BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  AB 250
          Author:   Holden (D) and V. Manuel Perez (D), et al.
          Amended:  6/26/13 in Senate
          Vote:     21

           
           SENATE BUSINESS, PROF. & ECON. DEV.COMMITTEE :  9-0, 6/24/13
          AYES:  Lieu, Block, Corbett, Galgiani, Hernandez, Hill, Padilla,  
            Wyland, Yee
          NO VOTE RECORDED:  Emmerson

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8
           
          ASSEMBLY FLOOR  :  73-5, 5/30/13 - See last page for vote


           SUBJECT :    California Innovation Initiatives

           SOURCE  :     Author


           DIGEST  :    This bill codifies and expands the California  
          Innovation Hub (iHub) Program at GO-Biz for the purpose of  
          stimulating economic development and job creation through the  
          coordination of federal, state, and local innovation-supporting  
          resources.

           ANALYSIS  :    

          Existing law:

          1. Establishes GO-Biz for the purpose of serving as the lead  
             state entity for economic strategy and marketing of  
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             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.  

          2. Establishes the California Economic Development 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 or grants.  Provides that upon appropriation by the  
             Legislature, moneys in the Fund may be expended by 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 the moneys were received.  

          This bill:

           1. Makes the following legislative findings and declarations:

              A.    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.

              B.    Innovation and tech-driven entrepreneurial activity  
                coupled with venture investment creates small business  
                startups and expansions at an accelerated rate, which  
                leads to significant employment opportunities that  
                contribute to the state's financial health and economic  
                competitiveness.

              C.    In order to maintain a healthy state economy and to  
                aid communities, entrepreneurship and technology-based  
                small businesses must be stimulated and supported.

              D.    iHubs are operated in California through a cooperative  
                agreement between GO-Biz and 12 geographically distinct  
                regions, all of which are partnered with public  
                universities, community college districts, local  
                governments, research institutions, industry, angel and  
                venture capital networks, and traditional financial  
                institutions.  The iHubs are California's premier resource  

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                for facilitating the success of entrepreneurial and small  
                technology startups that can grow California's economy by  
                assisting business owners in creating and retaining jobs,  
                increasing sales and profits, securing business financing,  
                and creating a successful new business climate in the  
                state.

              E.    The iHubs' economic impact in fostering  
                entrepreneurial business activity leads to job creation  
                and innovation in the economy by establishing a formal  
                partnership between the office and the iHub program.

              F.    It is necessary to establish a fund that would enable  
                GO-Biz to obtain funding from private sources, for  
                appropriation to state designated iHubs, iHub partner  
                organizations, and within state iHub-designated regions  
                for the purpose of establishing, promoting, and enhancing  
                California's innovation and entrepreneurship ecosystem.

           1. Creates the iHub Program within GO-Biz.  Requires GO-Biz to  
             designate iHubs within the state to stimulate partnerships,  
             economic development, and job creation by leveraging assets  
             to provide an innovation platform for startup businesses,  
             economic development organizations, business groups, and  
             venture capitalists.  Provides that the assets may include,  
             but are not limited to, research parks, technology  
             incubators, universities, and federal laboratories.  Requires  
             GO-Biz to oversee, coordinate, and provide assistance to each  
             iHub.

           2. Defines the following terms:  

              A.    "Applicant" as one or more entities that submit an  
                application to GO-Biz.  States that eligible applicants  
                must either be a fully accredited institution of higher  
                education or a private nonprofit corporation engaged in  
                economic development activities or a county or  
                municipality in this state that has a preexisting economic  
                development department or program or both or a public  
                economic development institution such as a workforce  
                investment board or an economic development corporation. 

              B.    "Innovation Hub" or "iHub" as a network of  
                interrelated firms, local governments, economic  

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                development organizations, educational entities, and  
                industries that collectively drive economic growth within  
                a defined geographic area.

              C.    "iHub coordinator" as the individual or entity agreed  
                to by the partnership that is responsible for implementing  
                the objectives of the iHub, serving as the primary agent  
                responsible for coordinating services and resources and  
                maintaining the partnership and serving as the primary  
                liaison to the state and the office.

           1. Requires GO-Biz to issue a request for proposals for the  
             iHub Program.  Requires an applicant's proposal to include,  
             but not be limited to the following, and states that GO-Biz  
             may also waive any of the following: 

              A.    A statement of purpose.

              B.    A signed statement of cooperation and a description of  
                the roles and relationships of each entity involved in the  
                partnership.

              C.    A designated iHub coordinator.

              D.    A clear explanation and map conveying the iHub's  
                physical boundary.

              E.    A clearly stated designee to coordinate iHub  
                activities.

              F.    A clearly identified central location, clearly  
                identified benchmarks or milestones with approximate dates  
                as to when they will be achieved.

              G.    A complete budget including a description of secured  
                funds with proof, pending funds, and potential future  
                funding sources, a list and brief description of local and  
                regional incentives and support programs.

              H.    A clearly articulated commercial market focus and  
                plan, a clearly articulated iHub management structure and  
                plan that may include a description of the capabilities,  
                qualifications and experience of the proposed management  
                team, team leaders, or key personnel who are critical to  

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                achieving the proposed objectives.

              I.    A list of iHub assets and resources.

              J.    A clearly articulated focus area of the iHub including  
                industry sectors or other targeted areas for development  
                and growth.

              AA.   A list of specific resources available to support and  
                guide startup companies.

              BB.   A clearly articulated list of goals to be achieved  
                with the certification of the iHub.

              CC.   Expectations for job development and business  
                creation.

              DD.   Defined performance standards agreed upon by the  
                partners involved in the development of the iHub.

              EE.   Evaluation procedures that will be used to measure the  
                level of achievement for each stated goal.

              FF.   A plan for sustainability.

              GG.   Organizational experience including capabilities,  
                related experience, facilities, techniques, unusual  
                resources, or unique combinations of these that are  
                integral factors for achieving the proposed objectives.

              HH.   Demonstrated experience with innovation programs such  
                as involvement with technology commercialization.

              II.   Demonstrated experience with technology transfer or  
                licensing.

              JJ.   Demonstrated experience with intellectual property  
                management.

              AAA.  Evidence of community engagement and support.

           1. Authorizes GO-Biz to designate an iHub for a term of not  
             more than five years and authorizes an iHub to reapply for a  
             designation without limitation on the number of times.   

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             Allows for more than one iHub to be designated in an area, to  
             the extent that there is a clear distinction between the  
             focus area of each iHub.  Requires GO-Biz to set guidelines  
             for approval, designation, operation, reporting,  
             redesignation, and dedesignation of iHubs.

           2. Provides that the iHub designation shall not be official  
             until a memorandum of understanding (MOU) is entered into by  
             the applicant and GO-Biz.  Requires the MOU to include the  
             goals and performance standards identified in the application  
             and other related requirements as determined by the office.   
             For an iHub designated by GO-Biz before January 1, 2014,  
             authorizes the iHub partnership to have until September 1,  
             2014 to enter into a MOU with GO-Biz.

           3. Requires an annual report from an iHub to GO-Biz on its  
             progress in meeting the goals and performance standards as  
             described in the application and MOU it has with GO-Biz.   
             Requires GO-Biz to post the information from these reports on  
             the GO-Biz Web site and provide notice to the Governor and  
             relevant policy committees of the Legislature that the  
             information is available on the Web site.

           4. Provides that a designated iHub must include at least one  
             major university or research center or institute, one  
             economic development organization, and consist of at least  
             four of the following:

              A.    A business support organization including a workforce  
                development or training organization, incubator or  
                business accelerator, business technical assistance  
                providers, chamber of commerce, and networking  
                organization that supports innovation.

              B.    An educational consortium including technology  
                transfer representatives.

              C.    A venture capital network including angel investors.

              D.    A business foundation, innovation foundation, science  
                foundation, laboratory research institution, federal  
                laboratory, or research and development facility.

              E.    A municipal economic development division or  

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                department.

              F.    A federal government partner such as a national  
                laboratory.

           1. Requires an iHub applicant, before receiving official  
             designation from GO-Biz, to self-certify that the iHub will  
             comply with the state's nondiscrimination policy and that the  
             iHub and its principals are current in payment of all state  
             and local taxes owed, unless they have entered into an  
             agreement that was deemed satisfactory by the respective  
             taxing authority and are in full compliance with the  
             agreement.

           2. Authorizes an iHub to:

              A.    Provide counseling and technical assistance, either by  
                direct or indirect services, in the areas of  
                entrepreneurial business planning and management,  
                financing, and marketing for small businesses.

              B.    Provide expert advice to entrepreneurs on starting a  
                business, including legal requirements for starting a  
                business and access to financing opportunities.

              C.    Conduct business workshops, seminars, and conferences  
                with local partners including, but not limited to, state  
                universities, state community colleges, local governments,  
                state and federal service providers, private industry,  
                workforce investment boards and agencies, small business  
                development centers, microenterprise development  
                organizations, small business service agencies, economic  
                development organizations, and chambers of commerce.

              D.    Facilitate partnerships between innovative startup  
                businesses, research institutions, and venture capitalists  
                or financial institutions.

           1. Requires the iHubs, to the extent feasible, to:

              A.    Work in close collaboration with the activities of the  
                office as its primary statewide partner.

              B.    Coordinate activities with the Employment Training  

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                Panel, the California Workforce Investment Board, the  
                Office of the Chancellor of the California Community  
                Colleges, the University of California, the California  
                State University, and other state economic and workforce  
                development programs.

           1. Establishes The Innovation Accelerator Account within the  
             California Economic Development Fund in the State Treasury.   
             Provides that subject to the approval of the Department of  
             Finance, all moneys collected and received by GO-Biz for  
             California Innovation Initiatives from gifts, bequests, or  
             donations shall be deposited in the iHub Accelerator Fund.   
             Continuously appropriates these funds.  

           Background
           
          Among other programs, GO-Biz administers the iHub Program in  
          partnership with the statewide network of small business  
          development centers (SBDCs).  SBDCs serve over 50,000 small  
          business owners and entrepreneurs each year through services  
          include consulting, mentoring and training related to business  
          management and planning, financing business growth and accessing  
          capital, international trade, government procurement and  
          technology commercialization.

          According to GO-Biz, in 2010, the state launched its new,  
          forward-thinking iHub Program in an effort to harness and  
          enhance California's Innovative spirit.  The iHubs improve the  
          state's national and global competitiveness by stimulating  
          partnerships, economic development, and job creation around  
          specific research clusters through state-designated iHubs.  The  
          iHubs leverage assets such as research parks, technology  
          incubators, universities, and federal laboratories to provide an  
          innovation platform for startup companies, economic development  
          organizations, business groups, and venture capitalists.

          There are currently 12 regional iHubs located throughout the  
          state:  (1) i-GATE iHub in Livermore; (2) Sacramento  
          iHub/Sacramento Regional Technology Alliance in Sacramento; (3)  
          San Diego iHub/CONNECT in La Jolla; (4) OCTANE iHub in Orange  
          County; (5) East Bay Green Corridor iHub in the East Bay; (6)  
          Clean Tech LA iHub in Los Angeles; (7) SJ/SV Emerging Technology  
          iHub in San Jose and Silicon Valley; (8) North Bay iHub in Santa  
          Rosa; (9) Greater Mission Bay iHub in San Francisco; (10) North  

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          State iHub in Chico; (11) Coachella Valley iHub in Palm Springs;  
          and (12) CalValleyTech iHub in the Central San Joaquin Valley.

           FISCAL EFFECT :    Appropriation:  Yes   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  8/9/13)

          BIOCOM
          California Healthcare Institute
          Clean Tech San Diego 
          CONNECT
          Los Angeles County Economic Development Corporation
          San Diego Regional Economic Corporation
          San Gabriel Valley Economic Partnership

           ARGUMENTS IN SUPPORT  :    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 states  
          that this bill "will serve as a catalyst to creating a network  
          of intellectual and business development assets that can  
          facilitate technology commercialization by establishing the  
          Innovation Hub program into law and authorizing access to  
          private sector capital for its operations."

          The Los Angeles County Economic Development Corporation call  
          this bill a boost to a low-cost program that is essential to  
          spurring innovation, prompting collaboration and improving the  
          state's overall economic competitiveness.  

          According to the California Healthcare Institute, this bill  
          provides an excellent model to bring the forces of innovation,  
          competition and education together and help ensure that  
          California remains the preeminent location for innovation in the  
          biomedical field.

          The San Gabriel Valley Economic Partnership states that by  
          leveraging local research parks, technology incubators, colleges  
          and universities and federal laboratories, the iHub Program has  
          successfully fostered greater collaboration between innovators  
          and venture capital investment opportunities within the state.    
           


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           ASSEMBLY FLOOR  :  73-5, 5/30/13
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,  
            Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,  
            Buchanan, Ian Calderon, Campos, Chau, Chesbro, Conway, Cooley,  
            Daly, Dickinson, Eggman, Fong, Fox, Frazier, Beth Gaines,  
            Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Hagman,  
            Hall, Harkey, Roger Hernández, Jones, Jones-Sawyer, Levine,  
            Linder, Logue, Lowenthal, Maienschein, Mansoor, Medina,  
            Mitchell, Morrell, Mullin, Muratsuchi, Nazarian, Nestande,  
            Olsen, Pan, Patterson, Perea, V. Manuel Pérez, Quirk,  
            Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting, Wagner,  
            Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A.  
            Pérez
          NOES:  Chávez, Dahle, Donnelly, Grove, Melendez
          NO VOTE RECORDED:  Holden, Vacancy


          MW:k  8/12/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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