BILL ANALYSIS �
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|Hearing Date:June 16, 2014 |Bill No:AB |
| |2749 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Ted W. Lieu, Chair
Bill No: AB 2749 Author:Assembly Committee on
Jobs, Economic Development
and the Economy
As Amended:April 10, 2014 Fiscal: Yes
SUBJECT: Economic development.
SUMMARY: Makes technical changes to the Government Code relating to
the transfer of economic development related programs from the
Business, Transportation and Housing Agency (BTH) to the Governor's
Office of Business and Economic Development (GO-Biz).
Existing law:
1)Places the definitions for specified terms relating to economic
development within part 4.7 of division 3 of title 2 of the
California Government Code, concerning Business and Tourism
(Government Code (GC) � 13997.2). This is reflective of the
Business, Transportation and Housing Agency (BTH)'s previous role as
administrator of economic development programs within the executive
branch of the California government.
2)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. (GC �� 12096
- 12098.5)
3)Designates the Director of GO-Biz as the official state
administrator of the Economic Adjustment Assistance Grant and the
Small Business Expansion Fund. (GC �13997.7)
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4)Establishes the California Small Business Finance Center within the
California Infrastructure and Investment Bank (I-Bank) for the
purpose of overseeing programs locally delivered through a network
of small business financial development corporations (FDCs). (GC �
63088 et. seq.)
This bill:
1)Makes technical corrections to the transfer of the administration of
the Economic Adjustment Assistance Grant and the Sudden and Severe
Economic Dislocation Grant Program from the BTH to GO-Biz.
2)Renumbers within statute the following definitions (no changes have
been made to the definitions):
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| a) Local Economic | b) Financial Intermediary |
| Development Organization | |
|------------------------------+------------------------------------|
| c) Regional Economic | d) Regional Economic Development |
| Development Organization | Corporation |
|------------------------------+------------------------------------|
| e) Regional Economic | f) Small Businesses |
| Development Organization | |
|------------------------------+------------------------------------|
| g) Economic Development | h) Community Development |
| Corporation | |
|------------------------------+------------------------------------|
| i) Triple Bottom Line | j) Financial Institution Capital |
|------------------------------+------------------------------------|
| aa) Economic Development| bb) Community Development |
| | Intermediary |
|------------------------------+------------------------------------|
| cc) Local Economic | dd) Microbusiness Lender |
| Development | |
|------------------------------+------------------------------------|
| ee) Emerging Domestic | ff) California Council on Science |
| Market |and Technology |
| | |
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3)Modifies the annual reporting requirements of the I-Bank including:
consolidating requirements; making submittal of the report to the
Legislature rather than the Joint Legislative Audit Committee;
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requiring that aggregate-level reporting be provided on revolving
loan fund activities rather than the current requirement to report,
in detail, on every application received during the reporting
period; and requiring the annual report be posted on its website.
4)Removes the requirement for the Small Business Advocate to consult
with the Department of Transportation on the Small and Emerging
Manager Contractor Technical Assistance Program, a program that
sunsetted on January 1, 2013.
5)Makes other technical and conforming changes to the Government Code.
FISCAL EFFECT: This bill is keyed "fiscal" by Legislative Counsel.
According to the Assembly Committee on Appropriations analysis dated
May 7, 2014, this bill will result in minor and absorbable costs to
GO-Biz.
COMMENTS:
1. Purpose. The Author is the Sponsor of this measure. According to
the Author, this measure makes a number of technical changes to
conform existing law with the previously enacted legislation.
2. Background.
a) 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
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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 (cited and described
below), which effectively codified GOED and changed its name to
GO-Biz, effective January 1, 2012. Since its inception, the
office has served over 3,000 businesses, 95% of which are small.
The most frequent types of assistance include help with permit
streamlining, starting a businesses, relocation and expansion of
businesses, and regulatory challenges.
According to GO-Biz, the Office of Small Business Advocate
(OSBA) advocates the causes of small business and provides small
business owners with the information needed to succeed in the
California marketplace. OSBA staff provides assistance to the
state's small business community on issues ranging from
regulations to procurement. Depending on the issue, staff can
refer small businesses to appropriate contacts in State
government, business, and service organizations. OSBA staff
also serves on various State interagency working groups and task
forces to represent small business interests in state
legislation, policy, and procedures.
In March 2012, the Governor 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 California Travel and Tourism
Commission, Small Business Loan Guarantee Program, the
California Film Commission, the Film California First Program
and the Infrastructure and Economic Development Bank (I-Bank).
b) Economic Adjustment Assistance Grant. The federal Economic
Adjustment Assistance Grant program was initially designated to
be administered through the Technology, Trade, and Commerce
Agency, which was eliminated in 2003. Although the State
Controller retained the federal money, no state entity had the
legal authority to actually use the money.
In 2008, BTH was designated as the state administrator of the
funds and the moneys were transferred to the California
Expansion Fund where they could be used under contract through
the state's network of FDCs. Code clean-up to the Governor's
GRP 2 transferred the authority to use the federal funds and the
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responsibility to oversee the FDC contracts from BTH to GO-Biz.
However, legislation enacted in 2013 ( AB 1247 (Medina), Chapter
537, Statutes of 2013), transferred the FDC programs to the
I-Bank, a unit within GO-Biz. This bill would give the
executive director of the I-Bank the authority to administer the
federal funds through the FDCs.
c) I-Bank. The I-Bank was established in 1994 to promote economic
revitalization, enable
future development, and encourage a healthy climate for jobs in
California. Housed within GO-Biz, it is governed by a
five-member board of directors comprised of the Director of
GO-biz (Chair), State Treasurer, Director Department of Finance,
Transportation Agency, and a Governor's appointee. The
day-to-day operations of the I-Bank are directed by the
Executive Director who is an appointee of the Governor and is
subject to confirmation by the California State Senate.
Currently, the I-Bank has authority for 25 staff members.
The I-Bank does not receive any ongoing General Fund support,
rather it is financed through fees, interest income, and other
revenues derived from its public and private sector financing
activities. According to its Comprehensive Annual Financial
Report for the fiscal year ended June 2013, its programs
continued to provide revenues sufficient to cover operating
expenses.
The I-Bank administers three programs: (1) the Infrastructure
State Revolving Fund which provides direct low-cost financing to
public agencies for a variety of public infrastructure projects;
(2) the Conduit Bond Program which provides financing for
manufacturing companies, public benefit nonprofit organizations,
public agencies and other eligible entities; and (3) the Small
Business Finance Center which helps small businesses access
private financing through loan guarantees, direct loans, and
performance bond guarantees. There is no commitment of I-Bank
or state funds for any of the conduit revenue bonds. Even in
the case of default, the state is not liable.
Since its creation in 1994, the I-Bank has loaned, financed, or
participated in over $344 billion in infrastructure and economic
expansion projects. This includes over $400 million to local
and state agencies; developing a high-level of expertise in the
financing of public infrastructure. The I-Bank also serves as
the state's only general purpose financing authority with broad
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statutory powers to issue revenue bonds, make loans, and provide
guarantees. Over $33 billion in conduit revenue bonds have been
issued by the I-Bank since 2000.
3. Prior Related Legislation. SB 820 (Committee on Governmental
Organization, Chapter 353, Statutes of 2013) enacted the statutory
changes to reflect the assignment and reorganization of the
functions of state government as outlined in the Governor's
Reorganization Plan No. 2 of 2012 (GRP 2), effective on July 3,
2012, and operative on July 1, 2013.
AB 1247 (Medina, Chapter 537, Statutes of 2013) established the
California Small Business Finance Center at the I-Bank, within
GO-Biz, and transferred the authority to administer the small
business loan guarantee program and other related programs to the
I-Bank.
AB 1317 (Frazer, Chapter 352, Statutes of 2013) also enacted
statutory changes to reflect the assignment and reorganization of
the functions of state government as outlined in the Governor's
Reorganization Plan No. 2 of 2012 (GRP 2), effective on July 3,
2012, and operative on July 1, 2013.
AB 29 (John A. P�rez, 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 192 (Assembly Budget Committee, Chapter 312, Statutes of 2007)
made the necessary statutory changes to allow the transfer of $4.3
million in federal funds held by the State Controller's Office to
the Business Transportation and Housing Agency in order to
reactivate the Sudden and Severe Economic Dislocation Grant Program
as was approved in the budget.
SUPPORT AND OPPOSITION:
Support: None on file as of June 11, 2014.
Opposition: None on file as of June 11, 2014.
Consultant:Sarah Mason
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