Amended in Assembly September 3, 2013

Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 495

Introduced by Assembly Member Campos

February 20, 2013

An act to add Article 6 (commencing with Section 12099.1) to Chapter 1.6 of Part 2 of Division 3 of Title 2 to the Government Code, relating to begin delete Community end delete begin insert community end insert investment.

LEGISLATIVE COUNSEL’S DIGEST

AB 495, as amended, Campos. Community investment.

Existing law authorizes the Governor’s Office of Business and Economic Development to, among other things, advance statewide economic goals.

This bill would establish the California Community Investment Initiative within the Governor’s Office of Business and Economic development. The initiative would be governed by a 13 member begin delete oversight board end delete begin insert end insert begin insert Coordination and Oversight Council end insert comprised of 6 citizens appointed by the Governor, 4 members of the Legislature, the Treasurer, the Controller, and the Secretary of the Business, Consumer Services, and Housing Agency, as specified.

The initiative would be required to create begin delete an inventory end delete begin insert a database end insert of low-income neighborhoods, begin delete public interments, state and local programs, and sources of public-sector finance, end delete begin insert compile and maintain an inventory of California public sector funding resources and financing mechanisms, end insert coordinate begin delete public-sector end delete begin insert public sector end insert financial investment and public programs to assist low-income communities to become business, development, and investment ready, develop criteria for begin delete determining the type of economically, socially, and environmentally responsible businesses and real estate developments to assist in starting-up, locating, and growing in low-income neighborhoods, establish a broad array of incentives to encourage responsible businesses and real estate developments to grow in low income neighborhoods and to encourage investment in low income neighborhoods, assist with formulating Community Development Strategies with associated Zoning and Area Plans, report annually to the Legislature and the Governor on whether the initiative has met the criteria established for measuring the economic, social, and environmental returns, and establish the California Community Investment Network, as specified end delete begin insert triple bottom-line equity funds, establish overall triple bottom-line goals and standardized metrics for economic, social, and environmental outcomes to be accepted by eligible equity funds, survey counties and cities to identify and inventory local governments that want to partner with triple bottom-line equity funds to invest in low-income neighborhoods, establish and convene regular meetings of the California Community Investment Network comprised of organizations and institutions with expertise and resources to advise the Coordination and Oversight Council and eligible equity fund managers, and report annually to the Legislature and the Governor on the status and progress of the California Community Investment Initiative and performance on goals and triple bottom-line outcomes, as specified end insert .

This bill would also make legislative findings and declarations.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

This act shall be known and may be cited as the
California Community Investment Initiative.

SEC. 2.  

The Legislature finds and declares all of the following:

(a) Despite having the largest state economy in the United States,
California has the highest poverty rate of any state, with nearly a
quarter of its residents living in poverty.

(b) In this era of public budget constraints, begin delete public-sector end delete begin insert public
sector end insert dollars are insufficient to solve the problems of low-income
neighborhoods. Therefore, begin delete private-sector end delete begin insert private sector end insert market
forces need to be engaged to make substantial investments that
produce a risk adjusted market rate of return.

(c) Low-income neighborhoods constitute domestic emerging
markets with significant purchasing power and location
efficiencies, but suffer from social, public safety, broadband, and
physical infrastructure problems that contribute to market
prejudices that lead to disinvestment.

(d) To overcome these problems and market prejudices,
low-income neighborhoods need to become business, development,
and investment-ready through a partnership of government,
begin delete private-sector end delete begin insert private sector end insert , community, and the environmental
leaders focused on generating coordinated, focused, effective
human services, public safety, broadband, workforce, education,
and physical infrastructure.

(e) A new class of begin delete business and end delete real estate begin insert and business end insert
developments begin delete are end delete begin insert is end insert emerging that begin delete are end delete actively begin delete pursuing end delete begin insert pursues end insert
economically, socially, and environmentally responsible outcomes.
begin insert These real estate and business developments often are the result
of investments from private end insert begin insert sector equity funds that generate
market-rate returns to investors, but are also legally committed
to improving social and environmental conditions and
characteristics for the existing residents in these neighborhoods.
These private end insert begin insert sector investment mechanisms often are refereed to
as “triple bottom-line” equity funds. end insert

(f)  begin delete Businesses and real estate developments of this type that end delete
begin insert Triple bottom-line equity funds and the real estate and business
developments resulting from them end insert are helping to reduce poverty
and improve the social and environmental dynamics of low-income
begin delete neighborhoods can benefit from coordinated state assistance. end delete
begin insert neighborhoods. Triple bottom-line equity investments can be
encouraged and the benefits from them can be enhanced and
accelerated by coordinated assistance from existing State of
California programs and funding resources. end insert

(g) Many of these neighborhoods are at transit hubs or have the
transit and mixed-use characteristics in place to make development
in them more climate friendly than development elsewhere.

(h) The State of California should encourage responsible
businesses and real estate developments to locate and do business
in business and development-ready low-income neighborhoods in
ways that solve economic, social, and environmental problems
rather than begin delete causing end delete begin insert cause end insert them.

(i) To accomplish this, begin insert the State of end insert California begin delete needs a end delete begin insert intends
to establish the end insert California Community Investment Initiative begin delete and
regional Community Development Strategies to assist low-income
neighborhoods and the cities, counties, and regions where they are
located to become business, development, and investment-ready. end delete
begin insert to assist low-income neighborhoods by encouraging private end insert begin insert sector
investment consistent with the economic development and
community improvement strategies of the cities, counties, and
regions where they are located. It is the intent of the State of
California that such private end insert begin insert sector investment is accomplished
without permanent displacement of existing residents in low-income
neighborhoods. end insert

SEC. 3.  

Article 6 (commencing with Section 12099.1) is added
to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government
Code, to read:

 

Article 6.  California Community Investment Initiative

 

12099.1.  

(a) The California Community Investment Initiative
is hereby begin delete created end delete begin insert established end insert within the Governor’s Office of
Business and Economic Development begin insert to encourage private end insert begin insert sector
investment in low-income neighborhoods to improve the economic,
environmental, and social conditions for the existing residents,
thereby helping improve the overall economic, environmental, and
social well-being for California end insert . The California Community
Investment Initiative shall be begin insert supported and end insert staffed by the
Governor’s Office of Business and Economic Development using
existing resources.

(b) The California Community Investment Initiative shall be
governed by a 13 member begin delete oversight board made up of: end delete
begin insert Coordination and Oversight Council comprised of end insert begin insert : end insert

(1) Six persons appointed by the Governor, comprised of three
citizens with begin delete private-sector end delete begin insert private sector end insert business or investment
expertise and three citizens with community development expertise.

(2) Four members of the Legislature, two from the Senate
appointed by the President pro Tempore of the Senate, one from
each of the two political parties with the most representatives in
the Senate, and two from the Assembly appointed by the Speaker
of the Assembly, one from each of the two political parties with
the most representatives in the Assembly. The members shall have
relevant program expertise to contribute to the initiative. The
members shall be nonvoting members of the begin delete oversight board end delete
begin insert Coordination and Oversight Council end insert and shall participate in the
activities of the begin delete board end delete begin insert council end insert only to the extent that their
participation is compatible with their respective positions as
Members of the Legislature.

(3) The Treasurer.

(4) The Controller.

(5) The Secretary of the Business, Consumer Services, and
Housing Agency.

12099.2.  

The California Community Investment Initiative shall
do all of the following:

(a)  begin delete Create an inventory end delete begin insert Develop and annually update a database end insert
of low-income begin delete neighborhoods, public interments, state and local
programs, and sources of public-sector finance, including
descriptions of asset size, underwriting criteria, decisionmaking
process, and other characteristics. The end delete begin insert neighborhoods in California
by county and city with relevant information about each
neighborhood, including socio-economic demographic data,
descriptions of pertinent characteristics to inform private sector
invests, such as local land use plans and zoning or other
development designations, and commitments from local
governments to support private sector investments. The
Coordination and Oversight Council shall adopt criteria for an
eligible low-income neighborhood. end insert

begin insert (b) end insert begin insert   end insert begin insert Compile and maintain a current inventory of end insert begin insert California
public sector funding resources and financing mechanisms that
may be allocated to or utilized in low-income neighborhoods with
a description of the amount of available funding, criteria for
allocation, and application and decision end insert begin insert making criteria. The end insert
inventory shall begin delete examine all of the following: end delete begin insert assess the role and
impact of all of the following entities and programs on low-income
neighborhoods end insert begin insert : end insert

(1) California Department of Insurance Organized Investment.

(2) Federal and State Low-Income Housing Tax Credit Program.

(3) California Alternative Energy and Advanced Transportation
Financing Authority.

(4) California Pollution Control Financing Authority.

(5) California Transportation Financing Authority.

(6) Industrial Development Finance Authority.

(7) The California Infrastructure and Economic Development
Bank.

begin insert

(8) Health and Human Services Agency.

end insert begin insert

(9) State Department of Education.

end insert begin insert

(10) Natural Resources Agency.

end insert begin insert

(11) Energy Commission.

end insert begin insert

(12) Public Utilities Commission.

end insert begin delete

(8)

end delete

begin insert (13) end insert   begin insert Local transportation authorities and the end insert Transportation
begin delete funding through the Metropolitan Planning Agencies. end delete begin insert Agency,
including all transportation funding proposed by the Department
of Transportation end insert begin insert or allocated by the California Transportation
Commission for expenditure by end insert begin insert state end insert begin insert or end insert begin insert metropolitan end insert begin insert planning end insert
begin insert organizations end insert begin insert . end insert

begin delete

(b)

end delete

begin insert (c) end insert  Coordinate begin delete public-sector end delete begin insert public sector end insert financial investment
and public programs to assist low-income communities to become
business, development, and investment ready begin insert or end insert begin insert complement
private end insert begin insert sector triple bottom-line equity fund investments end insert . These
programs shall include begin insert at least the following purposes end insert :

(1)  begin delete ______ end delete begin insert Economic development, including research and
development, manufacturing, and real estate development that
generates in jobs end insert .

(2)  begin delete ______ end delete begin insert Housing rehabilitation and construction end insert .

begin insert

(3) School construction, education, and academic performance
improvement.

end insert begin insert

(4) Workforce preparation and training.

end insert begin insert

(5) Public safety, community policing, crime prevention,
rehabilitation, and probation.

end insert begin insert

(6) Public health, social services, and other human services.

end insert begin insert

(7) Mental health services.

end insert begin insert

(8) Alcohol and other drug abuse prevention and treatment.

end insert begin insert

(9) Recreation and community arts and music programs.

end insert begin insert

(10) Transportation and other mobility infrastructure, including
public transit, walkways, and bicycle paths.

end insert begin insert

(11) Other infrastructure, including water, sewer, solid waste,
recycling, and lighting.

end insert begin insert

(12) Broadband deployment for high-speed Internet access,
other information technology infrastructure, and smart grid.

end insert begin insert

(13) Energy efficiency, weatherization, and renewable energy
resources.

end insert begin insert

(14) Environmental quality, resource recycling, community
gardens, and local food sourcing services.

end insert begin insert

(15) Homeless facilities and services.

end insert begin delete

(c)

end delete

begin insert (d) end insert  Develop begin insert and adopt end insert criteria for begin delete determining the type of
economically, socially, and environmentally responsible businesses
and real estate developments to assist in starting-up, locating, and
growing in low-income neighborhoods. end delete begin insert eligible triple bottom-line
equity funds that invest in enterprises and employers that generate
permanent jobs, including investments to assist in starting-up,
locating, and expanding employers in low-income neighborhoods. end insert
These criteria shall include begin insert the end insert begin insert spirit and intent of the
preponderance of the following criteria as refined and adopted by
the Coordination and Oversight Council end insert :

(1)  begin delete ______ end delete begin insert Commitment to locate investments in a low-income
neighborhood end insert .

(2)  begin delete ______ end delete begin insert Generation of living wage jobs with benefits for
low-income residents end insert .

(3)  begin delete ______ end delete begin insert Projected multiplier effect for generation of
additional employment end insert .

begin insert

(4) Provision of employment benefits, such as health care,
retirement plans, profit sharing, and employee stock ownership.

end insert begin insert

(5) Commitment to local hiring and job training.

end insert begin insert

(6) Engagement of local, women, and minority business
enterprises as suppliers and contractors.

end insert begin insert

(7) Development and sponsorship of employee training
programs, including job training and financial education.

end insert begin insert

(8) Provision of on site or nearby child care for children of
employees.

end insert begin insert

(9) Use of green building design, construction, renovation, or
operations.

end insert begin insert

(10) Implementation of energy and other resource efficiency,
recycling, or pollution prevention programs.

end insert begin insert

(11) Deployment of broadband high-speed Internet access and
other information technologies to support and increase productivity
and reduce impacts on the environment.

end insert begin insert

(12) Implementation of workplace safety or effective ergonomic
programs.

end insert begin insert

(13) Engagement with the local community through volunteer
organizations, local school support programs, and other
community initiatives.

end insert begin insert

(14) Production of economically, socially, or environmentally
beneficial products and services.

end insert begin insert

(15) Receipt of green business certification.

end insert begin insert

(16) Production of Corporate Social Responsibility (CSR),
Corporate Sustainability, and Creating Shared Value (CSV)
reporting.

end insert begin delete

(d) Establish a broad array of incentives to encourage
responsible businesses and real estate developments to grow in
low-income neighborhoods and to encourage investment in
low-income neighborhoods. These incentives shall include:

end delete begin delete

(1) Environmental and entitlement regulatory incentives.

end delete begin delete

(2) Integrated public agency assistance incentives.

end delete begin delete

(e) Assist with formulating Community Development Strategies
with associated Zoning and Area Plans that will help low income
neighborhoods and the cities, counties, and regions where they are
located to become business, development, and investment ready.

end delete begin delete

(f) Report annually to the Legislature and the Governor on
whether the initiative has met the criteria established for measuring
the economic, social, and environmental returns on the investments
made pursuant to this article.

end delete begin insert

(e) Develop and adopt criteria for eligible triple bottom-line
equity funds that invest in real estate developments to assist in
constructing, expanding, renovating, and rehabilitating buildings
in low-income neighborhoods that accommodate all allowed land
use approved and permitted by the local government land use
regulations. The criteria shall include the spirit and intent of the
following, as refined and adopted by the Coordination and
Oversight Council:

end insert begin insert

(1) Commitment to locate investments in a low-income
neighborhood.

end insert begin insert

(2) Consistency of development with local government land use
plans and alignment with local government priorities.

end insert begin insert

(3) Generation of construction jobs with living wages and
benefits.

end insert begin insert

(4) Establishment of job training and apprentice programs for
local residents.

end insert begin insert

(5) Ownership or equity participation by a local, woman, or
minority developer or use of local, women, or minority business
enterprises as contractors or subcontractors.

end insert begin insert

(6) Construction of affordable housing, especially as part of a
larger mixed-income, mixed-use project to optimize synergies
among land uses.

end insert begin insert

(7) Generation of permanent living wage jobs.

end insert begin insert

(8) Retention or generation of permanent living wage jobs.

end insert begin insert

(9) Use of green construction materials and practices.

end insert begin insert

(10) Incorporation of energy efficiencies, waste reduction, and
renewable energy resources.

end insert begin insert

(11) Implementation of smart development practices deploying
broadband for high-speed Internet access for smart infrastructure
and smart buildings, optimizing the utility of a smart grid.

end insert begin insert

(12) Incorporation of a multimodal transportation system that
optimizes walking, bicycling, public transit, and other strategies
to reduce single-occupant vehicle trips.

end insert begin insert

(13) Design of development consistent with the concept and
principles for livable communities.

end insert begin insert

(14) Accommodation of green and clean technology employers.

end insert begin insert

(15) Implementation of low-impact development practices
incorporating native vegetation, soil preservation, water use
conservation, recycling and other efficiencies, and pervious
pavement.

end insert begin insert

(16) Incorporation of parks, recreational areas, open spaces,
and other environmental amenities.

end insert begin insert

(17) Accommodation of locations for small and local businesses.

end insert begin insert

(18) Establishment of space for neighborhood organizations,
community centers, child care centers, and other nonprofit
community-based organizations.

end insert begin insert

(19) Use of bio-regional development practices connecting local
and regional sustainable food production with urban consumption.

end insert begin insert

(20) Acquisition of LEED certification for buildings and
neighborhoods.

end insert begin insert

(f) Establish overall triple bottom-line goals and standardized
metrics for economic, social, and environmental outcomes that
shall be accepted by all eligible equity funds.

end insert begin insert

(g) Gather evidence and conduct public forums to identify a
broad array of incentives that will encourage triple bottom-line
equity fund investments in low-income neighborhoods and take
the following actions:

end insert begin insert

(1) Prepare a report to the Legislature and Governor.

end insert begin insert

(2) Establish incentives for which there is existing legal and
regulatory authority.

end insert begin insert

(3) Recommend appropriate amendments to existing laws and
regulations and work with the Legislature and the Governor to
secure adoption.

end insert begin insert

(h) Survey counties and cities to identify and inventory local
governments that want to partner with triple bottom-line equity
funds to invest in low-income neighborhoods. This survey shall
determine if the local government has done any of the following:

end insert begin insert

(1) Approved within the last 10 years a general plan, specific
plan, or other land use plan or zoning regulation on which an
investor can rely to govern and control development.

end insert begin insert

(2) Identified local public funding or other resources that have
been or will be committed to the low-income neighborhood to
complement a triple bottom-line equity fund investment.

end insert begin insert

(3) Designated a person to coordinate alignment of public
resources and implementation of development plans with a fund
manager.

end insert begin insert

(4) Established county and city school integrated human services
teams to serve the low-income neighborhood with goals and
accountability to increase employment, improve education, reduce
poverty, reduce crime, and improve health status.

end insert begin insert

(5) Committed to cooperate in and assist with monitoring and
tracking performance outcomes in the low-income neighborhoods.

end insert begin insert

(i) Establish and convene regular meetings of the California
Community Investment Network comprised of organizations and
institutions with expertise and resources to advise the Coordination
and Oversight Council and eligible equity fund managers.

end insert begin insert

(j) Report annually to the Legislature and the Governor on the
status and progress of the California Community Investment
Initiative and performance on goals and triple bottom-line
outcomes pursuant to subdivision (f).

end insert

12099.3.  

begin insert (a) end insert begin insert   end insert The California Community Investment Initiative
shall begin delete establish the California Community Investment Network.
This network shall do all of the following: end delete begin insert encourage significant
private sector commitment, cooperation, and collaboration to
invest private capital in low-income neighborhoods through
eligible triple bottom-line equity funds. The California Community
Investment Initiative shall give priority consideration for award
of state assistance from public resources, herein identified, to
low-income neighborhoods into which investments are being made
by each fund that is capitalized with at least one billion dollars
($1,000,000,000) in investment funds. The Coordination and
Oversight Council shall adopt criteria and a process for
prioritizing assistance to low-income neighborhoods into which
investments are being made by triple bottom-line equity funds that
are capitalized with less than one billion end insert begin insert dollars ($1,000,000,000)
in investment funds. end insert

begin delete

(a) Establish the California Family of Funds. The California
Family of Funds shall consist of venture funds and real estate
funds.

(b) Invite top quartile investment fund managers to become the
managing partners of the venture and real estate funds and to
affiliate with a not-for-profit organization as a special limited
partner.

(c) Provide assistance to the managing partners and the special
limited partner in raising five hundred million dollars
($500,000,000) in assets for the venture funds and five hundred
million dollars ($500,000,000) in assets for the real estate funds
from private sector investors, institutional investors, and
foundations.

(d) Fund managers, with assistance from the special limited
partner, in turn, shall:

(1) Identify investment funds with a substantial positive,
economic, social, and environmental impact on low income
individuals and communities and a financial return at or above
market rate.

(2) Make investments in funds that meet the criteria set forth in
subparagraph (1).

(3) Work with funds the initiative has invested in to assist them
in accomplishing the stated objectives.

end delete begin insert

(b) The Coordination and Oversight Council shall adopt criteria
for an eligible triple bottom-line equity fund that shall include at
least the following:

end insert begin insert

(1) The fund shall be legally structured to comply with both the
spirit and intent of the preponderance of the relevant criteria
delineated in subdivisions (d) and (e) of Section 12099.2, as refined
and adopted by the Coordination and Oversight Council, including
triple bottom-line goals and outcomes with explicit metrics.

end insert begin insert

(2) The fund shall be managed by a reputable fund manager
with a track record of experience and performance with triple
bottom-line funds.

end insert begin insert

(3) The fund shall be prepared by experienced personnel to lead
and manage implementation of coordinated state and local
government public funding or other resources. This shall be
accomplished either by the fund manager or through a contractual
relationship between the fund manager and an appropriate
nonprofit organization.

end insert begin insert

(4) The fund shall be committed to working with relevant local
government jurisdictions to optimize the alignment of state public
funding and resources and local government funding and
resources.

end insert begin insert

(5) The fund shall be organized to track performance and report
metrics for triple bottom-line goals and outcomes.

end insert begin insert

(c) If requested by a local jurisdiction, the California Community
Investment Initiative shall provide technical assistance to review,
refine, and advise on local land use plans and zoning to increase
attraction of private investment by triple bottom-line equity funds.

end insert