BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 506 (Fuller) - Economic development:  military and aerospace
          
           ----------------------------------------------------------------- 
          |                                                                 |
          |                                                                 |
          |                                                                 |
           ----------------------------------------------------------------- 
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Version: April 14, 2015         |Policy Vote: B., P. & E.D. 9 -  |
          |                                |          0, V.A. 5 - 0         |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Urgency: No                     |Mandate: No                     |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Hearing Date: May 11, 2015      |Consultant: Robert Ingenito     |
          |                                |                                |
           ----------------------------------------------------------------- 
          
          This bill meets the criteria for referral to the Suspense File.




          Bill  
          Summary: SB 506 would (1) establish a process for the  
          designation of a local retention authority to serve as the lead  
          local government entity responsible for efforts to retain local  
          military installations, (2) create the Military and Aerospace  
          Program under the Governor's Office of Business and Economic  
          Development (GO-Biz) to address concerns relating to state and  
          local defense retention, base conversion and base reuse  
          activities, and (3) establish the 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.


          Fiscal  
          Impact:  







          SB 506 (Fuller)                                        Page 1 of  
          ?
          
          
           GO-Biz indicates that it would incur annual General Fund costs  
            of at about $2 million to implement the provisions of the  
            bill.

           The Governor's Office of Planning and Research (OPR) would  
            incur minor administrative costs.


          Background: The federal government conducted four rounds of Base  
          Realignment and Closure (BRAC) closures late 1988 and 1993.  
          Nationally, that process led to the closing of 350 large and  
          small military bases and 55 major realignments. Reportedly, this  
          saved federal taxpayers in excess of $16 billion through 2001  
          and six billion dollars more each subsequent year.  
          Prior to 1988, California had, by far, the largest military  
          presence of any state, and was home 15 percent of the Department  
          of Defense's (DoD's) total 275,264 personnel and 18 percent of  
          the major military bases around the country. Correspondingly,  
          the base closures over those four rounds hit the State  
          disproportionately hard. 


          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 OPR 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, 1998 and SB 1099, Knight,  
          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, 2004) then renamed  
          OMBRR to the Office of Military and Aerospace Support (OMAS),  
          signifying the close relationship between military and aerospace  








          SB 506 (Fuller)                                        Page 2 of  
          ?
          
          
          activities. OMAS exited through the 2005 BRAC round and  
          subsequently sunsetted in January of 2007.


          Unlike previous rounds, the fifth BRAC round (2005) focused more  
          on realignment than closure. Along with saving money, a top  
          priority was military force readiness, consolidating assets onto  
          centralized installations from which they can be deployed  
          rapidly and flexibly in support of an evolving global situation,  
          and joint service missions. Implementation of the 2005 BRAC  
          recommendations was completed in 2011.




          Proposed Law:  
           This bill would, among other things, do the following:
           The Military and Aerospace Support Act  


                 Establish 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.


                 State 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.


                 Authorize 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, as specified. Provide that participation  
               by Council members is voluntary and there is no  
               reimbursement for per diem or expenses.  Provide that the  
               Council may include, but is not limited to, representatives  








          SB 506 (Fuller)                                        Page 3 of  
          ?
          
          
               from any legislative office, state agency, local  
               government, industry, and civic or research organizations  
               that may have an interest in defense related activities.


                 Require the MA Program to do all of the following:


                  o         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.


                  o         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.


                  o         Help develop and coordinate state retention  
                    advocacy efforts on the federal level.


                  o         Conduct an evaluation of existing state  
                    retention and conversion programs, as specified, and  
                    provide the Legislature with recommendations on the  
                    continuation of existing programs.


                  o         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. State that the new  
                    plan shall include, but not be limited to, identifying  
                    major installations in California, determining how  








          SB 506 (Fuller)                                        Page 4 of  
          ?
          
          
                    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. 


                  o         Serve as the primary state liaison with DOD  
                    and its installations in this state and assist in  
                    resolving any disputes or issues between the DOD and  
                    state entities.


                  o         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.


                 Authorize the MA Program, providing that funds and  
               resources are available, to also:


                  o         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.


                  o         Provide technical assistance to communities  
                    with potential or existing base closure activities.


                  o         Provide a central clearinghouse for all  
                    defense retention and conversion funding, regulations,  
                    and application procedures for federal or state  
                    grants.


                  o         Serve as a central clearinghouse for input and  








          SB 506 (Fuller)                                        Page 5 of  
          ?
          
          
                    information, including needs, issues, and  
                    recommendations from businesses, industry  
                    representatives, labor, local government, and  
                    communities relative to retention and conversion  
                    efforts.


                  o         Identify available state and federal resources  
                    to assist businesses, workers, communities, and  
                    educational institutions that may have a stake in  
                    retention and conversion activities.


                  o         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.


                  o         Maintain and establish databases in fields  
                    such as defense-related companies, industry  
                    organization proposals for the state and federal  
                    defense industry, community assistance, training, and  
                    base retention, and provide electronic access to the  
                    databases.


                 Authorize 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.  Authorize 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.









          SB 506 (Fuller)                                        Page 6 of  
          ?
          
          

                 Require 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. State 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.  
               Require 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.  State 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.


                 Require GO-Biz to adopt necessary regulations to  
               implement the MA Program and MS Grant Program and shall  
               adopt these regulations as emergency regulations.


           Space Enterprise Development Act  


                 Require GO-Biz to implement a space enterprise  
               development program (Space Program) to foster activities  
               that increase the competitiveness of space enterprise in  
               California, as specified. Authorize 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.


                 Authorize 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.  Require the nonprofit to be selected  
               through a solicitation process that includes specified  
               criteria. Establish requirements for a contract between  








          SB 506 (Fuller)                                        Page 7 of  
          ?
          
          
               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.  Authorize the nonprofit to  
               perform specified activities, as determined contractually  
               between GO-Biz and the nonprofit.


                 Require 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.  Set forth  
               application requirements.  Designate 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.


                 Establish 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 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. 


                 Require 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  








          SB 506 (Fuller)                                        Page 8 of  
          ?
          
          
               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.


                 Require GO-Biz to adopt necessary regulations to  
               implement the Space Program and Space Grant Program.


                  


          Provisions Related to Local Retention Entities


                  Require a local retention authority (RA) to be  
               recognized for each active military installation in the  
               State.  Require 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).  Authorize a joint powers  
               authority to be designated or created if multiple affected  
               local governments are identified as an affected local  
               government.


                 Require the State to recognize an RA for each active  








          SB 506 (Fuller)                                        Page 9 of  
          ?
          
          
               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.


                 Provide 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.


                 Require OPR, in consultation with GO-Biz, to recognize  
               an RA for each military installation if the necessary  
               resolutions are not adopted and forwarded before October 1,  
               2016 to OPR.


                 State 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.




          Related  
          Legislation: 
                 SB 121 (Fuller) would require 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. The bill is  
               currently in the Senate Committee on Education.




          Staff  
          Comments: GO-Biz's annual General Fund budget is about $10  








          SB 506 (Fuller)                                        Page 10 of  
          ?
          
          
          million. The estimated position and equipment costs to  
          administer this bill would increase the size of the department  
          by roughly 20 percent.
          The 2005 Commission recommended that Congress authorize another  
          BRAC round in 2015, and then every 8 years ongoing. In May 2012,  
          the House Armed Services Committee rejected a proposal for a  
          2015 round of base closures. In March of 2015, an acting  
          assistant Secretary of Defense testified before a House  
          subcommittee, indicating that the Pentagon has begun the process  
          of requesting a new round of base closures. 




                                      -- END --