CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 1669

Introduced by Assembly Member Quirk-Silva
(Principal coauthor: Senator Allen)

February 17, 2023

An act to add Article 4.2 (commencing with Section 12096.540) to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code, relating to economic development.


LEGISLATIVE COUNSEL'S DIGEST


AB 1669, as introduced, Quirk-Silva. California Historically Significant Commercial District Act.
Existing law establishes the California Business Investment Service Program within the Governor’s Office of Business and Economic Development (GO-Biz) for the purpose of serving employers, corporate executives, business owners, investors, and site location consultants who are considering California for business investment and expansion. Existing law provides that the program is under the authority of the director, who is required, among other things, to work cooperatively with local, regional, federal, and other state public and private marketing institutions, economic developers, workforce training partners, and trade organizations in attracting, retaining, and helping businesses and investments grow and be successful in California.
This bill, upon appropriation by the Legislature, would establish the California Historically Significant District Program for the purpose of revitalizing and maintaining historically and culturally significant commercial corridors throughout the state by funding technical assistance, training, and other activities that increase the capacity of revitalization entities to provide business assistance programs and services that meet the unique needs of small businesses that operate within historic commercial districts. The bill would provide that the program be administered by the California Business Investment Service Unit within GO-Biz, in consultation with the Community and Placed-Based Solutions Unit. The bill would require the program to award grants to eligible grantees, as defined, who submit an application meeting certain requirements, including, among other things, documentation that the applicant has the experience and capacity to provide technical assistance, training, and other services that increase the capacity of revitalization entities to use place-based tools to improve the entrepreneurial ecosystem to meet the needs of small businesses that operate within historic districts. The bill would require training and education topics and uses of the grant by the grantee to include, but not be limited to, among other things, onsite assessment and training of revitalization entities to develop capacity for implementation of commercial district revitalization plans. The bill would require that grant funds be used by the grantee consistent with certain requirements, including that at least 40% of the total amount of the grant be used by the grantee to provide capacity-building programs and services to eligible historic commercial corridor revitalization entities throughout the state, as specified.
The bill would require a grantee, as a condition of receiving the grant, to report on the performance annually. The bill would require that this reporting include, among other things, outcomes from the training and technical assistance provided, including, among other things, the number of training events. The bill would also require a subgrantee to report on program performance quarterly and annually. The bill would require this reporting to include, but not be limited to, quarterly outcomes from the subgrants provided, including, among other things, the number of businesses reached in person. This bill would require a grantee, 6 months following the completion of the grant, to submit a final outcomes report which includes, among other things, a detailed narrative description of how the funds awarded were used to expand the capacity of the statewide network of historic commercial corridor revitalization entities and to help underserved business owners and entrepreneurs within those districts to adapt new, place-based business strategies.
This bill would require a grantee and any subgrantee to provide matching funds of at least one dollar for each dollar of state funds received. The bill would authorize up to 50% of the match to be in the form of in-kind services or resources. The bill would require that grant funding be available to the grantee for a 3-year period. The bill would authorize up to 5% of any program appropriation to be used by the Governor’s Office of Business and Economic Development for administrative costs, including reporting. The bill would authorize up to 5% of a grant to be used by the grantee for administrative costs related to the organization of the training, technical assistance, and program delivery, including travel and technology.
The bill would authorize the Director of GO-Biz to assign one or more of the duties or authorities provided by this bill to another unit within the office or another state agency. This bill would also make related findings and declarations.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) Small businesses experienced some of the most severe economic impacts from the COVID-19 pandemic, particularly small businesses owned by women, people of color, and other marginalized groups. While it is estimated that over 2,000 businesses in California closed during the early months of the pandemic, new business formation rose dramatically, with California experiencing a 21.7-percent increase in new businesses in 2020. After subsequent years of challenges, including lost revenue, pandemic adaptation, and staffing issues, entrepreneurs in 2023 face slowing economic growth and a possible recession. Supporting existing and new small businesses can bolster California’s economy during this economic downturn, as 48.2 percent of California workers are employed in small businesses, with 88.7 percent of all workers employed in businesses with 20 or fewer employees.
(b) To remediate pandemic impacts, the federal government created resources to support small businesses with a particular focus on expanding opportunity for underserved small businesses and deploying capital. The United States Treasury approved a formula-based award of up to $1,100,000,000 and a performance-based award of up to $200,000,000 in State Small Business Credit Initiative (SSBCI) funds to the State of California. As such, the 2023–24 fiscal year becomes a particularly important year to redouble efforts to adopt strategic approaches to meet niche small business capital needs. One of the first SSBCI hurdles California faces is having a sufficient number of finance-ready small businesses to meet performance-based awards, which require 49 percent of first tranche funding going to businesses owned by socially and economically disadvantaged individuals (SEDI).
(c) Specific measures are needed to support outreach to small businesses with fewer than 20 employees and SEDI-owned small businesses. Based on Small Business Administration data for businesses participating in the federal Paycheck Protection Program, these businesses cluster in historically significant business corridors, with a 10-percent higher concentration of businesses owned by underrepresented groups in these districts than minority ownership statewide. It is in the state’s interest to utilize and enhance existing economic and community development capacity to meet the state’s performance-based goals and accelerate the state’s draw down of federal SSBCI funds.
(d) Historically significant commercial districts, including Main Streets and cultural districts, are drivers of local economic impact through property and sales tax, private returns on public investment, and the advancement of quality of life. These districts were originally developed as centers of commerce, and they continue to play that role, with specific utility for emerging entrepreneurs and small, local businesses. Local commercial district organizations spur the revitalization of these districts by fostering place-based entrepreneurial ecosystems to power local wealth generation.
(e) Small businesses located within historically significant business districts benefit from tailored, ongoing support to help them adapt their businesses to new economic conditions. Specialized small business technical assistance can build local economic development capacity, activate disinvested community spaces, and fill a missing link in the small business support ecosystem. Support for small businesses, particularly BIPOC-owned and women-owned businesses create a wealth-building path for marginalized groups who are often displaced and priced out from communities in transition which contributes to gentrification.
(f) Locally organized public and private entities committed and designated by their local governments to improve the economic, physical, and social health of their Main Streets and neighborhood districts need additional training and guidance to implement revitalization plans attuned to the current challenges of the marketplace.
(g) California currently offers separate programs to enhance the state’s cultural districts and individualized technical assistance to small businesses. There is not a program covering California’s Main Street communities, nor a program that links the ongoing work of historic and cultural districts that are providing place-based support for revitalization and maintenance of commercial districts with the existing network of over 100 small business technical assistance providers. Leveraging the preexisting relationships of historic and cultural districts with their small businesses provides a unique opportunity to aggregate potential borrowers and enhance SSBCI deal flow, while also strengthening local commercial corridors.
(h) It is the intent of the Legislature to establish a program within the California Business Investment Service Unit within the Governor’s Office of Business and Economic Development to expand the capacity of the network of historically and culturally significant commercial district entities, including Main Street communities and cultural districts, to provide place-based support to disadvantaged small business owners.

SEC. 2.

 Article 4.2 (commencing with Section 12096.540) is added to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code, to read:
Article  4.2. The California Historically Significant Commercial District Act

12096.540.
 This article shall be known, and may be cited, as the California Historically Significant Commercial District Act.

12096.541.
 For purposes of this article:
(a) “Capacity-building services” means services that enhance the capacity of historic commercial corridor revitalization entities to design and implement commercial corridor revitalization plans, including, but not limited to:
(1) Onsite assessments of program delivery capacity, deployment of current resources, and opportunities for leveraging other public and private programs to meet small business development needs and improve the overall entrepreneurial ecosystem within the historic commercial corridor.
(2) Training to increase the capacity of revitalization entities to provide small business training, counseling, and assistance that addresses the unique challenges and opportunities of being located within historic commercial corridors.
(3) Training on how to coordinate and partner with other public and private programs to enhance access to these resources for small businesses located in historic commercial corridors, including, but not limited to, the Small Business Technical Assistance Program (Article 7 (commencing with Section 12100.60)) and the State Small Business Credit Initiative.
(b) “Commercial district revitalization plan” means an economic strategy that includes economic development and small business assistance programs and services implemented by an eligible historic commercial district revitalization entity that includes all of the following:
(1) An assessment of the entrepreneurial ecosystem and prioritization of the needs and opportunities for small business development within the historic commercial district. This shall include specific data and information relative to historically underserved small business owner groups, including the capital needs of businesses owned by socially and economically disadvantaged individuals.
(2) Recommendations, where appropriate, for place-based improvements that are essential for a comprehensive assessment and strategy for the revitalization of the historically significant commercial district.
(3) A set of actions that can be implemented within the next two years by the revitalization entity to address those needs and priorities, including facilitating small business access to other public and private resources that enhance the entrepreneurial ecosystem within the historic commercial corridor. This shall include a specific set of place-based tools and assistance geared toward the needs of historically underserved business owners.
(c) “Cultural district” means a geographical area that is certified as a state-designated cultural district by the Arts Council to Chapter 9.2 (commencing with Section 8758) of Division 1. The cultural district shall be in active status pursuant to subdivision (c) of Section 8758, as determined by the Arts Council.
(d) “Eligible applicant” means a statewide nonprofit organization that specializes in the revitalization of historic commercial districts, including Main Street communities, and has the demonstrated ability to provide capacity-building services to eligible historic commercial corridor revitalization entities.
(e) “Eligible subgrantee” means as an eligible historic commercial district revitalization entity that successfully completes the capacity-building training and has a commercial corridor revitalization plan approved by the grantee, as authorized by this article.
(f) “Eligible historic commercial district revitalization entity” or “revitalization entity” means an entity that meets either of the following criteria:
(1) The entity is any of the following:
(A) A cultural district.
(B) A Main Street community.
(C) Interested in, or in the process of, being designated as a cultural district or a Main Street community.
(2) The entity meets both of the following criteria:
(A) The entity is a locally based nonprofit or division of a local government organized to conduct revitalization of a historic commercial district.
(B) The entity has a demonstrated history of conducting revitalization planning activities within a historic commercial district.
(g) “Entrepreneurial ecosystem” means policies, structures, and approaches to investment that play a role in supporting economic activity and business enterprise throughout the business lifecycle. Entrepreneurial ecosystems are distinct within the range of business development models due to the central role location and the physical environment play within the approach. Place-based entrepreneurial ecosystems refer to the strategic alignment of a variety of public and private efforts, including, but not limited to, education and training, funding and finance, human capital, community culture, and regulatory frameworks.
(h) “Historic commercial district” and “historically and culturally significant commercial corridor” mean a geographic area within this state that is a mixed-use, compact, walkable district and characterized by all of the following:
(1) Dense settlement.
(2) Contiguous blocks of zero-lot-line buildings.
(3) Buildings of varied ages.
(4) A predominance of large ground-floor storefront display windows.
(5) Multiple property ownership structures.
(6) Significant public and private capital investment.
(i) “Historically underserved business owners” mean businesses owned by women, people of color, individuals that identify as LGBTQ, and individuals who qualify as socially and economically disadvantaged individuals as defined in Section 5701(15) of Title 12 of the United States Code, and other business owners that have historically and systematically been disenfranchised from accessing public small business programs.
(j) “Main Street community” is defined as a public or nonprofit entity formed to support the revitalization and maintenance of a historic commercial district that has demonstrated a commitment to the following:
(1) Broad-based community commitment to the revitalization project, including municipal support.
(2) Inclusive leadership and organizational capacity.
(3) Diversified funding sources and sustainable program operations.
(4) Programming driven by a locally organized commercial district revitalization plan.
(5) Preservation of historic and cultural assets as part of the commercial district revitalization plan.
(6) Quantifiable impact assessment to demonstrate results.

12096.542.
 (a) Upon appropriation by the Legislature for the purposes of this article, the California Historically Significant Commercial District Program is hereby established for the purpose of revitalizing and maintaining historically and culturally significant commercial corridors throughout the state by funding technical assistance, training, and other activities that increase the capacity of revitalization entities to provide business assistance programs and services that meet the unique needs of small businesses that operate within historic commercial districts. The program shall be administered by the California Business Investment Services Unit within the office, in consultation with the Community and Placed-Based Solutions Unit.
(b) (1) One or more grants shall be awarded to eligible grantees who submit an application meeting the requirements of paragraph (2).
(2) An eligible applicant shall submit an application to the California Business Investment Services Unit that includes all of the following:
(A) Documentation that the applicant has the experience and capacity to provide technical assistance, training, and other services that increase the capacity of revitalization entities to use place-based tools to improve the entrepreneurial ecosystem to meet the needs of small businesses that operate within historic districts.
(B) An outline, including timelines, on how the funding will be used to meet the requirements and purposes of this article.
(C) Documentation that the applicant has the organizational capacity to monitor and report on the use of grant funds, including subgrants to eligible subgrantees.
(D) Other information, as required by the California Business Investment Services Unit.
(3) Training and education topics and uses of the grant by the grantee shall include, but are not limited to, all of the following:
(A) Onsite assessment and training of revitalization entities to develop capacity for implementation of commercial district revitalization plans.
(B) Facilitation of education to revitalization entities to increase local capacity to provide small business training and assistance. Educational topics may include any of the following:
(i) Connectivity to other state and local small business support resources and technical assistance, including, but not limited to, awardees of funds through the Small Business Technical Assistance Program (Article 7 (commencing with Section 12100.60)) and the Accelerate California: Inclusive Innovation Hub Program (Article 6.2 (commencing with Section 12099.1)).
(ii) Community engagement and community wealth-building to mitigate the potential negative impacts of gentrification.
(iii) Any of the following:
(I) Place-based business support services, including online marketing and e-commerce for businesses with physical storefronts.
(II) Enhancing physical environments of small businesses.
(III) Districtwide solutions, including promotions, shared-asset management, and public space activation.
(IV) Other training specific to the needs identified by small businesses within the historic commercial district.
(4) Grant funds shall be used by the grantee consistent with the requirements of this article, including both of the following:
(A) At least 40 percent of the total amount of the grant shall be used to provide capacity-building programs and services to eligible historic commercial corridor revitalization entities throughout the state. The grantee may, subject to limitations set forth in this article, use a portion of these funds to provide staff and other resources that support the grantee’s ability to organize training, technical assistance, and program expansion to communities interested in commercial corridor revitalization programs.
(B) At least 50 percent of the total amount of the grant shall be used for the provision of subgrants to eligible historic commercial corridor revitalization entities to implement actions in their approved commercial corridor revitalization plan.
(c) (1) The grantee, as a condition of receiving the grant, shall report on the performance annually. Reporting shall include, but not be limited to, outcomes from the training and technical assistance provided, including all of the following:
(A) The number of training events.
(B) The number of participants at training events.
(C) The number of unique community-based revitalization organizations trained.
(D) The number of new community-based revitalization organizations trained.
(E) The number of unique communities counseled.
(F) The number of subgrants awarded.
(G) The number of new or expanded partnerships and collaborations between revitalization entities and other resource providers during the report period. This shall include, but not be limited to, information provided by the subgrantees on other public and private resources that were accessed through the subgrantee’s activities.
(H) A narrative on how the funding enhanced the existing statewide network of organizations committed to the revitalization of historically significant commercial districts and the underserved small businesses located within these districts.
(I) A summary of the proposed and completed actions identified in the approved commercial corridor revitalization plans. This information shall begin to be reported in the first annual report following the approval of a plan.
(J) An aggregation of information provided by the subgrantees. This information shall begin to be reported in the first annual report following the first submittal of quarterly information from the subgrantees.
(K) Other information required by the office, consistent with this article.
(2) The subgrantees shall report on program performance quarterly and annually. Reporting shall include, but not be limited to, quarterly outcomes from the subgrants provided, including, but not limited to, all of the following:
(A) The number of businesses reached in person.
(B) The number of new businesses located within the commercial district.
(C) The number of hours of business counseling conducted.
(D) The number of referrals to other small business technical assistance providers.
(E) The number of full-time and part-time jobs created.
(F) The number of full-time and part-time jobs retained.
(G) The value of marketing assistance consistent with location in historic commercial district.
(H) The value of new technology adopted.
(I) The number, type, and value of other public and private resources accessed by small businesses through the activities of the subgrantee.
(3) No later than six months following the completion of the grant, the grantee shall submit a final outcomes report that shall include, but not be limited to, a detailed narrative description of how the funds awarded were used to expand the capacity of the statewide network of historic commercial corridor revitalization entities and to help underserved business owners and entrepreneurs within those districts to adapt new, place-based business strategies.
(d) (1) The grantee and any subgrantees shall provide matching funds of at least one dollar for each dollar of state funds received. Up to 50 percent of the match may be in in-kind services or resources.
(2) Grant funding shall be available to the grantee for a three-year period.
(3) Up to 5 percent of any program appropriation may be used by the office for administrative costs, including reporting.
(4) Up to 5 percent of a grant may be used by the grantee for administrative costs related to the organization of the training, technical assistance, and program delivery, including travel and technology.
(e) The Director of the Governor’s Office of Business and Economic Development may assign one or more of the duties or authorities provided in this article to another unit within the office or another state agency. Should any duties or authorities be assigned pursuant to this subdivision, as a condition of the assignment, all provisions of this article shall apply to the new entity.