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SB-736 Creative Economy Incentive Act.(2019-2020)

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Date Published: 08/13/2019 09:00 PM
SB736:v95#DOCUMENT

Amended  IN  Assembly  August 13, 2019
Amended  IN  Assembly  July 01, 2019
Amended  IN  Senate  April 22, 2019
Amended  IN  Senate  March 27, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 736


Introduced by Senator Umberg

February 22, 2019


An act to add and repeal Article 8 (commencing with Section 12100.100) to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code, relating to state government.


LEGISLATIVE COUNSEL'S DIGEST


SB 736, as amended, Umberg. Creative Economy Incentive Program. Act.
Existing law, the Economic Revitalization Act, establishes the Governor’s Office of Business and Economic Development, also known as “GO-Biz,” to, among other duties, serve the Governor as the lead entity for economic strategy and the marketing of California on issues relating to business development, private sector investment, and economic growth. Existing state sales and use tax laws impose a tax on retailers measured by gross receipts on the sale of tangible personal property sold at retail in this state or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. These taxes are remitted to the California Department of Tax and Fee Administration.
This bill would, until January 1, 2031, enact establish the Creative Economy Incentive Program, Act, which would be administered by GO-Biz, for the purpose of providing financial support to a city, county, any nonprofit organization, city, county, special district, or any politicalsubdivision of state or local government, including a department, agency, commission, district, joint powers authority, nonprofit organization, authority, or a combination thereof for the purpose of assisting in financing a creative economy event, as defined. The bill would require an applicant to apply to GO-Biz for financial support pursuant to the program on an application that contains specified minimum information, including the adopted resolution of a county or city, if any, within the designated market area for the creative economy event evidencing that city’s or county’s commitment to contribute a portion of its respective local sales and use tax revenue or other local revenue as a local contribution to the creative economy event. The bill would require an applicant who receives financial support under these provisions to comply with specified reporting requirements and would require the office to complete a study of a creative economy event, as specified. The bill would authorize require the office to form a steering committee to make recommendations to the office regarding the development of guidelines and the review of applications under the program. these provisions. The bill would establish the Creative Economy Incentive Program Fund, Account, which, upon appropriation, would be used to carry out these provisions. The bill would require the office to annually prepare a report on its activities and outcomes under these provisions and submit the report to specified committees in the Senate and the Assembly on March 15 of each year, beginning with the year 2021.
The bill would require the California Department of Tax and Fee Administration to transfer specified sales and use tax receipts correlated with a creative economy event into the Creative Economy Incentive Program Fund until an amount equal to the total amount of financial support funding awarded to the applicant for the creative economy event has been transferred.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Article 8 (commencing with Section 12100.100) is added to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code, to read:
Article  8. Creative Economy Incentive Program Act

12100.100.
 (a) This article shall be known, and may be cited, as the Creative Economy Incentive Program. Act.
(b) There is in the State Treasury, Treasury the Creative Economy Incentive Program Fund. Account, created within the California Economic Development Fund created pursuant to Section 13997.6. Upon appropriation by the Legislature, the office may use moneys in the fund account to carry out the purposes of this article.
(c) A prudent reserve balance shall be maintained in the Creative Economy Incentive Program Fund Account at all times. The office may retain an amount not to exceed ____ percent of the total amount appropriated to the fund in a fiscal year for its reasonable administrative expenses, including, but not limited to, contract administration, accounting costs, and the costs of economic studies.
(d) The Creative Economy Incentive Program is hereby established. The operation of the Creative Economy Incentive Program shall be contingent upon an initial appropriation to the Creative Economy Incentive Program Fund Account by the Legislature for the purpose of carrying out the provisions of this article.

12100.101.
 (a) (1) It is the intent of the Legislature to spur jobs and economic growth and to foster social impact and community benefits throughout the state by establishing a program to provide timely and reliable financial support that is accessible to cities, counties, districts, joint powers authorities, and nonprofit organizations in the state that conduct creative economy events.
(2) It is the intent of the Legislature in enacting this program to allow cities, counties, districts, joint powers authorities, and nonprofit organizations to successfully compete against jurisdictions in other states to attract creative economy events aimed at creating jobs, stimulating the state’s economy, and fostering social impact and community benefits throughout the state.
(b) The Legislature hereby finds and declares that a variety of approaches for attracting significant creative economy events in other regions outside of California have been demonstrated to be successful, including the establishment of the Major Events Incentive Program, in Louisiana, Program in Louisiana and the Event Trust Fund, Fund in Texas, which allow local governments and local organizing committees to apply to the state for the establishment of separate event trust funds to help pay for certain eligible costs associated with conducting those events.
(c) The Legislature hereby finds and declares that creative economy events may include musical, cinematic, performance and other fine arts events and festivals, sports competition, agricultural, gastronomy, and other cultural events.
(d) The Legislature hereby finds and declares that the establishment of a state fund for attracting events with major beneficial impact to the state and its regions has been shown to be successful in stimulating the economy through job growth, economic and infrastructure development, and the influx of increased net revenue for the state and local governments as a result of increased tourism.
(e) The Legislature hereby finds and declares that creative economy events will have significant social impacts on the region where the event takes place by bolstering a shared sense of regional identity, fostering innovation, improving quality of life, and providing an expansive showcase for the host cities and counties by bringing together artists, cultural and community groups, and creative businesses.

12100.102.
 For purposes of this article, the following terms have the following meanings:
(a) “Applicant” means a city, county, a nonprofit organization, city, county, special district, or any other political subdivision of state or local government, including a department, agency, commission, district, or joint powers authority, nonprofit organization, or a or any combination thereof. An application may include an applicant that partners with other public entities and private organizations to conduct in the form of a host, sponsor, or other event partner of a creative economy event may apply applying for financial support an award under this article.

(b)“Confirmed market area” means a geographic area, specified and determined by the office, that has a reasonable likelihood to benefit economically from a specific creative economy event.

(c)

(b) “Creative economy event” means a musical, cinematic, performance and performance, or other fine arts events and festivals, event; a festival; sports competition, competition; an agricultural, gastronomic, or other business event; or a cultural event.

(d)“Financial support” means a grant of funds to an applicant for certain eligible expenditures related to a creative economy event pursuant to terms and conditions set forth in a contract between the office and the applicant.

(e)

(c) “Department” means the California Department of Tax and Fee Administration.
(d) “Designated market area” means a geographic area, specified and determined by the office, that has a reasonable likelihood to benefit economically from a specific creative economy event pursuant to paragraph (4) of subdivision (c) of 12100.103.
(e) “Financial support” means a designation of funds to an applicant for certain eligible expenditures related to a creative economy event pursuant to terms and conditions set forth in a contract between the office and the applicant.
(f) “Increased net revenue” means as defined by the office in the guidelines established pursuant to subdivision (d) of Section 12100.103.

(f)

(g) “Office” means the Governor’s office of Business and Economic Development, also known as “Go-Biz.”“GO-Biz”

(g)

(h) “Program” means the Creative Economy Incentive Program established by this article.

12100.103.
 (a) The office shall solicit shall, on or before July 1, 2020, accept applications from applicants for financial support administered pursuant to this article.
(b) An application shall be submitted in the form and manner prescribed by the office and shall include information the office determines is necessary or convenient to administer the program, including, at a minimum, all of the following:
(1) A description of the proposed creative economy event and its likely impact on the local economy. event, including information on selection criteria and a timeline for submitting bids and receiving determinations on the awarding of the event, if applicable.
(2) A description of the applicant’s and any partnering entity’s or organization’s experience in sponsoring or hosting significant or similar creative economy events. Information on a partnering organization may be included to demonstrate additional experience.
(3) A description of the financial strength and stability capacity of the entity that is serving as the fiscal agent and the primary financial backer of the creative economy event, including but not limited to, the applicant and any partnering organizations.
(4) A proposed budget for the creative economy event that shall include, but is not limited to, the total proposed expenditures for the creative economy event and the total projected income and net revenues of the creative economy event.
(5) A description and specific accounting of how the financial support funds will be used for eligible reimbursable expenditures.
(6) An analysis of the estimated incremental increase in the state sales and use tax revenue and revenue, local tax revenue revenue, and other tax revenues in the confirmed proposed designated market area and of the measurable economic impacts directly and indirectly attributable to the creative economy event and related activities for a one-year period commencing two months before the date of the creative economy event.
(7) The adopted resolution of each county or city, if any, within the proposed designated market area for the creative economy event evidencing that city’s or county’s commitment to contribute a portion of their respective local sales and use tax revenue or other local revenue as a local contribution to the creative economy event.
(8) Supplemental information, as required by the office, regarding the proposed creative economy event and the economic analysis submitted with the application.
(c) In reviewing an application submitted pursuant to subdivision (b), the office shall do all of the following:
(1) Determine if the application meets the minimum requirements of and any rating, ranking, and priorities identified in this article and guidelines promulgated pursuant to subdivision (d).
(2) Consider the equitable distribution over a three-year period of Creative Economy Incentive Program funds throughout the state.
(3) Notify applicants of whether the application was approved or denied and state the reasons for the approval or denial.
(4) Determine the amount of funding financial support to be made available to approved applicants and designate the confirmed market area.
(5) Award financial support funding in excess based on of the estimated incremental increase in tax revenue within the designated market area for creative economy events expected to provide demonstrable public benefits or positive social impacts.
(d) (1) The office shall establish and publish guidelines, through a public engagement and review process, to govern the application for, and use and administration of, funds awarded pursuant to this article. The guidelines shall include provisions for addressing situations when the funding requested by applications exceeds the amount determined to be available in the account for a particular fiscal year and how to measure social, cultural, economic and environmental benefits. All
(2)  All application procedures, forms, administrative guidelines, and other requirements developed by the office pursuant to this subdivision shall be exempt from the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(3) All guidelines shall be available on the office’s internet website. After the initial publication of the guidelines, the office shall notify the Senate Committee on Business, Professions and Economic Development, the Assembly Committee on Jobs, Economic Development, and the Economy, and the Assembly Committee on Arts, Entertainment, Sports, Tourism, and Internet Media of any changes to the regulations.

12100.104.
 (a) (1) The office shall enter into a contract with an applicant approved pursuant to Section 12100.103 that states the approved financial support amount and restrictions on the use of the financial support funds. amount.
(2) The office shall make those funds available to an approved applicant on a reimbursement basis, upon confirmation that the applicant was successfully selected as the host for the creative economy event for which the application was made. basis.
(b) The office and the approved applicant shall enter into a contract setting contract entered into pursuant to paragraph (1) of subdivision (a) shall also set forth the obligations of the applicant regarding eligible and ineligible expenditures, local contribution requirements, if any, public benefit or social impact obligations, if any, and audit, recordkeeping, and reporting requirements.
(c) (1) An applicant that has received financial support pursuant to this article shall report to the office, on an annual basis, the status of the creative economy event for which the financial support was approved, but if the event will occur within a year or less of the application approval, the applicant shall report quarterly.
(2) The report shall include an accounting, updated on an annual or quarterly basis as directed by the office pursuant to paragraph (1), for funds received pursuant to this article. eligible expenditures identified in the contract.

12100.105.
 (a) As used in this section, “sales and use tax revenue” means revenue collected pursuant to Sections 6051, 6051.3, 6201, and 6201.3 of the Revenue and Taxation Code excluding amounts required to be deposited into the State Treasury to the credit of the Local Revenue Fund 2011 pursuant to Section 6051.15 or 6201.15 of the Revenue and Taxation Code.
(b) (1) Notwithstanding Section 7101 of the Revenue and Taxation Code, the California Department of Tax and Fee Administration, at the direction of the office, shall transfer into the Creative Economy Incentive Program Fund Account the amount of sales and use tax revenue that is, during the applicable time period, both remitted from the confirmed designated market area and would otherwise be unencumbered General Fund moneys. The department shall stop transferring that sales and use tax revenue when an amount equal to the total amount of financial support awarded to the applicant for the creative economy event that occurred in the confirmed designated market area has been transferred into the Creative Economy Incentive Program Fund. Account.
(2) Notwithstanding any other law, the department, at the direction of the office, shall also transfer into the Creative Economy Incentive Program Fund the amount of a local contribution of local sales and use tax revenue committed to the creative economy event by a city or county within the confirmed designated market area during the applicable time period.
(3) For purposes of this subdivision, “applicable time period” means a period of time determined by the office office, and reflected in the contract entered into pursuant to Section 12100.104, to be reasonably correlated with the economic impact of the creative economy event.
(c) On or before 90 days after the last day of the creative economy event, in addition to tax revenue retained pursuant to subdivision (b), a city or county that has committed local revenue to the creative economy event that is not collected by the department shall remit those revenues to the Creative Economy Incentive Program Fund Account for distribution to the applicant.
(d) The office shall make disbursements to the applicant from the Creative Economy Incentive Program Fund Account for eligible expenditures under the contract. If local contributions have been committed to the creative economy event, disbursements shall be made proportionately from the state and local revenue in the Creative Economy Incentive Program Fund Account committed to the creative economy event. Upon payment of all obligations under the contract related to the creative economy event, remaining funds shall be distributed to the state into the General Fund, county, or city in proportion to the amount contributed by the state, county, or city.

12100.106.
 (a) On or before 10 months after the last day of the creative economy event, the office shall complete a study in the confirmed designated market area of the creative economy event on the measurable economic impact directly and indirectly attributable to the creative economy event and related activities. The study shall, at a minimum, confirm the actual attendance figures for the creative economy event and the actual amount of incremental increase in state and local tax receipts generated as a result of the creative economy event.
(b) The completed study shall be made available on the office’s internet website.

12100.107.
 (a) The office shall establish an executive steering committee to make recommendations to the office regarding applications.
(b) The steering committee shall include, but not be limited to, members from relevant state agencies and departments with expertise in economic development, job growth, and tourism, including various representatives from the Governor’s Office, the Department of Finance, the California Office of Tourism, and representatives a representative appointed by the Senate and Committee on Rules, and a representative appointed by the Speaker of the Assembly.
(c) The office shall consult with the steering committee on the development of guidelines and the review of applications submitted pursuant to Section 12100.103. The steering committee shall make recommendations to the office regarding the efficiency and viability of those applications and criteria for prioritizing applications for approval if funding requested by those applications exceeds the amount determined to be available in the fund for a particular fiscal year.

12100.108.
 (a) The office shall annually prepare a report on its activities and outcomes under this article during the previous calendar year. Beginning with 2021, on or before March 15 of each year the office shall submit the report to the Senate Committee on Business, Professions and Economic Development, the Assembly Committee on Jobs, Economic Development, and the Economy, and the Assembly Committee on Arts, Entertainment, Sports, Tourism, and Internet Media.
(b) The report shall include, at a minimum, all of the following information: ___.
(c) Applicants, as a condition of applying to the program, shall agree to provide the office with the information necessary to meet the requirements of this section.
(d) The office may include the report required under this section any other annual report the office is required to submit to the committee described in subdivision (a).

12100.108.12100.109
 This article shall remain in effect only until January 1, 2031, and as of that date is repealed.