BILL ANALYSIS Ó
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THIRD READING
Bill No: SCR 33
Author: Price (D)
Amended: As introduced
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEVELOP. COM : 5-0, 4/25/11
AYES: Price, Corbett, Hernandez, Negrete McLeod, Vargas
NO VOTE RECORDED: Emmerson, Correa, Walters, Wyland
SUBJECT : Foreign investment
SOURCE : Author
DIGEST : This bill expresses the sentiment of the
Legislature that the
EB-5 visa program is beneficial to the state's economic
development and provides important opportunities for
foreign direct investment to California.
ANALYSIS : Existing law:
1.Specifies that the Business, Transportation and Housing
Agency (BT&H) is the primary state agency authorized to
attract foreign investments, cooperate in international
public infrastructure projects, and support California
businesses in accessing markets, and requires the
Secretary to develop an international trade and
investment policy.
2.Sets forth findings and declarations detailing:
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A. The importance of strengthening collaborative
linkages among remaining California-based
international trade and investment promotion programs
operated at federal, state, regional and local levels
in light of the repeal of the statutory authority for
the Technology, Trade and Commerce Agency in 2003.
B. Data from 2000 shows that international trade and
investment activity in the state supports one in every
seven jobs.
C. Public Policy Institute of California data as to
the productivity of export business.
D. California has elements to form the foundation for
a global market-related economy.
E. California's multicultural and ethnic populations
offer unique opportunities for international trade and
investment.
F. High numbers of California workers are employed by
subsidiaries of foreign companies.
G. California's trade and investment policy is a
living document that should be regularly updated to
reflect emerging business trends and the changing
needs of California businesses and workers.
1.Requires the Secretary to complete a study on the
potential roles of the state in global markets and a
strategy for international trade and investment.
2.Requires the Secretary to convene a statewide business
partnership for international trade and investment.
3.Sets forth criteria by which the Secretary can establish
international trade and investment offices and the
Controller can allocate funds for those offices.
4.Specifies that the Governor is the primary state officer
representing California's interest in international
affairs; the Lieutenant Governor is the Chair of the
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California Commission for Economic Development to improve
trade opportunities for California; the Attorney General
assists the federal government in defending against
international challenges to California law; the Secretary
of State oversees the International Business Relations
Program which assists foreign business entities with the
various filing processes; the Department of Food and
Agriculture is the primary agency for the promotion of
California agriculture, fish and forest exports and; BT&H
is the agency responsible for international trade and
investment activities other than those covered by Food
and Ag.
5.Establishes the enterprise zone program, administered by
California Department of Housing and Community
Development to stimulate business and industrial growth
and create jobs in depressed areas of the state.
6.Defines a "targeted employment area" (TEA) for the
purposes of an enterprise zone, to mean an area within a
city, county, or city and county that is composed solely
of those census tracts designated by the US Department of
Housing and Urban Development as having at least 51% of
its residents of low- or moderate-income levels, using
either the most recent U.S. Department of Census data
available at the time of the original enterprise zone
application or the most recent census data available at
the time the targeted employment area is designated to
determine that eligibility. Specifies that the purpose
of a TEA is to encourage businesses in an enterprise zone
to hire eligible local residents. A TEA may include, but
is not required to include, all or part of the boundaries
of the enterprise zone. The TEA does not need to
encompass all eligible areas, but may include only those
areas that the local government determines have residents
who are in the most need of this employment targeting.
This resolution:
1.States that the economic downturn has led to higher
unemployment in California, and has limited access to
credit and investment for California businesses.
2.States that greater foreign investment in California
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would create jobs and improve the state's economy.
3.States that many foreign investors see California as a
desirable place to invest and reside.
4.Declares that it is in California's economic interest to
promote opportunities for EB-5 visa investment in the
state.
Background
The EB-5 visa category, which was created by Congress in
1990, is available to immigrants seeking to enter the
United States in order to invest in a business or company
that will benefit the economy. This federal program is
administered by the US Citizenship and Immigration Service
(USCIS). EB-5 is a federal program. The name "EB-5" is
derived from the fact that it is the 5th category of
Employment-Based visa. Permanent-resident status through
an EB-5 visa is available to foreign investors who have
invested - or are actively in the process of investing - at
least $1million into a new commercial enterprise, which can
entail: the creation of an original business; the purchase
of an existing business and restructuring or reorganizing
the business to the extent that a new commercial enterprise
results; or a significant expansion of an existing
business.
10,000 EB-5 visas are made available per year by USCIS.
Close to 4,300 investors attained EB-5 status in 2009, up
from only hundreds in 2007.
An applicant seeking status as an immigrant investor must
demonstrate that his or her investment will benefit the
U.S. economy and create full-time employment for at least
ten qualified individuals, or maintain the number of
existing employees in a troubled business. If the
investment in a new commercial enterprise is made in a
targeted employment area TEA, the required investment is
decreased to $500,000. A TEA is either a high-unemployment
area that has experienced an unemployment rate of at least
150% of the national average rate or a rural area.
In addition to individual investors, the federal government
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can also recognize regional centers which allow for a
pooling of investor money. There are at least 31
federally-recognized regional centers currently operating
in California, significantly more than any other state.
These regional centers are based across the state. Their
focuses vary widely, and include commercial real estate
development, agricultural products, film project, and
high-tech ventures.
Applicants to the EB-5 visa program must demonstrate that
they meet all requirements of the program prior to the
filing with the USCIS. If it is determined that the
investment criteria is met and properly documented, any
investor may be granted conditional permanent residence
status for a period of two years by USCIS. A permanent
green card may be issued at the end of the conditional
period.
FISCAL EFFECT : Fiscal Com.: No
SUPPORT : (Verified 4/26/11)
California Chamber of Commerce
ARGUMENTS IN SUPPORT : The California Chamber of
Commerce supports this resolution and writes:
SCR 33 specifically endorses more opportunities for
EB-5 visas as a way to encourage the flow of foreign
capital into the US economy and create jobs for US
workers. The EB-5 visa is available to foreign
investors who establish a business or invest in an
existing business to the amount of $1 million or more
(or $500,000 in a rural area, or areas of high
unemployment rates), and the business generates 10 or
more full-time staff. The investors and their
qualifying family members receive a conditional green
card and can apply for the conditions to be removed
after 21 months, allowing them to become permanent
residents of the US.
Foreign direct investment (FDI) contributes to
productivity growth, generates exports, and creates
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high-paying jobs for California workers. California
has historically been the most attractive destination
in the US for FDI. In 2008, foreign-controlled
companies employed 594,100 California workers. Major
sources of foreign investment in California in 2008
included Japan, the United Kingdom, France, and
Germany. Some advantages of investing in California
are as follows: FDI creates new jobs, boosts wages,
reinvests profits back into the economy, strengthens
local manufacturing, and brings in new research,
technology and skills. However, that leadership
position cannot be taken for granted. The EB-5 visa
has been underutilized, but California only stands to
gain from an increase in the usage of the visa. SCR
33 would help promote the availability and benefits of
the visa, and highlights the importance of FDI in
California as an economic driver in the state.
CTW:nl 4/26/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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