Amended in Assembly January 13, 2014

Amended in Assembly January 6, 2014

Amended in Assembly September 3, 2013

Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 495

Introduced by Assembly Member Campos

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(Coauthor: Assembly Member Dickinson)

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February 20, 2013

An act to add Article 6 (commencing with Section 12099) to Chapter 1.6 of Part 2 of Division 3 of Title 2 to the Government Code, relating to community investment.

LEGISLATIVE COUNSEL’S DIGEST

AB 495, as amended, Campos. Community investment.

Existing law authorizes the Governor’s Office of Business and Economic Development to, among other things, advance statewide economic goals.

This bill would establish the California Community Investment Program within the Governor’s Office of Business and Economic development. The program would be governed by a 14 member California Community Investment Council comprised of 6 citizens appointed by the Governor, 4 members of the Legislature, the Treasurer, the Controller, the Secretary of the Business, Consumer Services, and Housing Agency, and the Director of the Governor’s Office of Business and Economic Development, as specified.

The program would be required to create a database of low-income neighborhoods, compile and maintain an inventory of California public sector funding resources and financing mechanisms, coordinate public sector financial investment and public programs to assist low-income communities to become business, development, and investment ready, develop criteria for triple bottom-line equity funds, establish overall triple bottom-line goals and standardized metrics for economic, social, and environmental outcomes to be accepted by eligible investment funds, begin delete survey counties and cities to identify and inventory local governments that want to partner with triple bottom-line investment funds to invest in low-income neighborhoods, end delete establish and convene regular meetings of the California Community Investment Network comprised of organizations and institutions with expertise and resources to advise the California Community Investment Council and eligible investment fund managers, and report biannually to the Legislature and the Governor on the status and progress of the California Community Investment begin delete Initiative end delete begin insert Program end insert and performance on goals and triple bottom-line outcomes, as specified.

This bill would also make legislative findings and declarations.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

This act shall be known and may be cited as the
California Community Investment begin delete Initiative end delete begin insert Program end insert .

SEC. 2.  

The Legislature finds and declares all of the following:

(a) Despite having the largest state economy in the United States,
California has the highest poverty rate of any state, according to
the United States Census Bureau’s new definition of poverty that
takes cost of living into consideration, with nearly a quarter of its
residents living in poverty.

(b) In this era of public budget constraints, public sector dollars
are insufficient to solve the problems of low-income
neighborhoods. Therefore, private sector market forces need to be
engaged to make substantial investments that produce a risk
adjusted market rate of return.

(c) Low-income neighborhoods constitute domestic emerging
markets with significant purchasing power and location
efficiencies, but suffer from social, public safety, broadband, and
physical infrastructure problems that contribute to market
prejudices that lead to disinvestment.

(d) To overcome these problems and market prejudices,
low-income neighborhoods need to become business, development,
and investment-ready through a partnership of government, private
sector, community, and environmental leaders focused on
generating coordinated, focused, effective human services, public
safety, broadband, workforce, education, and physical
infrastructure.

(e) A new class of real estate and business developments is
emerging that actively pursues economically, socially, and
environmentally responsible outcomes. These real estate and
business developments often are the result of investments from
private sector investment funds that generate market-rate returns
to investors, but are also committed to improving economic, social,
and environmental conditions and characteristics for the existing
residents in these neighborhoods. These private sector investment
mechanisms often are referred to as “triple bottom-line” investment
funds.

(f) Triple bottom-line investment funds and the real estate and
business developments resulting from them are helping to reduce
poverty and improve the social and environmental dynamics of
low-income neighborhoods. Triple bottom-line investments can
be encouraged and the benefits from them can be enhanced and
accelerated by coordinated assistance from existing State of
California programs and funding resources.

(g) Many low-income neighborhoods are at transit hubs or have
the transit and mixed-use characteristics in place to make
development in them more climate friendly than development
elsewhere.

(h) The State of California should encourage responsible
businesses and real estate developments to locate and do business
in business and development-ready low-income neighborhoods in
ways that solve economic, social, and environmental problems
rather than cause them.

(i) To accomplish this, the State of California intends to establish
the California Community Investment begin delete Initiative end delete begin insert Program end insert to assist
low-income neighborhoods by encouraging private sector
investment consistent with the economic development and
community improvement strategies of the cities, counties, and
regions where they are located. It is the intent of the State of
California that such private sector investment is accomplished
without permanent displacement of existing residents in
low-income neighborhoods.

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(j) It is the intent of the Legislature that state agencies cooperate
with the California Community Investment Program to align their
resources to transform low-income neighborhoods and to attract
private investments into these neighborhoods.

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SEC. 3.  

Article 6 (commencing with Section 12099) is added
to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government
Code, to read:

 

Article 6.  California Community Investment begin delete Initiative end delete begin insert Program end insert

 

12099.  

For the purposes of this article, the following definitions
shall apply:

(a) “Poverty” means the supplemental poverty measure,
established by the United States Census Bureau in 2013 to
incorporate cost of living in the established rate of poverty.

(b) “Triple bottom-line investment funds” include, but are not
limited to, equity and debt investment vehicles that pursue market
and above market rates of financial return while at the same time
producing good jobs, affordable housing, and other economic,
social, and environmental benefits for the residents of the
communities where the investments are made.

12099.1.  

(a) The California Community Investment Program
is hereby established within the Governor’s Office of Business
and Economic Development.

(b) The program shall be under the direct authority of the
director.

(c) The purpose of the program is to:

(1) Encourage private sector investment in low-income
neighborhoods to improve the economic, environmental, and social
conditions for the existing residents, thereby helping improve the
overall economic, environmental, and social well-being for
California.

(2) Serve investors, employers, corporate executives, business
owners, and site location consultants who are considering
low-income neighborhoods for business investment and expansion.

(3) Coordinate state programs and funding resources that can
be used to address poverty reduction in California and to assist
low-income neighborhoods to become business, development, and
investment ready.

(d) The California Community Investment Program shall be
supported and staffed by the Governor’s Office of Business and
Economic Development using existing resources.

(e) In implementing the program, the director shall establish
and implement a process for establishing public education programs
and providing technical assistance to private sector investors.

(f) The California Community Investment Program shall be
governed by a 14 member California Community Investment
Council comprised of:

(1) Six persons appointed by the Governor, comprised of three
members with private sector business or investment expertise, two
members with community development expertise, and one
representative of organized labor.

(2) Four members of the Legislature, two from the Senate
appointed by the Senate Committee on Rules, one from each of
the two political parties with the most representatives in the Senate,
and two from the Assembly appointed by the Speaker of the
Assembly, one from each of the two political parties with the most
representatives in the Assembly. The members shall be nonvoting
members of the California Community Investment Council and
shall participate in the activities of the council only to the extent
that their participation is compatible with their respective positions
as Members of the Legislature.

(3) The Treasurer.

(4) The Controller.

(5) The Secretary of the Business, Consumer Services, and
Housing Agency.

(6) The Director of the Governor’s Office of Business and
Economic Development, shall serve as chair of the council.

12099.2.  

The California Community Investment Program shall
do all of the following:

(a) Develop and annually update a database of low-income
neighborhoods in California by county and city with relevant
information about each neighborhood, including socioeconomic
demographic data, descriptions of pertinent characteristics to
inform private sector investments, such as local land use plans and
zoning or other development designations, and commitments from
local governments to support private sector investments. These
neighborhoods shall be known as California Community
Investment Neighborhoods. The California Community Investment
Council shall adopt criteria whereby an eligible low-income
neighborhood can become a California Community Investment
Neighborhood.

(b) Compile and maintain a current inventory of California
public sector funding resources and financing mechanisms that
may be allocated to or utilized in low-income begin delete neighborhoods with
a description of the amount of available funding, criteria for
allocation, and application and decisionmaking criteria. In doing
this, the California Community Investment Council shall use the
inventory of business incentives, public sector funding resources,
and financing mechanisms maintained by the Governor’s Office
of Business and Economic Development and included in the State
of California Business Investment Guide. The inventory shall
include, but not be limited to, an assessment of the role and impact
of all of the following entities and programs on low-income
neighborhoods: end delete begin insert neighborhoods. end insert

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(1) California Department of Insurance’s California Organized
Investment Network.

(2) Federal and State Low-Income Housing Tax Credit Program.

(3) California Alternative Energy and Advanced Transportation
Financing Authority.

(4) California Pollution Control Financing Authority.

(5) California Transportation Financing Authority.

(6) Industrial Development Finance Authority.

(7) The California Infrastructure and Economic Development
Bank.

(8) Health and Human Services Agency.

(9) State Department of Education.

(10) Natural Resources Agency.

(11) Energy Commission.

(12) Public Utilities Commission.

(13) Local transportation authorities and the Transportation
Agency, including all transportation funding proposed by the
Department of Transportation or allocated by the California
Transportation Commission for expenditure by state or
metropolitan planning organizations.

(14) Greenhouse Gas Reduction Fund administered by the
California Environmental Protection Agency.

(15) California Pollution Control Financing Authority.

(16) Recycling Market Development Zone administered by
CalRecycle.

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(c) Coordinate public sector financial investment and public
programs to assist low-income communities that are eligible
California Community Investment Neighborhoods to become
business, development, and investment ready and to attract private
sector triple bottom-line fund investments. begin delete These programs shall
include, but not be limited to, the following purposes: end delete

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(1) Economic development, including research and development,
manufacturing, small business, and entrepreneurship growth and
real estate development that generates in jobs.

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(2) Housing rehabilitation and construction.

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(3) School construction, education, and academic performance
improvement.

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(4) Workforce preparation and training.

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(5) Public safety, community policing, crime prevention,
rehabilitation, and probation.

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(6) Public health, social services, and other human services.

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(7) Mental health services.

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(8) Alcohol and other drug abuse prevention and treatment.

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(9) Recreation and community arts and music programs.

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(10) Transportation and other mobility infrastructure, including
public transit, walkways, and bicycle paths.

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(11) Other infrastructure, including water, sewer, solid waste,
recycling, and lighting.

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(12) Broadband deployment for high-speed Internet access,
other information technology infrastructure, and smart grid.

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(13) Energy efficiency, weatherization, and renewable energy
resources.

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(14) Environmental quality, resource recycling, community
gardens, and local food sourcing services.

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(15) Homeless facilities and services.

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(d) Develop and adopt criteria for identifying eligible triple
bottom-line investments funds that will serve as partners and invest
in enterprises and employers that generate permanent jobs,
including investments to assist in starting-up, locating, and
expanding employers in low-income neighborhoods. begin delete These criteria
shall include the spirit and intent of the preponderance of the
following criteria as refined and adopted by the California
Community Investment Council: end delete

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(1) Commitment to locate investments in a low-income
neighborhood.

(2) Generation of living wage jobs with benefits for low-income
residents.

(3) Projected multiplier effect for generation of additional
employment.

(4) Provision of employment benefits, such as health care,
retirement plans, profit sharing, and employee stock ownership.

(5) Commitment to local hiring and job training.

(6) Engagement of local, women, and minority business
enterprises as suppliers and contractors.

(7) Development and sponsorship of employee training
programs, including job training and financial education.

(8) Provision of onsite or nearby child care for children of
employees.

(9) Use of green building design, construction, renovation, or
operations.

(10) Implementation of energy and other resource efficiency,
recycling, or pollution prevention programs.

(11) Deployment of broadband high-speed Internet access and
other information technologies to support and increase productivity
and reduce impacts on the environment.

(12) Implementation of workplace safety or effective ergonomic
programs.

(13) Engagement with the local community through volunteer
organizations, local school support programs, and other community
initiatives.

(14) Production of economically, socially, or environmentally
beneficial products and services.

(15) Receipt of green business certification.

(16) Production of Corporate Social Responsibility (CSR),
Corporate Sustainability, and Creating Shared Value (CSV)
reporting.

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(e) Develop and adopt criteria for eligible triple bottom-line
investment funds that invest in real estate developments to assist
in constructing, expanding, renovating, and rehabilitating buildings
in low-income neighborhoods that accommodate all allowed land
use approved and permitted by the local government land use
regulations. begin delete The criteria shall include the spirit and intent of the
preponderance of the following, as refined and adopted by the
California Community Investment Council: end delete

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(1) Commitment to locate investments in a low-income
neighborhood that benefit low-income residents.

(2) Consistency of development with local government land
use plans and alignment with local government priorities.

(3) Generation of construction jobs with living wages and
benefits.

(4) Establishment of job training and apprentice programs for
local residents.

(5) Ownership or equity participation by a local, woman, or
minority developer or use of local, women, or minority business
enterprises as contractors or subcontractors.

(6) Construction of affordable housing, especially as part of a
larger mixed-income, mixed-use project to optimize synergies
among land uses.

(7) Generation of permanent living wage jobs.

(8) Retention or generation of permanent living wage jobs.

(9) Use of green construction materials and practices.

(10) Incorporation of energy efficiencies, waste reduction, and
renewable energy resources.

(11) Implementation of smart development practices deploying
broadband for high-speed Internet access for smart infrastructure
and smart buildings, optimizing the utility of a smart grid.

(12) Incorporation of a multimodal transportation system that
optimizes walking, bicycling, public transit, and other strategies
to reduce single-occupant vehicle trips.

(13) Design of development consistent with the concept and
principles for livable communities.

(14) Accommodation of green and clean technology employers.

(15) Implementation of low-impact development practices
incorporating native vegetation, soil preservation, water use
conservation, recycling and other efficiencies, and pervious
pavement.

(16) Incorporation of parks, recreational areas, open spaces, and
other environmental amenities.

(17) Accommodation of locations for small and local businesses.

(18) Establishment of space for neighborhood organizations,
community centers, child care centers, and other nonprofit
community-based organizations.

(19) Use of bioregional development practices connecting local
and regional sustainable food production with urban consumption.

(20) Acquisition of LEED certification for buildings and
neighborhoods.

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(f) Establish overall triple bottom-line goals and standardized
metrics for economic, social, and environmental outcomes that
shall be accepted by all eligible investment funds.

(g) Gather evidence and conduct public forums to identify a
broad array of incentives that will encourage triple bottom-line
fund investments in low-income begin delete neighborhoods and take the
following actions: end delete begin insert neighborhoods. end insert

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(1) Prepare a report to the Legislature and Governor.

(2) Establish incentives for which there is existing legal and
regulatory authority.

(3) Recommend appropriate amendments to existing laws and
regulations and work with the Legislature and the Governor to
secure adoption.

(h) Survey counties and cities to identify and inventory local
governments that want to partner with triple bottom-line investment
funds to invest in low-income neighborhoods. This survey shall
determine if the local government has done any of the following:

(1) Approved within the last 10 years a general plan, specific
plan, or other land use plan or zoning regulation on which an
investor can rely to govern and control development.

(2) Identified local public funding or other resources that have
been or will be committed to the low-income neighborhood to
complement a triple bottom-line fund investment.

(3) Designated a person to coordinate alignment of public
resources and implementation of development plans with a fund
manager.

(4) Established county and city school integrated human services
teams to serve the low-income neighborhood with goals and
accountability to increase employment, improve education, reduce
poverty, reduce crime, and improve health status.

(5) Committed to cooperate in and assist with monitoring and
tracking performance outcomes in the low-income neighborhoods.

(i)

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begin insert (h) end insert  Establish and convene regular meetings of the California
Community Investment Network comprised of organizations and
institutions with expertise and resources to advise the California
Community Investment Council and eligible investment fund
managers.

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(j)

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begin insert (i) end insert  Report biannually to the Legislature and the Governor on
the status and progress of the California Community Investment
begin delete Initiative end delete begin insert Program end insert and performance on goals and triple bottom-line
outcomes pursuant to subdivision (f).

12099.3.  

begin delete (a) end delete begin delete   end delete The California Community Investment Program
shall encourage significant private sector commitment, cooperation,
and collaboration to invest private capital in low-income
neighborhoods through eligible triple bottom-line equity funds
with the goal of obtaining at least one billion dollars
($1,000,000,000) of new investment by triple bottom-line
investment funds in triple bottom-line real estate developments
and businesses located in low-income California neighborhoods. begin delete The California Community Investment Program shall give priority
consideration for award of state assistance from public resources
and programs, herein identified, to low-income neighborhoods
that adopt and implement strategies to become business,
development, and investment ready and collaborate with the
California Community Investment Program to attract investment
by triple bottom-line funds. end delete

begin delete

(b) The California Community Investment Council shall adopt
criteria for an eligible triple bottom-line equity fund that shall
include at least the following:

(1) The fund shall be legally structured to comply with both the
spirit and intent of the preponderance of the relevant criteria
delineated in subdivisions (d) and (e) of Section 12099.2, as refined
and adopted by the California Community Investment Council,
including triple bottom-line goals and outcomes with explicit
metrics.

(2) The fund shall be managed by a reputable fund manager
with a track record of experience and performance with triple
bottom-line funds.

(3) The fund shall attain a scale of at least one hundred million
dollars ($100,000,000) in capital.

(4) The fund shall be committed to working with relevant local
government jurisdictions to optimize the alignment of state public
funding and resources and local government funding and resources.

(5) The fund shall include experienced personnel to manage
coordination with appropriate state and local government public
funding or other resources. This shall be accomplished either by
the fund manager or through a contractual relationship between
the fund manager and an appropriate nonprofit organization.

(6) The fund shall be organized to track performance and report
metrics for triple bottom-line goals and outcomes.

(c) The California Community Investment Program shall give
priority consideration to working with triple bottom-line funds
that meet the criteria established by the California Community
Investment Council, with first attention to those funds with the
largest amount of capital. The California Community Investment
Program in the Governor’s Office of Business and Economic
Development shall assist funds meeting these criteria to identify
and make appropriate investments in investment ready low-income
communities and shall work with these funds to coordinate all of
the appropriate state and local financial and programmatic
resources to assist these investments to succeed.

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