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SB-625 Community development financial institutions: grant program.(2021-2022)

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Date Published: 02/19/2021 04:00 AM
SB625:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 625


Introduced by Senator Caballero

February 18, 2021


An act to add Article 11 (commencing with Section 63049.75) to Chapter 2 of Division 1 of Title 6.7 of the Government Code, relating to economic development.


LEGISLATIVE COUNSEL'S DIGEST


SB 625, as introduced, Caballero. Community development financial institutions: grant program.
(1) Existing law, the Bergeson-Peace Infrastructure and Economic Development Bank Act, establishes the California Infrastructure and Economic Development Bank (I-Bank) in the Governor’s Office of Business and Economic Development under the direction of an executive director appointed by the Governor, subject to confirmation by the Senate, and governed by a board of directors composed of specified persons. Existing law, among other things, authorizes the I-Bank to make loans, issue bonds, and provide financial assistance for various types of projects that qualify as economic development or public development facilities.
Existing federal law establishes the Capital Magnet Fund and makes moneys in that fund available to the United States Secretary of the Treasury to carry out a competitive grant program to attract private capital for, and increase investment in, certain affordable housing and economic development projects by providing grants, as provided, to Treasury-certified community development financial institutions or nonprofit organizations that meet specified criteria.
This bill would establish the California Investment and Innovation Program, administered by I-Bank, for the purpose of providing grants to qualified community development financial institutions. The bill would establish the California Investment and Innovation Fund and, upon appropriation, require I-Bank to award a grant to an eligible recipient, defined as a community development financial institution that meets specified criteria under the program, as provided. The bill would require, among other things, that an eligible recipient provide matching funds on a dollar-for-dollar basis with moneys received from private, nongovernmental sources. The bill would specify authorized uses of grant funds, including providing loans, grants, equity investments, or technical assistance within low-income communities or for purposes that have a direct and substantial benefit to lower income households.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) Community Development Financial Institutions (CDFIs) are a critical partner of the State of California in addressing short-term and long-term needs of low- and moderate-income communities in the areas of affordable housing, health care, small business lending, economic development, and more.
(b) As mission-driven lenders, grantors, and providers of technical assistance, CDFIs have proven time and again that they can play a valuable role in helping to deploy and leverage public investment quickly and efficiently.
(c) It is the intent of the Legislature in creating the California Investment and Innovation Program to establish a program that creates an ongoing partnership with CDFIs to assist the State of California in efficiently deploying resources to communities in need and establishing an equitable economic recovery that benefits low-income communities and communities of color that have been disproportionately impacted by the economic fallout of the COVID-19 pandemic and by historical and ongoing disinvestment.
(d) In addition to providing an economic jumpstart for those communities through immediate investment, it is the intent of the Legislature that the program created by this legislation will serve as a potential repository for current and future emergency or stimulus funding streams that would otherwise require the state to start up new programs, thereby slowing the delivery of these funds to those most in need. The program will be a permanent resource for community investment.

SEC. 2.

 Article 11 (commencing with Section 63049.75) is added to Chapter 2 of Division 1 of Title 6.7 of the Government Code, to read:
Article  11. California Investment and Innovation Program

63049.75.
 For purposes of this article:
(a) “Bank” means the California Infrastructure and Economic Development Bank.
(b) “Community development financial institution” means any community development financial institution certified by the federal Community Development Financial Institutions Fund under Part 1805 (commencing with Section 1805.100) of Chapter XVIII of Title 12 of the Code of Federal Regulations.
(c) “Eligible recipient” means a community development financial institution for which either of the following applies:
(1) The community development financial institution has its headquarters in this state.
(2) The community development financial institution has a record of lending in this state, based on either of the following:
(A) At least 25 percent of the community development financial institution’s loan portfolio provides financial assistance to persons or projects located in this state.
(B) The community development financial institution has provided financing assistance in this state totaling at least five million dollars ($5,000,000) over the following time periods:
(i) If the community development financial institution is not a small and emerging community development financial institution, the three years preceding the date of its application for a grant under the program.
(ii) If the community development financial institution is a small and emerging community development financial institution, any time period.
(d) “Fund” means the California Investment and Innovation Fund created in Section 63049.76.
(e) “Low-income communities” has the same meaning as defined in Section 39713 of the Health and Safety Code.
(f) “Lower income household” has the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(g) “Program” means the California Investment and Innovation Program established in Section 63049.76.
(h) “Small and emerging community development financial institution” means a community development financial institution that has less than ten million dollars ($10,000,000) in assets.

63049.76.
 (a) (1) The California Investment and Innovation Program is hereby established for the purpose of providing grants to eligible recipients.
(2) The bank shall administer the program.
(b) The California Investment and Innovation Fund is created in the State Treasury. Upon appropriation by the Legislature, the bank shall allocate moneys in the fund to eligible recipients in accordance with this article.
(c) The California Investment and Innovation Fund may receive funds made available to the state by any source, including, but not limited to, the federal government, philanthropic entitles, and financial intuitions.

63049.77.
 When funding is available pursuant to Section 63049.76, the bank shall make the funding available to eligible recipients. Unless otherwise prohibited by law, the bank shall use the available funding to do all of the following:
(a) Develop a competitive application process for awarding grants pursuant to the program and require each eligible recipient to submit an application in the form and manner prescribed by the bank.
(b) Require an eligible recipient to provide matching funds on a dollar-for-dollar basis with moneys received from private, nongovernmental sources.
(c) Set aside at least 20 percent of any amount made available for purposes of the program for eligible recipients that are small and emerging community development financial institutions.
(d) Ensure that eligible recipients receiving grants pursuant to the program serve geographically diverse areas, both urban and rural, across this state.

63049.78.
 (a) Unless otherwise prohibited by law, an eligible recipient that receives grant funds under the program may use those funds for the following purposes:
(1) Providing loans, grants, equity investments, or technical assistance within low-income communities or for purposes that have a direct and substantial benefit to lower income households.
(2) Serving investment areas or targeted populations, as those terms are defined in Section 4702 of Title 12 of the United States Code, as that section read as of January 1, 2021, by developing or supporting any of the following:
(A) Commercial facilities that promote revitalization, community stability, or job creation or retention.
(B) Businesses that either provide jobs in low-income communities or enhance the availability of products and services to lower income households.
(C) Community facilities.
(D) The provision of basic financial services.
(E) Housing that is principally affordable to lower income households. Assistance used to facilitate homeownership pursuant to this subparagraph shall be limited to services and lending products that serve lower income households that either are not provided by other lenders in the area or complement the services and lending products provided by other lenders that serve the investment area or target population.
(F) Any other businesses or activities deemed appropriate by the bank and consistent with the purposes of the program.
(b) An eligible recipient that provides loans with grant funds awarded under the program shall provide those loans on a revolving basis.

63049.79.
 The bank may adopt guidelines for the operation of the program in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2.