Bill Text: CA AB2270 | 2015-2016 | Regular Session | Amended
Bill Title: California Infrastructure and Economic Development Bank: surety bond program.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Failed) 2016-11-30 - From Senate committee without further action. [AB2270 Detail]
Download: California-2015-AB2270-Amended.html
BILL NUMBER: AB 2270 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 27, 2016
AMENDED IN ASSEMBLY APRIL 6, 2016
INTRODUCED BY Assembly Member Bonta
( Coauthor: Assembly Member
Gonzalez )
FEBRUARY 18, 2016
An act to amend Sections 63089.95 and 63089.96 of the Government
Code, relating to state government, and making an appropriation
therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 2270, as amended, Bonta. California Infrastructure and Economic
Development Bank: surety bond program.
Under the Small Business Financial Assistance Act of 2013, the
California Infrastructure and Economic Development Bank, within the
Governor's Office of Business and Economic Development, administers
specific programs relating to small business, either administered
directly by the bank or under contract with small business financial
development corporations. The act authorizes bank programs to offer
surety bond guarantees. The act prohibits a corporation from
guaranteeing any loan unless and until it makes specified
determinations, including that there is a low probability that the
surety bond would be granted by a financial institution or financial
company under reasonable terms or conditions, and the beneficiary has
demonstrated a reasonable prospect of successful completion of the
project.
This bill would modify that prohibition to refer to a surety bond
instead of a loan and would add private bonding companies to those
entities considered when calculating the probability that a surety
bond would be granted.
The act, in addition to the authority described above, authorizes
a corporation to act as a guarantor on a surety bond for any small
business contractor, including, but not limited to, women, minority,
and disabled veteran contractors.
This bill would expand those entities for which a corporation may
act as a guarantor on a surety bond to include disadvantaged business
enterprise contractors. The bill would require a surety bond program
to include technical assistance to a participating contractor, as
prescribed. The bill would authorize the bank, in implementing a
surety bond program under the act, to assign all or part of the
program to another state entity in a prescribed manner, to establish
one or more pilot projects before approving directives and guidelines
for a statewide surety bond and small contractor assistance program,
and to establish one or more nonstate contracts under specific
circumstances.
The act continues in existence the California Small Business
Expansion Fund (expansion fund), a continuously appropriated fund
that includes General Fund moneys. The expansion fund may be used to
pay defaulted loan guarantee or surety bond losses, or other
financial product defaults or losses, to fund direct loans and other
debt instruments, to pay administrative costs of corporations, to pay
state support and administrative costs, and to pay costs to protect
a real property interest in a financial product default.
By expanding the activities of the bank that are funded by
continuous appropriation from the expansion fund, this bill would
make an appropriation.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 63089.95 of the Government Code is amended to
read:
63089.95. In furtherance of the purposes set forth in Section
63088.1 of this code and Section 14001 of the Corporations Code, a
corporation may do any one or more of the following activities, but
only to the extent that the activities are authorized pursuant to the
contract between the bank and corporation: guarantee, endorse, or
act as surety on the bonds, notes, contracts, or other obligations
of, or assist financially, any person, firm, corporation, or
association, and may establish and regulate the terms and conditions
with respect to any such guarantees or financial assistance and the
charges for interest and service connected therewith, except that the
corporation shall not guarantee any surety bond unless and until it
determines:
(a) There is a low probability that the surety bond would be
granted by a private bonding company, financial institution, or
financial company under reasonable terms or conditions, and the
beneficiary has demonstrated a reasonable prospect of successful
completion of the project.
(b) The surety bond project coverage will be used exclusively in
this state.
(c) The beneficiary has a minimum equity interest in the business
as determined by the directives and requirements.
(d) As a result of the surety bond, the jobs generated or retained
demonstrate reasonable conformance to the directives and
requirements specifying employment criteria.
SEC. 2. Section 63089.96 of the Government Code is amended to
read:
63089.96. (a) In addition to the authority granted by Section
63089.95, pursuant to the directives and requirements a corporation
may act as guarantor on a surety bond for any small business
contractor, including, but not limited to, women, minority, disabled
veteran, and disadvantaged business enterprise contractors.
(b) The provisions of subdivision (a) allowing a corporation to
act as a guarantor on surety bonds may be funded through appropriate
state or federal funding sources. Federal funds shall be deposited in
the Federal Trust Fund in the State Treasury in accordance with
Section 16360, for transfer to the expansion fund.
(c) The surety bond program shall include technical assistance to
a participating contractor. Technical assistance provided pursuant to
this section shall include, but is not limited to, all of the
following:
(1) Assessment and identification of the particular barriers
facing the participating contractor and development of solutions to
those barriers. Activities pursuant to this paragraph may include the
following:
(A) Assessments by surety and construction experts.
(B) Development of a business plan.
(C) Workshops addressing contractor bonding, bidding on state
projects, job safety, and other topics that would be beneficial to
the participating contractor.
(D) Project field support.
(2) Identification of, and assistance in obtaining, other
financial support and resources. Activities pursuant to this
paragraph may include the following:
(A) Linkages with accountants, brokers, and surety companies
committed to helping contractors build bonding and organizational
capacity.
(B) Prequalifications for additional assistance.
(C) Collateral guarantees.
(d) In implementing a surety bond program pursuant to this
chapter, the bank may:
(1) Assign all or part of the program to another state entity that
agrees to implement the program consistent with this chapter and
the directives and requirements adopted by the bank. If
the bank assigns all or a part of the program to another state
entity, the bank shall retain responsibility for reporting on the use
and outcomes of the program, pursuant to Section 63089.98.
(2) Establish one or more pilot projects before approving
directives and guidelines for a statewide surety bond and small
contractor assistance program.
(3) Establish one or more nonstate contracts, to the extent deemed
necessary by the bank, based on there being an insufficient number
of corporations interested in, and qualified to, implement a surety
bond program, including the technical assistance required in
subdivision (c). These contractors shall be subject to the applicable
reporting requirements of this chapter, Section 63089.97, and any
other directive or requirement set by the bank.
