BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 398

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          Date of Hearing:  April 21, 2015

                                   INTERNET MEDIA

                             Ian Charles Calderon, Chair

          AB 398  
          (Campos) - As Amended April 20, 2015

          SUBJECT:  California Embassy.

          SUMMARY:  This bill would authorize the Governor's Office of  
          Business and Economic Development (GO-Biz) to accept submissions  
          of any tax exempt organization formed for the purpose of  
          establishing and maintaining a California Embassy in the  
          District of Columbia, as specified. 

          Specifically, this bill:  

          1)Permits the Governor's Office of Business and Economic  
            Development (GO-Biz) within the Governor's Office to accept  
            submissions of any plan of any organization that is exempt  
            from federal income tax as specified and formed for the  
            purpose of establishing and maintaining a California Embassy  
            in the District of Columbia.

          2)Requires the planned Embassy to be within one mile of the  
            United States Capitol building.


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          3)Further requires that the plan shall contain the following  

             a)   How the organization intends to establish the California  

             b)   How the organization intends to raise the funding  
               necessary to establish the California Embassy.

             c)   How the organization intends to maintain and operate the  
               California Embassy once it is established.

             d)   Any other relevant information the commission deems  

          4)States that the commission may approve the plan of any  
            organization that it determines will establish, operate, and  
            maintain a California Embassy that meets all of the following  

             a)   Showcases California's cultural diversity.

             b)   Showcases California's higher education opportunities.


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             c)   Showcases California's recreational and tourism  

             d)   Provides resources to Californians in the District of  

             e)   Provides a place of refuge for Californians in the  
               District of Columbia.

          5)Requires the organization whose plan is approved to submit a  
            report to the commission every two years, as specified.

          6)Makes various findings and declarations.
          EXISTING LAW:  

          1) Establishes the Governor's Office of Business and Economic  
             Development (GO-Biz) within the Governor's Office 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  

          2) Establishes the California Tourism Marketing Act (The Act).  

          3) Makes various findings and declarations regarding the  
             importance of California's tourism industry, need for  
             marketing of the industry and importance in funding the  


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             marketing of the industry, including an industry-approved  
             assessment to provide private-sector financing of marketing  
             necessary to increase tourism, as provided.

          4) Requires the Office of Tourism within GO-Biz to establish a  
             non-profit Commission consisting of 37 members, including  
             representatives of the tourism industry and travel agencies  
             or tour operators, whose mission is to increase the number of  
             persons traveling to and within California. Provides that the  
             Commission be administered by an executive director who shall  
             be a tourism industry marketing professional, recommended by  
             a vote of the commissioners and approved by the Governor. 

          5) Requires the Commission to annually provide to all assessed  
             businesses a report on the activities and budget of the  
             Commission. Provides that the Commission's annual budget is  
             subject to the review and approval of the Director of GO-Biz,  
             but specifies that any decision of the Director related to  
             the budget may be overridden by a vote of three-fifths or  
             more of the commissioners then in office. Requires the  
             Commission to maintain a report, updated when assessments are  
             amended and to be made available to any assessed business, on  
             the percentage assessment allocation between industry  
             categories and industry segments including the reasons and  
             methodology used for the allocations. 

          6) Requires the Commission to annually prepare a written  
             marketing plan and specifies that any expenditure by the  
             commission shall be consistent with the marketing plan.  
             Requires the marketing plan to promote travel to and within  
             California and to include, but not be limited to, an  
             evaluation of the previous year's budget and activities; a  
             review of California tourism trends, conditions, and  
             opportunities; target audiences for tourism marketing  
             expenditures; marketing strategies, objectives, and targets;  
             and a budget for the current year.  

          FISCAL EFFECT:  Unknown


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          1)Author's statement. The author states the following in  
            support of this measure, "In my new role as Assistant  
            Democratic Leader - External Relations, I am tasked with  
            looking to expand California's representation and  
            influence all over the nation. Our nation's capital,  
            Washington D.C., is the access point (and often only  
            stop) for decision-makers, diplomats, and business  
            leaders from all over the world. Having a strong entity,  
            or an "embassy", in the vicinity of the United States  
            Capitol that showcases California's economic and cultural  
            prominence and that serves to centralize efforts from  
            various California constituencies to advocate for  
            California's interests, would help to highlight the  
            critical role that California plays in both the nation  
            and the world. In addition, the California Embassy would  
            serve as a tourism home for all Californians and provide  
            them with any resources they may need to learn more about  
            our federal government's workings and its history, and  
            make the best of their visit to D.C.

            She further notes that, "California is the 7th largest  
            economy in the world, with a gross domestic product of  
            over $2.20 trillion and with a population of 38.8 million  
            people. At the same time, California receives 68 cents to  
            every dollar it contributes to the Federal budget. This  
            shows that although California plays a critical role in  
            the United States, it is a donor state. As Californians,  
            we should be more proactive in advocating for our state's  
            well-being and growth at the national level."

          2)Model: Florida House, a privately funded and operated  
            "Embassy." According to the author, Florida House in  


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            Washington DC is the model for this legislation. Florida is  
            the only state with an embassy in Washington, D.C. The Website  
            for Florida House provides the following information, "Founded  
            by former First Lady Rhea Chiles in 1973, thousands of  
            visiting dignitaries, students and those having business in  
            Washington have been welcomed to the nation's capital with a  
            cold glass of Florida orange juice. The beautiful three story  
            Victorian home, built in 1891, was purchased and is maintained  
            solely by individual and corporate contributions. No state or  
            federal tax dollars are used to support Florida House.

            "The Florida House Foundation is a nonprofit 501 (c) (3),  
            nonpartisan organization that provides cultural, social,  
            educational and economic resources; showcases Florida's  
            culture and diversity; maintains and operates Florida House;  
            and provides opportunities for Floridians to enrich their  
            appreciation and knowledge of our nation's government. Its  
            goals are to provide educational opportunities for Floridians  
            of all ages; To be the unparalleled leader in hospitality and  
            graciousness; To be of service to all Floridians; To be an  
            integral part of the Florida/Washington, DC community and our  
            Florida Congressional Delegation; To be a recognizable, sound  
            and thriving institution providing an endowment to ensure the  
            existence of Florida House for generations to come."  
            (  , accessed April 3, 2015).

          3)California presence in Washington D.C. California currently  
            has the largest Congressional Delegation of any state, with 53  
            elected representatives in the House and two Senators. Each of  
            these members has an office open to the public, located in the  
            Capitol and adjacent office buildings. In addition, the  
            California Governor maintains an office in Washington, DC,  
            which is technically open to the public. The Governor's office  
            is located at 444 North Capitol Street, and post 9-11,  
            visitors must pass through security to enter. Representatives  
            shared with the committee that while the offices are public,  
            they typically do not provide constituent services. Another  


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            association of Californians in Washington is "The California  
            Society," a private group of Californians doing business or  
            government employees living in Washington who gather monthly  
            for round table discussions of interest to California, and  
            provide a networking forum for visiting dignitaries. 

          4)Background: The California Tourism Marketing Act and Visit  
            California. The Act grew out of efforts to reverse a  
            multi-year decline in California's tourism industry. During  
            the 1970s, Governor Brown closed the Office of Tourism and  
            withdrew funding from many tourism promotion efforts. During  
            Governor Deukmejian's tenure, the Office of Tourism was  
            reactivated. In February 1993, Governor Wilson created the  
            Governor's Task Force on Tourism Funding (Executive Order  
            W-41-93) for the purpose of "investigating various tourism  
            funding methods and making policy recommendations regarding a  
            new, "non-tax" method of providing stable financing for  
            statewide tourism promotion." The Task Force, which was  
            composed of representatives from various California  
            businesses, developed the concept that was ultimately enacted  
            by SB 256 (Johnston) Chapter 871, Statutes of 1995, as the  
            California Tourism and Marketing Act. 

            The Act authorized the establishment of a non-profit, public  
            benefit corporation, Visit California, to oversee the  
            promotion of California as a premier travel destination. The  
            statute became operative upon industry wide approval in 1997  
            and the assessment program was initiated in 1998. In 2001, the  
            program was renewed by industry referendum with an 84% margin,  
            while in 2007 it was renewed by a 91% margin. The first full  
            year of assessment funding occurred during the 1998-99 fiscal  
            year and between 1998 and 2002, the marketing budget was fully  
            funded by the Commission and the state at approximately $14  
            million annually. 


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            Visit California is comprised of 37 Commission members,  
            representing each industry segment (Accommodations,  
            Restaurants and Retail, Attractions and Recreation,  
            Transportation and Travel Services, and Passenger Car Rental).  
            The Commission meets three times a year and directs and  
            approves the marketing plan, expenditures and the overall  
            strategic course for California tourism. The assessment  
            program is administered by the Office of Tourism, Tourism  
            Assessment Program which is housed in GO-Biz.

          5)Opposition of California tourism industry to prior version. 

            Opposition to the Embassy proposed under AB 398 comes from the  
            California tourist industry, which comprises a large aspect of  
            the Visit CA membership, based on their concerns about  
            redirecting scarce resources to activities beyond the scope of  
            Visit CA. They write the committee to share, "As a non-profit  
            association, CalTravel unifies our state's many travel-related  
            businesses by bringing the travel and tourism industry  
            together to deliver an exceptional California experience. The  
            travel and tourism sectors generate more than $117 billion for  
            the state economy, employ over 1,000,000 Californians and  
            bring in approximately $4.3 billion in local taxes and $5.2  
            billion in state taxes." 

            "Unfortunately, the CA Travel Association opposes any  
            deviation of Visit California's core purpose which is the  
            promotion of California as a tourist destination. While we  
            appreciate your intent, the industry is troubled by any  
            request to spend limited time and resources on a mission  
            outside of its intended scope." CalTravel also is concerned  


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            about the impact of redirecting resources to oversight of a  
            private non-profit Embassy on their effort to stave off  
            competition for tourists and travel dollars, pointing out  
            that, "The industry has increased its voluntary investment for  
            the Commission's marketing program to keep up with other  
            states and countries and on behalf of the industry, and want  
            to be sure those dollars are being used for their original  

          6)Author's recent amendments address travel industry opposition.

            In response to concerns raised by the travel and tourism  
            industry discussed in Comment 5 above, the author has amended  
            her bill to substitute the Governor's Office of Business and  
            Economic Development (GO-Biz) within the Governor's Office,  
            and delete Visit CA, as the state agency responsible for the  
            requirements of creating and maintaining the Embassy created  
            under the legislation. The author reports that her staff is in  
            negotiation with GO-Biz.

          7)Committee comment: If the California Embassy is intended as a  
            private non-profit enterprise, why does state agency need to  
            approve and oversee their activities? Given that the model for  
            the proposed California Embassy is a privately funded  
            non-profit which has never been financially supported by its  
            home state, and the requirement in the bill that any  
            organization which may be considered for approval must already  
            be a non-profit corporation "formed for the purpose of  
            establishing and maintaining a California Embassy in the  
            District of Colombia?," the committee may wish to consider the  
            need for the state to provide oversight in creating and  
            overseeing the proposed private non-profit foundation. 

          8)Double-referral: Should this bill pass out of this committee,  
            it will be re-referred to the Assembly Committee on Judiciary.


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          There is no support on file.


          (Prior version)

          California Hotel and Lodging Association
          California Association of Banquet & Breakfast Inns
          California Travel Association (CalTravel) 

          Analysis Prepared by:Dana Mitchell / A.,E.,S.,T., & I.M. / (916)  


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