BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 250| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 CONTINUED AB 250 Page 2 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 CONTINUED AB 250 Page 3 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 CONTINUED AB 250 Page 4 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 CONTINUED AB 250 Page 5 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. CONTINUED AB 250 Page 6 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 CONTINUED AB 250 Page 7 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 CONTINUED AB 250 Page 8 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 CONTINUED AB 250 Page 9 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. CONTINUED AB 250 Page 10 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 **** END **** CONTINUED