BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: SB 1215 Hearing Date: April 4,
2016
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|Author: |Allen |
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|Version: |February 18, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Nicole Billington |
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Subject: California Aerospace Commission
SUMMARY: Establishes the California Aerospace Commission to
foster the development of activities in California related to
the aerospace industry.
Existing law:
1)Establishes the Spaceport Office in the Department of
Transportation to seek and obtain federal funding for the
commercialization of private space activities in the state.
(Government Code (GC) § 14007.2)
2)Establishes the Governor's Office of Business and Economic
Development (GO-Biz), which is administered by a director
appointed by the Governor 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. (GC §§ 12096 -
12098.5)
3)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
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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)
4)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)
This bill:
1)Creates the California Aerospace Commission (Commission) to
foster the development of activities in California related to
aerospace, including, but not limited to, aviation, commercial
and governmental space travel, unmanned aerial vehicles,
aerospace education and job training, infrastructure and
research launches, manufacturing, academic research, applied
research, economic diversification, business development,
tourism, and education.
2)Establishes that the Commission shall:
a) Be an official recipient of grants from state or local
government sources or from private businesses or
individuals, for California aerospace-related activities,
including, but not limited to, studies, services,
infrastructure improvements, and modernization.
b) Be an advocate in support of California
aerospace-related activities, including, but not limited
to, the businesses, facilities, programs, developments,
alterations, modifications, educational activities, and
other programs impacting those activities.
c) Identify and recommend changes in federal, state, and
local statutes and regulations that will enhance the
development of California aerospace-related activities.
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d) Report on the economic and employment impacts of
California aerospace-related activities to the Governor and
the Legislature and other state agencies and commissions
that adopt regulations or make decisions or determinations
that affect those activities.
e) Recommend to the Governor and the Legislature
appropriate state funding mechanisms and amounts to promote
development of California aerospace-related activities.
f) Provide recommendations to the Governor and the
Legislature in the form of strategic planning documents,
with regard to the development of California
aerospace-related activities.
g) Act as a clearinghouse for aerospace-related issues and
information.
h) Foster and promote activities related to aerospace in
all parts of California.
FISCAL EFFECT: Unknown. This bill is keyed "fiscal" by
Legislative Counsel.
COMMENTS:
1.Purpose. The Author is the sponsor of this bill. According to
the Author, aerospace employs over 200,000 Californians
directly and supports more than half a million jobs in related
fields. The Author notes that California leads the United
States in aerospace services, including the design and
manufacture of aircraft, spacecraft, and commercial
satellites, and is home to the burgeoning private space
industry. "The Golden State is an unmatched pioneer in
aerospace education, through its exceptional science,
technology, engineering, and mathematics (STEM) education
programs at its world-class research universities. Yet, within
California government, there is currently no official, unified
voice advocating on behalf of aerospace interests," the Author
writes.
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2.History of Aerospace in California. 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 Defense
Base Realignment and Closure 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 the California Spaceport Authority
(Authority).
The Authority was originally created to recognize the support
and unique services required for 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. These grant programs were
ultimately administered by two separate nonprofit entities;
however, both were 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. 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 under the Business,
Transportation and Housing Agency was repealed in 2014.
3.Current Status of Aerospace Industry. According to a 2012
report by the Los Angeles Economic Development Corporation
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(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. Profitability within this
capital intensive industry depends largely 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 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 serves as 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, the aerospace
industry produced more than $183 billion in goods nationally.
With over $31 billion worth of goods produced, California's
aerospace industry represents 17 percent of this total.
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.
New technological trends are diversifying aerospace beyond
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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. 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 in the
state. 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 spinoff called the Spaceship Company is
currently under contract with Virgin Galactic to build the
first private fleet of space vehicles for space tourism.
However, California has faced challenges in retaining even
some California-based companies' manufacturing, testing and
launching activities. For example, the Mojave-based XCOR
Aerospace 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 a site in Texas for a new
launch facility and currently launches its Falcon 9 rockets
from a Florida site, although it has also used Vandenberg Air
Force Base in Lompoc, California. Since 2003, SpaceX has
tested rockets at McGregor Air Force Base in Texas. While
Virgin Galactic has facilities in Mojave, Los Angeles, and
Long Beach, it also has plans to launch from New Mexico's
Spaceport America.
4.Governor's Office of Business and Economic Development
(GO-Biz) and Current Aerospace Development Efforts. 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
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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 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. 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 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.
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 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
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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 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
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
California's iHub for Defense, Energy and Aerospace, named
iDEA Hub (referenced above), was founded in October 2013.
Based in Ridgecrest the iDEA Hub's region encompasses
California's Kern, Ventura, Orange, Los Angeles, and San Diego
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Counties and provides an ideal backdrop to encourage defense,
energy, and aerospace technology and businesses. The iDEA Hub
provides a focus both on small emerging technology companies
and university research teams, as well as established
high-tech businesses. The iDEA Hub in Ridgecrest facilitates
advancement of the aerospace industry by: promoting the
region's innovation ecosystem nation- and world-wide,
facilitating partnerships between government, industry, and
academia, connecting private sector capital with technology
commercialization opportunities, pursuing funded research
opportunities, promoting and hosting STEM activities in the
region, and helping businesses attract and retain a qualified
workforce.
1.Related Legislation This Year. AB 2600 (Lackey) would request
the Regents of the University of California to establish the
California Institute for Aerospace to achieve specified goals
relating to the development of the aerospace industry in the
state and would request the regents to locate the California
Institute for Aerospace at a satellite campus within 20 miles
of Edwards Air Force Base or United States Air Force Plant.
( Status: The bill is pending in the Assembly Committee on
Higher Education.)
2.Prior Related Legislation. SB 506 (Fuller) of 2015 would have
established 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 and
urged 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. ( Status: The bill was
held in the Senate Committee on Appropriations.)
AB 2763 (Committee on Accountability and Administrative
Review, Chapter 401, Statutes of 2014) reallocated specific
duties of the abolished Business, Transportation and Housing
Agency to GO-Biz and the Transportation Agency and eliminated
language regarding the Space Enterprise Development Program.
AB 250 (Holden, Chapter 530, Statutes of 2013) codified the
iHub program at GO-Biz and expanded the program.
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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.)
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 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 2711 (Portantino) of 2008 would have required Business,
Transportation and Housing Agency 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 Office of Military and Aerospace Support for two
years, until January 1, 2009, and expanded its duties to
include outreach to the aerospace industry for the purpose of
fostering aerospace enterprises in California.
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 Business, Transportation and Housing Agency
and referred to these programs as the Space Enterprise
Development Program.
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
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California Space Flight Competitive Grant Program and the
Highway to Space Program.
SUPPORT AND OPPOSITION:
Support:
California Conference of Machinists
Opposition: None on file as of March 29, 2016.
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