BILL ANALYSIS
AB 2798
Page 1
Date of Hearing: May 4, 2010
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel Perez, Chair
AB 2798 (Economic Development) - As Introduced: March 25, 2010
SUBJECT : Economic Development Omnibus
SUMMARY : Adds definitions and makes technical changes to the
codes relating to the state's economic development.
Specifically, this bill :
1)Defines "emerging domestic market" to mean people, places, or
business enterprises with growth potential that face capital
constraints due to systemic undervaluations as a result of
imperfect market information.
2)Defines "financial intermediary" to mean an institution, firm,
organization, or individual who performs intermediation
between two or more parties in a financial context, such as
connecting two sources of funds with users of funds
3)Defines "community development intermediary" to mean an
institution, firm, organization, or individual who performs
intermediation between two or more parties in a community
development context, such a connecting people and
organizations that have a stake in the future well-being of
communities and individuals who may not easily have access to
these stakeholders;
4)Defines "triple bottom line" to mean the economic
environmental and social benefits arising fro a project,
investment, or community and economic development activity;
5)Defines "small businesses" to mean a business with less than
100 employees and with a gross revenue of less than five
million dollars ($5,000,000), or a business that is otherwise
targeted by or participating in a federal or state program
engaged in programs or services for small businesses.
Application of this definition may only be used pursuant to a
direct reference;
6)Defines "community development" to mean a process designed to
create conditions of economic and social prosperity for the
whole community, or a targeted subset of the whole community,
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with the fullest possible reliance on the community's
initiative and active participation;
7)Defines "financial institution capital" to mean resources of a
financial institution, including, but not limited to, a bank
or credit union, that are legally available to be used to
generate wealth for the financial institution; and
8)Defines "California Council on Science and Technology" to mean
the council established by California academic research
institutions, including the University of California, the
University of Southern California, the California Institute of
Technology , Stanford University, and the California State
University, in support of Assembly Concurrent Resolution No.
162 (Res. Ch. 148, Stats. 1988).
EXISTING LAW :
1)Establishes the Business, Transportation and Housing Agency to
oversee and coordinate the activities of the economic
development programs.
2)Does not define the terms, emerging domestic market; financial
intermediary; community development intermediary; triple
bottom line; small businesses; community development;
financial institution capital; and California Council on
Science and Technology.
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose of the bill: The bill is a reintroduction of AB 1555
(Economic Development Committee) from 2009. The original
contents of the bill were deleted and the new language allowed
for the expanded use of ARRA money for broadband related
funding. To the committee's knowledge, there are no
controversial issues in this bill. Policy committees
typically carry measures that contain technical changes or
clean-up the codes. Nothing in this bill is intended to be
controversial. If language becomes controversial, it will be
removed.
2)Defining emerging domestic markets : "emerging domestic
market" refers to people, places, or businesses with growth
AB 2798
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potential, which have historically faced systemic capital
constraints. The demographics of emerging domestic markets
include ethnic- and women-owned firms, urban and rural
communities, companies which serve low- to moderate-income
populations, and other small- and medium-sized businesses.
Over the next 40 years, it is estimated that more than 85% of
U.S. population growth will come from minority ethnic groups.
This shift is already so significant that the combination of
African American and Hispanic consumer markets is larger than
the GDP of all but nine countries in the world.
With this growing diversity comes a change in the make-up of
business ownership in the country. The Milken Institute
states that minority-owned firms are growing at a rate six
times the growth rate (17% per year) of all other firms, and
sales from minority-owned firms are growing more than twice
the rate (34% per year) of all other firms.
Driven by these significant demographic changes and their
related impacts on markets, institutional investors have begun
to target small portions of their portfolios to emerging
domestic markets.
To better understand the dynamics of this new and growing
investment area the Economic Development Committee convened an
advisory group of economic and investment professionals for
the purpose of having an extended conversation about what
impediments they encounter in trying to invest in emerging
domestic markets.
During these discussions, it became apparent that, even with
the shifts in market share and business ownership, minority
businesses still experience significant impediments in
accessing capital. This bill was developed to provide key
phrases related to emerging domestic markets, including
"emerging domestic market," "financial intermediary,"
"community intermediary," and "triple bottom line."
A complete progress report on the Emerging Domestic Market
Advisory Group's meetings between October 11, 2007 through
January 22, 2008, is available on the JEDE website at
www.assembly.ca.gov .
3)Related Legislation: Below is a list of related legislation.
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a) AB 1555 (V. Manuel P?rez) - Economic Development
Omnibus : This bill added definitions and made technical
changes to the codes relating to the state's economic
development. The contents of the bill were removed and
language to expand the ARRA broadband funding for grants
was amended into the bill. Status: Signed by Governor -
Chapter 24, Statutes of 2009.
b) AB 3045 (Arambula) - Economic Development Omnibus: This
bill added definitions and makes technical changes to the
codes relating to the state's economic development.
Status: Vetoed by the Governor on September 29, 2009.
In his veto message the governor said: "I am returning
Assembly Bill 3045 without my signature. The historic
delay in passing the 2008-2009 State Budget has forced me
to prioritize the bills sent to my desk at the end of the
year's legislative session. Given the delay, I am only
signing bills that are the highest priority for California.
This bill does not meet that standard and I cannot sign it
at this time."
REGISTERED SUPPORT / OPPOSITION :
Support
Assembly Committee on Jobs, Economic Development, and the
Economy (sponsor)
Opposition
None received
Analysis Prepared by : Mercedes Flores / J., E.D. & E. / (916)
319-2090