BILL ANALYSIS                                                                                                                                                                                                    Ó







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        |Hearing Date:July 2, 2012          |Bill No:AB                         |
        |                                   |2012                               |
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                      SENATE COMMITTEE ON BUSINESS, PROFESSIONS 
                               AND ECONOMIC DEVELOPMENT
                          Senator Curren D. Price, Jr., Chair
                                           

                        Bill No:        AB 2012Author:J. Perez
                         As Amended:June 25, 2012 Fiscal:  Yes

        
        SUBJECT:   Economic development. 
        
        SUMMARY:  Transfers the authority for undertaking international trade 
        and foreign investment activities from the Business, Transportation 
        and Housing Agency (BTH) to the Governor's Office of Business and 
        Economic Development (GO-Biz), including establishing any 
        international trade and investment office.  In addition, the bill 
        transfers the responsibility for establishing an Internet-based permit 
        assistance center from the Secretary of the California Environmental 
        Protection Agency (CalEPA) to GO-Biz.

        Existing law:
        
        1)Establishes GO-Biz within the Governor's Office for the purpose of 
          serving as the lead state entity for economic strategy and marketing 
          of California on issues relating to business development, private 
          sector investment and economic growth.  GO-Biz also serves as the 
          administrative oversight for the California Business Investment 
          Service and the Office of the Small Business Advocate.  (Government 
          Code (GC) §§ 12096 - 12098.5)

        2)Provides that the Governor shall appoint the Director of the GO-Biz 
          who shall perform all duties, exercise all powers, assume and 
          discharge all responsibilities, and carry out and effect all 
          purposes vested by law in the office, including contracting for 
          professional or consultant services in connection with the work of 
          the office.  (GC § 12096.2)
         
        3)Establishes BTH for the purpose, among other things, of overseeing 
          and coordinating the activities of various departments, offices, and 





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          economic development programs, with responsibility for maintaining 
          the strength and efficiency of California's infrastructure and 
          financial markets.  These programs provide financial and 
          programmatic regulation important to the economic marketplace, 
          community development, the safe and efficient flow of commerce, and 
          activities related to international trade and investment.

        4)Provides that BTH shall be the primary state agency responsible for 
          trade and foreign investment activities and directs BTH, among other 
          things, to engage in the following as it relates to trade and 
          foreign investment:  (GC §§ 13996.45)

           a)   Attract employment-producing foreign investment to the state. 

           b)   Cooperate in international public infrastructure projects.

           c)   Provide support for California business in accessing 
             international markets, including but not limited to, export 
             assistance.

           d)   Engage in other trade or foreign investment related activities 
             specifically assigned by the Governor.

           e)   As a condition of that authority, directs the development and 
             implementation of a comprehensive international trade and 
             investment policy and strategies and plans to provide guidance to 
             other agencies and departments related to workforce and 
             infrastructure development.  All international trade and foreign 
             investment activities and funding are required to be consistent 
             with this strategy.

        5)Requires the Secretary of BTH, no later than February 1, 2008, to 
          provide to the Legislature a strategy for international trade and 
          investment that takes into consideration, at a minimum, on, policy, 
          goals and objectives to implement a comprehensive international 
          trade and investment program in California, measurable outcomes and 
          timelines, identification of key stakeholders, and other information 
          as specified.  Requires the relevant policy and fiscal committees to 
          review and hold a hearing on the strategy presented by the 
          Secretary.  (GC § 13996.55)

        6)Requires the Secretary of BTH to convene a statewide business 
          partnership for international trade and investment no later than 
          March 1, 2007, as specified.  (GC § 13996.6)

        7)Prohibits the Secretary of BTH from establishing any international 





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          trade and investment office (ITI Office) unless specified conditions 
          are met including that it is consistent with the policies and the 
          recommendations and priorities established in the international 
          trade and investment strategy and that the strategy conform to 
          requirements, as specified.  (GC § 13996.65)

        8)Prohibits the Secretary of BTH from establishing any ITI Office 
          unless the Secretary submits a business plan, as specified, to the 
          Legislature and meets other requirements, as specified.  (GC § 
          13996.7)

        9)Provides that the Controller shall not allocate any state funds to 
          the BTH for international trade and investment activities unless the 
          strategy for international trade and investment has be submitted to 
          the Legislature by May 1, 2008, and a report as required submitted 
          to fiscal committees of the Legislature.  (GC § 13996.75)

        10)Authorizes the Secretary of BTH to accept private sector moneys in 
          an amount not in excess of ten thousand dollars ($10,000) per 
          donation made to the state for the purpose of promoting 
          international trade and investment, subject to the Political Reform 
          Act requirements, and not in excess of a total of ten thousand 
          dollars ($10,000) per quarter per donor, and specifies the purposes 
          for which moneys may be used.  (GC § 13997)

        11)Creates the California Economic Development Fund (Fund) in the 
          State Treasury for the purpose of receiving federal, state, local 
          and private economic development funds, and receiving repayment of 
          loans or grant proceeds and interest on those loans and grants, and 
          provides that upon appropriation by the Legislature, moneys in the 
          Fund may be expended by the Secretary of BTH to provide matching 
          funds for loans or grants to public agencies, nonprofit 
          organizations, and private entities, and for other economic 
          development purposes, consistent with the purposes for which moneys 
          were received. (GC § 13997.6)
        12)Specifies that the Governor is the primary state officer 
          representing California's interest in international affairs and that 
          the Lieutenant Governor is the Chair of the California Commission 
          for Economic Development to improve trade opportunities for 
          California, and  that the BTH is the primary state agency 
          responsible for international trade and investment activities in 
          areas other than those covered by the Department of Food and 
          Agriculture, and specifies other authorities of State Office holders 
          and agencies as it relates to international affairs.  (GC 99500)

        13)Requires the Secretary for the California Environmental Protection 





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          Agency (CalEPA) to establish an electronic online permit assistance 
          center, called the "California Government-On Line to Desktops" 
          (CALGOLD), through the Internet, and that the CALGOLD shall be 
          available for use by any business or other entity subject to a law 
          or regulation implemented by a board, department, or office within 
          the CalEPA, and shall provide a business or other entity with 
          assistance in complying with those laws and regulations, and to the 
          extent feasible, incorporate permit assistance activities of local 
          and federal entities and of other entities of the state into its 
          operations.  (Public Resources Code § 71040)
        
        This bill:

        1)Transfers all authority for undertaking international trade and 
          foreign investment activities from the BTH to the GO-Biz. 

        2)Repeals the provisions in Item # 3) above, and instead recasts some 
          of these provisions and requirements for GO-Biz, and also provides 
          that the Director of GO-Biz may establish ITI Offices outside of the 
          Unites States if certain requirements and conditions are met, as 
          specified.

        3)Requires the GO-Biz, no later than February 1, 2014, to provide to 
          the Legislature a strategy for international trade and investment 
          that takes into consideration, at a minimum, on, policy, goals and 
          objectives to implement a comprehensive international trade and 
          investment program in California, measurable outcomes and timelines, 
          identification of key stakeholders, and other information as 
          specified.  However, removes the requirement that the relevant 
          policy and fiscal committees review and hold a hearing on the 
          strategy presented.

        4)Repeals the obsolete provision in Item # 6) above that required the 
          Secretary of BTH to convene a statewide business partnership for 
          international trade and investment no later than March 1, 2007, as 
          specified.

        5)Repeals the provisions in Item # 7) above which prohibited the 
          Secretary of BTH from establishing any international trade and 
          investment office (ITI Office) unless specified conditions are met 
          including that it is consistent with the policies and the 
          recommendations and priorities established in the international 
          trade and investment strategy and that the strategy conform to 
          requirements, as specified.  (  Note  :  To keep this provision would be 
          inconsistent with the new authority granted to the Director of 
          GO-Biz to establish ITI Offices outside of the Unites States if 





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          certain requirements and conditions are met, as specified.)

        6)Repeals the provisions in Item # 8) above which prohibited the 
          Secretary of BTH from establishing any international trade and 
          investment office (ITI Office) unless the Secretary submits a 
          business plan, as specified, to the Legislature and meets other 
          requirements, as specified.  (  Note  :  This provision would also be 
          inconsistent with the new authority granted to the Director of 
          GO-Biz to establish ITI Offices outside of the Unites States if 
          certain requirements and conditions are met, as specified.)

        7)Requires the Director of GO-Biz to prepare the following:

           a)   A budget for the International Trade and Investment Program 
             (Program) and a separately stated budget for each ITI Office and 
             specifies what information each of the budgets prepared shall 
             include.

           b)   A strategy and business plan for the Program, developed with 
             input from California businesses that shall include, but not be 
             limited to, measurable goals, objectives, and outcomes and 
             timelines necessary to attract employment-producing direct 
             foreign investment to the state and increase California exports.  
             Specifies what the strategy and business plan shall include.

           c)   A written review of the implementation of the prior year's 
             strategy and business plan for the Program that addresses the 
             performance of the program and each ITI Office.

           d)   Submit all of the above to the Legislature and policy 
             committees, as specified.

        8)Provides that the Controller shall not allocate any state funds to 
          the GO-Biz for international trade and investment activities unless 
          the strategy for international trade and investment has been 
          submitted to the Legislature by May 1, 2014.

        9)Authorizes GO-Biz to accept private sector moneys in an amount not 
          in excess of ten thousand dollars ($10,000) per donation made to the 
          state for the purpose of promoting international trade and 
          investment, subject to the Political Reform Act requirements, and 
          not in excess of a total of ten thousand dollars ($10,000) per 
          quarter per donor, and specifies the purposes for which moneys may 
          be used.

        10)Creates the California Economic Development Fund (Fund) in the 





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          State Treasury for the purpose of receiving federal, state, local 
          and private economic development funds, and receiving repayment of 
          loans or grant proceeds and interest on those loans and grants, and 
          provides that upon appropriation by the Legislature, moneys in the 
          Fund may be expended by the GO-Biz to provide matching funds for 
          loans or grants to public agencies, nonprofit organizations, and 
          private entities, and for other economic development purposes, 
          consistent with the purposes for which moneys were received.

        11)Specifies that GO-Biz is the primary state agency responsible for 
          international trade and investment activities in areas other than 
          those covered by the Department of Food and Agriculture. 
           
        12)Requires the GO-Biz to establish an electronic online permit 
          assistance center, called the "California Government-On Line to 
          Desktops" (CALGOLD), through the Internet, and that the CALGOLD 
          shall be available for use by any business or other entity subject 
          to a law or regulation implemented by an agency, authority, bureau, 
          board, commission, conservancy, council, department, state district 
          or office, and shall provide a business or other entity with 
          assistance in complying with those laws and regulations, and to the 
          extent feasible, incorporate permit assistance activities of local 
          and federal entities and of other entities of the state into its 
          operations.  

         
        FISCAL EFFECT:  According to the Assembly Committee on Appropriations 
        analysis dated April 25, 2012, negligible fiscal impact. 

        
        COMMENTS:
        
        1. Purpose.  The  Author  is the sponsor of this measure.  According to 
           the Author, "AB 2012 is a continuation of work started since 2010, 
           to create a single point of contact for business in California.  
           While the foundation for both the inclusion of foreign trade and 
           permitting was included in prior legislation that was signed into 
           law, the details had not been worked out."  

          "There is currently an agreement between GO-Biz and CalEPA to allow 
          GO-Biz to be able to maintain the CALGOLD website.  This bill 
          codifies that agreement."

          "Additionally, prior legislation defined the powers and duties 
          assigned to GO-Biz as the following : "In cooperation with the 
          federal government, foster relationships with overseas entities to 





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          improve the state's image as a destination for business investment 
          and expansion.  This bill formally transfers the responsibility for 
          foreign trade to GO-Biz."

        2.Background.  
         
           a)   Governor's Office of Business and Economic Development 
             (GO-Biz).  
           In February 2010, the Little Hoover Commission (LHC) undertook a 
             review of the state's economic and workforce development 
             programs.  In its final report, Making up for Lost Ground:  
             Creating a Governor's Office of Economic Development, it analyzed 
             the status and effectiveness of current programs since the 2003 
             demise of the Technology, Trade and Commerce Agency and 
             recommended the creation of a new governmental entity to fill the 
             void left by the dismantled agency.

             The report called for a single entity that would promote greater 
             economic development, foster job creation, serve as a policy 
             advisor and deliver specific services (i.e., permitting, tax, 
             regulatory, and other information) directly to the California 
             business community.  In April 2010, Governor Schwarzenegger 
             issued Executive Order S-05-10 as a means to operationalize the 
             report recommendations including the creation of the Governor's 
             Office of Economic Development (GOED).

             Since its inception, GOED has served over 3,000 businesses, 95% 
             of which are small.  The most frequent types of assistance 
             include help with permit streamlining, starting a businesses, 
             relocation and expansion of businesses, and regulatory 
             challenges.

             Under the auspices of GOED, a number of state programs and 
             services are administered, including programs related to 
             international trade, permit assistance, the Office of the Small 
             Business Advocate, and innovation.  There are 23 positions 
             assigned to GOED in 2011-12 Budget, which are funded through 
             existing state resources and staffed by personnel loaned from 
             state agencies and departments.   In October 2011, the Governor 
             signed AB 29 (cited and described below), which effectively 
             codified GOED and changed its name to GO-Biz, effective January 
             1, 2012.

             Among other programs, GO-Biz administers the Innovation Hub 
             (iHUB) program in partnership with the statewide network of Small 
             Business Development Centers.  There are currently 12 regional 





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             iHUBs located throughout the state.  The iHUB program is designed 
             to improve the state's national and global competitiveness by 
             stimulating partnerships, economic development, and job creation 
             around specific research clusters.  Key assets and partners of 
             the initiative include technology incubators, research parks, 
             universities, federal laboratories, economic development 
             organizations, business groups, and venture capitalists.

             Another key initiative of GO-Biz is the "strike teams" which can 
             be mobilized to help attract and/or retain specific businesses.  
             Strike teams are especially well suited to engage with major 
             employers and have been successfully activated to assist Bayer 
             Healthcare, Jazz Semiconductor, and Baxter Pharmaceutical to 
             locate and/or expand in California.

             GO-Biz is also sponsoring a permit streamlining pilot project, 
             which will offer a One-Stop-Shop for state and local permits.  
             The pilot, launched in partnership with the City and County of 
             San Francisco, will allow a business owner to login to a single 
             Web site (24x7) and apply for and pay all necessary city, county 
             and state permits.   

           b)   Expansion of GO-Biz and Reorganization.  In signing AB 29, 
             Governor Brown also issued a letter outlining his continued 
             interest in expanding the role of GO-Biz for the purpose of 
             better focusing the state's multiple economic development 
             activities.  The Governor reiterated this policy when he released 
             his proposed 2012-13 budget.

             On March 30, 2012, the Governor submitted a reorganization plan 
             to the Little Hoover Commission, which operationalized his 
             earlier statements.  Key GO-Biz related elements within the 
             reorganization plan include:

                         Dismantling BTH and transferring the following 
                  programs to GO-Biz:
                  o           The Small Business Loan Guarantee Program;
                  o           The California Travel and Tourism Commission;
                  o           The California Film Commission; 
                  o           The Film California First Program; and
                  o           The Infrastructure and Economic Development Bank 
                    (I-Bank).

                         Locating a Small Business Center program with 
                  GO-Biz, which is most likely, refers to the Small Business 
                  Development Centers Program (SBDC).  The SBDC is currently 





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                  co-located at GO-Biz.

                         Replacing the Secretary of BTH with the Director of 
                  GO-Biz as Chair of the California Travel and Tourism 
                  Commission and the I-Bank.  A newly established Secretary of 
                  Transportation replaces the Secretary of State and Consumer 
                  Services on the I-Bank board.

             The Little Hoover Commission had 30 days to analyze the Plan and 
             submit its recommendations to the Governor and Legislature.  The 
             Legislature has until July 3, 2012 (60 days) to consider the 
             Plan.  The Plan will go into effect on July 3rd unless the 
             Legislature takes an action pursuant to a resolution to 
             disapprove the Plan with a majority of the Members in each house 
             voting.

             On April 23 to April 25, 2012, the Commission held a series of 
             public hearings and received written testimony, interviewed 
             experts and reviewed analyses of the departments involved, 
             including its own previous work when relevant.  On April 25, May 
             11 and May 22, 2012, the Commission also held three public 
             hearings to develop and discuss its report and recommendation to 
             the Legislature.  In regards to the changes as mentioned, the 
             Commission stated, "These moves are consistent with the 
             Commission's previous recommendations, and the Commission 
             endorses them as they should bolster the state's economic 
             development efforts."  As further stated by the Commission:  "The 
             functions of the entities that would become part of GO-Biz are a 
             natural fit for economic and business development.  They are not 
             physically relocating but are virtually becoming a part of 
             GO-Biz, similar to what the Commission envisioned."

        1.Transfer of the State's Trade Program within BTH.  Between 1986 and 
          2004, the Technology, Trade and Commerce Agency (TTCA) was the 
          responsible government entity for promoting economic development, 
          international trade, and foreign investment in California.  When the 
          agency was eliminated due to its poor administrative performance, 
          the authority for all state trade activity was also struck from 
          statute. 

          Beginning in the 2005-06 session, several legislative measures were 
          introduced to reinstate the state's trade authority.  No measures 
          were successful until a compromise was negotiated with  SB 1513  
          (Romero, Chapter 663, Statutes of 2006).  During deliberations on 
          the re-establishment of the state's trade authority, concerns were 
          repeatedly raised that the state lacked a comprehensive, or even 





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          generally understandable, statutory scheme related to trade and 
          foreign relations.  

          SB 1513 addressed these concerns by first requiring the Business, 
          Transportation and Housing Agency (BTH) to undertake a trade study 
          to determine what role, if any, the state should play in 
          international trade and foreign investment activities.  Second, the 
                                                                           bill required BTH to establish a business advisory committee to 
          provide California businesses with direct access to the policy 
          making process.  Third, the bill required the development of a trade 
          strategy that is consistent with the trade study and acts as the 
          vehicle for implementing the state's trade policy.  The first 
          five-year strategy was published in February 2008.  The next update 
          is required in February 1, 2013.

        2.Transfer of CalGOLD Program.  Existing law requires businesses to 
          obtain various environmental permits prior to undertaking any 
          project with potential environmental impacts.  In 1997, the state 
          established a "smart" permit system to aid businesses in complying 
          with these laws and regulations.  The system, also known as the 
          CalGOLD, provides "hyperlinks: and other online resources that 
          business can use to identify permit requirements.  While statutorily 
          CalGOLD is directed to be operated through the Secretary of the 
          Environmental Protection Agency, the site and its related permit 
          assistance activities are being undertaken by GO-Biz through a 
          memorandum of understanding.

        5. Related Legislation.   AB 29  (John A. Pérez, Chapter 475, Statutes 
           of 2011) establishes GO-Biz within the Governor's Office for the 
           purpose of serving as the lead entity for economic strategy and 
           marketing of California on issues relating to business development, 
           private sector investment and economic growth.  
         
        AB 1137  (V. Manuel Pérez) of 2011, would have facilitated local 
           economic development and job creation by assisting small business 
           to access new export markets for their goods and services, updating 
           the law relating to free trade zones, and authorizing the use of 
           new federal funds under the Small Business Jobs Act of 2010.  This 
           measure was held in the Senate Committee on Appropriations.

         SB 1513  (Romero, Chapter 663, Statutes of 2006) provides new authority 
           for the BTH to undertake international trade and investment 
           activities, and as a condition of that new authority, directs the 
           development of a comprehensive international trade and investment 
           policy for California.  This bill reflects extended bi-partisan 
           discussions between the Senate and the Assembly.  





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         AB 2582   (Mullin, Chapter 283, Statutes of 2006) requires the CALGOLD 
           website to be updated periodically to include permitting and 
           regulatory compliance information relevant to emerging and evolving 
           industries.  The author was particularly interested in adding 
           online resources for the life sciences industry. 
        
        6. Arguments in Support.  The  California Workforce Association  writes 
           that it strongly supports efforts to facilitate bringing businesses 
           to California in order to generate much needed jobs in the state 
           and establishing a central location for business information and 
           permitting is an important step in helping California as it 
           continues to climb out of the Great Recession. 
        
        7. Technical Amendment.  With changes to Section 13996.65, a reference 
           to a subdivision which is no longer part of that Section was left 
           in and referred inadvertently in Section 13996.75.  Suggest the 
           following technical amendment:

        On page 17, line 8, strike after 2014, "or the strategy update 
           required by subdivision" and strike lines 9 through 11, inclusive.  
              

        
        SUPPORT AND OPPOSITION:
        
         Support:  

        California Workforce Association
        California Council for Environmental and Economic Balance

         Opposition:  

        None on file as of June 27, 2012.



        Consultant:Bill Gage