BILL ANALYSIS Ó
AB 495
Page 1
Date of Hearing: January 15, 2013
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Ed Chau, Chair
AB 495 (Campos) - As Amended: January 13, 2014
SUBJECT : Community investment
SUMMARY : Establishes the California Community Investment
Program (CCIP) within the Governor's Office of Business and
Economic Development (GO-Biz). Specifically, this bill :
1)Makes legislative findings.
2)States the intent of the Legislature that state agencies
cooperate with the CCIP to align their resources to transform
low-income neighborhoods and to attract private investments
into these neighborhoods.
3)Defines "poverty" to mean the supplemental poverty measure,
established by the United States Census Bureau in 2013 to
incorporate the cost of living in the established rate of
poverty.
4)Defines "triple bottom-line investment funds (TBL)" to
include, but not be limited to, equity and debt investment
vehicles that pursue market and above market rates of
financial return while at the same time producing good jobs,
affordable housing, and other economic, social, and
environmental benefits for the residents of the communities
where the investments are made.
5)Provides that the purpose of the CCIP is to:
a)Encourage private sector investment in low-income
neighborhoods to improve the economic, environmental, and
social conditions for the existing residents;
b)Serve investors, employers, corporate executives, business
owners, and site location consultants who are considering
low-income neighborhoods for business investment and
expansion; and
c)Coordinate state programs and funding resources that can be
used to address poverty reduction in the state and to assist
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low-income neighborhoods to become business, development, and
investment ready.
1)Requires the CCIP to be supported and staffed through existing
resources at GO-Biz.
2)Requires the Director of GO-Biz to establish and implement a
process for establishing a public education program and
providing technical assistance to private sector investors.
3)Requires the CCIP to be governed by a 14 member council
including:
a)Six persons appointed by the Governor, comprised of three
members with private sector business or investment expertise,
two members with community development expertise, and one
representative of organized labor;
b)Four non-voting members appointed by the Legislature including
two members from the Senate and two from the Assembly, one
from each of the two political parties with the most
representatives in each house;
c)The Treasurer;
d)The Controller;
e)The Secretary of Business, Consumer Services, and Housing
Agency; and
f)The Director of GO-Biz
1)Requires the CCIP to do all of the following:
a)Develop and annually update a database of low-income
neighborhoods in the state, known as California Community
Investment Neighborhoods. The database shall including
socio-economic demographic data, descriptions of pertinent
characteristics to inform private sector investments, such as
local land use plans and zoning, or other development
designations and commitments from local government to support
private sector investments;
b)Adopt criteria to define an eligible low-income neighborhood
as a California Community Investment Neighborhood;
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c)Compile and maintain a current inventory of California public
sector funding resources and financing mechanisms that may be
allocated to or utilized in low-income neighborhoods;
d)Coordinate public sector financial investments and programs to
assist low-income communities that are eligible California
Community Investment Neighborhoods to become business,
development, and investment ready and attract private sector
TBL fund investments;
e)Develop and adopt criteria for identifying eligible TBL
investment funds that will serve as partners and invest in
enterprises and employers that generate permanent jobs
including investments to assist in starting-up, locating, and
expanding employers in low-income neighborhoods;
f)Develop and adopt criteria for eligible TBL investment 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;
g)Establish overall TBL goals and standardized metrics for
economic, social, and environmental outcomes that shall be
accepted by all eligible investment funds;
h)Gather evidence and conduct public forums to identify a broad
array of incentives that will encourage TBL fund investments
in low-income neighborhoods;
i)Establish overall TBL goals and standardized metrics for
economic, social, and environmental outcomes that shall be
accepted by all eligible funds;
j)Gather evidence and conduct public forums to identify a broad
array of incentives that will encourage TBL fund investments
in low-income neighborhoods;
aa)Establish and convene regular meetings of the California
Community Investment Network comprised of organizations and
institutions with expertise and resources to advise the
California Community Investment Council and eligible
investment fund managers; and
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bb)Report biannually to the Legislature and Governor on the
status and progress of the CCIP and performance on goals and
TBL outcomes.
1)Requires the CCIP to encourage significant private sector
commitment, cooperation, and collaboration to invest private
capital in low-income neighborhoods through eligible TBL
equity funds with a goal of obtaining at least $1 billion in
new investment by TBL investment funds in real estate
developments and business located in low-income neighborhoods.
EXISTING LAW establishes the Governor's Office of Business and
Economic Development (GoBIZ) (Government Code Section 12096 et
al.)
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill: According to the author, this bill is
necessary because "poverty is increasing in California, and the
state lacks a coordinated economic development strategy to bring
social equity private investment to low-income neighborhoods.
According to the supplemental poverty measure, established by
the U.S. Census Bureau in 2013 to incorporate cost of living in
the establishment of the rate of poverty, the rate of poverty in
California is 23.5%, which means that nearly nine million people
are poor. Low-income neighborhoods face challenges in accessing
capital. One way to address poverty is to increase public and
private investment in resource poor neighborhoods through triple
bottom line investing. Triple bottom line investing promotes a
market or above market rate of economic return, environmental
protection, and social equity. However, private investment
won't flow into low-income neighborhoods unless the state can
help underwrite the risk of crime, poverty, low job skills, and
poor infrastructure. While the state has numerous programs
aimed at reducing poverty and promoting economic development,
none of this is organized or coordinated."
There are several regional investment funds, Bay Area Family of
Funds and Genesis LA that have invested in economic development
and affordable housing projects using a triple bottom-line
investment strategy. Several states, including Massachusetts,
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Florida, and Michigan have created statewide offices to assist
in triple bottom-line investing.
TBL Investment : The TBL is an accounting framework that
incorporates three dimensions of performance: social,
environmental, and financial. The difference from traditional
reporting frameworks is that it includes environmental and
social measures. One of the challenges of this type of
accounting is defining an appropriate measure of environmental
and social benefit.
While profits can be measured in dollars, how does one measure
social capital? This remains a significant challenge. There is
no universal standard method for calculating the TBL nor is
there a universal standard for the measures that compromise the
three TBL categories. Government and business may view
sustainability in different terms. Stakeholder groups, such as
socially responsible investors, non-governmental organizations,
green consumers, and governmental regulators and agencies are
increasingly calling for information related to the social and
environmental dimensions.
This bill would set up the CCIP within in GO-Biz and direct
staff within in the existing resources available to the
Department to do the following:
1) Develop and annually update a database of low-income
communities with characteristics that would support triple
bottom-line investment.
2) Compile and create an inventory of public funding
sources that can be used in low-income neighborhoods.
3) Coordinate public sector financial investments and
public programs to assist low-income neighborhoods to
attract private sector triple bottom-line investments;
4) Develop and adopt criteria for eligible triple
bottom-line investment funds that the state will partner
with to invest in projects that create jobs or real estate
investments in low-income neighborhoods;
The CCIP would be governed by a 14-member council and would also
establish a network comprised of organizations and institutions
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with expertise and resources to advice the council and eligible
fund managers.
Defining low -income : The proposed CCIP would identify and
target low-income neighborhoods for private investment through
triple bottom-line investment funds but no where in the bill is
low-income defined. The federal definition of low-income
includes households that make 80% or less of the area median
income. The committee may wish to include this definition in the
bill for clarity.
Defining "good" jobs : The CCIP is intended to facilitate the
creation of jobs in low-income communities. The committee may
wish to set a standard for the types of jobs that need to be
created. The bill uses the definition "living wage jobs" in a
few places in the bill but not consistently. Living wage is a
wage that takes into account area-specific cost of living and
covers the basic expenses involved in supporting a family. The
committee may wish to amend the bill to incorporate this
terminology throughout the bill.
Deadline for Generating Funding: One of the goals of the CCIP
is to generate least $1 billion dollars in new investment by
triple bottom-line investment funds in low-income neighborhoods.
In order to measure the success of the CCIP, the committee may
wish to set a deadline for meeting this goal. A deadline will
create accountability and a matrix to measure the success of the
program. The committee may wish to add a three year deadline
for generating $1 billion in investment by TBL funds.
Committee amendments:
1)On page 4, line 23, delete "good" and insert "living wage
jobs"
2)On page 4, after line 25, insert:
(c ) "Low-income" means households whose income does not
exceed 80% of area median income.
3)On page 7, line 38, after "permanent" insert "living wage
jobs"
4)On page 11, line 18, after "neighborhoods" insert "by January
1, 2019"
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REGISTERED SUPPORT / OPPOSITION :
Support
4C Capital
Alliance for Community Development
Avante Mezzanine Partners
Bay Area Impact Investing Initiative
Breakthrough Communities
Bronze Investments
California Communities United Institute
California Emerging Technology Fund
Caymus Capital Group, LLC
DBL Investors
Economic Innovation International
Huntington Capital
Mays&Corrales
Nehemiah Corporation of America
Personal Insurance Federation of California (PIFC)
San Jose City Councilmember Ash Kalra
Seal Cove Financial
Strategic Development Solutions
Sustainable Enterprise Conference
Sustainable Systems, Inc.
Transom Capital Group
2 individuals
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085