Law:Division 15.5. State Assistance Fund For Enterprise, Business And Industrial Development Corporation (California)

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Contents

Chapter 1. General Provisions

Article 1. Short Title, Construction And Severability

Ca Codes (fin:32000-32002) Financial Code Section 32000-32002



32000. This division shall be known and may be cited as the "State Assistance Fund for Enterprise Act of 1989."


32001. In this division, unless the context otherwise requires: (a) A reference to a statute or to a regulation includes such statute or regulation as amended, whether before or after the effective date of this division, as well as any new statute or regulation substituted for such statute or regulation after the effective date of this division. (b) A reference to a governmental agency or to a public officer includes any governmental agency or public officer which succeeds after the effective date of this division to substantially the same functions as those performed by such governmental agency or public officer on the effective date of this division.


32002. If any provision of this division or the application thereof to any person or circumstances is held invalid, illegal, or unenforceable, such invalidity, illegality, or enforceability shall not affect other provisions or applications of this division which can be given effect without the invalid, illegal, or unenforceable provision or application, and to this end, the provisions of this division are declared to be severable.


Article 2. Legislative Purposes

Ca Codes (fin:32101) Financial Code Section 32101



32101. The purposes of this division are the following: (a) To enhance the availability of financial assistance for small business in California. (b) To increase the cost effectiveness and efficiency of financial assistance to small businesses provided by the state. (c) To provide maximum utilization of available federal assistance programs, including, but not limited to, the Small Business Administration's loan guarantee program. (d) To reduce duplication and overlap in the provisions of financing assistance to small businesses through increased coordination and direction of state assistance programs. (e) To provide the maximum degree of leverage of the limited state resources available to assist small business, consistent with sound business practices and fiduciary responsibility. (f) To increase the competitiveness of California's small businesses in the world economy and the creation of jobs.


Article 3. Definitions

Ca Codes (fin:32200-32219) Financial Code Section 32200-32219



32200. Subject to additional definitions contained in Division 15 (commencing with Section 31000) and this division which are applicable to specific provisions of these divisions and unless the context otherwise requires, the definitions in this article apply throughout this division.


32201. "Alternative energy system" means any device or combination of devices which conserves or produces heat, process heat, space heating, water heating, steam, space cooling, refrigeration, mechanical energy, electricity, or energy in any form convertible to these uses, which does not expend or use conventional energy fuels, except when such conventional energy fuels are used as a back up energy system for such alternative energy system or in conjunction with an alternative energy system.


32202. "Conventional energy fuel" means any fuel derived from petroleum deposits, including but not limited to oil, heating oil, gasoline, fuel oil, or natural gas, including liquified natural gas, or nuclear fissionable materials. "Conventional energy fuel" includes energy produced by the use of such fuels.


32203. "Small business" means a business defined as an eligible small business as set forth in Section 121.3-10 of Part 121, Chapter 1, Title 13 of the Code of Federal Regulations.


32204. "State Controller" means the State Controller or any person to whom the State Controller delegates the authority to act for him or her in the particular matter.


32205. "Rules Committee" means the rules committee of the State Senate or any person to whom the rules committee of the State Senate delegates to act for it in the particular matter.


32206. "Speaker" means the Speaker of the State Assembly or any person to whom the Speaker of the Assembly delegates the authority to act for him in the particular matter.


32207. "Corporation" means the State Assistance Fund for Enterprise Business and Industrial Development Corporation.


32208. "Energy Commission" means the California Energy Resources Conservation and Development Commission.


32209. " Alternative energy business firm" means any small business engaged primarily in the business of the design, manufacture, production, assembly, distribution, marketing, sale, transportation, or installation of an alternative energy system, or, any small business engaged primarily in the business of producing, transmitting, or selling energy produced by an eligible alternative energy system.


32210. "Board" means the board of directors of the corporation.


32211. "President" means the president of the corporation.


32212. "Finance officer" means the director of the finance division of the corporation.


32215. "Governor" means the Governor of the State of California or any person to whom the Governor of the State of California delegates the authority to act for him in the particular matter.


32216. "Savings-investment ratio" means an analysis of the proposed system in which energy cost savings are added to other net benefits and costs from operation, maintenance, replacements, depreciation, tax credits and financing costs, and divided by initial investment costs. All benefits and costs are to be evaluated in present or constant dollars.


32217. "Life cycle cost analysis" means an analysis of a proposed system in which all costs and benefits are evaluated over the expected life of the system.

32218. "Minimum economic feasibility" means that the net savings or benefits of an investment exceed the net costs.


32219. "Special projects" means any financing assistance or other program undertaken by the corporation pursuant to Article 3 (commencing with Section 32720) of Chapter 6.


Chapter 2. Corporate Matters

Article 1. Creation Of The Corporation

Ca Codes (fin:32300-32301) Financial Code Section 32300-32301



32300. The Legislature hereby authorizes the creation of a nonprofit corporation pursuant to the provisions of the Nonprofit Corporation Law (Part 1 (commencing with Section 9000), Division 2, Title 1 of the Corporations Code) on January 1, 1981.


32301. Except as otherwise provided in this division: (a) The Nonprofit Corporation Law shall apply to the corporation. However, whenever any provision of the Nonprofit Corporation Law conflicts with any provision of this division, the provision of the Nonprofit Corporation Law shall not apply and the provision of this division shall apply. (b) The Business and Industrial Development Corporation Law (Division 15 (commencing with Section 31000)) shall apply to this corporation. However, whenever any provision of the Business and Industrial Development Corporation Law conflicts with any provision of this division, the provision of the Business and Industrial Development Corporation Law shall not apply and the provision of this division shall apply. (c) The Small Business Development Corporation Law (Chapter 1 (commencing with Section 14000) of Part 5 of Division 3 of Title 1 of the Corporations Code) shall apply to the corporation, except that, to the extent of any conflict between those provisions and this division, the provisions of this division shall prevail. (d) Whenever a conflict exists between any of the following acts, the conflict shall be resolved by applying the conflicting provision contained in the act in order of preference as listed in this subdivision, and the applicable provision shall prevail over the other conflicting provisions: (1) The Business and Industrial Development Corporations Law (Division 15 (commencing with Section 31000)). (2) The Small Business Development Corporation Law (Ch. 1 (commencing with Section 14000), Pt. 5, Div. 3, Corp. C.). (3) The Nonprofit Corporation Law (Div. 2 (commencing with Section 5000) Pt. 1, Corp. C.). (e) The State Assistance Fund for Enterprise, Business, and Industrial Development Corporation (SAFE-BIDCO), which was established by this division, meets the definition of a community development financial institution for purposes of eligibility consistent with Sections 12209, 17053.57, and 23657 of the Revenue and Taxation Code.


Article 2. Corporate Name

Ca Codes (fin:32310) Financial Code Section 32310



32310. The name of this corporation shall be: State Assistance Fund for Enterprise, Business and Industrial Development Corporation.


Article 3. Board Of Directors

Ca Codes (fin:32320-32326) Financial Code Section 32320-32326



32320. Except as provided in Sections 32325 and 32352.5, the board of directors of the corporation shall consist of six members, two official and four public directors.


32321. (a) The official members of the board shall be: (1) A member of the Governor's cabinet, or his or her designee. (2) One member of the Energy Commission, selected and appointed by the members of the Energy Commission. (b) The public members of the board shall be: (1) One member selected and appointed by the Senate Rules Committee. (2) One member selected and appointed by the Speaker of the Assembly. (3) Two members selected and appointed by the Governor as follows: (A) One member with a minimum three years' experience as an owner, partner, officer, or employee of a California-based small business. (B) One member with a minimum three years' experience as an officer or employee of a financial institution.


32322. (a) The terms of official members of the board shall coincide with their official terms of office, except in the case of the member selected and appointed by the members of the Energy Commission, who shall serve on the board until he or she is no longer a member of the Energy Commission or until he or she is replaced by a vote of the Energy Commission. (b) The public members of the board shall be appointed by the Rules Committee, Speaker, and Governor in such a manner that they shall hold office for overlapping terms. At the time of the appointment of first directors, the first term of the directors appointed by the Rules Committee and Speaker shall be approximately two years. At the time of the appointment of first directors, the first term of the directors appointed by the Governor shall be approximately one year for one director and approximately three years for two directors. Thereafter, the terms of all public directors shall be three years. Directors shall be eligible for reappointment for an unlimited number of terms. (c) A public director's tenure shall continue until his successor has been appointed and has taken his position on the board. (d) In the case of public members, vacancies shall be filled by appointment of the respective appointing authority for the unexpired remainder of the term.

32323. (a) The directors selected and appointed by the Governor, Rules Committee, and Speaker shall meet the requirements of subdivision (d) of Section 31152. (b) The directors shall hold office until the directors of the State Assistance Fund for Enterprise, Business and Industrial Development Corporation take office.


32324. (a) The official directors shall serve without compensation, except that they shall be reimbursed for their actual and necessary expenses incurred in the performance of their duties, or at the discretion of the board, may receive a reasonable per diem payment and mileage charge as reimbursement for living and traveling expenses incurred in the performance of duties away from their principal areas of residence. The amount of such per diem payment shall not exceed the rate established by the state for any calendar day. No director shall receive per diem both in the course of his official duties and from the corporation for the same calendar day. (b) All other directors may, at the discretion of the board, be paid a stipend in addition to reimbursement for their actual and necessary expenses incurred in the performance of their duties or reasonable per diem payment and mileage charge. The amount of any per diem payment shall not exceed the rate established by the state for any calendar day. The board shall determine the amount of the stipend received by public directors, provided, however, that such stipend shall not exceed one hundred dollars ($100) for any calendar day. Additionally, public directors may not receive stipends for more than 25 days in any calendar year.


32325. If the corporation becomes a federal Community Development Financial Institution (CDFI), in addition to the official and public directors provided for in Section 32321, the board may select not more than three private directors to assist the board in managing the corporation, subject to the following: (a) Private directors shall serve on the board in an advisory and voluntary capacity. (b) Each private director shall be knowledgeable about the CDFI target market. (c) At the discretion of the board, private directors shall be eligible to receive compensation, subject to the limitations contained in subdivision (b) of Section 32324.


32326. The board of directors of the corporation shall establish a loan committee, which shall review, rank, and approve or disapprove applications for loans under this division in accordance with procedures and criteria adopted by the board of directors. The loan committee shall consist of persons appointed by, and who shall serve at the pleasure of, the board of directors of the corporation.


Article 4. Management Of The Corporation

Ca Codes (fin:32330-32332) Financial Code Section 32330-32332



32330. The management of the corporation shall be conducted by the board of directors, subject to the following limitations: (a) All action taken by the board of directors shall require the approval of a majority of the board present at a meeting at which there is a quorum or by unanimous written consent of all directors. (b) The board of directors shall file revised articles of incorporation with the Secretary of State no later than January 30, 1990. (c) The board of directors shall apply for a revised license as a California Business and Industrial Development Corporation by March 1, 1990.

32331. The operations of the corporation shall be directed by the president of the corporation, who shall be selected and appointed by the board.

32332. The corporation shall adopt bylaws, which shall include provisions governing the election of officers; the establishment and functions of committees; eligibility criteria for loan applications and application procedures; procedures for the deposit and sale of government guaranteed securities; and the establishment of loan loss reserves.


Article 6. Powers, Exclusions And Prohibitions

Ca Codes (fin:32350-32352.5) Financial Code Section 32350-32352.5



32350. (a) The corporation may appoint such agents and employees as it requires, and determine their qualifications, duties, terms of employment, and compensation. The corporation shall adopt personnel rules and regulations applicable to its employees. (b) The corporation may contract for such legal counsel as in its judgment is necessary or advisable to enable it to carry out its purposes.

32351. The corporation shall not provide financing assistance to any business firm in this state unless such business firm meets the financial and eligibility criteria for the specific type of financial assistance to be provided by the corporation, including, where appropriate, prior application to a bank or other financial institution for a loan or other financial assistance.


32352. The corporation shall (a) be empowered to do and perform all acts contemplated for a business and industrial development corporation, and (b) upon approval of the Small Business Development Board, perform acts contemplated for a small business development corporation, pursuant to Part 5 (commencing with Section 14000) of the Corporations Code. Notwithstanding any other provision of law, upon approval by the Small Business Development Board of the corporation's application to become a small business development corporation pursuant to this section, the sum of seven hundred fifty thousand dollars ($750,000) shall be transferred from the State Enterprise Loan Fund for deposit in the Small Business Expansion Fund created pursuant to Section 14029 of the Corporations Code for immediate transfer to a loan fund established pursuant to Section 14045 of the Corporations Code. Upon suspension of the corporation as a small business development corporation, the funds shall be transferred to the Small Business Expansion Fund pursuant to Section 14025 of the Corporations Code.


32352.5. (a) If the corporation becomes a small business development corporation pursuant to Section 32352, the official and public members of the board of directors shall, within 30 days thereafter, appoint three additional directors to the board, who shall be residents of the region to be served by the corporation when acting as a small business development corporation. (b) For purposes of this section, the three regional directors appointed pursuant to subdivision (a) shall be appointed by the official and public members of the board as full voting members of the board.


Chapter 3. Corporate Finances

Article 1. Corporate Accounts

Ca Codes (fin:32400-32404) Financial Code Section 32400-32404



32400. The financial accounts and records of the corporation shall be kept by the finance officer according to policies and rules which the board shall adopt.


32401. The corporation shall adopt as its fiscal year the period from July 1st to and including the following June 30th.


32402. In addition to other accounts the board may establish, the financial accounts of the corporation shall include: (a) A general operating account. (b) A general reserve account. (c) An enterprise loan fund. (d) A government guaranteed securities trust fund.


32403. Except as otherwise provided for in this division, all funds received by the corporation shall be deposited in the general operating account of the corporation.


32404. Beginning with the fiscal year which begins July 1, 1982, and each fiscal year thereafter, the board shall not adopt any budget for the corporation in which the projected total operating expenditures exceed the expected balance of the general operating account.


Article 3. Government Guaranteed Securities Trust Fund

Ca Codes (fin:32420-32423) Financial Code Section 32420-32423



32420. In this article "trust fund" means the government guaranteed securities trust fund of the corporation.


32421. The finance officer shall place into the trust fund all securities held by the corporation which carry a guarantee of repayment issued by the Small Business Administration or guarantee of repayment issued by any other governmental authority.


32422. According to policies and regulations which the board shall adopt, the finance officer shall use his or her best efforts to sell the guaranteed portion of the securities held in the trust fund to private investors or the state.

32423. The proceeds of the sale of government guaranteed securities shall be allocated to the accounts of the corporation in the following manner: (a) That portion of the proceeds of the sale of government guaranteed securities which represents the purchase of the principal amount of the securities shall be credited to the enterprise loan fund of the corporation; and (b) That portion of the proceeds of the sale of government guaranteed securities which represents the purchase of the future interest earnings of the securities shall be credited to the general operating account of the corporation.


Chapter 5. Loan Operations

Ca Codes (fin:32600-32601) Financial Code Section 32600-32601



32600. (a) The finance officer shall not execute any loan that is not: (1) Approved for guarantee by the Small Business Administration, under that agency's prevailing standards for loans of similar type, purpose, amount, and duration that are in effect at the time the guarantee is approved by the agency. (2) Approved for guarantee by another governmental loan guarantee authority, and the minimum amount of the guarantee is not less than 50 percent of the principal amount of the loan. (3) Made pursuant to the corporation's participation with the Small Business Administration as a small business investment company or local development company. (4) Less than 16 percent of the total financing package arranged between the corporation and another lender or lenders on behalf of the applicant. (b) This section does not apply to loans made pursuant to Section 32724.


32601. The corporation shall not provide financing assistance on any application, except for any application submitted for review as a special project, which has not been reviewed in the manner specified by the board.


Chapter 6. Miscellaneous

Article 1. Office Of Management Services

Article 2. Alternative Energy Research

Article 3. Special Projects

Ca Codes (fin:32720-32724) Financial Code Section 32720-32724



32720. The corporation is authorized to accept any public or private financial grant in furtherance of the purposes of this division, including, but not limited to, grants for alternative energy research or demonstration projects, manpower training, or economic development.


32721. The board may consider and adopt rules for the acceptance and disbursement of grants, provided, however, that the cost of administering any grant, less any payment for grant administration made to the corporation by the granting authority, shall in no case exceed 5 percent of the operating budget of the corporation in any calendar year.


32722. The corporation may participate with any federal or state governmental agency, department, board, bureau, or office in any program which is intended to assist the development of the alternative energy industry or to encourage economic development.


32723. The corporation may develop and implement a program to assist private financial institutions, to evaluate investment opportunities in alternative energy systems, and to help potential small business borrowers make contact with appropriate private sources of funds for alternative energy investments.


32724. Notwithstanding any other provision of this division, loans or other financing programs undertaken by the corporation in furtherance of minority enterprises and export financing shall be funded from the enterprise loan fund, or other accounts which the corporation may establish. The board shall promulgate separate loan review procedures and criteria which shall be applicable to loans and other financing programs implemented by the corporation pursuant to this section.


Chapter 7. Borrowing From The State

Article 2. State Enterprise Loan Fund

Ca Codes (fin:32810-32814) Financial Code Section 32810-32814



32810. The Controller shall establish, maintain, and administer a separate account within the General Fund of the State of California to effect the provisions of this chapter.


32811. The name of this account shall be the "State Enterprise Loan Fund," which fund shall be continuously appropriated for the purposes of this division.

32812. The Controller shall transfer into the fund from the General Fund and from the Energy Resources Program Account in the General Fund all moneys required to meet the loan requests of the corporation, subject to the following terms and conditions: (a) The amount transferred to the fund from the General Fund shall not exceed one million five hundred thousand dollars ($1,500,000). (b) The amount transferred to the fund from the Energy Resources Programs Account in the General Fund shall not exceed one million dollars ($1,000,000) and the Controller shall not transfer any money from the account to the fund unless and until both of the following occur: (1) The corporation certifies to the Controller that it has approved not less than a total of five million dollars ($5,000,000) in loans to eligible small businesses in this state. (2) The corporation certifies to the Controller that it will use the additional money transferred to the fund only to make new loans to eligible small businesses in this state.


32813. The Controller shall disburse moneys from the fund to the corporation subject to the provisions of this chapter.


32814. The Controller shall deposit in the fund all moneys received from the corporation in repayment of the principal and interest of loans made to the corporation.


Article 3. Borrowing From The Fund

Ca Codes (fin:32820-32823) Financial Code Section 32820-32823



32820. The corporation is authorized to borrow money from the fund, subject to the following terms and conditions: (a) The interest rate on loans from the fund to the corporation shall be six percent per annum; (b) The maximum term of the loans to the corporation shall be for 20 years;

32820.5. Upon approval of the corporation to exercise the powers of a small business development corporation pursuant to Section 32352, the corporation shall cease to be liable for payment of interest on loans made or to be made from the fund pursuant to this article.


32821. The corporation shall make application in writing to the Controller for loans from the fund.


32822. Within five working days after receipt of an application from the corporation for a loan from the fund, the Controller shall disburse the proceeds of the loan to the corporation, unless: (a) The corporation is in default on any previous loan from the fund; or (b) In order to lend the amount requested by the corporation, the Controller would be required to transfer to the fund amounts which cumulatively would exceed the maximum amount specified in Section 32812.


32823. If the Controller finds either subdivision (a) or (b) of Section 32822 to be the case, the Controller shall deny the loan application of the corporation.


Chapter 8. Energy Efficiency Improvements

Article 1. Purpose

Ca Codes (fin:32900) Financial Code Section 32900



32900. (a) Energy costs account for a growing and substantial portion of the operating costs of small businesses in California. (b) Expenditures on energy by small businesses reduce profit margins and increase operational difficulties. (c) Substantial reductions in small business energy costs can be realized through the installation of energy conservation, management, and other efficiency improvements. (d) Small business typically do not have access to financing at rates and terms which make energy efficiency investments cost effective and feasible. (e) Providing financing assistance to small businesses to promote energy efficiency investments is consistent with the guidelines for using federal petroleum violation escrow account funds which provide compensation to energy users who were overcharged by oil companies that violated federal oil price control regulations.


Article 2. Definitions

Ca Codes (fin:32905-32911) Financial Code Section 32905-32911



32905. In addition to the definitions set forth in Article 3 (commencing with Section 32200) and unless the context otherwise requires, the definitions in this article apply throughout this chapter.

32907. "Energy efficiency improvement" means any device, or combination of devices, or modification to the plant, equipment, or process which conserves or reduces the consumption of energy by the applicant through such measures as lighting changes, implementation of load management, or changes in energy facilities reducing the consumption of heat, process heat, space heating, water heating, steam, space cooling, refrigeration, mechanical energy, or electricity.

32911. "Escrow funds" mean those funds received by the state from the designated petroleum violation escrow funds as defined by Section 155 of the Further Continuing Appropriations Act of 1983 (P.L. No. 97-377).


Article 3. Energy Efficiency Improvements Loan Fund

Ca Codes (fin:32920-32942) Financial Code Section 32920-32942



32920. In addition to other accounts the board may establish, the financial accounts of the corporation shall include an energy efficiency improvements loan fund for the purpose of making loans under this chapter and paying for administrative, marketing, and public information costs and establishing a loan-loss reserve.


32922. The purpose of this article is to authorize the corporation to use the funds in the energy efficiency improvements loan fund for measures to reduce the energy consumption of qualifying small businesses through the installation of energy conservation, load management, or other devices to improve energy efficiency at facilities owned or operated by the qualifying small business and nonprofit organization.


32924. Escrow funds appropriated to the corporation may only be used to provide for subsidized loans, or loans with a low interest rate, granted pursuant to this article, except that the corporation may deposit escrow funds not yet used for those purposes in interest bearing accounts with accredited financial institutions. The corporation shall deposit interest earnings on those accounts in the general operating account of the corporation and may be used for purposes designated by the board.


32926. The interest earned on any loans made by the corporation pursuant to this article shall be deposited in the energy efficiency improvements loan fund.

32927. No more than two hundred fifty thousand dollars ($250,000) of money in the energy efficiency improvements loan fund may be used for initial organizational expenses.


32929. The corporation shall designate an officer of the corporation to administer the loan program established by this article. The officer responsible for the program shall report directly to the president of the corporation.


32930. Priority in ranking loan applications shall be given to small businesses purchasing or implementing energy efficiency improvements by considering the following characteristics in descending order of importance: (a) It improves energy efficiency utilization or conserves energy at the highest savings-investment ratio, as provided in Section 32648. (b) It improves energy utilization efficiency or conserves energy while developing or advancing the state of the art in technology or services available to small businesses and nonprofit organizations.


32932. Loans made under this chapter to small businesses shall be at a fixed rate of interest that shall not exceed the prevailing prime interest rate as published in the Wall Street Journal.


32936. The corporation shall use its best efforts to set interest rates on loans made under this chapter at the point at which the loan makes an investment in energy efficiency improvements cost effective.

32940. Guidelines for approving loan applications shall be developed by the board on or before May 1, 1987. In developing those guidelines, the board shall incorporate the recommendations adopted by the California Energy Commission with respect to technical criteria which are to be applied to projects receiving loans from the corporation pursuant to this chapter. The corporation may contract with the Energy Commission for the purpose of developing technical guidelines.

32942. Loans shall be approved according to criteria established by a credit committee, chaired by the chief financial officer of the corporation or that officer's designee. The other members of the committee shall be the member of the board appointed by the Energy Commission and the corporate president.


Article 4. Small Business Energy Accounting

Ca Codes (fin:32952) Financial Code Section 32952



32952. The corporation shall develop a program to assist small business owners in reducing their energy costs by providing technical assistance and information through local chambers of commerce and business organizations.


Article 5. Reports

Ca Codes (fin:32960) Financial Code Section 32960



32960. This chapter shall become inoperative on July 1, 2011, and, as of January 1, 2012, is repealed, unless a later enacted statute, which becomes effective on or before January 1, 2012, deletes or extends the dates on which it becomes inoperative and is repealed.


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