BILL ANALYSIS Ó
AB 1067
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ASSEMBLY THIRD READING
AB 1067 (Medina)
As Amended April 18, 2013
Majority vote
ECONOMIC DEVELOPMENT 7-0
APPROPRIATIONS 17-0
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|Ayes:|Medina, Daly, Fong, Fox, |Ayes:|Gatto, Harkey, Bigelow, |
| |Melendez, V. Manuel | |Bocanegra, Bradford, Ian |
| |Pérez, Brown | |Calderon, Campos, |
| | | |Donnelly, Eggman, Gomez, |
| | | |Hall, Holden, Linder, |
| | | |Pan, Quirk, Wagner, Weber |
| | | | |
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SUMMARY : Codifies the state's participation in the federal
investment visa program by establishing the California Foreign
Investment Program within the Governor's Office of Business and
Economic Development (GO-Biz). Specifically, this bill :
1)Specifies that GO-Biz shall serve as the lead state entity for
overseeing the state's participation with the U.S. Citizenship
and Immigration Services' EB-5 Investment Program (EB-5
Investment Program).
2)Provides that, among other duties, GO-Biz shall set the terms
and conditions for issuing a state designation letter for
Targeted Employment Areas (TEAs).
3)Requires each regional center to provide contact information
to GO-Biz. GO-Biz is similarly required to post this
information on its Web site.
4)Requires each regional center to annually provide information
to GO-Biz on the number of clients served, location of
investments, and the number of direct and indirect jobs
created.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill will result in administrative costs of
approximately $100,000.
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COMMENTS : This bill provides statutory clarity to the state's
role in facilitating the federal immigrant investor visa
program. Established in 1990, prospective foreign investors who
agree to invest $500,000 in economically distressed areas or $1
million in other areas are eligible to receive one of 10,000
EB-5 visas issued annually.
In making the case for codifying the state's involvement in
attracting and facilitating EB-5-based foreign investments, the
author cites the existing state responsibilities to issue
certification letters, the large number of EB-5 regional centers
(over 60) within the state, and the important role private
sector investments and business development play in the health
of the state's economy.
California's Global Economy: International trade and foreign
investment are very important components of California's $1.9
trillion economy. California receives more foreign direct
investment (FDI) than any other state in the U.S., which is
significant since the U.S. is the largest receiver of FDI in the
world. The California economy benefits from FDI in many ways,
some of which include assisting in the creation of jobs,
boosting worker wages, increasing exports, bringing in new
technology and skills, and generally strengthening the state's
manufacturing base. The federal International Trade
Administration estimates that over 562,700 California workers
benefit from jobs with foreign-owned firms, which accounts for
5.1% of all private sector jobs in the state. Approximately 11%
of all U.S. workers at foreign-owned firms are located in
California, which has had the highest level of employment in
foreign-owned firms since at least 1997.
EB-5 Investment Program: Created as a pilot program in 1990,
the EB-5 Investment Program is designed to stimulate the U.S.
economy through capital investment and resulting in job creation
by immigrant investors. As of June 30, 2011, it is estimated
that the program has resulted in more than $1.5 billion in
capital investments and created at least 34,000 jobs.
Under the U.S. Citizenship and Immigration Service (USCIS)
administered program, permanent-resident status is provided to
foreign investors who have invested - or are actively in the
process of investing - at least $1 million into a new commercial
enterprise, which can entail: the creation of an original
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business; the purchase of an existing business and restructuring
or reorganizing the business to the extent that a new commercial
enterprise results; or a significant expansion of an existing
business.
An applicant seeking status as an immigrant investor must
demonstrate that his or her investment will benefit the U.S.
economy and create at least 10 full-time jobs, or maintain the
number of existing employees in a troubled business. For
investors who choose to invest in TEAs, the required investment
is decreased to $500,000. A TEA is either a high-unemployment
area that has experienced an unemployment rate of at least 150%
of the national average rate or a rural area. Investments made
in a TEA require certification that the area qualifies as a TEA.
GO-Biz currently issues these certification letters. In 2012,
over 6,500 TEA-based visas were issued for investors and
immediate family, while only three visas were issued for non-TEA
investments.
Based on 2011 state figures (most current) and a high
unemployment rate defined as 13.4% or greater, 58 urban cities,
16 counties, 21 rural areas, and 13 metropolitan statistical
areas in California have been identified as eligible TEAs.
In addition to individual investors, the federal government can
also recognize regional centers which allows for a pooling of
investor money. There are over 60 federally recognized regional
centers currently operating in California, significantly more
than any other state. These regional centers are based across
the state. Their focuses are widely varied and include
commercial real estate development, agricultural products, film
projects, and high-tech ventures. Information on these centers
is limited to the name of the center. This bill will provide
transparency as to who are the operators of regional centers,
which should result in greater program and investment
integration within the state's economic development network.
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090
FN: 0000339
AB 1067
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