Actions so far have been disappointing. City officials have witnessed the dissolution of redevelopment agencies and efforts to eliminate the Enterprise Zone Program, which were the two major tools local agencies had to promote economic development.
In the Governor’s budget summary (Page 170) describing his rationale for eliminating redevelopment, the Governor explained: “The private development that occurs in redevelopment project areas often would have occurred even if the RDAs were never established. There is little evidence that redevelopment projects attract business to the state. Studies indicate most of the business development is simply shifted from elsewhere in the state. While this may help relieve localized blight and equalize economic activity relative to nearby communities, there are better alternatives for local entities to fund these efforts without shifting resources from schools, counties, special districts, and core city services.”
For the rationale for proposing to eliminate enterprise zones, the Governor’s budget summary (Page 44) states: “The EZ program is a tax expenditure — an expenditure program for local economic development run through the tax system. The Budget proposes to make significant changes in the way funding of local development efforts is handled. These changes are intended to move the responsibility and the authority for local development efforts to the local jurisdictions and their voters. Eliminating state tax benefits for EZs is a fundamental part of this change. Because the primary benefit of these zones is to shift economic activity from one geographic region within California to another geographic region within California, they are not of statewide interest.”
Thus, to date, local officials have not witnessed much interest from the Governor’s administration in assisting with local economic efforts.
New Go-Biz Team Appointed
Last week, Gov. Jerry Brown appointed a slate of executives to his new Office of Business and Economic Development (GO-Biz). On the same day, the Governor also signed legislation authorizing GO-Biz to reestablish California’s international trade office in China and other offices worldwide. Gov. Brown has said that he believes these actions will help strengthen California’s economy through trade and investment partnerships.
Gov. Brown appointed 12 officers to GO-Biz including:
Kish Rajan, GO-Biz director
Lillian Conroe, small business specialist
Janelle Green, small business specialist
Jorge Jaramillo, deputy director of external affairs
Will Koch, deputy director of legislative and inter-governmental affairs
Jeff Malin, senior small business development specialist
Paul Martin, deputy director of permit assistance
Leslie McBride, deputy director of business investment services
Paul Oliva, deputy director of international affairs and business development
Frank Ramirez, senior permit assistance specialist
Louis Stewart, deputy director of innovation and entrepreneurship
Barbara Vohryzek, deputy director of small business
The officers have a variety of backgrounds including four team members with local government experience. Rajan has been a Walnut Creek council member since 2008. Green served as a planning analyst for the Sacramento Municipal Utilities District. Malin served as director of development operations for the city of Los Angeles under both Mayor Villaraigosa and Mayor Hahn. McBride served as mayor pro tem of Yuba City.
What is GO-Biz?
GO-Biz was created to serve as the liaison to California’s regulatory agencies and local governments for purpose of streamlining the process of economic development and job creation.
The office comprises five units:
Small Business Assistance;
Encouraging Innovation and Entrepreneurship; and
International Affairs and Trade Development.
The stated goal of GO-Biz is to bring economic development and jobs into California. Their website provides various “success stories” and touts a record of assisting more than 3,595 businesses in 2011, creating or saving 6,000 jobs and bringing in $750 million in investments.
The business development unit is intended to help companies expand in California by “streamlining the site selection process and offsetting the cost of doing business.” The unit offers information about tax incentives, including California’s Enterprise Zone Program, which provides tax incentives to help attract business to the state, retain and expand business and industry, and create job opportunities for Californians. Although, the Enterprise Zone Program which is still housed under HCD’s umbrella, has been subject to recent talk of elimination or reform.
Last year, HCD announced that it will be seeking changes to the program, and would not re-designate zones until reforms were implemented. For more background on the Enterprise Zone reform discussion please see, the Nov. 4, 2011 CA Cities Advocate story “Prepare for Big Changes to Enterprise Zones in 2012.” It is unclear if the Enterprise Zone Program will ultimately be transferred to GO-Biz, since GO-Biz is seeking to be the “one-stop-shop” for all things business.
GO-Biz also offers a confidential site selection worksheet to be filled out by the prospective business so that GO-Biz can suggest a location most suited to the business’s needs as part of its site selection service. The potential benefit to local governments would be that GO-Biz could facilitate the location of businesses in cities which are most hospitable to certain industries.
Where appropriate, GO-Biz refers users to contact local governments for more information on local requirements. For example, it refers users to contact the appropriate local government for their business licenses and permits, but also states that it will provide permitting assistance by scheduling pre-application meetings between businesses and the regulatory agencies. The permit assistance unit’s purpose is to act as “a neutral facilitator between state regulatory agencies and businesses to resolve permitting issues. However, details on exactly how cities and GO-Biz would interact to facilitate local requirements remain to be seen.
GO-Biz has created a “California Investment Guide” that discusses California’s business climate, business advantages, investment assistance opportunities, state taxes and permitting. In the guide’s Local Incentive Options its offers information about Revolving Loan Funds and how they can be used to capitalize HCD’s Community Development Block Grant Program. The guide instructs users to contact their city or county for more information on this issue.
The website also offers another comprehensive guidebook “Setting Up Business in California: A Guide for Investors” which provides information for foreign and domestic investors, definitions of types of business and associated requirements, as well as a variety of employment law resources.
International Affairs and Trade Development
Despite the 2003 closures of California’s international trade offices worldwide due to budget concerns, one of the current focuses for GO-Biz appears to be the reopening those offices, specifically in Shanghai and Bejiing.
AB 2012 (Pérez), signed by the Governor on Sept. 11, authorizes GO-Biz to open trade offices in countries with the greatest potential for export growth and foreign direct investment in California using state funds or private donations. AB 2012 also transfers the state’s online permit resource center to GO-Biz.
Specific to ambitions for Chinese offices, the Governor maintains that direct access for California businesses to Chinese business contacts and investors will encourage a stronger economy through financial partnerships and increased exports. China is California’s third-largest trading partner and according to GO-Biz, in 2011 China invested $1.5 billion in California projects (10 percent of all Chinese investment in the United States).
Previous criticisms that the trade offices serve more as political rather than an economic expansion still remain. However, the criticisms have been deflected by the Administration which maintains that these international trade offices will be funded strictly through public-private partnerships, including a partnership with the Bay Area Council which plans to raise $1 million to open an office in Shanghai. Further, the increase in California’s exports has been cited as a sign that international offices are needed.
A third international office in Mexico is also planned.
For more information about GO-Biz, please visit its website.
The significant augmentation of staffing for GO-Biz and the plan to reopen foreign trade offices could indicate a renewed interest in economic development from the Governor’s administration. Whether this translates into programs and efforts that are viewed as helpful by city officials, remains to be seen.