BILL ANALYSIS �
AB 2309
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Date of Hearing: April 25, 2012
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel P�rez, Chair
AB 2309 (Hill) - As Amended: March 29, 2012
SUBJECT : San Mateo Innovation Center Pilot Program
SUMMARY : Authorizes, until January 1, 2016, the San Mateo
County Community College District to partner with the Economic
Development and Growth Enterprise (EDGE) for the purpose of
establishing the San Mateo Innovation Center Pilot Program. In
addition, the bill specifies that the purpose of the Pilot
Program is to:
1)Promote business development and job creation by helping early
stage business ventures acquire new ideas to either find early
stage funding or to reach the point of operating stability;
2)Leverage the underutilized infrastructure and nascent
entrepreneurship programs of the community college system to
sponsor programs that encourage and reward creativity,
collaboration, and innovation; and
3)Recruit and coordinate businesses and investors from the local
community to provide funding, sponsorships, and internships.
These provisions will only become operative upon appropriation
of funds expressly for the purposes of this bill, or if
sufficient private funding is received, whichever comes first.
EXISTING LAW :
1)Establishes the Governor's Office of Business and Economic
Development (GO-Biz) 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.
2)Establishes the California Community Colleges Economic and
Workforce Development (EWD) Program as a primary mission of
the California Community Colleges (CCC). The EWD program is
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administered through the CCC Chancellor's Office for the
purpose of advancing California's economic growth and global
competitiveness through education, training, and services that
contribute to continuous work force improvement, technology,
deployment, and business development. CCCs work with
employers, advisory committees, and agency partners to
identify, on a region-by-region basis, workforce education and
training needs, including the needs of small business.
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Purpose : This bill is the author's 2012 Constituent
Bill Idea Contest Winner. According to the author, "It
establishes the San Mateo Innovation Center Pilot Program
within the San Mateo Community College District. The goal of
the bill is to promote business development and job creation
in San Mateo County by bringing together academia and the
private sector.
Local groups like the Economic Development Growth Enterprise,
which is a part of the San Mateo Chamber of Commerce, are
interested in partnering with the San Mateo Community College
District on programs that will expose students to regional
industries such as high-tech, bio-tech, green-tech and venture
capital. The bill clarifies that the pilot program will only
take effect if private funding is obtained by the San Mateo
Community College District."
2)Challenges to California's Competitiveness : Innovation has
long been the cornerstone of California's competitive edge.
Innovation, by its very nature, requires constant reassessment
and, very often, reinvestment of public resources to maintain
and enhance a creative environment where businesses and
financial partnerships can constantly evolve.
In March 2008, JEDE undertook a survey of California's
business climate. Overall, JEDE found that the state's
businesses experience higher costs than in many other areas of
the nation, consistently ranking California in the top 10
highest cost states. However, the survey also found that even
with those costs certain regions of the state remain highly
competitive within the national and global marketplace.
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Since the release of the 2008 survey, JEDE policy staff has
continued to track California competitiveness issues and
report them as part of the monthly update of the Fast Facts.
As an example, the 2007 index developed by the Milken
Institute and Greenstreet Partners ranked four California
metro areas in the top 25 areas that are best to create and
sustain innovation-based jobs: Riverside-San Bernardino
(3rd), Bakersfield (17th), Vallejo-Fairfield (22nd), and
Sacramento-Arden-Arcade-Roseville (25th). In the 2010 index,
however, only one California location was ranked in the top 25
communities, that being Hanford-Corcoran (24th).
Relative to the attraction of venture capital, California's
top position is being challenged by other states. Among the
top five U.S. receivers of venture capital, California was the
only state to see a decline in venture capital investment; the
state went from receiving $997 billion in 2008 to $845 billion
in 2010. The State of Washington saw the largest increase in
venture capital investment, having received $79 billion in
2008 to $256 billion in 2010.
Another historic California strength has been its
academic-based research capacity with the University of
California, Caltech and Stanford consistently ranking among
the top research universities for technology transfers.
California also ranks first among 50 states for patents issued
in 2010, when 30,089 total patents were granted. While the
state's world class research universities remain an advantage,
recurring cuts to the University of California system and the
proliferation of new global centers of innovation will likely
require new collaborations and investments.
Other indices reviewed identified additional areas that
threaten California's long-term economic strength. In
particular, JEDE surveys found that the state will need to
make long-term investments in infrastructure, K-12 education,
and workforce development. As an example, a 2008 Business,
Transportation and Housing Agency (BTH) study found that any
area where the state "cannot supply high-quality workers - at
the right quantity - will tend to encourage industry to
outsource, offshore, or move out of state." Further,
California ranks only 5th among U.S. states in science and
technology according to the Milken Institutes 2010 Science and
Technology Index. If the state does not regain
competitiveness in these areas, California's advantages in
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entrepreneurship, finance, and technology will further erode.
AB 2309 proposes a pilot project to evaluate a new model for
partnering with community colleges and businesses leaders for
the purpose of promoting business development and job creation
among early stage business ventures. It is envisioned that
the model will leverage underutilized infrastructure and
activate nascent entrepreneurship programs at the local
community college, as well as recruit businesses and investors
from the local community.
3)Technology Commercialization Programs : California faces
competition from other countries and states. While previously
the state was the clear leader in global innovation and
technology, the past decade has seen other regions make
significant strides that can now support technology based
industries. As an example, China and Germany have both
surpassed California as the leaders in equity capital for
solar. Below are two examples of programs from other states
designed to support a vibrant and continually innovating
business sector:
a) The Utah Technology Commercialization & Innovation
Program : The purpose of the Technology Commercialization &
Innovation Program (TCIP) is to accelerate the
commercialization of promising technologies that have
strategic value for Utah. The end goal of the TCIP Program
is to help drive economic development and job creation.
The program is a state funded grant program initially
adopted by the Utah Legislature in 1986 and focuses on
accelerating the process of taking university-developed
cutting-edge technologies to market.
b) The Massachusetts START Program : In March 2012, the
Massachusetts Technology Development Corporation announced
the launch of a $6 million initiative to help startups
commercialize technologies developed under federal Small
Business Innovation Research grants. As designed, the
START program will provide financial support, as well as
coaching, business planning and introductions to potential
investors.
4)The EDGE : The EDGE is an economic development and growth
initiative of the San Mateo Area Chamber of Commerce (Chamber)
formed in 2010 "to drive the sustained vitality of the
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business community located on the San Francisco Bay Area
Peninsula." In January 2011 the local office of the federal
Small Business Development Center (SBDC) Program co-located at
the EDGE facilities. The SBDC counselors offer individual
advice and guidance to business owners concerning the
formation and management, financing, and marketing of new and
existing businesses. Counseling is offered at no cost to
qualified business owners.
Another EDGE project is the San Mateo Innovation Center, which
will serve as a pilot project for what the Chamber believes is
a unique approach to accelerating job growth through
publicprivate partnerships that focus on practical education
opportunities driven by local business needs. The Innovation
Center model will be designed to build communities of
entrepreneurs, private investors, the community college
system, and local businesses that collaborate in the
nurturing, launch, and growth of new businesses. The focus of
the Innovation Center will be earlystage ventures whose target
customer base extends beyond the local economy to the national
or global level.
The San Mateo Area Chamber of Commerce believes that the
region offers a compelling location to launch a pilot program
that could ultimately be extended to the state's entire
community college system.
5)Small Business Development Centers : The federal government
currently provides block grants to states to undertake small
business assistance programs that facilitate international
trade and development. California law, however, does not
provide guidance on how and when the state will jointly
participate in these programs. In some cases, California is
losing out on federal dollars and, in other cases, federal
dollars are being poorly leveraged.
The SBDC Program is administered by the federal Small Business
Administration through six California Administrative Lead
Centers (regional centers) which are located at public
institutions of higher education across the state. Each of
the regional centers administers its own SBDC program and
provides direction and mentoring to the other SBDCs within
their region. There are a total of 38 SBDCs in California.
Pursuant to federal law, each of the six regional centers is
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required to demonstrate that it has a match for the federal
funds, with at least 50% of the match being in the form of
cash. Prior to the dissolution of the Technology Trade and
Commerce Agency in 2003, the state regularly provided the
required cash match. Since that time, the state's
contributions have been intermittent. In 2010, the state
appropriated $6 million to the SBDC programs, leveraging
another $18 million in in-kind and federal funds. While the
regional centers have been successful in obtaining in-kind
contributions or funding for a specific event, unrestricted
cash contributions has been challenging.
The SBDCs recently reported that the $6 million expended by
the state in the 2010/11 fiscal year resulted in 7,994 jobs
being created and retained, 740 business start-ups, an
increase in sales of $220 million, and $176 million in new
debt and equity capital raised by SBDC assisted businesses.
The SBDC Program is currently co-located with GO-Biz and
regularly participates in business and economic development
discussions with federal and state policy makers. The
Governor's reorganization plan, submitted to the Little Hoover
Commission on March 30, 2012 references a Small Business
Center Program, which is generally understood to mean the SBDC
Program.
6)Related legislation : Below is a list of related legislation.
a) AB 2506 (V. Manuel P�rez) Innovation and Job Creation
Act : This bill authorizes a comprehensive set of
enhancements to tax incentive programs and administrative
procedures including a manufacturing sales tax exemption,
increased R&D credits and secondary education donation
credits for the purpose of creating jobs and supporting
innovation-based businesses. Status: The bill is pending
in the Assembly Committee on Business, Professions and
Consumer Protection.
b) AB 2619 (V. Manuel P�rez) Start-Up California Impact
Investment Fund : This bill authorizes the I-Bank to
administer the Start-Up California Impact Investment Fund
Program for the purpose of providing equity financing to
start-ups and other small size businesses. Status: The
bill pending in the Assembly Committee on Appropriations.
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c) AB 2711 (Portantino, Arambula, Price and Salas) State
Technology and Innovation Strategy : This bill would have
required the Secretary of the Business, Transportation and
Housing Agency to develop a comprehensive state technology
and innovation strategy to guide future state expenditures
and activities. Status: The bill was held under
submission in the Assembly Committee on Appropriations in
2008.
d) SB 1070 (Steinberg) Career Technical Education Pathways :
This bill extends the sunset date for the Career Technical
Education Pathways Initiative component of the current EWD
Program. Status: The bill is pending in the Senate
Committee on Appropriations.
e) SB 1401 (Lieu) Workforce Investment Board : This bill
requires the state's Workforce Investment Board to assist
the Governor in the alignment of the education and
workforce investment systems; and creates a California
Industry Sector Initiative that will accomplish specified
tasks, including aligning and leveraging state and local
Workforce Investment Act funding streams. Status: The
bill is pending in the Senate Committee on Labor and
Industrial Relations.
f) SB 1402 (Lieu) Economic and Workforce Development
Program : This bill recasts and revises provisions of the
Education Code governing the EWD Program and extends the
program's sunset date from January 1, 2013, to January 1,
2018. Status: The bill is pending in the Senate
Committee on Appropriations.
REGISTERED SUPPORT / OPPOSITION :
Support
None received
Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090
AB 2309
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