SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 3205 (Salas) - Regions Rise Grant Program

Bill Summary:

AB 3205 would establish the Regions Rise Grant Program within the Governor’s Office of Business and Economic Development (GO-Biz), as specified.

Fiscal Impact:

GO-Biz indicates that it would incur annual General Fund costs of $804,000 to implement the provisions of the bill. The extent to which the funding would be ongoing would depend on the number of rounds of grants that GO-Biz would administer. However, staff likely would be needed for at least three years (the amount of time funding would be available as defined in the bill).

In addition, the bill would result in a General Fund cost pressure, in the tens of millions of dollars, to provide grants to regional collectives. The magnitude of the cost pressure would depend on the number of grants awarded, the size of grants and whether the program is ongoing or one-time in nature.

Background:

The State has had various economic development offices through the years. GO-Biz was established statutorily in 2011. Since then, the office has been the subject of roughly two dozen laws adding to its responsibilities. Some of GO-Biz’s key functions include the following:

• GO-Biz is supposed to recommend changes to state policies to (1) advance statewide economic goals, and (2) respond to economic problems and opportunities.
• Several small units of GO-Biz serve as points of contact for businesses considering relocating to or expanding in California. Services include resources for small businesses and assistance for international investors. GO-Biz helps businesses obtain information about the various agencies that administer and issue permits to firms.
• GO-Biz helps run a program of individually negotiated tax credits for certain relocating or expanding businesses.
• The California Film Commission, Travel and Tourism Commission, and Infrastructure Bank have been assigned for oversight purposes to GO-Biz.

Proposed Law:

This bill would, among other things, do the following:

• Establish the Regions Rising Grant Program within GO-Biz, as specified.
• Define regions as a geographic area comprised of one or more counties and cities that form a functional economy.
• Require GO-Biz to develop and implement a process for awarding competitive grants to eligible applicants, as defined.
• Require awarding grants to meet certain minimum conditions, including, but not limited to, that the funds awarded be available for a period of three years, and that the application contain specified information.
• Require GO-Biz, upon appropriation of the Legislature, to issue grants to qualified regional collectives as specified.
• Require the regional collective receiving funding to submit a copy of its annual and final report, as provided, to the office and each city and county within the areas identified in their application as the geographic boundary of their work.

Staff Comments:

As noted above, this bill would establish the Regions Rise Grant Program within GO-Biz to support regional economic development through capacity building, strategic planning, and collaboration efforts. The bill would take effect upon appropriation of funds by the Legislature to GO-Biz for implementation; however, the bill does not specify a monetary amount. The number of entities that would apply for grants is also unknown.

The GO-Biz fiscal estimate assumes that (1) between 10 and 25 “regional collaboratives” would apply for grants, with up to 12 meeting the criteria set forth in the bill as both eligible and competitive, and (2) the total grant amount for any given year would be between $20 million and $40 million.

The bill would require GO-Biz to develop and implement the Program, including (1) creating request for proposals (including outreach and public comment on draft concepts), (2) verifying of applicant eligibility per the three outlined criteria in the statute (including documentation verification), (3) issuing awards based on meeting key deliverables, and (4) monitoring ongoing reporting and processing of annual reports. GO-Biz anticipates the program would cost $804,000 annually for a manager, grant analysts, an IT position, and administrative support staff, inclusive of salaries, benefits, and operating expenses and equipment.

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SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Steven Glazer, Chair

2019 - 2020 Regular

Bill No: AB 3205 Hearing Date: August 8, 2020

Subject: Regions Rise Grant Program

SUMMARY:

Establishes the Regions Rise Grant Program in the Governor’s Office of Business and Economic Development (GO-Biz) to enable regions to collaborate and create inclusive regional strategies for economic prosperity.

Existing law:

1. Establishes the Governor’s Office of Business and Economic Development (GO-Biz) under the California Governor’s Office and the control of a director via the Economic Revitalization Act. (Government Code (GOV) §§ 12096-12098.5)
2. Requires GO-Biz to serve as the Governor’s lead entity for economic strategy and the marketing of California on issues related to business development, private sector investment, and economic growth. (GOV § 12096.3)
3. Requires the Controller to disburse monies to GO-Biz ($10 million in the 2018–19 fiscal year (FY) and increasing $10 million each FY thereafter until the 2022–23 FY, at which time the disbursement is $50 million each year thereafter) based on sales tax revenue estimates from cannabis sales for GO-Biz to administer a community reinvestments grants program (Grants Program) to local health departments, and at least 50 percent to qualified community-based nonprofit organizations to support job placement, mental health treatment, substance use disorder treatment, system navigation services, legal services to address barriers to reentry, and linkages to medical care for communities disproportionately affected by past federal and state drug policies, in consultation with the Labor and Workforce Development Agency and the State Department of Social Services. (Revenue and Taxation Code § 34019 (d))

This bill:

1. Establishes the Regions Rising Grant Program within GO-Biz to support inclusive, cross-jurisdictional, and innovative processes that lead to inclusive strategies to address barriers and challenges confronting communities in creating economic prosperity for all.
2. Defines regions as a geographic area comprised of one or more counties and cities that form a functional economy.
3. Requires the office to develop and implement a process for awarding competitive grants to eligible applicants.
4. Defines an eligible applicant as a regional collective comprised of public and private stakeholders who organize themselves around one or more community challenges or priorities impacting a region and meet certain requirements established in the bill.
5. Requires awarding grants to meet certain minimum conditions, including, but not limited to, that the funds awarded be available for a period of three years, and that the application contain specified information.
6. Requires the office, upon appropriation of the Legislature, to issue grants to qualified regional collectives as specified.
7. Requires the regional collective receiving funding to submit a copy of its annual and final report, as provided, to the office and each city and county within the areas identified in their application as the geographic boundary of their work.

FISCAL EFFECT:

According to the Assembly Appropriations Committee, this bill will result in unknown one-time or ongoing General Fund costs to provide grants to regional collectives. Costs would depend on the number of grants awarded, the size of grants and whether the program is ongoing or one-time in nature. Assuming one round of grants with ten awardees receiving grants of $2 million, grant costs would be $20 million. The bill would also result in $700,000 General Fund costs for GO-Biz to hire a manager, grant analysts, and administrative support staff to administer the program. Whether the funding is ongoing depends on how many rounds of grants GO-Biz administers, but staff likely would be needed for at least three year (the amount of time funding would be available as defined in the bill).

COMMENTS:

1. Purpose. California Forward is the Sponsor of the bill. According to the Author, “AB 3205 establishes the Regions Rise Grant Program in the Governor’s Office of Business and Economic Development (GO-Biz) to enable regions to collaborate and create inclusive regional strategies for economic prosperity. The grant program is competitive, and sets out criteria on the definition of “region” that allows for parties to collaborate around significant regional issues and requires involvement from local government, businesses, nonprofits and equity groups. It requires an applicant to include a private match. The bill incentivizes collaboration across partners and sectors to address a region’s most pressing challenges through its unique assets and opportunities. These regional economic strategies and priorities will help inform the State’s efforts to close the equity gap and create a California for all.”
2. Background.

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 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 percent of which are small businesses. 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 (IBank).

Regions Rise Together. In 2019, GO-Biz created the Regions Rise Together initiative, joining forces with the Office of Research and Planning (OPR) and California Forward, a non-profit organization advocating for shared prosperity across all of the state’s regions and for improved government performance and accountability. According to an opinion piece, the initiative was created to address the growth inequality in our state, given that nearly 70% of job growth from 2010-2018 originated in the coastal regions around Los Angeles, San Diego, and the Bay Area, as well as decades longstanding income growth inequality in areas like Merced, Kern, and San Bernardino counties. The initiative focuses on revitalizing particularly the inland communities of California by exploring opportunities in agriculture, tech, and climate science by building on existing local programs. Examples of local programs include research from UC Merced on the new ways to study the impacts of climate change on soil and water, and a vision for an expanded tree canopy initiative in Stockton that offers a model for improved quality of life, community farming, and climate resilience. The Governor’s Office has continued to support and fund this initiative as a potential way to create positive change and stimulate economic growth and development.

Regions Rise Grant Program. This bill hopes to establish a Regions Rise Grant Program that would create a competitive grant program to support regional collaboration among public and private sector stakeholders to address and resolve significant community development issues which currently impede inclusive economic growth and upward mobility for historically marginalized groups. It does this by establishing a regional collective, consisting of one government agency, one local business, one educational or workforce entity, one economic development entity, and one nonprofit organization, to address one or more common regional issues or challenges, including workforce development, climate planning, housing, and transportation. Funding will be granted to regional collectives on a three-year basis for planning activities, sustaining regional convenings and planning activities in process, and implementing recommended strategies resulting from those activities. The bill specifies particulars for applications, including but not limited to a list of key deliverables during the grant period, and a successful regional collective must submit a copy of its annual and final report to each city and county within the area identified in their application as the geographic boundary of their work.

Economic Need and COVID-19. Research demonstrates that the inequality between the residents in low-income communities and those that reside in California’s most affluent communities has dramatically increased in the past several decades. For example, the pretax income among the highest 1% of California taxpayers increased from 9.82% in 1980 to 25.1% of total income in 2013. During the last seven years, the pace of these disparities has only increased.

COVID-19 has exacerbated this situation. 7.6 million Californians have filed for unemployment assistance between March and the end of July this year. In March of 2020, Colusa County experienced the highest unemployment rate in the state (22.4%) and Imperial County the second highest (20.5%). However, new data from economists at Opportunity Insights suggests the hardest-hit group is low-income households living in high-income areas, particularly in the service industry.

Originally an outgrowth of the California Economic Summit, an annual meeting of a year-round collaboration of over 750 public and private stakeholders, this bill provides a framework to answer the concern that the work of regional collectives can only go so far without funding.

1. Arguments in Support. Supporters generally argue the following: “We understand the Governor and the Legislature have indicated that COVID-19 responses will be priorities during this time. Support for rebuilding regional economies that are fundamentally more inclusive and based on an equity framework, a true “California for All”, must be central to that plan. Otherwise we will simply be recreating the economic conditions of widespread geographic and ethnic inequities that are aggravating the current crisis. AB 3205 tackles this directly and lays the groundwork for a fundamentally more inclusive economy with more economic resilience for all Californians…. The Regions Rise Grant Program would provide the needed incentive and support to institutionalize an inclusive process at the regional level focused on economic strategies that provide an opportunity for all people in a community to prosper. Further, AB 3205 can help prepare regional leaders to take advantage of additional federal, state and philanthropic funds available to address workforce, education, environmental and economic challenges. With the current public COVID-19 health crisis, we have learned it is even more imperative that our regions continue to identify feasible strategies and solutions that meet the needs of the local community. As the impact of COVID-19 accelerates an economic downturn, the importance of building sustainable economies resilient to extraordinary hardships is more important than ever.”
2. Policy Considerations and Questions.

COVID-19 and its Economic Impact. COVID-19 has dramatically shifted policy priorities at the local, state, federal, and global levels. Its impact to the economy has been nothing short of devastating. While early data showed just the number of people facing unemployment in the state, more nuanced data from economists released later indicate the pandemic is affecting low-income families living in high-income areas such as San Francisco and Los Angeles the most, particularly in the service industry. Given the new data suggesting a need for support in cities because of the pandemic, and given that this bill originally came out of a summit that happened before the pandemic, it is important to consider an approach that takes into account and plans for the state’s recovery in a post-COVID world.

Technical and Implementation Concerns. It is unclear how this bill will be practically implemented given the broad and at times undefined language of some provisions. For example, a region is defined as a geographic area comprised of one or more counties and cities that form a functional economy, but the bill does not define what a functional economy is. Given this, the workability of this bill’s proposed program is questionable from an implementation and technical perspective. Moreover, it is currently unclear where the funds for this program will come from, given the existing budget does not contain an allocation for this program.

SUPPORT AND OPPOSITION:

Support:

California Forward (Sponsor)

3core
Bay Area Council
CA Economic Summit
CA Stewardship Network
Cal Asian Chamber of Commerce

California Association of Christian Colleges and Universities
California Forward Action Fund
California Hispanic Chambers of Commerce
California Partnership for The San Joaquin Valley
California Travel Association (CALTIA)
Caloz
Central Valley Community Foundation

City of Fresno
Csu Fresno, Office of Community and Economic Development
Economic Development Collaborative, Ventura County
Economic Vitality Corporation, San Luis Obispo County
Fresno Business Council
Fresno County Economic Development Corporation
Fresno Metro Black Chamber of Commerce
Greater Bakersfield Chamber of Commerce
Imperial County Transportation Commission
Inland Empire Community Foundation
Inland Empire Economic Partnership
Kern Community Foundation
Los Angeles County Economic Development Corporation
Monterey Bay Economic Partnership
North Bay Leadership Council
Orange County Business Council
Reach
Reading and Beyond
Redwood Coast Rural Action
Sacramento Area Council of Governments
San Diego Regional Economic Development Corporation
San Joaquin Valley Rural Development Center
Sierra Business Council
Spur
Stanislaus Community Foundation
Stanislaus Cradle to Career Partnership
Tahoe Prosperity Center
Valley Can (Clean Air Now)
Valley Vision
Villines Group, LLC
X Sector Labs

Opposition:

None on file

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ASSEMBLY THIRD READING

ATR Bill Id:AB 3205

Author:(Salas)

As Amended Ver:May 19, 2020

Majority vote

SUMMARY:

AB 3205 establishes the Regions Rise Grant Program, administered by the Governor's Office of Business and Economic Development (GO-Biz), to support inclusive, cross-jurisdictional, and innovative processes that lead to inclusive strategies to address barriers and challenges confronting communities in creating economic prosperity for all.

Major Provisions

1. Requires a regional collective to have, as one of its primary missions, the addressing of one or more common regional issues and challenges that are larger than a single community, including, but not limited to, workforce development, educational pathways, land use, climate planning, transportation, housing, homelessness, economic mobility, equity gaps, and economic development.
2. Requires a regional collective that receives funding to establish a steering committee that is inclusive of historically underrepresented persons and representative of the membership of the region.
3. Specifies that eligible activities include funding to support regional collectives at different collaboration stages, including, but not limited to, initiating or expanding regional convenings and planning activities, sustaining regional convenings and planning activities in process, and implementing recommended strategies resulting from those activities.
4. Sets the following program priorities:
   1. The region's need for cross-sectoral and cross-jurisdictional solutions to the demonstrated key regional challenges.
   2. The readiness and capacity of the region to support rural, disadvantaged areas, or underserved population groups.
   3. The assessment of key deliverables funded under the grant and the potential of the regional collective's overall initiative to make system changes that can be operationalized based on success stories and best practices.

COMMENTS:

Those individuals most impacted by the coronavirus emergency are also California's most economically vulnerable. As income disparities have grown, these individuals from historically underinvested communities face even greater social-economic challenges. Research shows that the inequality between the residents in low-income communities and those that reside in California's most affluent communities has dramatically increased in the past several decades. For example, the pretax income among the highest 1% of California taxpayers increased from 9.82% in 1980 to 25.1% of total income in 2013. During the last seven years, the pace of these disparities has only increased.

This bill establishes a competitive grant program to support regional collaboration among public and private sector stakeholders to address and resolve significant community development issues which currently impede inclusive economic growth and upward mobility for historically marginalized groups.

According to the Author:

The people living in the Central Valley and Inland Empire deserve the same opportunities that are available in the more prosperous regions of the state. In 2018, the top 5% of California households saw their average income grow by more than 15%, while the bottom fifth saw their income shrink by more than 5%. In a state of 40 million people, 7.1 million cannot afford basic expenses like clothing, food, and work-related needs. At the start of this year, while California touted a statewide unemployment average of around 4%, counties such as Imperial, Kern, Tulare, Colusa, and Merced were closer to 10% unemployment and above. AB 3205 drives our communities together to create innovative solutions to tackle the barriers that prevent inland California from experiencing the health and prosperity our Golden State experiences in other regions. Not only will AB 3205 help revitalize economies, but it will also make those economies more inclusive and more equitable.

Arguments in Support:

The Governor and the Legislature are working diligently to address COVID-19 and the state's economic recovery. "Support for rebuilding regional economies that are fundamentally more inclusive, a true 'California for All,' must be central to that plan. Otherwise we will simply be recreating the economic conditions of widespread geographic and ethnic inequities that are aggravating the current crisis. AB 3205 tackles this directly and lays the groundwork for a fundamentally more inclusive economy with more economic resilience for all Californians."

Arguments in Opposition:

There is no known opposition to this bill.

FISCAL COMMITTEE COMMENTS:

According the Assembly Appropriations Committee:

1. Unknown one-time or ongoing General Fund costs to provide grants to regional collectives. Costs would depend on the number of grants awarded, the size of grants and whether the program is ongoing or one-time in nature. Assuming one round of grants with ten awardees receiving grants of $2 million, grant costs would be $20 million.
2. $700,000 General Fund for GO-Biz to hire a manager, grant analysts, and administrative support staff to administer the program. Whether the funding is ongoing depends on how many rounds of grants GO-Biz administers, but staff likely would be needed for at least three year (the amount of time funding would be available as defined in the bill).

VOTES:

ASM JOBS, ECONOMIC DEVELOPMENT, AND THE ECONOMY: 7-0-0

YES: Cunningham, Boerner Horvath, Chau, Chen, Quirk-Silva, Ramos, Luz Rivas

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bauer-Kahan, Bloom, Bonta, Calderon, Carrillo, Chau, Megan Dahle, Diep, Eggman, Fong, Gabriel, Eduardo Garcia, Petrie-Norris, McCarty, Robert Rivas, Voepel

UPDATED:

VERSION: May 19, 2020

CONSULTANT: Toni Symonds / J., E.D., & E. / (916) 319-2090 FN: 0002960

Date of Hearing: June 2, 2020

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 3205

Author:(Salas) – As Amended Ver:May 19, 2020

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill establishes, subject to appropriation, a new competitive grant program within the Governor’s Office of Business and Economic Development (GO-Biz) to support regional economic development through capacity building, strategic planning and collaboration efforts.

Specifically, the bill directs GO-Biz to award grants with funding available for up to three years to one or more “regional collectives” who organize around community challenges described in their grant application. Grant recipients are to submit annual and final reports on their use of grant funds and are required to match state funds.

FISCAL EFFECT:

1. Unknown one-time or ongoing General Fund costs to provide grants to regional collectives. Costs would depend on the number of grants awarded, the size of grants and whether the program is ongoing or one-time in nature. Assuming one round of grants with ten awardees receiving grants of $2 million, grant costs would be $20 million.
2. $700,000 General Fund for GO-Biz to hire a manager, grant analysts, and administrative support staff to administer the program. Whether the funding is ongoing depends on how many rounds of grants GO-Biz administers, but staff likely would be needed for at least three year (the amount of time funding would be available as defined in the bill).

COMMENTS:

1. Purpose. This bill is sponsored by California Forward and creates a new grant program at GO-Biz with the intention of encouraging economic growth and collaboration in certain regions of the state. According to the sponsor, certain areas of the state have been left behind in California’s prosperity over the last decade and the COVID-19 crisis likely will make these disparities worse. The bill aims to provide capital to encourage these regions of the state to collaborate to solve their problems.
2. Background. GO-Biz is the state’s lead agency for economic strategy and job creation efforts. The office provides recommendations to the state on economic policy and programming. It provides services to businesses, administers tax credits and offers regulatory guidance.

Analysis Prepared by: Natasha Collins / APPR. / (916) 319-2081

Date of Hearing: May 12, 2020

ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT, AND THE ECONOMY

Sabrina Cervantes, Chair

ABPCA Bill Id:AB 3205 (

Author:Salas) – As Amended Ver:May 4, 2020

SUBJECT: Regions Rise Grant Program

POLICY FRAME: Those individuals most impacted by the coronavirus emergency are also California’s most economically vulnerable. As income disparities have grown, these individuals from historically underinvested communities face even greater social-economic challenges. Research shows that the inequality between the residents in low-income communities and those that reside in California’s most affluent communities has dramatically increased in the past several decades. For example, the pretax income among the highest 1% of California taxpayers increased from 9.82% in 1980 to 25.1% of total income in 2013. During the last seven years, the pace of these disparities has only increased.

AB 3205 establishes a competitive grant program to support regional collaboration among public and private sector stakeholders to address and resolve significant community development issues which currently impede inclusive economic growth and upward mobility for historically marginalized groups.

The analysis includes information on the growing income disparities among Californian regions and population groups, regional approaches to increasing economic security, and related legislation. Concerns were initially raised by some stakeholders that the bill appeared to designate official spokespeople for region by virtue of receiving a grant. As this was not the intention of the author or sponsor, amendments have been developed to clarify the role of regional collectives and better align their work with local governments. The recommended amendments are outlined in Comment 5.

SUMMARY: AB 3205 establishes the Regions Rise Grant Program, administered by the Governor’s Office of Business and Economic Development (GO-Biz), for the purpose of supporting inclusive, cross jurisdictional, and innovative processes that lead to inclusive strategies to address barriers and challenges confronting communities in creating economic prosperity for all. Specifically, this bill:

1. Makes legislative findings and declarations:
   1. California’s regional economies compete in an increasingly connected and complex global market driven by changes in technologies, demographics, and geopolitics.
   2. Growing inequality and the erosion of upward mobility in California call for state policy to be intensely focused on increasing economic opportunity and security for all Californians.
   3. Public policy plays a critical role in creating the conditions that attract private capital investment, while encouraging equitable and sustainable economic growth.
   4. Yet California lacks a process to help inform the future creation of a coherent strategy that explicitly links state and regional priorities with goals and metrics, investments, and programs. A process should integrate the values of equity, resiliency, and collaboration around issues of shared importance including transportation, housing, homelessness, workforce, sustainability, and governance.
   5. California policy to advance triple-bottom-line goals should motivate, create capacity for, and invest in regionally driven strategies. This approach will empower and align behind regions, leverage business and civic contributions, and ensure that funds follow strategic decisions rather than decisions being made to chase funds.
   6. Regional triple-bottom-line prosperity strategies should be predicated on partnerships among state and local governments, and among public, private, and civic organizations, through which projects can integrate legal authorities, financial resources, and organizational expertise, creating longevity and generating prosperity for all.
   7. The philanthropy community, both in and outside of California, are seeking avenues to invest in communities across California in a strategic, yet transformative manner that includes opportunities to leverage or pool additional dollars to deepen impact.
   8. There is a need to create a state program that provides competitive grants for multijurisdictional organizations that involve local governments, and private and civic organizations covering locally defined economic regions to adopt a comprehensive shared prosperity strategy focused on the priority challenges of the respective region.
   9. There is a need to create pathways for private business, philanthropy, and others to financially support inclusive planning and decision-making processes reflective of a shared vision of a California for all, across the state’s underserved regions for investment.
2. Establishes the Regions Rise Grant Program, administered by the Governor’s Office of Business and Economic Development (GO-Biz), for the purpose of achieving the following:
   1. To enable local governments, community-based nonprofit organizations, businesses, and other key local stakeholders to establish regional groups tasked with identifying and developing strategies to address key regional barriers to prosperity for all.
   2. To build the capacity at the local level for inclusive collaboration and planning with the active engagement of representatives from disenfranchised or disadvantaged communities.
   3. To create interdisciplinary and cross-sector regional strategies for addressing key regional challenges.
   4. To establish pathways to implement strategies developed by the regional groups established pursuant to this part.
3. Conditions the making of grant awards to an appropriation for this purpose.
4. Defines the following term:
   1. “Director” means the Director of the Governor’s Office of Business and Economic Development.
   2. “Office” means the Governor’s Office of Business and Economic Development.
   3. “Program” means the Regions Rise Grant Program created pursuant to Section 12100.71 and administered in accordance with this article.
   4. “Region” means a collective of counties, cities, local agencies, private businesses, educational entities, and nonprofit organizations that organize themselves around a functional economy, as established by this bill.
5. Requires an applicant to establish a region, pursuant to requirements of the bill, before submitting an application to the program. The bill requires a region to either meet the requirements in a) OR b):
   1. The region meets both of these criterion:
      1. Consists of at least one government agency, one local business, one educational or workforce entity, and one nonprofit organization.
      2. The region must be comprised of a geographic area that experiences common regional issues and challenges that are larger than a single community, including, but not limited to, workforce development, educational pathways, land use, climate planning, transportation, housing, homelessness, economic mobility, equity gaps, and economic development.
   2. The region is a geographic location delineation by a metropolitan statistical area, as established by the United States Office of Management and Budget.
6. Requires each region to designate a lead principal agency or organization. The principal agency or organization is required to be identified in the application and serve as GO-Biz’ main program contact.
7. Requires each member of the proposed region to submit a letter of support to the principal agency or organization. These letters are to be included with the grant application, as specified.
8. Requires a region that receives grant funding to establish a steering committee to achieve the goals and purposes of the program. The steering committee is required to be representative of the membership of the region.
9. Requires GO-Biz to develop an application for regions to apply for competitive grants that can be spent over a period of three years. GO-Biz is to give priority to regions that can demonstrate all of the following:
   1. The partners of the region are representatives of the region’s demographic make-up, key industries, city and county governments, private businesses, educational and workforce partners, and nonprofit and philanthropic organizations.
   2. The need for cross-sectoral, multipartnership solutions to key regional challenges.
   3. The readiness and capacity to support rural or disadvantaged areas.
   4. The assessment of key deliverables and the potential of the initiative to make system changes that can be operationalized based on success stories and best practices.
   5. A commitment to match nonstate funds.
   6. Letters of support from local government agencies, nonprofit organizations, private businesses, education partners, ethnic communities, and philanthropic organizations that indicate a significant threshold of community involvement.
   7. A commitment to collect and share data, as required by the office, that can help inform the effectiveness of the grant dollars in building strategies for regional prosperity and to hold partners accountable for progress through the use of tools, including the California Dream Index.
10. Requires GO-Biz to act as an informal advisor to regions that receive funding by providing best practices and informing regional organizations of the state’s initiatives in areas including workforce development, educational pathways, land use, climate planning, and the other regional issues identified by regions.
11. Requires an annual report detailing the regional issues analyzed, priorities identified, strategies developed to address regional issues, and plans to implement priority efforts.
12. Requires GO-Biz to create a process for regional priorities to be brought forward to the Governor, the Legislature, and any other relevant agency, including the Office of Planning and Research. These regional priorities are to serve as a guide for the development and recommended action of related state functional plans, strategies, and investments.

EXISTING LAW 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.

FISCAL EFFECT: Unknown

COMMENTS & CONTEXT:

1. Growing Income Inequality: In the pre-coronavirus economy, California’s dominance in innovation-based industries was unquestionable, however, even with 120 months of uninterrupted economic growth, the divide between the middle and lower income households and the top income earners was accelerating. The Coronavirus has only deepened California’s income inequality, with the state’s most vulnerable being at the greatest risk for poor health outcomes, having the least amount of savings to survive the economic impacts of the Stay-at-Home Order, and being most likely to work in low-paid and least protected essential businesses.

According to April 2020 research by the McKinsey Institute, 57 million jobs are at risk in the US due to the necessary, but extreme, steps that are taking place to stop the spread of the coronavirus. In California, McKinsey estimates that certain sectors will be more severely impacted than others. As examples of sectors with the highest vulnerability, in the accommodation and food service sector, an estimated 1.6 million jobs are at risk (95% of all jobs in the sector), and, in the arts and entertainment sector, 287,000 jobs (87% of all jobs) are at risk. The economic impacts are, however, much more widespread. The McKinsey Institute reports that 48% of jobs in the construction sector, 49% of jobs in real estate, and 37% of jobs in manufacturing are at risk, to name only a few sectors identified as having more than 30% of their jobs at risk.

In addition to losing their jobs, many of these impacted workers have little formal education beyond high school and possibly a few additional years of higher education course work and/or occupational training. In the last recession, individuals without four-year degrees faced the greatest challenges in becoming reemployed and remained unemployed for significantly longer time periods.

As of April 25, 3.4 million people had filed for unemployment in California. Current federal actions have extended unemployment insurance benefits by 13 weeks and added a supplemental $600 per week until July 1, 2020. Unemployment benefits have also been authorized for independent contractors, the self-employed, and individuals who do not otherwise qualify for unemployment insurance due to part-time work. These are extremely important moneys to workers in highly vulnerable occupations.

A review of the March 2020 unemployment numbers illustrates this expanding pattern of economic disparity between regions and population groups in California. It is important, however, to recognize that these numbers only reflect the initial few weeks of California’s response to the coronavirus epidemic. Chart 1 shows unemployment-related information by selected counties and population groups.

The data shows income disparities are increasing, which is impacting a range of economic and societal issues. California is not unique in experiencing a rise in income inequality. National data show that while the top 1% of income households were significantly impacted by the recession, by 2017, annual revenues had risen to the highest levels ever. Between 1979 and 2017, the income for the top 1% of income households cumulatively rose by 157%.

In March 2020, California’s seasonally adjusted unemployment rate was 5.3%. For comparison purposes, Chart 1 uses not seasonally adjusted for county data and a 12-month moving average for demographic data. While the state’s not seasonally adjusted unemployment rate for March 2020 was 5.6%, some areas of the state had lower rates and others had considerably higher. San Mateo County recorded the lowest at 2.8%, while Colusa County experienced the highest unemployment rate at 22.4% and Imperial County the second highest at 20.5%. Under the provisions of the federal Workforce Innovation and Opportunity Act, an area of substantial unemployment is considered to be any contiguous area within a state with an unemployment rate above 6.5%. California had 28 counties which experienced unemployment rates at or above 6.5% in March 2020. There were three counties in the state, each in the Bay Area, with unemployment rates at or below 3%.

Looking more specifically at different population groups, the data also show the disparities between the statewide rate of 4.1% and the rates of key subgroups, including unemployment among Blacks and Hispanics being 5.2% and 4.7% respectively. For the youngest members of the workforce, obtaining quality jobs remains a significant issue, with unemployment among 16 to 19 year olds and 20 to 24 year olds being well above the state average, ranging from 15.1% to 7.6% respectively. According to the March 2020 figures, 11.8 million people in California are not participating in the labor force, an increase of 100,000 individuals during a 12-month period.

1. Helping Communities become Investment Ready: The geographic targeting of economic and community development programs is based on the development principle that focusing significant incentives and other resources to lower income communities allows these communities to more effectively compete for new businesses, retain existing businesses, and stop or slow the spiraling effects of poverty and unemployment. Geographically targeted approaches to economic and community development are designed to result in increased tax revenues, higher rates of private investment, less reliance on public health and social services, and lower public safety costs.

A central component of the state/region partnership model funded through the Regions Rise Grant Program is its potential to assist at-risk communities in stopping the downward spiral of poverty and (re)build communities with economic and social promise. In the last decade, there has been a renewed interest by institutional investors in identifying communities which have turned the corner and now represent unique economic opportunities. These communities are sometimes referred to by investors as emerging domestic markets (EDMs).

EDMs are people, places, or business enterprises with growth potential that face capital constraints due to systematic undervaluation as a result of imperfect market information. While not every low income neighborhood in California is ready for private sector investment, many neighborhoods can become investment ready through effective partnerships between the nonprofit, private, and public sectors.

The demographics of EDMs include minority- and women-owned firms, urban and rural communities, companies which serve low-to-moderate-income populations, and other small and medium-sized businesses. The increase in investor interest is driven, in part, by the recognition of the changing demographics in the U.S. which are resulting in a significant increase in minority purchasing power and business development by minority-owned firms.

Both the California Public Employees Retirement System (CalPERS) and the California State Teachers Retirement System adopted EDM investment goals for their entire portfolios. Under its California Initiative, which began in 2001 and focuses on historically underserved areas, CalPERS has directed and invested over $1 billion in 569 companies primarily located in California. California has no other similar program that could possibly outpace the volume of investments large institutional investors can make. Experience is showing that adopting policies and programs that support investment by institutional investors is sound economic policy.

1. Examples of Regional Approaches to Upward Mobility: In February 2019, the Assembly Committee on Jobs, Economic Development, and the Economy (JEDE) began a series of hearings examining how public and private sector initiatives were being used or could be used to support upward mobility, reduce racial disparities, and address climate change. Three primary themes emerged from these hearings, being the need to:
   • Upskill individuals to meet market challenges;
   • Establish integrated and accountable governance structures to better support businesses, program and service providers, and individuals; and
   • Remove barriers for start-ups, entrepreneurs, and expanding businesses, including manufacturers.

In order to advance the JEDE Committee’s understanding of how sustainable and inclusive economic strategies can actually be implemented in the real world, a field hearing was conducted outside of the confines of the State Capitol, which highlighted regional initiatives in the Inland Empire. The keynote presentation by Dr. Karthick Ramakrishnan, Chair of the Center for Social Innovation at the University of California, Riverside, highlighted a number of regional initiatives being conducted within the Inland Empire. Among other initiatives presented, Dr. Ramakrishnan discussed Inland California Rising, an initiative he co-launched in February 2019 and which hosted summits in both of its partner regions, the Inland Empire and the San Joaquin Valley. The following is a selection of other initiatives discussed in the course of the hearing:

• GenerationGO/Vision2Succed: An initiative of San Bernardino County using its local workforce board as the facilitator. The purpose of GenerationGO is to connect K-12 schools, community colleges, and businesses to create and enhance career pathways and provide hands-on training. After several successful years, both the scope and geographic footprint are being expanded.
• Consortium for Excellence in Logistics: The mission of this initiative, facilitated by the Inland Empire Economic Partnership, is to leverage the region’s large number of warehouses and strategic location to position the Inland Empire as a supply chain and logistics hub. By fully embracing the leadership role, the consortium believes the Inland Empire can drive innovation within the sector resulting in economic growth and better paying jobs, while still providing environmental and societal benefits.
• Inland Economic Growth & Opportunity (IEGO): This initiative, supported through the Community Foundation, is a network of business, government, educational, and nonprofit institutions, working to better align workforce and economic development efforts. Their objective is to increase high-paying quality jobs, increase opportunities for advanced manufacturing, and accelerate the growth of promising emerging industries (such as IT, cybersecurity, and battery storage).

JEDE’s hearing aligned with Governor Newsom’s Region’s Rise Together, which was led by GO-Biz and supported by California Forward, the sponsor of this bill.

1. Roadmap to Shared Prosperity: This bill is an outgrowth of the California Economic Summit, a year-round collaboration of over 750 public and private stakeholders who annually meet to share their work, be inspired, and make plans for the following year’s activities. This important work is supported and facilitated by California Forward and the Roadmap to Shared Prosperity. The 2019 Roadmap to Shared Prosperity outlined the California Economic Summit’s plans for a comprehensive agenda to address the state’s biggest challenges with a triple bottom line approach.

• Creating the California Dream Index, a new scorecard for tracking the state’s progress toward improving economic mobility.
• Developing a poverty prescription through innovative “two generation” strategies and system change efforts that can improve results with adequate investments in a smarter safety net and put the California Dream within reach of every child.
• Encouraging early childhood strategies that support community, regional, and state efforts to coordinate and expand high quality learning and nurturing for all children ages 0 to 5 through system change strategies, partnerships, and adequate investments.
• Continuing the Summit’s “One Million Challenges,” ongoing initiatives to close gaps in skilled workers, livable communities, and well-paying jobs.

A key issue in moving forward on this work was the limited capacity of regional collectives to sustain their valuable work. AB 3502 establishes a grant program that would both help fund and elevate this work.

1. Proposed Amendments: Below is a list of amendments the committee members may wish to review when considering the bill.
   1. Add legislative intent and program objectives that demonstrate how the grant program relates to the current coronavirus emergency.
   2. Set a specific overall purpose for the program that more clearly encompasses the goals and objectives already articulated in the bill. Use the existing purpose to set the program’s goals.
   3. Mandate the inclusion of historically underrepresented voices within the regional collectives funded through the program, including project steering committees.
   4. Shift the drafting of the bill from setting regional boundaries to funding regional collectives comprised of public and private stakeholders who organize themselves around one or more community challenges impacting multiple government jurisdictions.
   5. Allow applications with overlapping geographic boundaries to be funded to the extent that regional collectives’ work is distinctly different, e.g. one collective is focusing on maternal health in lower income neighborhoods, while another collective is working on aligning education and workforce training opportunities with an emerging high tech industry sector.
   6. Clarify the sustainable development principles that are intended to drive the work of the regional collectives funded through the grant program.
   7. Set threshold criteria for evaluating grant applications, including requirements for reporting outcomes annually and providing letters of support from local government agencies, ethnic chambers, and other public and private stakeholders.
   8. Modify the matching funds provision to reflect that some of the most important issues that need to be addressed may also be in areas that do not have access to matching funds.
   9. Clarify that grants may be awarded to regional collectives in a range of development stages, including those initiating and expanding regional convening, those sustaining regional engagements, and those that are ready to implement recommended strategies.
   10. Expand the list of mandatory regional partnership members to include at least one economic development entity.
2. Related Legislation: Below is a list of bills from the current and prior sessions.
   1. AB 29 (John A. Pérez, Feuer, and V. Manuel Pérez) Office of Business and Economic Development: This bill established GO-Biz to include the newly codified California Business Services and the existing Office of the Small Business Advocate. Status: Signed by the Governor, Chapter 475, Statutes of 2011.
   2. AB 27 (Parra) California Partnership for the San Joaquin Valley: This bill would have codified the establishment and operation of an up to 64-member California Partnership for the San Joaquin Valley for the purpose of improving the economic, social, and environmental conditions of the San Joaquin Valley. Status: Held on the Suspense File of the Assembly Committee on Appropriations, 2008.
   3. AB 31 (Parra) California Partnership for the San Joaquin Valley: This bill would have created a 24-member California Partnership for the San Joaquin Valley (SJV) for the purpose of coordinating and improving state and federal efforts in the SJV, in concert with locally led efforts to improve the living standards and overall economic performance of the region. Status: Died on the Senate Floor, August 2006.
   4. AB 119 (Assembly Budget Committee) Elimination of State Economic Strategy: This bill eliminated, commencing January 1, 2012, the responsibility of the Secretary of Labor and Workforce Development Agency to lead the preparation of a biennial California Economic Development Strategic Plan and to biennially convene an Economic Strategy Panel to provide recommendations regarding the plan. Status: Signed by the Governor, Chapter 31, Statutes of 2011.
   5. AB 358 (Greyson) Regional Economic Development Areas: This bill would have enacted the Regional Economic Development Area Act for the purpose of certifying regional economic development areas that include, but are not limited to, active and inactive military bases. Status: Died without action in Assembly Committee on Jobs, Economic Development, and the Economy, 2018.
   6. AB 742 (Cervantes) Office of Place-Based Strategies: This bill would have established the Office of Place-Based Economic Strategies within GO-Biz for the purpose of supporting local and regional economic development entities to access programs and implement place-based and other community- and neighborhood-level strategies. Status: Held in the Assembly Appropriations Committee, 2019.
   7. AB 906 (Cooley, Cervantes, Kiley) State Action Plan: This bill would have required the Governor’s Office of Business and Economic Development to take the lead in preparing a California Economic Development Strategy based on regional priorities. Status: Held in the Assembly Committee on Appropriations, 2019.
   8. AB 1233 (V. Manuel Pérez) State Economic & Workforce Development Strategy: This bill would have required GO-Biz to prepare a five-year Economic and Workforce Development Strategy. The blueprint will help the state set a strategic path forward by prioritizing and coordinating state activities, supporting local and regional economic development activities, and better leveraging private and public sector resources. Status: Held in the Assembly Committee on Appropriations, 2012.
   9. AB 2596 (Cooley, Kiley, Quirk-Silva) State Action Plan: This bill would have required the Governor’s Office of Business and Economic Development to take the lead in preparing a California Economic Development Strategy based on regional priorities. Status: Vetoed by the Governor. The veto message stated: “Since its inception, GO-Biz has expanded direct foreign investment, created opportunities for small businesses, identified incentives for growth, and helped resolve barriers for businesses navigating the government. These successes are due, in part, to the ability of GO-Biz to nimbly respond to rapidly changing economic factors including unpredictable federal decisions, natural disasters and more. I don’t believe an ongoing costly study and report will provide any additional benefit to these efforts.”
   10. SB 1230 (Umberg and Caballero) CDFI Grant and Tax Credit: This bill establishes the Community Development Financial Institutions Grant Program, administered by GO-Biz, and authorizes a CDFI Tax Credit, as specified. Status: Pending in the Senate Committee on Business, Professions, and Economic Development.

REGISTERED SUPPORT / OPPOSITION:

Support

California Forward (sponsor)

3core
Bay Area Council
CA Economic Summit
CA Stewardship Network
Cal Asian Chamber of Commerce
California Hispanic Chambers of Commerce
California Partnership for The San Joaquin Valley
Caloz
Central Valley Community Foundation
Coalition for Small and Disabled Veteran Businesses
CSU Fresno, Office of Community and Economic Development
Economic Development Collaborative, Ventura County
Economic Vitality Corporation, San Luis Obispo County
Fresno Business Council
Fresno County Economic Development Corporation
Fresno Metro Black Chamber of Commerce
Greater Bakersfield Chamber of Commerce
Imperial County Transportation Commission
Inland Empire Community Foundation
Inland Empire Economic Partnership
Kern Community Foundation
Los Angeles County Economic Development Corporation
Monterey Bay Economic Partnership
North Bay Leadership Council
Orange County Business Council
Reach
Reading and Beyond
Redwood Coast Rural Action
Sacramento Area Council of Governments

Opposition

None on File

Analysis Prepared by: Toni Symonds / J., E.D., & E. / (916) 319-2090