BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 431 (Price) - Economic Development: California Socioeconomic
Development Pods Program
Amended: April 2, 2013 Policy Vote: G&F 6-1, BP&ED 10-0
Urgency: No Mandate: No
Hearing Date: May 13, 2013 Consultant: Robert Ingenito
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 431 would establish the California
Socioeconomic Development Pods Program within the Governor's
Office of Business and Economic Development (GO-Biz) to
encourage the use of social innovative financing, as defined,
within blighted areas of the State.
Fiscal Impact: GO-Biz indicates that it would require three
permanent positions and $315,000 annually (General Fund) to
implement the provisions of the bill. Additionally, the bill
could lead to possibly increased costs, potentially significant,
for the use of unused or underused state- owned or leased
property. The State has averaged roughly $30 million in
property sales annually over the last 20 years. It is unclear
exactly how many of the relatively small number of parcels sold
each year would be used for the purposes of this program.
Background: In February 2010, the Little Hoover Commission
reviewed the State's economic and workforce development
programs. Specifically, it analyzed the effectiveness of all
current programs since the elimination of the California
Technology, Trade and Commerce Agency (TTCA) in 2003, and
recommended the creation of a new governmental entity to replace
TTCA, to promote greater economic development, foster job
creation, serve as a policy advisor and deliver specific
services (e.g. permitting, regulatory and other information)
directly to the State's business community. In 2012, the
Legislature created GO-Biz for these purposes.
Among other programs, GO-Biz administers the Innovation Hub
(iHub) program in partnership with the statewide network of
Small Business Development Centers. There are currently 12
regional iHubs located throughout the State. The iHub program
is designed to improve the state's national and global
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competitiveness by stimulating partnerships, economic
development, and job creation around specific research clusters.
Key assets and partners of the initiative include technology
incubators, research parks, universities, federal laboratories,
economic development organizations, business groups, and venture
capitalists.
Proposed Law: SB 431 would create the Socioeconomic Development
Pod Program within GO-Biz. The bill directs GO-Biz to designate
blighted areas, as defined, suited for the program to leverage
assets to provide stimulation and incentives for industry,
economic development organizations, business groups, and social
innovation funders. GO-Biz shall oversee, coordinate, and
assist each pod.
When designating an area as a pod for the Program, GO-Biz shall
include:
A statement of purpose.
A signed statement of cooperation, and a description of
the roles and relationship of each entity in the program.
A designated coordinator.
A clear explanation and map of the pod's boundaries.
A clearly identified designee to coordinate pod
activity, central location, benchmarks and milestones with
approximate dates of achievement.
A list of the pod's assets and resources.
A clearly articulated focus area of the pod, including
industry sectors or other targeted areas for development
and growth.
A list of specific resources available to support and
guide training.
Expectations for job development and business creation.
Defined performance standards agreed upon by the
partners involved in the development of the pod.
Evaluation procedures that will be used to measure the
level of achievement for each stated goal.
A plan for sustainability.
Designated pods must include at least one major university or
research center or institute, one economic development
organization, and at least two of the following:
A business support organization including a workforce
development or training organization, incubator or business
accelerator, chamber of commerce, and networking
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organization that supports innovation.
An educational consortium including technology training
representatives.
A social innovative financing network including
traditional investors.
A community-based organization specializing in
retraining, reducing recidivism, or homelessness.
A municipal economic development division or department.
A federal government partner.
Pods may provide counseling and technical assistance for
retraining or recidivism reduction; conduct workshops, seminars,
or conferences with local partners, and facilitate partnerships
between innovative startup businesses, research institutions,
venture capitalists, or financial institutions. To the extent
feasible, pods shall perform activities in close collaboration
with GO-Biz, and coordinate with the Employment Training 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.
GO-Biz may use vacant or underused state-owned or leased
property to assist Pods to establish incubators and
demonstration sites with the consent of the Director of the
Department of General Services. GO-Biz may do the same for
businesses and non-profits.
Related Legislation: SB 9 (Price) would establish the Office of
Social Innovation within GO-Biz to establish partnerships with
government agencies, private investors, nonprofit organizations,
and for-profit service providers to facilitate the use of social
impact bonds (SIBs), as defined, to address social services
needs.to explore the use of social innovative financing in the
State of California. This bill is pending in the Senate
Committee on Governance and Finance.
Staff Comments: SB 431 also creates the Pod Accelerator Fund
within the State Treasury. All moneys received by GO-Biz from
gifts, bequests, and donations shall be deposited in the fund
with the consent of the Department of Finance. The Fund is
continuously appropriated to the Pod program pursuant to the
terms of the gift, bequest, or donation. Staff recommends
deleting the continuous appropriation authority, as it reduced
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legislative oversight.
In 2004, voters approved a constitutional amendment that
dedicated proceeds from sale of surplus state property purchased
with General Fund monies to payment of principal and interest on
the Economic Recovery Bonds approved in March 2004. When those
bonds are repaid, proceeds from surplus property are to be
directed to the Special Fund for Economic Uncertainties.
Proceeds from the sale of other surplus state properties also
are also restricted. For example, if the property was purchased
with federal funds, the money has to be used for the same
purposes. These factors would limit the ability to use surplus
state property for the purposes of the bill.