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








          SB 506 (Fuller)                                         Page 23  
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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.)









          SB 506 (Fuller)                                         Page 24  
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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  








          SB 506 (Fuller)                                         Page 25  
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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,  








          SB 506 (Fuller)                                         Page 26  
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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.








          SB 506 (Fuller)                                         Page 27  
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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 --