BILL ANALYSIS
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THIRD READING
Bill No: AB 2798
Author: Assembly Jobs, Economic Development, and the
Economy
Committee
Amended: As introduced
Vote: 21
SENATE BUS., PROF. & ECON. DEVEL. COMMITTEE : 7-0, 6/14/10
AYES: Negrete McLeod, Aanestad, Calderon, Correa, Florez,
Walters, Yee
NO VOTE RECORDED: Wyland, Oropeza
ASSEMBLY FLOOR : 71-0, 5/10/10 (Consent) - See last page
for vote
SUBJECT : Economic development
SOURCE : Author
DIGEST : This bill makes technical changes and defines
certain terms as it relates to the states economic
development and emerging domestic markets.
ANALYSIS :
Existing law
1. Designates the Business, Transportation and Housing
Agency as the primary state agency responsible for
facilitating economic development in the state.
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2. Establishes the California Economic Development Fund in
the State Treasury for the purpose of receiving
specified economic development funds.
3. Authorizes the Secretary of Business, Transportation and
Housing (Secretary) to expend moneys in the fund, upon
appropriation by the Legislature, for specified purposes
relating to economic development.
4. Authorizes the Secretary to administer the federal
Economic Adjustment Assistance Grant, as defined, and
defines various terms for the purposes of these
provisions relating to economic development.
This bill:
1. Clarifies that California's economic development
corporations and organizations provide broad public
benefits to the residents of the state.
2. Defines the following terms:
A. "Emerging domestic market" means people, places,
or business enterprises with growth potential that
face capital constraints due to systemic under
valuations as a result of imperfect market
information.
B. "Financial intermediary" means an institution,
firm, organization, or individual who performs
intermediation between two or more parties in a
financial context, such as connecting sources of
funds with users of funds.
C. "Community development intermediary" means an
institution, firm, organization, or individual that
performs intermediation between two or more parties
in a community development context, such as
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.
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D. "Triple bottom line" means the economic,
environmental, and social benefits arising from a
project, investment, or community and economic
development activity.
E. "Small businesses" means 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.
F. "Community development" means a process
designed to create conditions of economic and
social prosperity for the whole community, or a
targeted subset of the whole community, with the
fullest possible reliance on the community's
initiative and active participation.
G. "Financial institution capital" means 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.
H. "California Council on Science and Technology"
means 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 (Resolution Chapter 148,
Statutes of 1988).
Background
According to information provided by the Committee on Jobs,
Economic Development and the Economy (JEDE), "emerging
domestic market" refers to people, places, or businesses
with growth potential, which have historically faced
systematic capital constraints. The demographics of
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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 percent of the U.S. population
growth will come from minority ethnic groups. The shift is
already so significant that the combination of African
American and Hispanic consumer markets is larger than the
Gross Domestic Product (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 percent per
year) of all other firms, and sales from minority-owed
firms are growing more than twice the rate (34 percent 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, JEDE convened an advisory group of
economic and investment professionals for the purpose of
having an extended conversation about what impediments
those individuals encounter when 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."
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall,
Bill Berryhill, Tom Berryhill, Blakeslee, Block,
Blumenfield, Bradford, Brownley, Buchanan, Caballero,
Charles Calderon, Carter, Chesbro, Conway, Cook, Coto,
Davis, De Leon, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Gilmore, Hagman, Hall, Hayashi, Hernandez, Hill,
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Huber, Huffman, Jeffries, Jones, Knight, Lieu, Logue,
Bonnie Lowenthal, Ma, Miller, Monning, Nestande, Niello,
Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas,
Silva, Skinner, Smyth, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, John
A. Perez
NO VOTE RECORDED: De La Torre, DeVore, Harkey, Mendoza,
Nava, Norby, Saldana, Solorio, Vacancy
JJA:do 6/16/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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