BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1067|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 1067
Author: Medina (D), et al.
Amended: 8/20/13 in Senate
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEVELOP. COMM. : 10-0, 6/17/13
AYES: Lieu, Emmerson, Block, Corbett, Galgiani, Hernandez,
Hill, Padilla, Wyland, Yee
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 73-0, 5/9/13 - See last page for vote
SUBJECT : Economic development: foreign trade
SOURCE : Author
DIGEST : This bill establishes the California Foreign
Investment Program within the Governors Office of Business and
Economic Development (GO-Biz) as the lead entity for overseeing
the states participation in the United States (U.S.) Citizenship
Immigration Services' EB-5 Investment Program (EB-5 Program).
Senate Floor Amendments of 8/20/13 make clarifying changes and
address cost and workload concerns for GO-Biz; and remove the
provision requiring GO-Biz to transmit a copy of a designation
letter to every Member of the Legislature whose district is
located in the targeted employment areas (TEA) and instead
requires GO-Biz to annually report to the Legislature on the
number of state designation letters issued, provided in the
CONTINUED
AB 1067
Page
2
aggregate by county and by legislative district.
ANALYSIS :
Existing law:
1. Establishes the enterprise zone (EZ) program, administered by
the Department of Housing and Community Development to
stimulate business and industrial growth and create jobs in
depressed areas of the state.
2. Defines a "targeted employment area" for the purposes of an
EZ, to mean an area within a city, county, or city and county
that is composed solely of those census tracts designated by
the U.S. Department of Housing and Urban Development as
having at least 51% of its residents of low- or
moderate-income levels, using either the most recent U.S.
Department of Census data available at the time of the
original EZ application or the most recent census data
available at the time the TEA is designated to determine that
eligibility. Specifies that the purpose of a TEA is to
encourage businesses in an EZ to hire eligible local
residents. A TEA may include, but is not required to
include, all or part of the boundaries of the EZ. The TEA
does not need to encompass all eligible areas, but may
include only those areas that the local government determines
have residents who are in the most need of this employment
targeting.
3. Establishes GO-Biz for the purpose of serving as the lead
state entity for economic strategy and marketing of
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.
4. Specifies that GO-Biz is the primary state agency authorized
to attract foreign investments, cooperate in international
public infrastructure projects, and support California
businesses in accessing markets, and requires the Director of
GO-Biz to develop an international trade and investment (ITI)
program attracting employment-producing direct foreign
investment to the state and provides support for California
CONTINUED
AB 1067
Page
3
businesses in accessing international markets and increasing
exports.
5. Authorizes GO-Biz to establish ITI offices outside of the
U.S. according to certain requirements.
6. Requires GO-Biz to prepare an ITI strategy and provide a
report to the Legislature on or before February 1, 2014,
updated once every five years that includes (a) policy goals,
objectives and recommendations necessary to implement a
comprehensive ITI program; (b) measurable outcomes and
timelines for the goals, objectives and actions for the
program; (c) impediments to achieving goals and objectives;
(d) key stakeholder partnerships that will be used to
implement the strategy; (e) options for funding; and (f) an
organizational structure for state administration of ITI
policies, programs and services.
7. Requires the Director of GO-Biz to prepare the following:
A. A budget for the ITI program and a separately stated
budget for each ITI office, with specified information.
B. A strategy and business plan for the ITI program,
with specified information, that is developed with input
from California businesses that shall include, but not
be limited to, measurable goals, objectives, and
outcomes and timelines necessary to attract
employment-producing direct foreign investment to the
state and increase California exports.
C. A written review of the implementation of the prior
year's strategy and business plan for the ITI program
that addresses the performance of the program and each
ITI office.
8. Provides that the State Controller shall not allocate any
state funds to GO-Biz for ITI activities unless the strategy
for ITI has been submitted to the Legislature by May 1, 2014.
9. Establishes processes and accountability measures for GO-Biz
to accept private monies to fund, establish and operate
international trade offices.
CONTINUED
AB 1067
Page
4
10.Establishes the EB-5 visa category Section 203(b)(5) of the
Immigration and Nationality Act.
This bill establishes the California Foreign Investment Program
within GO-Biz. Specifically, this bill:
1. Provides that GO-Biz shall serve as the lead state entity for
overseeing the state's participation with the U.S.
Citizenship and Immigration Services' (USCIS) 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
TEAs.
3. Requires a regional center with one or more offices within
the state to provide GO-Biz with contact information for the
center and the geographic region, if applicable, and industry
sector or subsectors recognized by the USCIS for that center;
and 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 which may be satisfied by providing
GO-Biz with a copy of the USCIS Form I-924A.
4. Requires GO-Biz to post on its Web site a list of contact
information for each regional center applicant that receives
a support letter, and specifies that the list shall be
updated when new information is made available on at least an
annual basis.
5. Authorizes specified public and private corporations to
establish, operate, and maintain a regional center subject to
specified conditions and restrictions.
6. Requires GO-Biz to annually report on the number of state
designation letters issued and information provided to GO-Biz
in either its annual report or in a separate report to the
Legislature. Specifies that the information on regional
centers and designation letters be provided in the aggregate,
by county, and by legislative district.
7. Provides that the requirements and authorities in this bill
CONTINUED
AB 1067
Page
5
only affect EB-5 related activities that occur on or after
January 1, 2014.
Background
EB-5 Program . The EB-5 visa category, which was created by
Congress in 1990, is available to immigrants seeking to enter
the U. S. in order to invest in a business or company that will
benefit the economy. This federal program is administered by
the USCIS. The name "EB-5" is derived from the fact that it is
the 5th category of the Employment-Based visa.
Permanent-resident status through an EB-5 visa is available to
foreign investors who have invested - or are actively in the
process of investing - at least $1million into a new commercial
enterprise, which can entail: the creation of an original
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. 10,000 EB-5 visas are made available per year by
USCIS. Close to 4,300 investors attained EB-5 status in 2009,
up from only hundreds in 2007.
An applicant seeking status as an immigrant investor must
demonstrate that his/her investment will benefit the U.S.
economy and create full-time employment for at least 10
qualified individuals, or maintain the number of existing
employees in a troubled business. If the investment in a new
commercial enterprise is made in a TEA, 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.
In addition to individual investors, the federal government can
also recognize regional centers which allow for a pooling of
investor money. There are at least 31 federally-recognized
regional centers currently operating in California,
significantly more than any other state. These regional centers
are based across the state. Their focuses vary widely, and
include commercial real estate development, agricultural
products, film project, and high-tech ventures.
Applicants to the EB-5 visa program must demonstrate that they
meet all requirements of the program prior to the filing with
the USCIS. If it is determined that the investment criteria is
CONTINUED
AB 1067
Page
6
met and properly documented, any investor may be granted
conditional permanent residence status for a period of two years
by USCIS. A permanent green card may be issued at the end of
the conditional period.
California's Role in EB-5 . Currently, GO-Biz serves as a
resource to connect those interested in receiving foreign
investment through EB-5 with the necessary state entities
responsible for the identification and designation of TEAs. In
accordance with Title 8, Code of Federal Regulations Section
204.6(i), the Employment Development Department has been
delegated the authority by the state to designate the cities,
counties, metropolitan statistical areas, and geopolitical
subdivisions (census tracts) that meet the high unemployment
definition to qualify for the $500,000 minimum investment
threshold as TEAs for EB-5 Program purposes.
Unemployment rates for cities, counties and census tracts are
published annually and the state uses the most recent calendar
year labor force and unemployment estimates to establish high
unemployment rates and high unemployment areas.
Upon the request of the applicant or an alternative
representative body, staff at GO-Biz may determine that a
specific metropolitan statistical area, a county within a
metropolitan statistical area, or a county in which a city or
town with a population of 20,000 or more is located, is a TEA.
In order to make such a determination, the county, city or
census tract in question must experience an average unemployment
rate of 150% of the national average.
According to GO-Biz, for TEA projects that do not meet the
existing standard, pre-calculated certification categories,
GO-Biz can certify "Special TEA applications" under the
following criteria:
Projects can receive an EB-5 "Special TEA certification" if
they are located within an area of twelve or fewer contiguous
Census Tracts with a total average unemployment rate of 150%
the national average.
Requests for a special TEA should include a table listing of
each census tract with its corresponding unemployment rate
and a map showing the project address.
CONTINUED
AB 1067
Page
7
A supporting letter from the local Economic Development
Corporation or County or City in which the project is to be
located must be provided. The letter must indicate the
economic development corporation's concurrence that the
proposed census tract will reasonably be a source of
workforce for the project.
Comments
According to the author's office, California leads the nation in
attracting and receiving foreign direct investment. The
author's office asserts that the top countries investing in
California are Japan, the United Kingdom and the Netherlands and
that foreign direct investment has many positive impacts on the
state's economy, including job creation. According to the
author's office, in 2010, foreign firms employed almost six
million Americans and owned over 33,000 individual business
establishments. The author's office states that foreign
affiliate employment accounts for over 700,000 jobs in
California and that the state cannot afford to miss out on the
tremendous economic benefits that foreign investment provides.
The author's office believes that implementing a robust EB-5
Program in the state will continue to create jobs, introduce new
technology and research, and contribute to rising productivity
within the state.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
ASSEMBLY FLOOR : 73-0, 5/9/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Cooley,
Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Hagman, Hall, Harkey, Roger Hernández, Jones, Jones-Sawyer,
Levine, Linder, Lowenthal, Maienschein, Medina, Melendez,
Mitchell, Morrell, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Patterson, Perea, V. Manuel Pérez, Quirk,
Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting, Torres,
Wagner, Weber, Wieckowski, Wilk, Williams, Yamada, John A.
CONTINUED
AB 1067
Page
8
Pérez
NO VOTE RECORDED: Conway, Grove, Holden, Logue, Mansoor,
Waldron, Vacancy
MW:d 8/21/13 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
**** END ****
CONTINUED