BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: SB 506 Hearing Date: April 27, 2015
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|Author: |Fuller |
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|Version: |April 14, 2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Sarah Mason |
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Subject: Economic development: military and aerospace.
SUMMARY: Establishes a military and aerospace program within
the Governor's Office of Business and Economic Development
(GO-Biz), tasked with activities related to state and local
defense retention, conversion and base reuse activities.
Establishes a space enterprise development program within GO-Biz
to foster activities that increase the competitiveness of space
enterprise in California, including, the commercial use of
space, space vehicle launches, space launch infrastructure,
manufacturing, applied research, technology development,
economic diversification, and business development. Authorizes
both programs to create and oversee grant programs. Urges local
governments impacted by military installations to cooperate in
efforts to retain these installations and recognizes a local
retention authority for each active military installation in the
state.
Existing law:
1)Establishes 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
growth. GO-Biz also serves as the administrative oversight
for the California Business Investment Service and the Office
of the Small Business Advocate. (Government Code (GC) §§
12096 - 12098.5)
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2)Authorizes GO-Biz as the lead entity for economic strategy and
the marketing of California on issues relating to business
development, private sector investment and economic growth.
Authorizes GO-Biz, in this capacity, to coordinate the
development of policies and criteria to ensure that federal
grants administered or directly expended by state government
advance statewide economic goals and objectives. Authorizes
GO-Biz to market the business and investment opportunities
available in California by working in partnership with local,
regional, federal, and other state public and private
institutions to encourage business development and investment
in the state. Authorizes GO-Biz to support small businesses
by providing information about accessing capital, complying
with regulations, and supporting state initiatives that
support small business. (GC § 12096.3)
3)Requires GO-Biz to designate Innovation Hubs (iHubs) within
the state to stimulate partnerships, economic development, and
job creation by leveraging assets to provide an innovation
platform for startup businesses, economic development
organizations, business groups, and venture capitalists. (GC
§ 12099.1)
4)Requires an iHub to: provide counseling and technical
assistance in the areas of entrepreneurial business planning
and management, financing, and marketing for small businesses;
provide expert advice to entrepreneurs on starting a business,
including legal requirements for starting a business and
access to financing opportunities; conduct business workshops,
seminars, and conferences with local partners; facilitate
partnerships between innovative startup businesses, research
institutions, and venture capitalists or financial
institutions. (GC § 12099.6)
5)Creates the Innovation Accelerator Account within the
California Economic Development Fund in the State Treasury and
states that, subject to the approval of the Department of
Finance, all moneys collected and received by GO-Biz for
California Innovation Initiatives from gifts, bequests, or
donations shall be deposited in the Innovation Accelerator
Account and continuously appropriated to GO-Biz pursuant to
requirements for a gift, bequest, or donation. (GC § 12099.7)
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6)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. Requires the Director of
GO-Biz to develop an international trade and investment
program attracting employment-producing direct foreign
investment to the state and provides support for California
businesses in accessing international markets and increasing
exports. Authorizes GO-Biz to establish international trade
and investment (ITI) offices outside of the U.S. according to
certain requirements. Establishes processes and
accountability measures for GO-Biz to accept private monies to
fund, establish and operate international trade offices. (GC
§§ 13996.41, 13996.42, 13997)
7)Establishes the California Economic Development Fund in the
State Treasury for the purpose of receiving federal, state,
local, and private economic development funds, and receiving
repayment of loans or grant proceeds and interest on those
loans or grants. Provides that upon appropriation by the
Legislature, moneys in the fund may be expended by GO-Biz to
provide matching funds for loans or grants to public agencies,
nonprofit organizations, and private entities, and for other
economic development purposes, consistent with the purposes
for which the moneys were received. (GC § 13997.6)
8)Establishes the Office of Planning and Research (OPR) in the
Governor's office tasked with engaging in the formulation,
evaluation and updating of long-age goals and policies for
land use, population growth and distribution (GC §§ 65037 and
65040)
9)Requires OPR to develop and adopt guidelines for the
preparation of and the content of the mandatory elements
required in city and county general plans that, among other
requirements, contain advice including recommendations for
best practices to allow for collaborative land use planning of
adjacent civilian and military lands and facilities. States
that the guidelines shall encourage enhanced land use
compatibility between civilian lands and any adjacent or
nearby military facilities through the examination of
potential impacts upon one another. States that the
guidelines shall contain advice for addressing the effects of
civilian development on military readiness activities carried
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out on military installations, military operating areas,
military training areas, military training routes, military
airspace and other territory adjacent to those installations
and areas.
10)On or before January 1, 2004, requires OPR to, if sufficient
federal funds become available for this purpose, prepare and
publish an advisory planning handbook for use by local
officials, planners, and builders that explains how to reduce
land use conflicts between the effects of civilian development
and military readiness activities carried out on military
installations, military operating areas, military training
areas, military training routes, and military airspace, and
other territory adjacent to those installations and areas.
(GC § 65040.9)
11)Requires OPR to serve as the state's liaison to the United
States Department of Defense (DOD) in order to facilitate
coordination regarding issues that are of significant interest
to the state and the department, particularly with regard to
any proposed federal Base Realignment and Closure actions.
Provides that, in this role, OPR shall: coordinate with DOD
and other state agencies, state departments, local
governments, and other private and public entities to ensure
the sustainability of defense activities within the state;
develop legislation that supports the relationship between the
state and DOD; work with federal defense agencies to address
regulatory activities by state agencies that affect the
sustainability of defense operations within the state; and
develop any necessary regional or stateside strategies
necessary for the establishment and retention of the state's
military facilities and installations that are potentially
impacted by any proposed federal Base Realignment and Closure
(BRAC) actions. (GC § 65040.14)
12)Establishes the Military Base Reuse Authority Act to plan
for, finance and manage the transition of the military base
from military to civilian use. (GC § 67800 et. seq)
This bill:
Provisions Related to the Military and Aerospace Support Act
1)Enacts the Military and Aerospace Support Act and finds and
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declares the following:
a) There is potential for federal action to close or
realign additional military installations nationwide
through the base closure process, budget reductions, or
internal DOD reorganizations.
b) There is synergy between the aerospace industry and DOD
activities in the state. Prior base closure rounds have
resulted in significant downsizing and loss of jobs in the
aerospace industry in California.
c) There is potential growth in the aerospace industry, not
only in national defense applications, but in commercial
and private enterprises such as unmanned aerial vehicles,
commercial space flight, and commercial space launch
vehicles and services.
1)Establishes the Military and Aerospace Program (MA Program) in
GO-Biz in an effort to be proactive in retaining and expanding
military facilities, the aerospace industry, and the jobs and
intellectual capital associated with them in the state.
2)States that the purpose of the MA Program is to provide a
central clearinghouse for all defense retention, conversion,
and base reuse activities in the state and interacting and
communicating with military installations in the state and to
retain and encourage growth in the aerospace and space flight
industries through technical and regulatory advice, grants and
other programs administered by GO-Biz or other state agencies.
3)Authorizes GO-Biz to establish a Military Advisory Council
(Council) to provide input, information, technical advice, or
other comments to the Program on military related matters,
including, but not limited to, active DOD installations in
California and defense conversion issues. Provides that
participation by Council members is voluntary and there is no
reimbursement for per diem or expenses. Provides that the
Council may include, but is not limited to, representatives
from any legislative office, state agency, local government,
industry, and civic or research organizations that may have an
interest in defense related activities.
4)Requires the MA Program to do all of the following:
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a) Develop and recommend to the Governor and the
Legislature a strategic plan for state and local defense
retention and conversion efforts. The plan shall address
the state's role in assisting communities with potential
base closures and those impacted by previous closures.
GO-Biz may coordinate with other state agencies, local
groups, and interested organizations on this strategic plan
to retain current DOD installations, facilities, bases, and
related civilian activities.
b) Conduct outreach to entities and parties involved in
defense retention and conversion across the state and
provide a network to facilitate assistance and coordination
for all defense retention and conversion activities within
the state.
c) Help develop and coordinate state retention advocacy
efforts on the federal level.
d) Until January 1, 2020, conduct an evaluation of existing
state retention and conversion programs and provide the
Legislature with recommendations on the continuation of
existing programs, including, but not limited to, the
possible elimination or alteration of those programs and
provide recommendations to the Legislature on the necessity
of new programs for defense retention and adequate funding
levels.
e) Update the plan prepared by the Defense Conversion
Council as it existed on December 31, 1998, and any
subsequent state agency reports, with the goal to minimize
California's loss of bases and jobs in future rounds of
base closures. States that the new plan shall include, but
not be limited to, identifying major installations in
California, determining how best to defend existing bases
and base employment in this state, coordinating retention
activities with communities that may face base closures,
developing data and analyses on bases in this state and
coordinating with the state congressional delegation, the
Legislature, and the Governor. Authorizes GO-Biz to
temporarily borrow technical, policy, and administrative
staff from other state agencies, including the Legislature.
f) Serve as the primary state liaison with DOD and its
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installations in this state and assist in resolving any
disputes or issues between the DOD and state entities.
g) Review actions or programs by state agencies that may
affect or impact DOD installations or the state's military
base retention and reuse activities, and recommend to the
Governor and the Legislature actions that may be taken to
resolve or prevent similar problems in the future.
1)Authorizes the MA Program, providing that funds and resources
are available, to also:
a) Provide a central clearinghouse for all base retention
or conversion assistance activities, including, but not
limited to, employee training programs and regulation
review and permit streamlining.
b) Provide technical assistance to communities with
potential or existing base closure activities.
c) Provide a central clearinghouse for all defense
retention and conversion funding, regulations, and
application procedures for federal or state grants.
d) Serve as a central clearinghouse for input and
information, including needs, issues, and recommendations
from businesses, industry representatives, labor, local
government, and communities relative to retention and
conversion efforts.
e) Identify available state and federal resources to assist
businesses, workers, communities, and educational
institutions that may have a stake in retention and
conversion activities.
f) Provide one-stop coordination, maintain and disseminate
information, standardize state endorsement procedures, and
develop fast-track review procedures for proposals seeking
state funds to match funding from federal defense
conversion programs.
g) Maintain and establish databases in fields such as
defense-related companies, industry organization proposals
for the state and federal defense industry, community
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assistance, training, and base retention, and provide
electronic access to the databases.
1)Authorizes GO-Biz to apply for grants and seek contributions
from private industry to fund MA Program operations. Provides
that any private funds shall be deposited into the Military
and Aerospace Account, which is established in the Special
Deposit Fund in the State Treasury. Authorizes GO-Biz to
expend moneys in the account, upon appropriation by the
Legislature in the annual Budget Act, only for the purposes
outlined above related to the MA Program. Provides that
records of funds received and expenditures made shall be
subject to public disclosure and a report describing the
receipt and expenditure of these funds shall be submitted to
the Department of Finance, the Assembly Committee on Budget,
and the Senate Committee on Budget and Fiscal Review at least
biennially.
2)Requires GO-Biz to establish a military support grant program
(MS Grant Program) to grant funds to communities with DOD
installations to assist them in developing a retention
strategy. States that in order to discourage multiple grant
applications for individual defense installations in a region,
the criteria for grants shall be drafted to encourage a single
application for grant funds to develop a single regional
defense retention strategy. Requires that the structure,
requirements, administration, and funding procedures of the
grant program be submitted to the Legislature for review at
least 90 days prior to making the first grant disbursement.
States that GO-Biz may only make a grant award if the local
community provides at least 50 percent or more in matching
funds or in-kind services, with at least 50 percent of that
match being in the form of funding.
3)Requires GO-Biz to adopt necessary regulations to implement
the MA Program and MS Grant Program and shall adopt these
regulations as emergency regulations.
Provisions Related to the Space Enterprise Development Act
4)Enacts the Space Enterprise Development Act and defines the
following terms:
a) "Authority" means the California Spaceport Authority
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(Authority).
b) "Date of designation" means the date that the spaceport
receives designation by the Authority.
c) "Director" means the Director of GO-Biz.
d) "Governing body" means the governing body of a city,
county, city and county, special district, or joint powers
authority.
e) "Launch" means to place, or attempt to place, a launch
vehicle into a ballistic, suborbital, or orbital
trajectory, into Earth orbit in outer space, or otherwise
into outer space, and also is a means of placing a
commercial, civil, or military payload into Earth orbit or
beyond, including all activities involved in the
preparation of a launch vehicle for flight, including all
processing, servicing, and support activities that take
place at a launch site or at a California mission control
support site for ocean launches. A "launch" begins with
the arrival of the launch vehicle or payload at the launch
site.
f) "Launch site" means a location from which a space launch
or operation directly associated with a space launch takes
place, a location at which a launch vehicle or its payload,
if any, is intended to land, or as defined in the
Commercial Space Launch Act (51 U.S.C. Sec. 50901 et seq.).
The site includes any right-of-way directly associated with
the space launch or reentry operations and all facilities
and support infrastructure related to launch, reentry, or
payload processing.
g) "Launch vehicle" means a vehicle specifically designed
and built to operate in or place a payload in the upper
atmosphere or outer space. "Launch vehicles" include, but
are not limited to, expendable space launch vehicles and
reusable launch vehicles.
h) "Office" means GO-Biz.
i) "Operation of a launch site" means the conduct of
approved safety operations at a launch site to support the
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launching of vehicles and payloads.
j) "Operation of a reentry site" means the conduct of
safety operations at a fixed site on Earth at which a
reentry vehicle and its payload, if any, is intended to
land.
aa) "Payload" means an object, including, but not limited
to, a satellite that a licensed launch site undertakes to
place into outer space by means of a launch vehicle,
including components of the vehicle specifically designed
or adopted to support that activity.
bb) "Person" means any individual and any corporation,
partnership, joint venture, association, or other entity
organized or existing under the laws of any state or
nation.
cc) "Reentry" means the return of any launch vehicle that
has been placed in a ballistic, suborbital, or orbital
trajectory, and its payload, if any, to the Earth.
"Reentry" includes all activities involved in the
postflight ground operations.
A "reentry" ends when a launch vehicle or payload, if any,
has completed its descent to Earth and is retrieved.
dd) "Reentry site" means the location on Earth at which a
reentry is intended to occur, as defined in a license
issued or transferred by the United States Secretary of
Transportation, and any necessary support infrastructure
related to reentry or payload recovery.
ee) "Reusable launch vehicle" means a vehicle that is
designed to launch into an orbital or suborbital
trajectory, into Earth orbit in outer space, or otherwise
into outer space, that returns to Earth and is reused for a
subsequent future launch.
ff) "Spaceport" means an entity that has been designated by
the Authority to operate launch or reentry sites.
1)Requires GO-Biz to implement a space enterprise development
program (Space Program) to foster activities that increase the
competitiveness of space enterprise in California, including,
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but not limited to, the commercial use of space, space vehicle
launches, space launch infrastructure, manufacturing, applied
research, technology development, economic diversification,
and business development. Authorizes GO-Biz to contract with
other state or private agencies, nonprofit corporations,
universities, firms, or individuals for the performance of
technical or specialized work, or for services related to
space enterprise development programs.
2)Authorizes GO-Biz to select a California nonprofit corporation
to assist in the administration of space enterprise economic
development activities through programs, projects, grants,
partnerships, networks, and collaboration. Requires the
nonprofit to be selected through a solicitation process that
includes criteria for selection of the corporation, which
includes, but is not limited to, demonstrated experience in
space enterprise and the ability to perform space enterprise
development activities. Establishes requirements for a
contract between GO-Biz and the nonprofit which include
quarterly reports of the nonprofit's activities and finances,
conflict of interest provisions developed by GO-Biz and the
ability for GO-Biz to cancel the contract if the nonprofit
does not comply with requirements. Authorizes the nonprofit
to perform one or more of the following activities, as
determined contractually between GO-Biz and the nonprofit:
a) Serve as the Authority.
b) Pursue grants from the federal government or from
private businesses, foundations, or individuals, for
California space enterprise activities, including, but not
limited to, studies, services, infrastructure improvements
and modernization, and defense transition programs, to the
extent permitted by law.
c) Identify science and technology trends that are
significant to space enterprise and the state and act as a
clearinghouse for space enterprise issues and information.
d) Develop and implement a state strategy for applying and
commercializing technology to create jobs, respond to
industry changes, and foster innovation and competitiveness
in space enterprise.
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e) Provide information to the Director relevant to changes
in federal, state, and local statutes and regulations that
will enhance the development of space enterprise in
California.
f) Provide information to GO-Biz regarding the development
of laws, regulations, decisions, or determinations
affecting the economic and employment impacts of space
enterprise in California.
g) Provide recommendations to the Director for appropriate
state funding mechanisms and amounts to promote development
of space enterprise in California, including education and
workforce development.
h) Provide recommendations to the Director in the form of
strategic planning documents.
i) Review applications for, and promote, the California
Space Enterprise Competitive Grant Program.
1)Requires the Authority to designate spaceports for the
operation of launch sites or reentry sites and specifies that
any city, county, city and county, special district, joint
powers authority, or private entity, may apply to the
Authority for designation as a spaceport. Sets forth
application requirements. Designates an entity that has a
federal launch site operator's license from the United States
Secretary of Transportation under the authority of the
Commercial Space Launch Act (49 U.S.C. Sec. 7101 et seq.) as a
spaceport as long as they maintain their federal designation
and provide proof of their extension to the Authority upon
request. Clarifies that these provisions do not apply to any
launch site operator who is federally licensed on or before
January 1, 2005.
2)Establishes the California Space Enterprise Competitive Grant
Program (Space Grant Program) within GO-Biz to provide
funding, upon appropriation by the Legislature, for the
development of space enterprise in California. Authorizes
entities conducting activities intended to improve the
competitiveness of space enterprise in California, including
public, private, educational, commercial, nonprofit, or
for-profit entities to apply for grants. Clarifies that space
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enterprise activities include, but are not limited to, the
commercial use of space, space vehicle launches, space launch
infrastructure, manufacturing, applied research, technology
development, economic diversification, and business
development.
3)Requires GO-Biz or the nonprofit acting as the Authority to
issue solicitations that include minimum eligibility and
requirements for grants and that address jobs created and
retained by the implementation of the project, cost sharing by
other project participants, a condition that grant funds will
not be used to supplant other project funds, a demonstration
that a majority of the project will be undertaken in
California, an agreement among all project participants as to
intellectual property rights relative to the project, the
potential impact on the state's economy, the
cost-effectiveness of the project, the importance of state
funding for the viability of the project, a demonstration of
technical feasibility and an assessment of programmatic risk.
Requires an impartial review panel to evaluate grant
proposals, comprised of technical and scientific experts and
government representatives from throughout the state who are
knowledgeable about activities related to space enterprise.
Requires applications to be ranked and include recommendations
as to the amount of state funding for each grant application.
States that the granting of funds to private entities serves a
public purpose by assisting an industry vital to the health
and welfare of the State of California.
4)Requires GO-Biz to adopt necessary regulations to implement
the Space Program and Space Grant Program.
Provisions Related to Local Retention Entities
5)Defines the following terms for provisions related to local
retention entities:
a) "Military installation" means a base, camp, post,
station, yard, center, homeport facility for any ship, or
other facility under the jurisdiction of the DOD.
b) "Affected local government" means any county or city
identified as located wholly or partly within the
boundaries of a military installation or as having a sphere
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of influence over any portion of the installation with
responsibility for local zoning and planning decisions.
1)Finds and declares the following:
a) Because of the tremendous economic impact that military
installations have on the state, it is in the best interest
of the state to facilitate their retention.
b) It is the intent of the Legislature to encourage
cooperation among affected local governments in their
efforts to retain military installations in this state by
authorizing the creation of a joint powers authority.
c) The Legislature also encourages affected local
governments to engage other community-based organizations
in their retention activities.
1)Requires a local retention authority (RA) to be recognized for
each active military installation in this state. Requires a
list of RAs or their successors, including, but not limited
to, separate airport or port authorities recognized as the
local retention authority for the military installations, to
be maintained by the Office of Planning and Research (OPR).
Authorizes a joint powers authority to be designated or
created if multiple affected local governments are identified
as an affected local government.
2)Requires the state to recognize an RA for each active military
installation if resolutions acknowledging it as the RA are
adopted by all Boards of Supervisors (BOSs) and City Councils
(CCs) for counties and cities identified as affected local
governments.
3)Provides that, if prior to January 1, 2004, a local government
was awarded grant moneys pursuant to any predecessor agency
for a specific military installation and still qualifies as an
affected local government, the recipient local government
shall be recognized by the state as the RA unless resolutions
acknowledging a different RA are adopted by all County BOSs
and CCs for counties and cities identified as affected local
governments.
4)Requires OPR, in consultation with GO-Biz, to recognize an RA
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for each military installation if the necessary resolutions
are not adopted and forwarded before October 1, 2016 to OPR.
5)States that the RA shall be recognized by all state agencies
as the local retention planning authority for the military
installation and requires the state to encourage the federal
government and other local jurisdictions to recognize these
RAs.
FISCAL EFFECT: Unknown. This bill is keyed "fiscal" by
Legislative Counsel.
COMMENTS:
1.Purpose. The Author is the Sponsor of this measure.
According to the Author, despite the tremendous economic
impact and jobs associated with defense and aerospace in
California, there is no statewide entity designated in law
responsible for helping retain military installations and grow
aerospace activities. The Author states that this bill
recognizes the unique synergy between DOD activities in the
state and aerospace/space flight industries, by designating
GO-Biz as the lead state entity for fostering these two
economic activities.
The Author is concerned that there is nothing in current law
that ensures there is a continuity of actions or focus from
one administration to the next with respect to military
installation issues and future base realignment and closures.
The Author acknowledges that while GO-Biz has the iHUB program
with centers of innovation throughout the state that are
typically focused on regional economic clusters (including the
Innovation Hub for Defense, Energy and Aerospace (iDEA Hub)),
this system does not provide for a statewide focus on military
installations as well as aerospace and spaceflight activities.
The Author notes that the iDEA Hub region encompasses
California's Kern, Ventura, Orange, Los Angeles, and San Diego
counties but leaves out other significant aerospace/defense
regions like the Central Coast and Silicon Valley.
According to the Author, this bill provides continuity on
issues related to military installations by designating GO-Biz
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as the statewide lead on fostering the state's military,
aerospace and spaceflight sectors and provides flexibility for
the administration to organize and operate programs by
allowing GO-Biz to contract with other state or private
agencies, nonprofit corporations, universities, firms, or
individuals to fulfill any of its duties.
The Author notes that California has benefited significantly
from the spending on the war on terror starting in the early
2000's and that with a new round of base closures always on
the horizon, California cannot wait to implement measures
aimed at keeping military bases open and operational.
According to the Author, bigger and more immediate threats to
military installations other than Base Realignment and Closure
(BRAC) include federal budget reductions, non-BRAC force
realignments and reductions in aircraft inventory. The Author
notes that during past BRAC rounds, cities and counties within
California were pitted against each other, fighting to keep
their local base from closing and when a base was closed,
there was confusion and debate over which local entity was
responsible for the conversion and cleanup of the base. In
some communities, multiple local jurisdictions claimed
management and development rights to the closed base.
According to the Author, a process was established to end
these disputes that involved bringing the communities together
to select single local base reuse authority. The law was then
expanded to select a single local retention authority
responsible for fending off future BRAC rounds and to promote
the retention of the selected military base. The Author notes
that this law was in effect during the 2005 BRAC round but was
subsequently sunset in January 2007. This bill would
reestablish a process for one local retention authority to be
recognized for each military installation in the state.
2.Base Realignment and Closure. The Defense Base Realignment
and Closure Act (BRAC) established a process for DOD to
evaluate and then provide recommendations for the closure of
military installations, necessary for reductions to overall
DOD spending when the Cold War ended. The process requires
that an assessment of those DOD recommendations be completed
by an independent commission. Since the inception of the
DOD's post-Cold War downsizing, the federal government has
conducted five rounds of military base closures. In
California, over 29 bases were closed or realigned, resulting
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in both the loss of military installations and associated
jobs, as well as serious impacts to the robust aerospace
industry in the state, particularly Southern California,
stemming from defense spending cuts.
Prior to the mid 1990's, California's response to BRAC was
primarily focused on assisting local communities in the reuse
of shuttered military bases. In 1994, then-Governor Wilson
issued an Executive Order (W-87-94) which directed the
Governor's Office of Planning and Research to coordinate the
state's effort to assist local communities in developing
strategies to protect California bases from further closings,
as a means of focusing on the importance military bases have
on the state's economy. Subsequent legislation ( AB 639 , Alby
Chapter 952, Statutes of 1998 and SB 1099 , Knight, Chapter
425, Statutes of 1999) codified an Office of Military Base
Retention and Reuse (OMBRR), placing it within the Technology,
Trade and Commerce Agency (TTCA) and outlining the
responsibilities of the office, including the creation of a
Defense Retention Grant Program. The grant program aided
local communities in preparing for future BRAC rounds. SB 926
(Knight and Ashburn, Chapter 907, Statutes of 2004) then
renamed OMBRR to the Office of Military and Aerospace Support
(OMAS), signifying the close relationship between military and
aerospace activities. OMAS exited through the 2005 BRAC round
and subsequently sunsetted in January of 2007.
3.Aerospace in California. According to a recent report by the
Los Angeles Economic Development Corporation (LAEDC), the
aerospace industry is comprised of companies that manufacture
aircraft (civil and military), missiles, satellites and other
space vehicles and the companies that manufacture and
distribute parts and components. Buyers of these products
include private industry, the military and government space
administrations. The report notes that today, aerospace is a
highly concentrated industry, dominated by a small number of
large firms that are supported by a large number of smaller
contractors. It is also characterized as a capital intensive
and high-value added industry. Profitability depends a great
deal on technical expertise, innovation and the ability to
accurately price long-term contracts for programs that may
take years to design, develop and build. According to the
report, demand for aerospace products is driven by both civil
and military requirements.
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The California Spaceport Authority (Authority) was originally
created to recognize the support and unique services required
for the development of commercial launch, manufacturing, and
academic and research operations related to space flight. A
nonprofit corporation was designated as the Authority with a
mission of developing the commercial space industry in
California and assisting with defense conversion efforts. AB
1475 (Bordonaro, Chapter 938, Statutes of 1997) then
designated a new nonprofit corporation as the Authority and
also created two grant programs to foster space flight-related
infrastructure and associated activities -The Space Flight
Competitive Grant Program and the Highway to Space Competitive
Grant Program, ultimately administered by two separate
nonprofit entities, both responsible for the promotion of
commercial space flight activities in the state. In 2003, all
space flight related promotions and programs were consolidated
under one entity and grant program with the passage of AB 1532
(Nakano, Chapter 627, Statutes of 2003) which tasked the
Authority with responsibility for attraction and promotion of
space flight industries in California and the administration
of the space enterprise development program. Following the
2008 economic downturn, state and private funding for the
Authority became limited or reallocated. In 2010, the
nonprofit corporation selected to administer the space
enterprise development program shuttered and no action was
taken to select another nonprofit to administer the program.
Language in the Government Code related to the Space
Enterprise Development Program was repealed in 2014.
California's robust aerospace industry suffered a significant
downsizing and restructuring with the decline in military
spending following the end of the Cold War and as a result of
numerous BRAC rounds. In the early 1990s, there were efforts
to retain many of California's aerospace companies and jobs
through the development of commercial space activities on
California's Central Coast at Vandenberg Air Force Base.
These efforts generated legislation (AB 279, 1993) to
designate California's first Spaceport Authority. This
designation then allowed this Authority to lease federal
property deemed "excess capacity" under the Federal Commercial
Space Launch Act. The excess property was known as Space
Launch Complex (SLC 6) [Formerly West Coast launch site for
the Space Shuttle].
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According to a brief prepared by the California Research
Bureau, aerospace is one of the nation's standout industries.
Its workforce is highly skilled and well paid~ its exports
grow our economy~ and it is a continuing source of innovation.
Aerospace encompasses a diverse range of productive
activities, including the manufacturing of both civilian and
military aircraft, space vehicles, guided missiles and
associated parts. In 2011, California's aerospace industry
produced over $31 billion worth of goods. Nationally, the
aerospace industry produced more than $183 billion in goods in
2011. California represented 17 percent of this total. This
was a slight increase over recent years. Overall, aerospace
represented more than 72 percent of all transportation
equipment manufacturing in California in 2011. Across all
manufacturing sectors, aerospace contributed more than 6.3
percent of the
$495 billion in manufactured goods produced in California in
2011.
Aerospace is particularly attractive for economic development
due to the various "spillover effects" the industry brings
with it. This can represent the promotion of related
industries through the supply chain, such as engine and engine
parts, electrical components, hydraulics and fluid power
subassemblies, intake and exhaust systems, even including
seating and interior trim manufacturing. Other support
services such as transportation and logistics support,
managerial services, construction, and utilities also see an
increase in demand due to California's large aerospace
industry.
The brief notes that new technological trends are diversifying
aerospace beyond the military/defense and commercial air
travel markets. The expansion of unmanned aerial vehicles
(UAVs, or drones) from purely military to law enforcement and
civilian uses is one such trend. The other is the growth of
commercial spaceflight. The use of drones in the United
States has been highly controversial, but the Federal Aviation
Administration (FAA) has been moving forward with plans to
integrate drones into the U.S. air traffic control system, and
has recently announced the selection of six states as initial
test site operators to begin studying issues related to the
wider use of drones. This past decade has seen tremendous
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innovation in commercial spaceflight. The industry is being
driven by three potential markets: payload delivery,
terrestrial travel, and space tourism. Two big names in
commercial space are SpaceX and Scaled Composites, both of
which were founded in and are based in California, with
manufacturing facilities located here. SpaceX was the first
private entity to launch a liquid fueled rocket into orbit,
the first to successfully attach a craft to the International
Space Station (ISS) and is currently fulfilling a $1.6 billion
contract to supply the ISS. The first facility in the country
to be certified by the FAA as a spaceport is also in
California, the Mojave Air & Space Port. This has been the
test site for many competitors in the Ansari X Prize-a $10
million prize for the first nongovernmental organization to
successfully launch and recover a reusable manned spacecraft
twice within a two?week period. The winner of the X Prize,
Scaled Composites, is based in Mojave, and uses the spaceport
as the initial test site for its projects. A spin?off called
the Spaceship Company is currently under contract with Virgin
Galactic to build the first private fleet of space vehicles
for space tourism.
The aerospace industry has long been a leading catalyst for
technological innovation in the nation, with Southern
California's aerospace firms taking the lead for much of the
industry's history and remains a vital sector for both the
national and California economies. However, California has
faced challenges in retaining even some California-based
companies' manufacturing, testing and launching activities.
XCOR Aerospace, based in Mojave, moved its commercial space
research and development center headquarters to Midland,
Texas, and will be establishing an operational and
manufacturing site at the Kennedy Space Center in Florida with
the assistance of Space Florida. SpaceX, based in Hawthorne
selected Brownsville, Texas for a new launch facility and
currently launches its Falcon 9 rockets from Cape Canaveral in
Florida, although it has also used Vandenberg Air Force Base
in Lompoc, California. Since 2003, SpaceX has tested rockets
at McGregor Air Force Base, near Waco, Texas. Virgin Galactic,
which has facilities in Mojave and Los Angeles, has plans to
launch from New Mexico's Spaceport America, but did just open
a new design and manufacturing facility for a small satellite
launch vehicle (LauncherOne) at Long Beach Airport earlier
this year.
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4.Governor's Office of Business and Economic Development
(GO-Biz). In February 2010, the Little Hoover Commission
undertook a review of the state's economic and workforce
development programs. In its final report, Making up for Lost
Ground: Creating a Governor's Office of Economic Development,
it analyzed the status and effectiveness of current programs
since the 2003 demise of the Technology, Trade and Commerce
Agency (TTCA) and recommended the creation of a new
governmental entity to fill the void left by the dismantled
agency.
The report called for a single entity that would promote
greater economic development, foster job creation, serve as a
policy advisor and deliver specific services (i.e.,
permitting, tax, regulatory, and other information) directly
to the California business community. In April 2010, Governor
Schwarzenegger issued Executive Order S-05-10 as a means to
operationalize the report recommendations including the
creation of the Governor's Office of Economic Development
(GOED).
In October 2011, the Governor signed AB 29 (John A. Pérez,
Chapter 475, Statutes of 2011), which effectively codified
GOED and changed its name to GO-Biz, effective January 1,
2012. Since its inception, the office has served thousands of
businesses, 95% of which are small. The most frequent types
of assistance include help with permit streamlining, starting
a business, relocation and expansion of businesses, and
regulatory challenges.
In March 2012, Governor Brown initiated a reorganization
process to realign the state's administrative structure. Key
changes include dismantling of the Business, Transportation
and Housing Agency (BTH) and the shifting of a number of key
programs and services to GO-Biz including the Small Business
Loan Guarantee Program, the California Travel and Tourism
Commission, the California Film Commission, the Film
California First Program and the Infrastructure and Economic
Development Bank (I-Bank). GO-Biz also administers the "Made
In California" program for the purpose of encouraging consumer
product awareness and to foster the purchases of products
manufactured in California. In addition, the Governor called
for the placement of the California SBDC Program within
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GO-Biz. GO-Biz also now has authority for undertaking
international trade and foreign investment activities,
including establishing any international trade and investment
office (AB 2012, Perez, Statutes of 2012). GO-Biz has
partnered with the Bay Area Council to open a California-China
Trade and Investment office in Shanghai's downtown Yangpu
district and is authorized under current law to accept private
monies to establish, fund and operate these offices.
A key initiative of GO-Biz is the "strike teams" which can be
mobilized to help attract and/or retain specific businesses.
Strike teams are especially well suited to engage with major
employers and have been successfully activated to assist Bayer
Healthcare, Jazz Semiconductor, and Baxter Pharmaceutical to
locate and/or expand in California.
Among these other programs, GO-Biz also administers the
Innovation Hub (iHub) program. According to GO-Biz, in the
spring of 2010, the state launched its new, forward-thinking
iHub program in an effort to harness and enhance California's
Innovative spirit. The iHubs improve the state's national and
global competitiveness by stimulating partnerships, economic
development, and job creation around specific research
clusters through state-designated iHubs. The iHubs leverage
assets such as research parks, technology incubators,
universities, and federal laboratories to provide an
innovation platform for startup companies, economic
development organizations, business groups, and venture
capitalists. AB 250 (Holden, Chapter 530, Statutes of 2013)
codified the iHub program at GO-Biz and expanded the program.
There are currently 16 regional iHubs located throughout the
state.
CalValley Tech iHub in the Central Valley
Cleantech Los Angeles iHub
Coachella Valley iHub
CNMI iHub in Torrance
East Bay Green Corridor iHub
iDEA iHub (referenced above) in Ridgecrest
i-GATE iHub in Livermore
iHub San Diego
iHub San Joaquin in San Joaquin County
Inland SoCal Link iHub in Riverside
Innovate North State iHub in Chico
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North Bay iHub in Santa Rosa
OCTANe iHub in Orange County
Sacramento iHub in the Sacramento Region
San Jose/Silicon Valley iHub
SF iHub in San Francisco
While GO-Biz has undertaken administration for programs
outlined above, the design of the office within the Office of
the Governor was aimed at allowing it to operate at a higher
level than other agencies within state government which are
inherently organized to serve as umbrella organizations for
multiple regulatory programs.
1.Related Legislation This Year. SB 121 (Fuller) requires that
school construction projects on military installations that
are eligible for specified federal grants be given priority
for funding under the State School Facility program. ( Status:
The bill is pending in the Senate Committee on Education.)
AB 14 (Waldron) establishes the Unmanned Aircraft Systems
(UAS) Task Force to develop a comprehensive policy for the use
of UAS in California. ( Status: The bill is currently pending
in the Assembly Committee on Transportation.)
AB 442 (Irwin) codifies the Governor's Military Council, under
the direction of the California Military Department, and
provides for appointment to the Council by the Governor.
( Status: The bill is currently pending in the Assembly
Committee on Appropriations.)
AB 1080 (Obernolte) authorizes the Department of Finance to
determine that an agreement between a former redevelopment
agency and a joint powers authority that was created to
exercise the powers provided by the Military Base Reuse
Authority Act is an enforceable obligation. ( Status: The
bill is currently pending in the Assembly.)
AJR 11 (Burke and Atkins) memorializes the President and the
Congress of the United States to recognize the unique military
value of California's defense installations and the
disproportionate sacrifices California has endured in previous
BRAC rounds. ( Status: The bill is pending on the Assembly
Floor.)
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2.Prior Related Legislation. AB 1997 (Gorrell) of 2013 would
have provided that tax exemptions for persons engaged in
aircraft manufacturing, for use primarily in manufacturing,
processing, refining, fabricating, or recycling of property,
or research and development also applies to local sales and
use taxes and those specified state taxes with respect to
qualified tangible personal property purchased by a qualified
person that is engaged in aircraft manufacturing of unmanned
aerial vehicles. ( Status: The bill was never heard in a
policy committee of the Legislature.)
AB 250 (Holden, Chapter 530, Statutes of 2013) codified the
iHub program at GO-Biz and expanded the program.
AB 737 (Fox) of 2013 would have required GO-Biz to prepare and
submit a proposal for an unmanned aircraft test site to the
FAA on or before May 6, 2013.
( Status: The bill was never heard in a policy committee of
the Senate in order to be considered in the 2013-14 Session.)
SB 245 (Rubio) of 2011 would have re-established the Office of
Military Support within the Governor's Office of Planning and
Research (OPR) for the purpose of serving as a clearinghouse
for state activities related to the military, including base
closures.
AB 29 (John A. Pérez, Chapter 475, Statutes of 2011)
established GO-Biz within the Governor's Office for the
purpose of serving as the lead entity for economic strategy
and marketing of California on issues relating to business
development, private sector investment and economic growth.
AB 2287 (Bass) of 2010, would have established the Office of
Economic Development, which includes the California Business
Investment Services Program, within the then-Governor's
Economic Development Office. ( Status: This bill was held in
the Assembly Committee on Jobs, Economic Development and the
Economy.)
AB 2734 (John A. Perez) of 2010 created the Office of Economic
Development which included the California Business Investment
Services Program within the Governor's Office. Required the
Office to serve the Governor as the lead entity for economic
strategy and marketing of California and make recommendations
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to the Governor and Legislature regarding polices, programs,
and actions to advance statewide economic goals. ( Status :
This measure was vetoed by the Governor in 2010. In his veto
message, the Governor indicated that he was "disappointed at
the insistence of the State Senate to make the director of
this office subject to confirmation, which inappropriately
infringes on the rights and powers of my office.")
SB 1259 (DeSaulnier) of 2010 would have created the Economic
Development and Job Creation Agency and require the new agency
to perform duties relating to economic development and job
creation. It requires the secretary to develop a
reorganization plan and propose a structure for the agency.
( Status: The measure was held in the Senate Committee on
Appropriations.)
AB 2711 (Portantino) of 2008 would have required BTH to
develop a comprehensive state technology and innovation plan.
( Status: The measure was held in the Assembly Committee on
Appropriations.)
SB 1698 (Ashburn, Chapter 681, Statutes of 2006) extended the
authority for OMAS for two years, until January 1, 2009, and
expanded the duties of the OMAS to include outreach to the
aerospace industry for the purpose of fostering aerospace
enterprises in California.
AB 2565 (Parra, Chapter 763, Statutes of 2004) requires that
the strategic plan originally prepared by the California
Defense Retention and Conversion Council as it existed in 1998
be updated.
AB 1202 (Laird, Chapter 330, Statues of 2005) replaced
obsolete references to the Defense Conversion Council with
OMAS and revised the definition of military bases, required
the Director of OPR to select a mediator, in consultation with
the federal Office of Economic Adjustment, to reach agreement
among different jurisdictions on a local reuse entity in the
event that the multiple local governments cannot agree on a
single reuse entity for each base.
SB 926 (Knight and Ashburn, Chapter 907, Statutes of 2004)
consolidated the defense retention and conversion efforts in
the state. The bill changed the name of OMBRR to OMAS,
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transferred its functions to BTH, and set forth its duties and
authority with respect to state and local defense retention
and conversion, consolidating all such programs under a single
office within state government. The bill also provided for the
use of state Infrastructure and Economic Development Bank
funds by local governments to develop projects on or near a
military base that enhance the base's mission.
AB 1532 (Nakano, Chapter 627, Statutes of 2003) transferred
the Technology Planning Program, California Space Enterprise
Competitive Grant Program, and the Challenge Grant Program in
the TTCA to the BTH and referred to these programs as the
Space Enterprise Development Program.
SB 296 (Soto) of 2001 would have enacted the Department of
Defense Operational Effectiveness Preparedness Act to help
prevent any further base closures in the state. ( Status: The
bill was never heard in a policy committee of the
Legislature.)
SB 1468 (Knight, Chapter 971, Statutes of 2002) required
cities and counties to include military installations,
aviation routes, airspace, and readiness activities in their
state-mandated general plans, and requires OPR to provide
guidance to local officials as part of its advisory General
Plan Guidelines.
SB 1099 (Knight, Chapter 425, Statutes of 1999), the
California Defense Retention and Conversion Act, reconstituted
the defunct Defense Conversion Council as the California
Defense and Retention and Conversion Council as well as
required the establishment of a Defense Retention Grant
Program.
AB 639 (Alby Chapter 952, Statutes of 1998) enacted the
Defense Conversion, Reuse and Retention Omnibus Act which was
designed to assist communities in both closure and retention
efforts.
AB 1475 (Bordonaro, Chapter 938, Statutes of 1997) established
the California Space and Technology Alliance as the primary
California Space Authority to oversee the operations of the
California Space Flight Competitive Grant Program and the
Highway to Space Program.
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SB 268 (Roberti, Chapter 441, Statutes of 1993) created the
Defense Conversion Matching Grant Program, administered by the
Office of Strategic Technology within the Trade and Commerce
Agency, and overseen by the Defense Conversion Council. Also
appropriated $5.5 million from the Petroleum Violation Escrow
Account to fund defense conversion efforts.
SB 458 (Hart, Chapter 445, Statutes of 1993) enacted the
California Defense Conversion Act of 1993 to enable the state
to assume a leadership role in converting to a peacetime
economy. Also created a 15-member Defense Conversion Council
in the Trade and Commerce Agency with prescribed powers and
duties, including the establishment of criteria for
designation of regional technology alliances.
NOTE: Double-referral to Senate Committee on Veterans Affairs.
SUPPORT AND OPPOSITION:
Support: None on file as of April 21, 2015.
Opposition: None on file as of April 21, 2015.
-- END --