BILL ANALYSIS Ó
AB 250
Page 1
Date of Hearing: May 1, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 250 (Holden) - As Amended: April 18, 2013
Policy Committee: JEDE Vote:7-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill codifies and expands the California Innovation Hub
(iHub) Program at the Governor's Office of Business and Economic
Development (GO-Biz) to stimulate economic development and job
creation by coordinating federal, state and local resources.
Specifically, this bill:
1)Establishes proposal criteria for applicants to the California
iHub Program. Successful applicants will be designated iHubs.
2)Requires designated iHubs to include at least one economic
development organization, one major university or research
center or institute, and one other organization from a list
that includes a venture capital network and a government
economic development program among other possibilities.
3)Specifies that iHubs may, among other things:
a) Provide counseling and technical assistance in business
planning, management, financing, and marketing.
b) Provide advice on starting a business and accessing
financing opportunities.
c) Conduct business workshops, seminars, and conferences
with local partners.
AB 250
Page 2
d) Facilitate partnerships between start-ups and research
institutions with venture capitalists and financial
institutions.
4)Authorizes GO-Biz, with the approval of the Department of
General Services, to use unused or underused state-owned or
leased property for iHubs, nonprofits and businesses to
establish proof-of-concept centers, incubators and
demonstration sites. GO-Biz may authorize businesses or
nonprofits to use state property for demonstration purposes.
FISCAL EFFECT
1)Administrative costs to GO-Biz of approximately $100,000. A
significant amount of the work is already being done by the
office.
2)Possible GF costs in the millions to tens of millions for the
use of unused or underused state- owned or leased property.
In 2011-12 DGS sold approximately $42 million of property and
has averaged about $30 million annually over the last 20
years. It is unclear exactly how many of the relatively small
number of parcels sold each year would be used for the
purposes of this program.
COMMENTS
1)Purpose . According to the author, job creation through rapid
technology commercialization is a vital part of the state's
economic well-being, as identified in a January 2012 symposium
held by the Brookings Institute. The author contends AB 250
will serve as a catalyst to create a network of intellectual
and business development assets to facilitate technology
commercialization by establishing the Innovation Hub program
into law and authorizing access to private sector capital for
its operations. The author describes iHubs as the triple
helix model of economic development: each iHub is operated by
local consortiums comprised of government entities, community
colleges and universities, and industry. With the addition of
venture capital networks, the author contends the inputs
necessary for the development of an innovation ecosystem are
AB 250
Page 3
present.
2)Support . According to supporters, including the California
Healthcare Institute, iHubs have already demonstrated their
potential. They support legislation to codify the IHub
program and authorize state-owned property to be utilized by
the California start-up companies for demonstration of their
emerging technologies.
3)Surplus state property. In 2004, voters approved Proposition
60A, a constitutional amendment that dedicated proceeds from
sale of surplus state property purchased with GF monies to
payment of principal and interest on the Economic Recovery
Bonds approved in March 2004. When those bonds are repaid,
proceeds from surplus property are to be directed to the
Special Fund for Economic Uncertainties. Proceeds from the
sale of other surplus state properties also are also
restricted. For example, if the property was purchased with
federal funds, the money has to be used for the same purposes.
These factors would limit the ability to use surplus state
property for the purposes of the bill.
4)Office of Business and Economic Development . The Governor's
Office of Economic Development was established to serve the
needs of businesses and economic developers. While initially
established through Executive Order S-01-10, the office was
later codified and renamed the Governor's Office of Business
and Economic Development (GO-Biz), by AB 29 (J. Pérez),
Chapter 475, Statues of 2011.
In 2012, a comprehensive reorganization of the state's
administrative structure was begun, further consolidating
GO-Biz's position as the state's lead in economic development.
Effective July 1, 2013, GO-Biz will have administrative
authority for more economic development related programs and
services including the Small Business Loan Guarantee Program
and the Infrastructure and Economic Development Bank.
5)Related legislation . AB 653 (V. Manuel Pérez), among its
other provisions, codifies the iHub program. AB 653 is
pending in the JEDE Committee.
6)There is no registered opposition to this bill .
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081
AB 250
Page 4