, as defined in paragraph (1) of subdivision (a) of Section 26003, utilized.
(5) The amount of reduction in greenhouse gases, air pollution, water pollution, or energy consumption.
(h) The exclusions granted pursuant to Section 6010.8 of the Revenue and Taxation Code for projects approved by the authority pursuant to this section shall not exceed one hundred million dollars ($100,000,000) for each calendar year.
(i) (1) The authority shall study the efficacy and cost benefit of the sales and use tax exemption as it relates to advanced manufacturing projects. The study shall include the number of jobs created, the costs of each job, and the annual salary of each job. The study shall also consider a dynamic analysis of the economic output to the state that would occur without the sales and use tax exemption. Before January 1, 2017, the authority shall submit to the Legislature, consistent with Section 9795 of the Government Code, the result of the study.
(2) Before January 1, 2015, the authority shall, consistent with Section 9795 of the Government Code, submit to the Legislature an interim report on the efficacy of the program conducted pursuant to this section. The study shall include recommendations on program changes that would increase the program’s efficacy in creating permanent and temporary jobs, and whether eligibility for the program should be extended or narrowed to other manufacturing types. The authority may work with the Legislative Analyst’s Office in preparing the report and its recommendations.
(j) This section shall remain in effect only until January 1, 2021, and as of that date is repealed, unless a later enacted statute, that becomes operative on or before January 1, 2021, deletes or extends that date. The sale or purchase of tangible personal property of a project approved before January 1, 2021, shall continue to be excluded from sales and use taxes pursuant to Section 6010.8 of the Revenue and Taxation Code for the period of time set forth in the authority’s resolution approving the project pursuant to this section.

SEC. 17. SEC. 18.

 Section 26061 of the Public Resources Code is amended to read:

26061.
 To qualify for assistance pursuant to this chapter, the PACE program shall require all of the following:
(a) The interest rate on the PACE bond does not exceed a percentage as determined by the authority to be appropriate.
(b) Minimum legal financing structure and credit underwriting criteria as determined by the authority are met.
(c) Proceeds of the PACE bonds are used to finance qualified energy and water efficiency, electric vehicle charging infrastructure, and clean energy improvements.
(d) The improvement financed is for a residential project of four units or fewer, or a commercial project that costs less than twenty-five thousand dollars ($25,000) in total.

SEC. 18. SEC. 19.

 Section 6010.8 of the Revenue and Taxation Code, as amended by Section 5 of Chapter 788 of the Statutes of 2015, is amended to read:

6010.8.
 (a) (1) “Sale” and “purchase” do not include any lease or transfer of title of tangible personal property constituting any project to any participating party.
(2) On and after the operative date of the act adding this paragraph, “sale” and “purchase” do not include any lease or transfer of title of tangible personal property constituting any project to any contractor for use in the performance of a construction contract for the participating party that will use that property as an integral part of the approved project.
(b) As used in this section, “project” has the meaning specified in subparagraph (B) of paragraph (8) of subdivision (a) of Section 26003 of the Public Resources Code and “participating party” has the meaning specified in subparagraph (B) of paragraph (7) of subdivision (a) of Section 26003 of the Public Resources Code.
(c) This section shall remain in effect only until January 1, 2021, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2021, deletes or extends that date.