Equitable Economic Development across California

Equitable Economic Development across California Report #271 | November 2022 Milton Marks Commission on California State Government Organization and Economy www.lhc.ca.gov LITTLE HOOVER COMMISSION Dedicated to Promoting Economy Pedro Nava and Efficiency in California State Chair Government Sean Varner Vice Chair The Little Hoover Commission, formally known as the Milton Marks “Little Hoover” Commission on California State Government Dion Aroner Organization and Economy, is an independent state oversight agency. David Beier Asm. Tasha Boerner Horvath By statute, the Commission is a bipartisan board composed of Cynthia Buiza five public members appointed by the governor, four public members appointed by the Legislature, two senators and two Anthony Cannella assemblymembers. Asm. Phillip Chen Bill Emmerson* In creating the Commission in 1962, the Legislature declared its Gil Garcetti* purpose: Sen. Dave Min ...to secure assistance for the Governor and itself in Sen. Jim Nielsen promoting economy, efficiency and improved services in the Janna Sidley transaction of the public business in the various departments, *Served on study subcommittee agencies and instrumentalities of the executive branch of the state government, and in making the operation of all COMMISSION STAFF state departments, agencies and instrumentalities, and Ethan Rarick all expenditures of public funds, more directly responsive Executive Director to the wishes of the people as expressed by their elected Tamar Foster representatives... Deputy Executive Director The Commission fulfills this charge by listening to the public, Krystal Beckham consulting with the experts and conferring with the wise. In the Ashley Hurley course of its investigations, the Commission typically empanels Sherry McAlister advisory committees, conducts public hearings and visits government Tristan Stein operations in action. Its conclusions are submitted to the Governor and the Legislature WITH GRATITUDE TO for their consideration. Recommendations often take the form of Rachel Mattioli legislation, which the Commission supports through the legislative process. Contacting the Commission All correspondence should be addressed to the Commission Office: Little Hoover Commission 925 L Street, Suite 805, Sacramento, CA 95814 (916) 445-2125 | LittleHoover@lhc.ca.gov This report is available from the Commission’s website at www.lhc.ca.gov. Table of Contents EXECUTIVE SUMMARY ......................................................................3 INTRODUCTION .................................................................................6 I. CALIFORNIA’S REGIONAL ECONOMIC DISPARITIES .................7 Regional Disparities ........................................................................................7 Regional Economies and Economic Opportunity ......................................10 II. INCLUSIVE REGIONAL ECONOMIC DEVELOPMENT ................12 Driving Regional Growth ..............................................................................12 Orienting Toward Inclusion .........................................................................17 Balancing Growth and Inclusion .................................................................18 III. INCLUSIVE REGIONAL ECONOMIC DEVELOPMENT INITIATIVES IN CALIFORNIA............................................................19 Fresno DRIVE (Developing the Region’s Inclusive and Vibrant Economy) .......................................................................................................19 Inland Economic Growth and Opportunity (IEGO) ....................................20 Lessons Learned ............................................................................................20 IV. STATE INITIATIVES ......................................................................24 Regions Rise Together ..................................................................................26 Community Economic Resiliency Fund (CERF) ...........................................26 Issues with CERF ............................................................................................28 Can This Time Be Different? .........................................................................32 V. COMMITTING TO EQUITABLE REGIONAL ECONOMIC DEVELOPMENT ................................................................................33 Prioritize More Disadvantaged Regions and Subregions .........................33 Provide Greater Clarity and Strategic Focus to CERF ...............................34 Increase Regional Capacity for Inclusive Development ..........................37 Improve State Coordination .......................................................................38 RECOMMENDATIONS ......................................................................41 APPENDIX .........................................................................................45 NOTES ...............................................................................................52 EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 1 Letter from the Chair November 17, 2022 The Honorable Gavin Newsom Governor of California The Honorable Toni Atkins The Honorable Scott Wilk Speaker pro Tempore of the Senate Senate Minority Leader and members of the Senate The Honorable Anthony Rendon The Honorable James Gallagher Speaker of the Assembly Assembly Minority Leader and members of the Assembly DEAR GOVERNOR AND MEMBERS OF THE LEGISLATURE: In the spring of 2022, the Little Hoover Commission launched a study to review California’s efforts to foster inclusive and sustainable regional growth. The following report details our findings and recommendations for lifting up the state’s less prosperous regions. The Commission found that over recent decades, California’s coastal cities have surged ahead while benefiting from the emergence of a globalized, technology-driven economy. Meanwhile, the state’s inland and rural regions—with less economic diversity and exposure to knowledge-based industries—have fallen behind. The Commission learned that California faces regional disparities in income, employment, and education attainment. In its report, the Commission identifies key steps that California can take to support inclusive regional economic growth and reduce regional economic disparities. Governor Newsom and the Legislature have taken notable steps in bolstering inclusive regional economic development, including through their $600 million investment in the new Community Economic Resilience Fund (CERF), which aims to support regional collaboratives as they work to develop and implement inclusive development strategies. However, CERF faces challenges with respect to scale, coordination, and balancing priorities that threaten its ability to significantly impact regional economies. To catalyze and sustain inclusive regional economic development, the Commission recommends that California prioritize resources for more disadvantaged regions and subregions, align funding and programs to facilitate regional development strategies, invest in regional capacity building, and ensure that regions balance the goals of growth and inclusion. The state’s investment in CERF—along with an unprecedented influx of state and federal funding—provides a critical opportunity to make substantial progress in tackling California’s regional disparities. The Commission respectfully submits this work and stands prepared to help you take on this challenge. Sincerely, Pedro Nava, Chair Little Hoover Commission 2 | LITTLE HOOVER COMMISSION Executive Summary California’s is a story of two economies. Over Inclusive Regional Economic recent decades, the economic trajectory of coastal Development Initiatives in metropolitan areas has diverged dramatically from California that of inland and rural parts of the state. As the knowledge-based economies of California’s coastal In recent years, stakeholder coalitions around metropolises surged forward, much of California was, California have launched initiatives, like DRIVE in in relative terms, left behind. Fresno and IEGO in the Inland Empire, that aim Today, significant disparities in income, employment, to promote more inclusive regional economic and educational attainment distinguish inland and development. rural California from the state’s coastal metropolises. These initiatives reveal critical elements for building In many parts of California, providing more inclusive and sustaining cross-sector regional coalitions and opportunity will require identifying and supporting for developing and advancing shared development new drivers for economic growth and for the creation agendas. of quality jobs. Economic growth and job creation are ◊ Data: Data is essential for identifying the not sufficient in themselves to address longstanding specific challenges facing regional economies, economic and racial inequities; they are, however, a determining which sectors provide the best necessary precondition for achieving more equitably prospects for creating quality jobs, and shared prosperity. establishing concrete goals around which to align Inclusive Regional Economic stakeholders. Development ◊ Leadership: Regional development initiatives require leaders who are willing and able to do In order to reduce regional economic disparities, the work of establishing and maintaining trusted less prosperous regions need inclusive economic relationships, resolving conflicts, and keeping development—they need both sustainable economic disparate stakeholders moving in a common growth and greater economic inclusion. direction. ◊ Building an Inclusive Table: Inclusive regional Regions can encourage economic development by development depends on convening a variety of building on regional strengths, supporting traded stakeholders around a single table. An inclusive sectors (those that sell goods and services outside process that incorporates both community the region), fostering innovation, encouraging groups and institutional stakeholders into the talent development, and developing public-private decision making process can be crucial for partnerships that move existing industries up bringing these different interests together. the value chain and advance emerging economic opportunities. ◊ Trust Building: At the core of inclusive development initiatives lies the difficult work Regions can also ensure that economic growth of building trust and common purpose among benefits disinvested communities by addressing potentially competing stakeholders. Regional barriers to opportunity, investing in community development strategies need to provide development, and working with organizations opportunity and space for interests to overcome that can help create pathways to training and distrust and arrive at better understanding. employment in quality jobs. EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 3 State Initiatives Committing to Equitable Regional Economic In conjunction with regional initiatives, the State of Development California is beginning for the first time to address regional economic development in a consistent Advancing the economies of less prosperous and comprehensive manner. The Regions Rise regions will require greater state leadership, long- Together initiative aimed to support regional term support for regional development, and more economic planning in parts of the state that have coordination of existing resources. California cannot not shared in the prosperity of California’s coastal expect regions to do all the work of aligning funding cities. With the new Community Economic Resilience and coordinating programmatic and regulatory Fund (CERF), state government is now poised to requirements. State government needs to direct invest $600 million statewide in support of regional resources to regions that need them the most, invest collaboratives that will develop and implement in regional capacity, facilitate regional development inclusive development strategies. strategies, and ensure that regions balance the goals Nevertheless, CERF faces several significant of growth and inclusion. challenges that may limit its ability to advance Recommendations regional economies. Recommendation 1: The Governor, Legislature, and ◊ Balancing Priorities: CERF commendably relevant state agencies should prioritize historically encourages regional development that disadvantaged regions for funding within CERF and balances economic growth, social equity, and related programs. environmental sustainability. Yet the program also encompasses a broad range of desired Recommendation 2: Policymakers should provide outcomes, without establishing clear precedence greater strategic clarity to CERF by focusing the among its various goals. The risk is that when program more clearly on the creation of quality jobs everything is a priority, nothing is. in sustainable industries with high growth potential ◊ Scale: CERF is a four-year, $600 million program. and on connecting members of disadvantaged Although this represents a significant investment communities with the quality jobs created. in regional economies, it is only a drop in the bucket compared to the investment required to Recommendation 3: State government should bend regional economic trajectories. Lifting up strongly encourage and support regional investment the economies of less prosperous regions will in traded sectors. Traded sectors drive regional likely require billions in funding over decades. growth. State government needs to encourage regions to focus their strategies specifically on these ◊ Coordination: Recent budgets include over $10 sectors. billion in one-time and continuing funding that can support regional development projects. This Recommendation 4: The Governor should further funding, however, is spread across 65 programs create a single, senior point of leadership for and investments and across 21 departments regional economic development, and the Governor, and agencies—with different requirements, Legislature, and state agencies should further regulatory frameworks, and administrative coordinate state funding and programs in support of processes. regional economic development strategies. 4 | LITTLE HOOVER COMMISSION Recommendation 5: California should build regional capacity to pursue inclusive regional economic development by dedicating ongoing funding for regional collaboratives and planning for how to structure and sustain regional collaboration after the end of CERF. Recommendation 6: The Legislature should allocate ongoing funding to better enable colleges and universities to act as leaders in regional economic development and improve alignment with regional economies. Recommendation 7: State policymakers should institutionalize the regular reporting of metrics relating to the health of regional economies and the extent of regional economic disparities. EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 5 Introduction If the San Francisco Bay Area were its own state, coalitions that are working to identify opportunities it would have the highest per capita income in the to advance regional economies equitably. United States. If the San Joaquin Valley were its With the new Community Economic Resilience Fund own state, its per capita income would be among (CERF), California is poised—for the first time—to the lowest.1 This is a point that state leaders and provide substantial state support for inclusive observers have repeatedly made in the past decade.2 regional economic planning and for regional It nevertheless bears repeating. California is home to economic development. CERF offers the opportunity some of the most prosperous, most innovative places to build on existing initiatives and catalyze more in the United States. It is also home to cities and inclusive and sustainable growth. Yet experience regions that feature rates of unemployment that are illustrates that regional development requires among the highest in the country and where incomes time, resources, and strategic clarity. Advancing significantly lag national averages. the economies of less prosperous regions will Regional disparities exist, of course, alongside require long-term support, more coordination of significant statewide inequality. Economic disparities existing resources, and greater state leadership and within regions, moreover, are larger than those facilitation. between regions. Yet addressing statewide This report examines the challenge of promoting challenges of economic and racial inequality requires more equitable economic development across attention to the regional dimensions of economic California. It looks at how state government can opportunity. Although regions across the state have promote economic development in regions that difficulty connecting disadvantaged communities have been “left behind” by the advance of California’s with opportunity, it is harder still in regions that knowledge- and technology-based economy and do struggle to produce well-paying jobs. For this reason, so in a way that promotes inclusive growth within California needs more equitable growth among those regions. Ambitious new state programs regions, as well as within regions. and initiatives, together with an unprecedented In recent years, state and regional leaders have availability of state and federal funding, provide a directed attention to economic divergence pathway toward addressing regional inequalities. among California’s constituent regions. They Successfully implementing development strategies, have highlighted and sought to address growing much less scaling them to the point where they disparities in income, employment, and opportunity will meaningfully change regional economies, will between coastal metropolises and inland and more require strong governance and ongoing commitment rural regions. Governor Gavin Newsom’s Regions at both the state and regional levels. This report Rise Together initiative aimed to support regional considers how state government can better provide economic development planning in parts of the state the leadership and coordination required to support that have not shared in the prosperity of California’s inclusive regional economic development. Although coastal cities. Meanwhile, regional initiatives have the report especially focuses on the San Joaquin begun to chart a path toward more inclusive Valley and Inland Empire, the Commission believes economic growth in parts of California that have, that the findings and recommendations will generally by some measures, lagged economically in recent be applicable to other inland and rural regions, decades. Fresno DRIVE, the Inland Economic Growth including the Redwood Coast, North State, Salinas and Opportunity (IEGO) initiative in the Inland Valley, and Imperial Valley. Empire, and other initiatives represent cross-sector 6 | LITTLE HOOVER COMMISSION I. California’s Regional Economic Disparities Defining ‘Region’ California’s is a story of two economies.3 This report uses the term region interchangeably to apply both to California possesses the world’s fifth largest metropolitan areas (which are defined by economy; it is a powerhouse of innovation and the commuting patterns of residents and birthplace to world-leading enterprises. The state is generally constitute a unified labor market, home to Silicon Valley and Hollywood. California’s and which research organizations like the manufacturing sector leads all other states in output Brookings Institution and Jobs for the Future and employment, while venture capital investments take as the basis for their analyses of regional in California far exceed those in any other state.4 economies) and to the specific regional California is also home to scientists and researchers designations instituted for purposes of the working on the frontiers of invention, whether it be CERF program.7 the next generation of battery technology or the future of space travel. Underlying these successes Defining ‘Equitable are California’s world-class university systems and Regional Economic strong state support for innovation, research, and Development’ development.5 This study understands equitable regional Yet this portrait of pathbreaking economic success economic development as economic is a story largely based on California’s coastal development that encourages inclusive metropolises. California’s inland and more rural growth among and within regions. It focuses regions have less exposure to the knowledge and on how California can encourage economic technology industries that have powered California’s growth in regions that have historically economy over the past decades.6 Their economies been less prosperous, thereby reducing are less diversified than those of coastal regions and economic disparities among regions. It many currently lack the economic drivers to create further considers how California can promote quality jobs at scale for residents. Inland and rural economic growth that leads to the closing regions are at once most impacted by climate change of racial disparities and the creation of and environmental pollution and most vulnerable greater prosperity within marginalized and to potential job losses from measures designed to disinvested communities.8 address climate change and improve environmental quality. REGIONAL DISPARITIES residents of these two cities faced dramatically The UC Berkeley economist, Enrico Moretti, observed different outlooks. In 2012, when Moretti described that, in 1970, the economic prospects for someone the contrasting fates of Menlo Park and Visalia, the born in Menlo Park and someone born in Visalia were average salary in Menlo Park was the second highest approximately the same. Both these communities in the United States and half of adult residents had a “had a mix of residents with a wide range of income college degree. In comparison, Visalia had the second levels,” and the differences in educational attainment lowest percentage of college-educated workers in the between the two were small. Three decades later, country and one of the lowest average salaries.9 EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 7 This economic divergence stemmed from large- technology jobs are in these four metropolitan scale trends in globalization and technological areas.12 change. These trends have tended to reward those Much of California was left behind as coastal cities metropolitan areas with strengths in technology and surged forward. Inland and rural economies have innovation, helping them concentrate investment, historically been less diversified than those of coastal high-quality jobs, college-educated talent, and metropolises. As a result, many parts of California economic dynamism. Meanwhile, these same trends struggled to overcome the post-Cold War decline in have tended to weigh heavily on other regions, defense spending and the subsequent loss of jobs hollowing out middle-skill jobs and leaving those in manufacturing. Job growth has disproportionately regions struggling to identify industries that can concentrated in industries like logistics, agriculture, drive economically and environmentally sustainable and retail, industries which tend to provide growth and provide quality jobs.10 relatively few quality jobs (in terms of providing a Over the last few decades, California’s coastal living wage and benefits or opportunity for career metropolises have benefited from the emergence of advancement).13 Construction drove growth in some a globalized, technology-driven economy. Although inland areas until the Great Recession, when portions Silicon Valley epitomizes the 21st-century high-tech of the San Joaquin Valley and Inland Empire were economy, other coastal areas have also prospered ground zero for the collapse of the housing bubble. as centers of innovation, investment, and dense More recently, logistics has propelled job growth in industrial clusters. In 2019, the Brookings Institution the Inland Empire and San Joaquin Valley, but this identified 20 “superstar metro areas” nationwide sector faces growing community, environmental, that dominate the country’s innovation economy and political backlash.14 Significantly, these inland and are home to most jobs in innovation industries. regions have tended to see significant economic and Four of these superstar areas were in California: San population growth in recent years, in part because Jose-Sunnyvale-Santa Clara; San Francisco-Oakland- of the arrival of families priced out of coastal areas, Hayward; Los Angeles-Long Beach-Anaheim; and but this growth has not translated into shared San Diego-Carlsbad.11 Ninety percent of California’s prosperity.15 Chart 1: Regional Per Capita Personal Income, 1970-2020 8 | LITTLE HOOVER COMMISSION As a result of these contrasting economic trajectories, capita personal income was about 35 percent below per capita incomes have diverged dramatically the statewide figure. Moreover, per capita personal between coastal and inland regions over the past income in these inland regions was about 60 percent four decades. In 1980, according to data from the lower than it was in San Francisco metro area (See federal Bureau of Economic Analysis, per capita Chart 1, page 8). personal income in the Fresno and Bakersfield Notably, per capita income in inland areas declined metropolitan areas and in the Inland Empire was not just relative to coastal California, but also relative approximately 10 percent below the statewide figure to the national average. In 1980, per capita personal and about 25 percent below per capita personal income in Fresno, Bakersfield, and the Inland Empire income in the San Francisco metro area. In early stood at about the national average; in 2020, per 2020, by contrast, per capita personal income in capita personal income in these areas trailed the Fresno was about 30 percent below the statewide national average by as much as 25 percent. figure; in Bakersfield and in the Inland Empire, per Chart 2: Share of Struggling Chart 3: Baccalaureate Families by MSA, 2019 Attainment by MSA, 2021 Merced Visalia-Porterville 64% Merced 14% 14% Visalia-Porterville Merced 60% Visalia-Porterville 16% 16% Bakersfield Salinas 60% Bakersfield 19% 19% Stockton-Lodi Bakersfield 60% Stockton-Lodi 20% 20% Riverside-San Bernardino-Ontario Fresno 56% Riverside-San Bernardino-Ontario 24% 24% Fresno Riverside-San Bernardino-Ontario 53% Fresno 24% 24% Salinas Los Angeles-Long Beach-Anaheim 53% Salinas 27% 27% National Average Stockton-Lodi 47% National Average 35% 35% Sacramento-Roseville-Arden-Arcade San Diego-Carlsbad 47% Sacramento-Roseville-Arden-Arcade 3 3 6 6 % % Los Angeles-Long Beach-Anaheim National Average 44% Los Angeles-Long Beach-Anaheim 3 3 7 7 % % San Diego-Carlsbad Sacramento-Roseville-Arden-Arcade 40% San Diego-Carlsbad 4 4 2 2 % % San Francisco-Oakland-Hayward San Francisco-Oakland-Hayward 39% San Francisco-Oakland-Hayward 5 5 2 2 % % San Jose-Sunnyvale-Santa Clara San Jose-Sunnyvale-Santa Clara 54% San Jose-Sunnyvale-Santa Clara 36% 54% 0% 10% 20% 30% 40% 50% 60% 0% 10% 20% 30% 40% 50% 60% 70% 0% 10% 20% 30% 40% 50% 60% Note: Percentage of families that struggle to cover their living Note: Percentage of population over the age of 25 with a Bachelor’s expenses. degree or higher. Source: Sifan Liu and Joseph Parilla, How Family Sustaining Jobs Source: U.S. Census Bureau, Table B15002, https://data.census.gov/ Can Power an Inclusive Recovery in America’s Regional Economies cedsci/table?q=Table%20B15002&tid=ACSDT1Y2021.B15002. (Brookings Institution, February 18, 2021), https://www.brookings. edu/essay/how-family-sustaining-jobs-can-power-an-inclusive- recovery-in-americas-cities/. EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 9 Today, inland and rural regions (with the exception of the Sacramento corridor) tend to have more struggling families, higher unemployment, and lower Comparing Regional educational attainment than coastal metropolitan Economic Well-Being areas: A number of data tools exist that can ◊ According to analysis from the Brookings provide perspective on the extent of regional Institution, in 2019, 53 percent of families with disparities. The Commission identified 11 children in the Inland Empire, 56.4 percent of data tools that measure and analyze the families with children in the Fresno metro area, well-being of regions and places in California and almost 60 percent of families with children in its issue brief, Using Data Tools to Compare in the Bakersfield metro area were struggling to Regional Economic Well-Being in California. cover living experiences. In contrast, 44 percent The brief also discusses how data tools can of families nationally were struggling and 39 provide different measures of regional well- percent were struggling in the San Francisco being and of regional disparities depending metro area (See Chart 2, page 9).16 on the metrics they use, how they delineate ◊ Unemployment in August 2022 (by metropolitan regions, and the timeframe they cover. statistical area) stood at 5.9 percent in Fresno, 6.7 percent in Bakersfield, and 16.2 percent in El Centro in Imperial County. Conversely, the unemployment rate was 2.8 percent in the San neighborhoods are low opportunity and the region Francisco area and 3.8 nationwide.17 faces significant racial gaps in income, wealth, and ◊ Among inhabitants over the age of 25, about education.22 24 percent in the Fresno metro area and in the Yet, in comparison to more prosperous coastal Inland Empire have a bachelor’s degree, while regions, these and other inland and rural regions face 18.6 percent in the Bakersfield metro area hold an additional challenge in connecting disinvested a bachelor’s. This compares to 52 percent in the and marginalized communities with economic San Francisco metro area, and a national average opportunity: how to create quality growth and quality of 35 percent (See Chart 3, page 9).18 jobs in the first place. REGIONAL ECONOMIES AND ECONOMIC OPPORTUNITY Critically, these regions’ economies tend to feature As the disparate impact of COVID and the pandemic a small share of jobs in what economists refer to recession illustrated, economic and racial inequality as “tradable sectors.” These are industries that sell is a statewide crisis.19 Like the rest of the state, goods outside the region, thus providing income that California’s less prosperous regions feature can help drive growth and wealth creation. Moreover, significant racial and economic disparities. In 2017, the tradable sectors in these regions—primarily Black and Latino residents constituted 58 percent logistics in the Inland Empire and agriculture in the of the Inland Empire’s population, but 71 percent of San Joaquin Valley—include industries that rely on people living in struggling families.20 In Bakersfield, relatively low-skilled labor and are vulnerable to 45 percent of Latino workers and 40 percent of Black automation, competition from other regions, and the workers struggle to make ends meet, compared to 25 impact of either climate change or efforts to mitigate percent of White workers.21 In Fresno, 70 percent of climate change. 10 | LITTLE HOOVER COMMISSION Remote Work, Tech Employment, and Regional Disparities With the COVID pandemic’s impact on traditional patterns of work, some state and national commentary has focused on the possibility that the rise of remote work might help reduce regional economic disparities by counteracting the concentration of high-quality jobs in a handful of metropolitan centers. In particular, commentators have looked at the potential for remote work to enable regions outside coastal tech centers to attract a higher share of technology jobs.23 Significant uncertainty surrounds what the future of work—and of remote work—looks like.24 The Brookings Institution reports that the COVID pandemic seems to have indeed encouraged some growth in tech employment in a wider range of places. According to a recent Brookings study, there was a decline in the rate of growth in technology jobs in dominant tech centers like San Francisco and Los Angeles in the first year of the pandemic and slight increases in the growth rate for technology jobs in many other metro areas nationally.25 However, the wider diffusion of technology jobs does not appear poised to bring significant advantages to more disadvantaged regions in California. Inland California cities like Stockton, Fresno, and San Bernardino experienced little gain in tech employment.26 Instead, the beneficiaries were Sun Belt cities and prominent university cities in other states, as well as amenity-rich vacation towns, like Santa Barbara. The rise of remote work was also not a panacea for the places attracting remote workers. In many places, the arrival of high-wage remote workers has been associated with increasing housing costs, putting pressure on existing residents.27 In addition, while the arrival of high-wage remote workers may increase demand for local businesses, the possibility of remote work in itself does not necessarily make it easier for individuals in more disadvantaged regions to access those high-wage jobs. This is a key reason why California’s inland and capita income, of 384 MSAs, we drop to 290th. And more rural regions struggle to produce quality, well- it’s really because we don’t make anything. We move paying jobs for their residents. The Fresno DRIVE everything, but we don’t make anything. And in the investment plan observes that only 29 percent of long term, unless we change that, this is going to be Fresno’s economic output comes from exportable an ongoing issue for this region.”29 sectors, compared to the U.S. average of 51 percent, In many parts of California, achieving greater a situation which weighs on average wages and prosperity and providing more inclusive opportunity reduces the region’s growth potential.28 Meanwhile, will require identifying and supporting existing and Paul Granillo, President and CEO of the Inland Empire emerging industries that can act as drivers for growth Economic Partnership, observed regarding the Inland and the creation of quality jobs. Such economic Empire: “We are the 12th largest MSA (metropolitan development on its own will not be sufficient to statistical area) by population…but if you look at per EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 11 address longstanding racial disparities or ensure does not provide shared prosperity or opportunity. that disinvested neighborhoods have access to Instead, Gootman continued, “[Economic success] opportunity. As discussed below, community has to have two other dimensions. One is about development and strategies to address barriers to prosperity: the productivity of firms in order to access are an inherent part of inclusive development generate higher value activities and therefore higher initiatives. Yet, if growth and job creation are not value jobs. And then it’s inclusion: who is able to sufficient to address longstanding inequities, they access jobs and maximize their potential.”33 are probably a necessary precondition for achieving greater inclusion and more equitably shared “You can have economic growth prosperity. As Marek Gootman, a senior fellow at the without inclusion, but you Brookings Institution who has worked with regional development initiatives in California, advised the cannot have inclusion without Commission, “You can have economic growth without growth.” - Marek Gootman, inclusion, but you cannot have inclusion without growth.”30 Senior Fellow, Brookings Institution II. Inclusive Regional Economic Development DRIVING REGIONAL GROWTH In recent years, various national research and Regional economic development strategies have policy organizations have observed that the traditionally focused on deploying tax or other American economy faces twin challenges: growing financial incentives to attract businesses to a economic disparities between regions and a lack region.34 More recently, however, researchers have of inclusive growth within regions. A number of argued that rather than focusing principally on regions around the United States have responded attracting businesses and jobs, regions can better to these challenges by launching initiatives that encourage economic development by building a aim simultaneously to advance regional economic regional ecosystem that enhances competitiveness, development and achieve more inclusive growth productivity, and the ability of regional businesses to that closes racial and neighborhood disparities. The grow. Brookings Institution, the Urban Institute, Jobs for the Future, and other organizations have established a The Brookings Institution has identified five growing library of reports that study these initiatives components that underlie the economic success of and document promising strategies for promoting regions.35 The first three of these factors are drivers inclusive regional economic development.31 of regional economic growth: Traded Sectors (which bring money into the region and tend to lead to Inclusive regional economic development means growth in productivity and innovation); Talent (the different things to different people. However, pool of knowledge, skills, and expertise in a region, a shared theme behind different ways of as well as the region’s ability to provide residents conceptualizing the term is the understanding with in-demand skills and training); and Innovation that economic growth alone is not enough. Marek (which supports business creation, the development Gootman explained, “Economic success cannot of new products and services, and helps make be defined simply as growth.”32 The experience of improvements in productivity possible). The other the last few decades has shown that growth alone two factors are enablers of regional economic 12 | LITTLE HOOVER COMMISSION The Regional Economic Development Toolbox States and regions have an extensive toolbox of approaches and interventions that they can deploy to encourage investment, job creation, and the advancement of key industries. Incentive programs nationally receive the largest share of dollars for regional economic development. Research suggests, however, that tax benefits and other incentives focused on business attraction tend to feature a high cost per job created and often subsidize jobs that would have been created anyway.36 Nevertheless, incentives may be more effective if targeted toward more distressed job markets. Other interventions and strategies appear to provide more promising and cost-effective approaches for encouraging regional economic development.37 These include: ◊ Industrial Cluster Strategies—Cluster strategies aim to establish a geographic concentration of closely-related companies and organizations that benefit from their proximity to one another. Although cluster approaches are now ubiquitous, successful implementation of cluster strategies tends to be rarer and there is debate about the effectiveness of cluster strategies compared to other approaches to support regional economic development. The development of industrial clusters requires sustained cross-sectoral collaboration and significant commitment in time and money, but has potential to transform regional economies.38 ◊ Business Support—A range of interventions exist to support both new and established business enterprises. These include incubators and accelerators, as well as programs, like manufacturing extension services, that help businesses adopt new technologies and process innovations. Timothy Bartik, an economist with the Upjohn Institute, observes, “Advice is cheap. But if the advice is high- quality, effects on job creation can be high relative to costs.”39 ◊ Job Training—Small- and medium-sized enterprises are key drivers for job creation, but they often do not have the staffing to train workers. Customized job training can increase productivity and lead to benefits that significantly outweigh costs.40 In previous studies, the Commission identified opportunities to improve alignment between training programs and industry. These kinds of supports and interventions already exist in many parts of California, in the form of state-supported Innovation Hubs (like the Water, Energy, and Technology (WET) Center at California State University, Fresno and UC Riverside’s Opportunities to Advance Sustainability, Innovation, and Social Inclusion (OASIS) initiative), university-sponsored incubators and accelerators (like UC Riverside’s ExCITE incubator), and community college supported training centers (like Chaffey College’s InTech Center). Regional strategies and collaborations can help to direct more resources to existing programs and also help align programmatic assets around common priorities.41 In addition to these interventions and strategies, economists and economic development practitioners observe that addressing regional infrastructural needs (including around goods movement, transportation, and broadband) can be critical to advancing regional economies.42 EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 13 growth: Infrastructure (which makes it possible for residents to connect to jobs and allows employers to Defining Economic connect to workers, customers, and suppliers); and Development Governance (which determines the ability of regional institutions to deliver on a common economic and Community development agenda). Development According to Brookings, encouraging quality growth This report understands economic requires addressing all these factors, thereby development as focused on wealth creation cultivating a regional ecosystem that promotes and on increasing the capacity of individuals, job quality and access, productivity, and regional firms, and communities to produce competitiveness. Regional leaders have an extensive goods and services and to innovate.44 It toolbox of interventions for building on these understands community development as components and advancing specific development focused on building stronger and more priorities (See Box on page 13), including industrial resilient communities, especially through cluster strategies, job training and upskilling place-based efforts to improve the quality programs, the creation of business incubators and of life in neighborhoods.45 Economic and accelerators to support entrepreneurship, and the community development are thus closely establishment of university extension services that interrelated but distinct. Melissa James, link regional businesses to applied research. President and CEO of the Regional Economic Action Coalition (REACH) initiative on the With respect to designing and implementing Central Coast, helpfully differentiated strategies for regional economic development, economic and community development as there is no foolproof recipe for success. Regional follows: “Economic development is about development initiatives frequently end in failure building wealth; community development or disappointment. The success of development is about how wealth is deployed in the initiatives depends on a range of factors, including community.”46 strong leadership (especially from both political and business leaders), adequate funding, clear strategic priorities, ability to align investment and stakeholders around those priorities, and commitment to pursuing strategies long enough for them to bear fruit—not to Mayor of Fresno and current President and CEO of mention luck.43 the Central Valley Community Foundation, observed that among local and regional policymakers, “We Nevertheless, witnesses identified foundational often just are completely blinded by the idea that a elements for regional economic development that job is a job is a job. From an economic development generally appear to be critical for increasing regional standpoint, that’s simply not the case.”47 Jobs in growth, productivity, and competitiveness. traded sectors tend to provide higher wages than jobs in nontraded sectors and, because traded Focus on Traded Sectors sectors bring money into the region, they have a Witnesses emphasized that development strategies strong multiplier: growth in traded industries helps can best advance regional economies by focusing to fuel local economic activity and thus support on tradable sectors. Ashley Swearengin, the former additional job creation in local serving sectors.48 14 | LITTLE HOOVER COMMISSION Regional Economic Strengths and Opportunities Inland and rural regions possess economic strengths and areas of competitive advantage that can act as the basis for regional economic development strategies. Egon Terplan, former Senior Advisor for Economic Development and Transportation at the California Strategic Growth Council, observed, “Future economic success will require tailoring strategies for the distinctiveness of each regional economy.”49 Market assessments for some regional economic development initiatives have identified key industry sectors and subsectors that may be able to drive regional economic growth and increase regional economic competitiveness. According to these market assessments, the following are some of the areas of regional opportunity that, with investment and leadership, could serve as future growth engines and sources of quality jobs, including at the middle-skill level: ◊ Fresno—Advanced agricultural production; green manufacturing50; and business services, including second office operations.51 ◊ Inland Empire—Sustainable logistics; advanced manufacturing; cybersecurity; and green technology. Lithium recovery from the Salton Sea, if demonstrated to be feasible, could also provide an opportunity to develop regional supply chains for the production of batteries and zero-emission vehicles.52 ◊ Bakersfield and Kern County—Renewable biofuels; carbon capture and storage; aerospace; advanced manufacturing, especially with respect to regional strengths in energy production; and business services, including second office operations.53 ◊ Stanislaus County—Bioindustrial manufacturing (including biofuels); food manufacturing; the nascent circular economy; modular and prefabricated housing; and agricultural equipment manufacturing.54 Market assessments also observe that regions would generally benefit from supporting small businesses and entrepreneurship, especially in communities of color. Although business dynamism varies among regions, connecting both young and small businesses with capital, knowledge transfer, innovation assets, workforce training, and other supports is likely to foster entrepreneurship and encourage job creation across regions.55 Moreover, traded sectors serve a market that also tend to drive regional gains in productivity extends beyond regional boundaries and they and innovation.56 In 2018, the OECD reported that consequently have potential for significantly higher a key characteristic of those “lagging” regions in rates of growth than are possible for local serving Europe that were catching up with their country’s industries. Since businesses in traded sectors must economically leading regions was that tradable compete across regional boundaries, these sectors sectors accounted for a growing percentage of their EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 15 output, while those regions that were not catching up higher share of jobs that pay a living wage or offer had not seen an increase in tradable sectors’ share of the possibility of career advancement.60 regional output.57 “[The work] needs to be Local serving sectors are important: they constitute the majority of jobs within regions. Retail and grounded in an aspiration about restaurants provide neighborhood vitality, while what’s possible. Thinking ten healthcare is an increasingly significant provider of middle-skill jobs. Yet these sectors do not drive years out and working back. regional growth; they circulate money within Looking at existing strengths.” the region, rather than bringing money into it. - Lenny Mendonca, former Chief Consequently, Marek Gootman advised, “The emphasis on economic development has got to be Economic and Business Advisor these traded sectors in order to have the greatest to Governor Newsom impact.”58 Build on Regional Strengths Work through Cross-Sectoral and Public-Private Partnerships Witnesses observed that regions have the best chance of driving economic growth and generating Regional development initiatives require partnership quality jobs by building on and maximizing existing between the public and private sectors. Witnesses economic strengths, assets, and opportunities. testifying before the Commission emphasized that Lenny Mendonca, former Chief Economic and economic development requires collaboration Business Advisor to Governor Newsom, advised the among industry, local and regional government, and Commission that strategies need to balance between anchor institutions, like colleges and universities.61 identifying aspirational goals and being grounded Brookings researchers have observed that such in reality: “[The work] needs to be grounded in public-private partnership is especially important an aspiration about what’s possible. Thinking ten for industry cluster initiatives, the most successful years out and working back. Looking at existing of which tend to be: “Industry-driven, university- strengths.”59 Regions will not create a new Silicon fueled, government-funded.”62 That is, they are led Valley—and they should not try. by businesses that believe they will benefit from collaboration and by individuals who understand Instead, regions can make investments in research long-term industry trends, and they further leverage and development and in innovation with the goal both government catalytic funding and the capacity of moving existing industries into higher value-add of research universities to support innovation, talent activities that can support the creation of quality development, and firm creation. Beyond successful jobs. They can also identify opportunities to build cluster initiatives, public-private partnership also on regional assets and competitive advantages to appears critical for implementing broader strategies diversify into emerging industries with potential to to advance regional economies. advance the regional economy. Along these lines, the Brookings Institution has advised regions to focus Witnesses noted that within cross-sector development efforts on their existing or emerging partnerships, a strong element of industry “opportunity industries,” which are those that tend leadership is essential, since it is the success and to feature a higher share of middle-skill jobs and a 16 | LITTLE HOOVER COMMISSION Higher Education and Regional Economic Development Policymakers often frame investments in higher education institutions and in university research and innovation as a form of economic stimulus.63 Yet researchers advise that the impact of institutions of higher education on regional economies can vary dramatically. Investments in new facilities and in expanding institutions of higher education will contribute to local and regional economic activity. Colleges and universities are, after all, sources of employment, and the construction of new facilities will temporarily inject money into the local economy. Regions will also benefit from a better educated labor force, though the extent of that benefit will depend on how much demand exists in the region for more graduates and whether training correspondents to regional employers’ needs.64 However, researchers suggest that universities’ most significant impact on regional economies comes through localized knowledge spillovers—the transfer of productivity-enhancing knowledge from universities to regional employers. This is the mechanism by which universities can enhance the productivity and competitiveness of regional businesses, support the development of regional industry clusters, and encourage the creation of startups and new enterprises, thereby stimulating demand for regional human capital.65 Researchers observe that for such knowledge spillovers to benefit the regional economy, there must be sufficient industrial concentration to take advantage of them. Without a relevant industry concentration or cluster in the area, the benefits of innovative research, together with new graduates with relevant skills, will flow to places where there is demand for those skills and for that knowledge.66 This suggests that investments in university research and innovation (as with investments in job training and career education) will have the greatest economic impact if they align closely with existing or emerging regional industries. Successful examples of regional economic development initiatives, like those focused on diversifying the economies of Albany, New York and Pittsburgh, Pennsylvania into high technology, tend to feature substantial partnership between institutions of higher education and industry, with universities acting as leaders in advancing regional economic development agendas.67 competitiveness of regional businesses that will drive ORIENTING TOWARD INCLUSION regional growth and generate higher quality jobs for Although economic growth is vital for fueling job residents. Examples of public-private partnership creation, economic development on its own does within economic development include interventions not necessarily benefit underserved and disinvested that aim to build closer relationships between communities. “Where in the world,” Ana Gutierrez, industry and research institutions (often with the Senior Director at Jobs for the Future, asked, “do you goal of facilitating research and development and find inclusion, when the focus has been on growth encouraging the transfer of knowledge) and to better alone?”69 align career training with industry needs.68 EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 17 Inclusive growth advocates call for orienting disinvested communities access jobs and training economic development toward inclusion. They opportunities.74 Regional initiatives can also help further argue that growth and inclusion are not community organizations connect with funding contradictory.70 Greater inclusion can help fuel and support. As Cassandra Little, CEO of the greater growth overall by expanding regional Fresno Metro Black Chamber of Commerce, markets, increasing the pool of regional talent, observed, “Those closest to the problem are and addressing the structural and systemic factors closest to the solution, but often farthest from that can weigh on regional economic potential.71 the resources.”75 Achieving greater inclusion, however, requires ◊ Strategies can support minority- and women- deliberate and intentional planning to ensure that owned businesses through investment and marginalized and disadvantaged communities are technical support, and through efforts to better able to share equitably in growth and in job and connect these small businesses with regional wealth creation. growth drivers.76 Researchers suggest a range of strategies that can ◊ Inclusive economic development strategies help regions orient economic development toward can look at where economic and community inclusion: development intersect. Disparities in transportation, education, housing, and access ◊ Economic development organizations can to childcare act as barriers to employment change how they evaluate the success of their and wealth creation, and undermine a work. Traditionally, economic development region’s potential for growth by reducing its practitioners have focused on metrics like job pools of talent and entrepreneurs.77 Inclusive counts and dollars invested. Under an inclusive development strategies may include support economic framework, economic developers for place-based and community-building might also look closely at job quality and interventions that connect disinvested accessibility, or the reduction of racial disparities, neighborhoods to opportunity, whether through when evaluating development opportunities.72 education, training, transportation, or other Lee Ann Eager, President and CEO of Fresno services. County Economic Development Corporation BALANCING GROWTH AND INCLUSION (EDC), explained that the EDC has started to Generating shared prosperity thus requires that consider social impact and sustainability in its regions attend to both growth and inclusion. Yet business attraction work, “We don’t want to be there is tension between the two. In part, this the place that will take any business that will stems from the fact that policy discussions about come. We got into the crisis we’re in because, addressing inequality and insecurity usually occur historically, we didn’t care who we were attracting separately from those that focus on productivity, to the region: a job was a job.”73 innovation, and economic growth.78 Moreover, these ◊ Inclusive development strategies can expand separate discussions generally employ different engagement with communities and with terminologies, involve different agencies, attract community stakeholders, especially by including different constituencies, and focus on different community leadership in the decision-making geographic levels.79 process. Regional initiatives can work with community-based organizations to create Economic development and community development pipelines and pathways that help members of priorities can differ. Community members may, 18 | LITTLE HOOVER COMMISSION understandably, want to prioritize investments in and Opportunity (IEGO) in the Inland Empire; Kern neighborhood jobs. Karen Suarez, Director of Uplift County’s B3K (A Better Bakersfield and Boundless San Bernardino and Co-Chair of the IEGO initiative, Kern); Regions Rise Together: Salinas in the Salinas observed, “Some of the greatest obstacles we have Valley; and Stanislaus 2030 in Stanislaus County. in ensuring economic prosperity for all is the lack Although regional economies vary considerably of investment in specific neighborhoods.”80 Yet, as and regions face distinct challenges, there are key Marek Gootman noted, a regional development features that are common across these initiatives. strategy that is looking to create quality jobs at scale They arose out of concerns over growing inequality and advance the economy at a regional level may not and lack of quality jobs, and from questions about be able to bring jobs into particular neighborhoods. how to advance regional economies and expand According to Gootman, “You can’t bring the economic opportunity. Most built on the ongoing economy into neighborhoods. You have to connect work of civic leaders and regional organizations neighborhoods into where the economy works, associated with the California Stewardship Network, which is the region.”81 There will be times when an alliance of regional leaders pursuing triple- regional leaders and stakeholders will need a clear bottom-line solutions (that is, focused simultaneously conception of whether their priority at a particular on environmental sustainability, social equity, and moment is economic development or community economic growth) to regional challenges. Many development. also included partnership with the Brookings Ultimately, regions will likely need to invest both Institution’s Metropolitan Policy Program, which has in communities and in long-term strategies for been studying, working with, and advising regional economic growth, and carefully balance the goals development initiatives around the country. of growth and inclusion.82 They will need to work to Two of these initiatives are especially notable given simultaneously create economic opportunity and this report’s focus on regional disparities: Fresno eliminate barriers to that opportunity. They will also DRIVE and IEGO. These initiatives helped to inspire need to determine how to integrate and combine the state’s Regions Rise Together initiative. Moreover, the distinct but interrelated investments and development initiatives in Kern County and interventions required to advance both communities Stanislaus County have drawn on DRIVE as a model. and the regional economy. FRESNO DRIVE (DEVELOPING THE REGION’S III. Inclusive Regional INCLUSIVE AND VIBRANT ECONOMY) Economic Development DRIVE is a 10-year investment plan for developing an Initiatives in California inclusive and sustainable economy for the greater Fresno region.83 DRIVE formally launched in 2019 In recent years, a number of stakeholder coalitions and is spearheaded by the Central Valley Community around California have launched initiatives to Foundation. In that year, with support from McKinsey promote more inclusive economic development & Company, the Brookings Institution, the Urban within their regions or metropolitan areas. These Institute, and Jobs for the Future, and with an initial include: San Diego’s Inclusive Growth Initiative; grant from the Irvine Foundation, the DRIVE coalition Sacramento’s Prosperity Strategy; REACH (Regional completed a development plan that outlines a $4 Economic Action Coalition) on the Central Coast; billion investment over 10 years aimed at supporting Fresno DRIVE (Developing the Region’s Inclusive economic development, building human capital, and Vibrant Economy); Inland Economic Growth and encouraging neighborhood development.84 EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 19 This plan was the product of input from over 300 enough quality jobs to produce broadly shared representatives from over 150 civic, community, and prosperity.89 IEGO builds on this initial collaboration industry organizations.85 and is working to create a more inclusive and resilient regional economy by establishing the Inland The DRIVE investment plan identifies 18 Empire as a global hub for innovation in sustainable constituent initiatives. These include: developing logistics, expanding advanced manufacturing, and a Fresno-Merced Future of Food Innovation encouraging job growth in cybersecurity and green corridor; creating K-16 educational pathways and technology.90 upskilling opportunities; supporting minority- and women-owned small businesses; building LESSONS LEARNED wealth in communities of color; expanding Inclusive regional economic development depends permanent affordable housing; and revitalizing on bringing different stakeholders together, Fresno’s downtown area.86 This range of balancing potentially competing interests, and initiatives underscores DRIVE’s awareness of the developing a shared agenda for promoting economic interconnected nature of the challenges facing the growth and addressing barriers to opportunity. Lenny regional economy, and of the need to address these Mendonca advised that initiatives need to bring to challenges in an integrated manner. Lindsay Fox, the table government entities, anchor institutions President and CEO of United Way Fresno and Madera (including institutions of higher education), business, Counties, related, “We realize that we have to move labor (whether organized or worker voice), and quickly and bring the pieces together.”87 A $15 million community advocates. He emphasized, “It needs to grant from the Irvine Foundation has allowed DRIVE be one table.”91 to begin implementation of five of the constituent The experience of DRIVE and IEGO illustrates several initiatives (See Box on page 21), while other DRIVE key lessons for building and maintaining inclusive elements, including the Future of Food Innovation regional coalitions, bringing stakeholders around a initiative, have separately received state and federal common table, and sustaining conversation among funding.88 them. INLAND ECONOMIC GROWTH AND OPPORTUNITY (IEGO) Data IEGO is a cross-sector collaboration, anchored Data is key. Data can help regions identify the specific by the Inland Empire Community Foundation, of challenges facing their economies and residents. more than 50 organizations—including regional Data can also help regions determine which government, businesses, institutions of higher industries and sectors provide the best prospects education, community organizations, and other for creating quality jobs, what specific barriers stakeholders—working to grow middle-class jobs prevent disadvantaged communities from accessing and encourage inclusive economic development in economic opportunity, and what kinds of policies and Riverside and San Bernardino Counties. This initiative programs can help address those barriers. As Lenny emerged out of a collaboration in 2016 between Mendonca noted, “When you are grounded in reality, regional leaders and the Brookings Institution that you can move forward.”92 aimed to study and address a key challenge facing the regional economy: although the Inland Empire’s New data on the economic conditions of regions economy and population grew rapidly following has played a critical role in helping to get economic the Great Recession, this growth did not generate development initiatives moving. In Fresno, data 20 | LITTLE HOOVER COMMISSION Fresno DRIVE Initial Initiatives In 2020, the DRIVE coalition selected five initiatives for initial piloting and implementation. 1. Civic Infrastructure for Low-Opportunity Neighborhoods—This DRIVE initiative works with nonprofits in low-opportunity areas to engage residents in community development and in training for community building. Tania Pacheco-Werner, Co-Director of the Central Valley Health Policy Institute and one of the leaders of DRIVE’s civic infrastructure work, summarized the goals of this initiative: “It’s about having the community shape how development happens. It’s also about helping the community learn to navigate the system and how to build the social capital they need to raise themselves up and access opportunities.”93 2. Betting Big on Small Businesses Owned by Women and People of Color—This DRIVE initiative is led by the Fresno Metro Black Chamber of Commerce and expands its Fail Fast Incubator. This incubator provides technical assistance and mentorship for women and minority entrepreneurs, including support in developing tailored business plans and connecting with investors.94 3. Wealth Creation in Communities of Color—This initiative aims to help families in communities of color build generational wealth. It includes trainings in financial literacy and prosperity coaching, as well as the development and piloting of a Community Investment Trust that will enable community ownership of community assets, thereby building ownership in the community and shaping the direction of investment in it.95 4. Second Office Fresno—Second Office Fresno aims to attract companies and private sector employment to the Fresno region. One element of this broader initiative centers on Fresno’s Impact Economy and on shifting traditional business attraction strategies from a focus on job counts and project costs toward evaluating the community and social impact of businesses. Fresno County EDC is working with both the Harvard Business School and community members to develop an Inclusive Community Scorecard that evaluates employers’ overall impact based on metrics like employment equity, environmental impact, and job quality. The intention is that this tool can help determine which enterprises receive public incentive dollars, as well as influencing employer decision making.96 5. Upskilling—Career Nexus is an initiative led by the Fresno Business Council that connects unemployed and underemployed young adults with career pathways and work-based learning through high-quality paid internships.97 The program provides soft skills training and mentorship to interns while also working with employers to help them understand where interns are coming from. Genelle Taylor Kumpe, COO of the Fresno Business Council, emphasized the two-way engagement that Career Nexus encourages, “It’s great to see employers learning, and learning to meet people where they are, and have interns learn about skills and about being in a workplace.”98 EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 21 from the Urban Institute, which showed that Fresno about the regional economy and arrive at consensus ranked last among 59 California cities for racial regarding promising paths forward. To this point, Mr. and economic inclusion, amounted to a “sucker Avila recommended that regions pursue co-designed punch” that helped bring key regional power-holders studies of regional economies that incorporate and stakeholders to the table. Ashley Swearengin disinvested communities’ input and perspective.103 explained, “Data has been absolutely central to our Leadership discovery process as a community and uncovering layers of inequitable economic opportunity. It caused Leadership is essential. Inclusive tables do not form an about-face for our institutions, many of whom— on their own. Instead, Lenny Mendonca explained myself included—have been working for 20 years on that regional development initiatives need to what we had believed to be institutional reform.”99 In be convened, “by someone with the credibility, other regions, data has helped to establish concrete energy, and resiliency to pursue this over the goals, metrics, and vision around which to align time frame that it is going to take and ensure stakeholders.100 Marian Kaanon, President and CEO that [the] players are all at the table and having of the Stanislaus Community Foundation, reported open and honest conversations.”104 Inadequate that research showing that Stanislaus County leadership is a key reason for the failure of regional needs to create 40,000 quality jobs to halve the development strategies, which require someone share of children in struggling families has created or some institution to maintain strategic focus and a more concrete conversation about economic sustain cooperation and coordination both among development, helping to move county leadership and governmental agencies and institutions and across stakeholders.101 stakeholder groups.105 Yet, if data can help build awareness and consensus, In Fresno, DRIVE participants universally note the participants in regional initiatives also pointed to pivotal role that Ashley Swearengin played in getting instances when data contributed to dissension DRIVE off the ground and keeping the initiative because groups disagreed on how to interpret moving forward in a unified way. Ms. Swearengin data or found that it did not reflect their reality. remarked regarding the challenges of sustaining Alex Avila, co-founder of the Black Brown Economic a large coalition, “Even on good days, I think half Empowerment Partnership and of the Inland Empire the coalition quits, and on bad days the other Multicultural Collective and a participant in IEGO, half quits.”106 Committed participants are vital to reported that initial presentations to community keeping initiatives going, but initiatives also need groups of Brookings’ findings on the Inland Empire’s conveners and leaders who are willing and able to economy were not successful, since those findings, do the hard work of building and maintaining trusted as presented, did not seem to reflect communities’ relationships, keeping disparate stakeholders moving lived experience.102 There needs to be a shared in a common direction, carrying out mediation and understanding of the definitions and parameters of conflict resolution, and finding ways to integrate the data under consideration. diverging priorities.107 Data is critical for evaluating the state of regional Building an Inclusive Table economies and identifying regional economic strengths and weaknesses. Data collection and A critical lesson from initiatives is that an inclusive analysis are also, however, just the starting points for process can be crucial for bringing different groups a process that aims to build shared understanding around a single table. As discussed below, there 22 | LITTLE HOOVER COMMISSION is often limited trust between community groups build a more inclusive coalition. Mr. Avila explained, and institutional stakeholders. An inclusive process “We went into the relationship looking for failure, that brings communities into the decision making looking for another gimmick.”112 Nevertheless, he process can help build trust and create the space for related that IEGO’s leaders showed themselves to be developing a common agenda. committed to a more inclusive process, including by incorporating community organizations’ suggestions An inclusive process has helped to build and sustain into the initiative’s application for the U.S. Economic the DRIVE coalition. Many DRIVE participants Development Agency’s Build Back Better Regional reported initial skepticism regarding the effort. Challenge grant competition and by affirming these Would it be another initiative that promised organizations’ importance to the coalition. For Mr. inclusion, but did nothing to advance racial equity? Avila, these actions were key to gaining confidence However, DRIVE built trust and gained buy-in by that IEGO’s leadership was genuinely committed responding to community stakeholders’ input and to working ‘with’ community organizations and by prioritizing initiatives that support investments in communities of color as equal partners: “Not only underserved and disinvested communities. Several are they taking our ideas into consideration, they’re participants further observed that DRIVE’s willingness also defending us and working with us. Who does to emphasize racial equity has been vital to building that?”113 Ms. Decker and Jackie Melendez, Executive trust and showing that this initiative is different from Director of IEGO, confirmed that expanding top-down economic development projects of the community participation and integrating economic past.108 As Lindsay Fox, one of the leaders of DRIVE’s and community development are now priorities for work around building wealth in communities of color, IEGO.114 observed, “Look at the name of our workgroup… It’s about generational wealth very specifically for Trust Building communities of color. And that is a huge, huge The power and potential of initiatives like IEGO and difference.”109 DRIVE lies in bringing together stakeholders across Conversely, IEGO began as a partnership that sectors and silos. At the core of these initiatives lies focused primarily on civic leaders and institutional the difficult work of building trust, understanding, bodies. Initial planning centered largely around and common purpose among groups that institutional stakeholders, with relatively limited traditionally have been more likely to be at odds than community participation.110 This approach showed sitting around the same table.115 its weaknesses, however, when IEGO tried to A fundamental challenge for inclusive economic engage with community groups. Alex Avila reported development is convincing business and community that IEGO’s first presentation to community stakeholders to sit down together. These interests organizations was a failure. According to Mr. Avila, use different terminologies and come to the table “They bombed.”111 It was another case of an outside with different priorities. Even when initiatives group coming to disadvantaged communities succeed in getting different stakeholders into the and explaining what they would do for those same room, distrust is a challenge.116 communities, rather than seeking to work with them. And there is good reason for distrust. Disinvested Mr. Avila credited IEGO and Michelle Decker, and marginalized communities face deep-seated, President and CEO of the Inland Empire Community longstanding, and substantially institutionalized Foundation, for trying again and for working to inequities, and they have borne the negative effects EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 23 of growth.117 Promises have been broken in the broken promises, this is an ongoing and unfinished past.118 Meanwhile, even when business groups want process. As Alex Avila related, it remains a case of, to support more inclusive practices, they can be “I trust you—until.”123 However, as Mr. Avila further reluctant to sit down with community stakeholders explained, it is a process that allows for learning and since, as Marek Gootman ventriloquized, “The growth, and one that, with the right supports and community interests are angry with us because we leadership, allows community organizations and haven’t been here before, so they’re going to yell at marginalized communities to shape the conversation us, and I don’t like that. I’m here to help, now.”119 around economic development.124 Regional development strategies need to provide IV. State Initiatives opportunity and space for different groups, stakeholders, and interests to arrive at better There is a long history of regionalism in many parts understanding. Ashley Swearengin reported that the of California. In the 1990s, for example, the Irvine work around DRIVE, “feels more like community-wide Foundation provided funding for the Collaborative reconciliation than it does running a big economic Regional Initiatives, an array of regional partnerships development effort.”120 According to Ms. Swearengin, around the state that worked to build civic leadership regional economies work well when different around addressing regional challenges.125 stakeholders value other groups’ agendas as well as Nevertheless, state government has generally given their own; the challenge in Fresno and the Central little support or attention to regional economic Valley has been that stakeholders have tended planning. Paul Granillo observed to the Commission, to think of their own agenda as the only one that “The State has long ignored most regional economic matters. DRIVE has worked to break this logjam: development planning…and has really come short in “Bringing people into a space where they are forced contributing meaningful funding for the execution to confront the challenges and where they are of any regional economic development efforts.”126 facilitated to sit and learn why this environmental The exceptions have tended to prove this rule. In justice group or this community group is suing them 2005, for instance, Governor Arnold Schwarzenegger over and over and over again. What is it that is so created the California Partnership for the San Joaquin important to them that brings them to the point Valley, a state board intended to provide leadership where the only recourse they feel they have is one for regional economic development. The Partnership of filing a lawsuit? Getting those parties to the table developed a strategic plan for closing gaps in to sit and listen to one another. Not necessarily to income, education, transportation, and health, but, agree, but to understand. That’s the great unlock apart from an initial grant of $5 million, this plan for that we’re going for here. It is relational.”121 regional development went unfunded.127 Without state support, neither the Partnership for the San This is a process.122 Participants in regional Joaquin Valley nor other regional planning initiatives development initiatives observed that building trust have had the political muscle to push forward takes time and that there will always be conflict. strategic priorities.128 According to some participants, initiatives are just beginning to work out how to have the conversations In recent years, however, California state where different interests and stakeholders tease out government has begun to address regional economic the points of conflict and figure out what potential development, and regional disparities, in a more resolutions might be. Given histories of inequity and consistent and comprehensive manner. First through the Regions Rise Together initiative and, 24 | LITTLE HOOVER COMMISSION Regional Economic Development Efforts in Other States Notable examples of successful regional development efforts, like the transformation of Pittsburgh from a declining steel town into a hub for technology and health research and the redevelopment of Albany into center for nanotechnology and computer chip manufacturing, illustrate the potential for sustained and significant investment in regional development to revitalize regional economies.129 In the last decade, several states have launched regional economic development initiatives with the goal of encouraging greater economic growth statewide and diversifying regional economies. These initiatives have divided states into economic regions and established regional councils or authorities charged with developing and implementing regional economic strategic plans. ◊ In 2011, New York State established ten Regional Economic Development Councils (REDCs) which empower regional stakeholders to develop regional strategic plans and identify economic development priorities. Under this initiative, New York has awarded over $7.5 billion to more than 9,000 regional projects, with REDCs providing advice as to which projects should be funded under regular state funding streams and vying for strategic funding in state grant competitions.130 ◊ In 2012, Nevada divided the state among regional development authorities (RDAs) tasked with promoting economic development projects. RDAs were intended to serve as the key actors for promoting economic diversification, advancing targeted industry sectors, and encouraging regional investment.131 ◊ In 2015, Indiana launched the Regional Cities Initiative, a grant competition which incentivized counties to come together for the purpose of regional economic development planning. In 2021, Indiana built on this framework with the Indiana Regional Economic Acceleration and Development Initiative (READI), which will provide $500 million in American Rescue Plan Act funds to regions to create and implement sustainable development plans that improve quality of place, quality of life, and quality of opportunity within communities.132 Recent analyses of regional development efforts in New York and Nevada provide some key lessons from which California might learn as it launches the CERF initiative: ◊ In 2019, New York’s Citizens Budget Commission reviewed the state’s REDC program, finding that its design was strong (incorporating long-term planning, regional stakeholder leadership, and workforce development) but that investment was dispersed and often departed from regional strategic priorities. The Commission advised that the program would benefit from more closely concentrating funding on projects tied to regional strategies and from establishing standard metrics for evaluating regional performance and project outcomes.133 ◊ A recent analysis of Nevada’s economic development efforts over the last decade credits them with helping to increase the state’s economic resiliency.134 However, the report also recommends improvements in the state’s approach to regional development, especially through the establishment of regional outcome measures and greater partnership between the state and regions in advancing industry and sector opportunities.135 EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 25 more recently, through the Community Economic also aimed to change the mental map of California Resilience Fund, California has put an emphasis on by drawing attention to the state’s distinct regions regional planning around sustainable and equitable and to inland California, especially with the goal of economic development. encouraging philanthropic organizations to provide support more broadly across the state.140 This attention to regional economic development stems, in part, from the work of two civic leadership In partnership with California Forward and the organizations, California Forward and the California California Stewardship Network, state officials from Stewardship Network, which have advocated for the Governor’s Office of Planning and Research (OPR) a regional and triple-bottom-line approach to and the Governor’s Office of Business and Economic economic development in California for more than Development (GO-Biz) hosted a series of regional a decade.136 It also stems from the wider, national summits—in the Inland Empire, Bakersfield, Merced, conversation about growing regional imbalances. and Redding—in 2019 wherein they encouraged area industry and civic leaders to partner in developing REGIONS RISE TOGETHER strategies for equitable and environmentally Governor Newsom launched the Regions Rise sustainable regional growth. Together initiative in May 2019. In an op-ed announcing the new initiative, Lenny Mendonca Although the COVID pandemic diverted attention and Kate Gordon, who was then director of the from Regions Rise, the initiative nevertheless helped Governor’s Office of Planning and Research, to incubate regional planning in Kern County, observed that the gains from California’s innovative Stanislaus County, and the Salinas Valley. economy were not shared equitably across the state COMMUNITY ECONOMIC RESILIENCE FUND and that inland communities faced high structural (CERF) unemployment and acute environmental challenges. CERF represents the first instance of the State of Mendonca and Gordon explained that Regions Rise California stepping up with funding to support Together rested on the belief, “that every region inclusive regional economic development planning in California deserves a strong foundation for a and implementation. sustainable future.”137 The Community Economic Resilience Fund is a new The goal of the initiative was to support regional $600 million program, jointly administered by the partnerships that would build on regional strengths Labor and Workforce Development Agency (LWDA), to promote inclusive and sustainable economic OPR, and GO-Biz, that will support the development development, with state government helping to and implementation of regional roadmaps for guide and enable this work through funding for the sustainable and equitable development. Specifically, “connective tissue” between regions, including higher CERF aims, “to foster long-term economic resilience education, infrastructure, and capacity building.138 in the overall transition to a carbon-neutral According to Mendonca and Gordon, Regions Rise economy,” and, “support the creation of quality jobs would, “[build] on existing locally-driven initiatives and equal access to those jobs.” CERF will provide in our state’s diverse regions while also leveraging funding to 13 regional partnerships (See Figure 1, the investments and policy priorities of the state.”139 page 27) to develop regional plans and implement Egon Terplan, former Senior Advisor for Economic strategic projects that support a high road approach Development and Transportation at the California to economic development—one that “favors Strategic Growth Council, explained that the initiative businesses that invest in their workforce, pay living 26 | LITTLE HOOVER COMMISSION Figure 1: Community Economic Resilience Fund (CERF) Regions REDWOOD NORTH STATE COAST SACRAMENTO EASTERN SIERRA BAY AREA NORTHERN SAN JOAQUIN VALLEY CENTRAL SAN JOAQUIN VALLEY CENTRAL COAST INLAND EMPIRE KERN COUNTY LOS ANGELES COUNTY ORANGE COUNTY SOUTHERN BORDER Source: Governor’s Office of Planning and Research, Labor and Workforce Development Agency, and the Governor’s Office of Business and Economic Research. “Finalized CERF Regions and Responses to Frequently Asked Questions.” https://www.opr.ca.gov/economic-development/cerf/docs/20211217- CERF_Final_Regions_FAQ.pdf. EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 27 wages, and engage in environmentally sustainable education and training providers, environmental business practices.”141 Mary Collins, Senior Advisor justice organization, and disinvested communities. for Climate and Economy at OPR, explained that the HRTCs will be required, “to develop a holistic program particularly aims to address persistent racial economic development and transition roadmap and economic inequities and help regions build on with strategies that prioritize the creation of high- comparative advantages so as to take advantage of quality jobs, equitable access to jobs and resources, economic opportunities in the context of economic and emphasize developing sustainable and resilient shifts and climate change.142 economies and industries.” HRTCs are expected to align their development plans with state strategies CERF was established in 2021 through SB 162. around clean energy, air pollution reduction, CERF implements aspects of the Regions Rise transportation decarbonization, and climate Together framework and further builds on bills adaptation. In their regional plans, HRTCs are also that Assemblymember Rudy Salas put forward in expected to develop strategies for increasing health 2020 (AB 3205) and 2021 (AB 106), which would and environmental equity and to target investments have created a Regions Rise Grant Program for that benefit disinvested communities, defined collaborative regional planning around inclusive primarily as census tracts that are low income or very economic development. CERF also builds on the environmentally impacted. California Workforce Development Board’s High Road Training Initiative, which supports model Each regional plan is further required to identify partnerships providing training pathways leading to 2-to-5 strategic investments or projects that would high-quality, family-supporting jobs. be funded in the CERF implementation phase. These projects must promote state climate goals, support CERF will support regional collaboratives in two labor standards and job quality, enjoy community phases: first, in the planning of roadmaps for support, and demonstrate a clear role in the larger economic development and clean-energy transition; regional economic strategy. Regions will be expected and, second, in the implementation of strategic to fully expend implementation funds by the end of projects that advance those roadmaps. 2026. CERF will provide $5 million planning grants to each ISSUES WITH CERF of the 13 CERF regions to support the creation of CERF promises to support regional economic a High Road Transition Collaborative (HRTC) and planning and help catalyze regional economic the development of a regional economic recovery development projects. Moreover, the program and transition plan.143 Solicitation for proposals builds on key lessons learned from regional began in May 2022 and 31 organizations submitted development initiatives. In particular, CERF directs notices of intent to apply for planning grants.144 In regions to do the data collection and analysis and October 2022, LWDA announced the first round of the inclusive table building, especially with respect to CERF planning grants. In many cases, these grants disinvested communities, that witnesses identified will support collaboratives that build on or include as key foundational steps in inclusive development existing regional economic development initiatives.145 strategies. CERF’s emphasis on high road approaches to regional development, meanwhile, reflects a Regional HRTCs are expected to include growing body of work from economists and policy representation from labor, the business community, experts who argue for strategies specifically oriented government, community-based organizations, toward the creation of quality jobs, including through economic development agencies, philanthropy, 28 | LITTLE HOOVER COMMISSION investing in worker skills and providing for worker Balancing Priorities voice.146 Participants in existing regional development Yet CERF also faces several significant challenges initiatives expressed appreciation for CERF’s that may limit the program’s ability to realize its commitment to a bottom-up, worker- and goals or significantly impact regional economies. community-centered approach. However, some Although regional stakeholders and witnesses voiced also suggested that the program could benefit from appreciation for this state support for regional greater strategic focus and clarity. They advised that development, several sounded notes of caution over CERF’s broad framing meant that almost any group whether CERF’s scale is sufficient to meaningfully could see the program as a vehicle for advancing advance the program’s aims and whether regional their preferred priorities. They wondered how collaboratives would be able to navigate effectively regions, in practice, can realistically navigate across among CERF’s various outcome goals. so many priorities in a single program—and warned CERF Regions in Context The CERF agencies employed a two-stage process for the identifying the CERF regions. They first used California’s regional economic markets, which are defined by the Employment Development Department’s Labor Market Information Division based on commute patterns and labor force data, as a starting point. The CERF interagency team then refined those regional delineations through consideration of industry mix and economic relationships, geographic scale, relative size of population, and existing regional planning connections. 147 These new designations add to an array of regional units already in place in California. In 2020, the Governor’s Office of Planning and Research commissioned the California Research Bureau (CRB) to compile the different regional designations employed by state government programs and agencies. CRB ultimately identified 13 sets of regional designations in use, with different regional units existing, among others, for the Strong Workforce Program, for Economic Development Department market analysis and workforce planning, and for implementation of the Sustainable Communities and Climate Protection Act (SB 375).148 Although there is overlap and continuity among these different designations, there is also significant variation. For example, the Strong Workforce Program establishes six regional community college consortia, while SB 375 and the Regional Early Action Program (REAP) both rely on California’s 18 metropolitan planning organizations for implementation. CERF adds another set of regional designations to this array of regional definitions and regional planning units. As California launches CERF, state government and regional leaders may wish to evaluate whether CERF regions are able to coordinate effectively with other regional units concerned with economic, educational, and environmental planning, especially when the boundaries of these various regional units overlap in differing ways. EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 29 that when everything is a priority, nothing is. They testimony regarding the timeframe for development also suggested that finding a balance among goals initiatives, it is, “five years to see anything, and and interests will be made more difficult by the then 10 to 20 years after that.”155 This is the work of number of desired outcomes. decades.156 CERF, on the other hand, is a one-time, four-year program that appears likely to spread The tension between CERF’s goals around economic money broadly but shallowly. growth and environmental sustainability illustrates the challenge. CERF directs regions to focus on Experts in regional economic development that aims at a carbon-neutral, climate-resilient economy; of ten target industries development warn that mentioned in CERF guidelines, all but two are climate inadequate funding is a related.149 Yet, as Marek Gootman observed, many regions are not positioned to build their economies major reason for the failure around green or climate-oriented industries and do of regional development not possess strengths in environmental innovation.150 strategies and suggest that far For example, the market assessment for Kern larger sums than CERF provides County’s B3K initiative acknowledges that the region are required to meaningfully is the site of significant expansion in renewable energy production, but further observes that wind change regional economies. and solar energy have not proven to be a source of durable, long-term job creation.151 The problem is that wind and solar facilities require minimal labor Although CERF guidelines assert, “Community- and following construction; moreover, while oil and gas worker-centered inclusive economic planning has have historically supported a regional supply chain, never been attempted at this scale,” when divided the technological components and electrical systems among projects in 13 regions, CERF funding will that make up most of the cost of solar systems actually be quite limited, especially in relation to the are developed and manufactured outside the scale of the program’s ambitions.157 Should CERF region.152 B3K has identified potential opportunities funding be divided among regions based on current around biofuels production and carbon capture population levels, the Inland Empire would probably and sequestration, but these areas are subject to receive around $58 million. The San Joaquin Valley significant regulatory uncertainty and it is unclear if regions would probably receive a combined $53 they align with the vision of CERF’s architects.153 million.158 Spread over four years, this provides just $14.5 million and $13.3 million per year, respectively. Scale: Time and Funding Mary Collins acknowledged that the funding provided by CERF is, “a drop in the bucket.”159 CERF provides significant and, according to regional development leaders, appropriate funding for Experts in regional development warn that regional planning and convening.154 With respect to inadequate funding is a major reason for the failure implementation, however, CERF’s ambitions appear of regional development strategies and suggest that to be out of step with the scale of the program. far larger sums than CERF provides are required to Research and experience is clear: transforming a meaningfully change regional economies.160 Timothy regional economy takes significant resources and Bartik, an economist with the Upjohn Institute who ample time. As Marek Gootman cautioned in his focuses on local and regional economic development, 30 | LITTLE HOOVER COMMISSION suggests that annual per capita expenditures of programs and agencies. Commission staff have of $200-to-$300 for at least a decade are likely identified $9.3 billion in one-time funding and $1.2 necessary to provide meaningful employment billion in annual continuing funding from the 2021-22 change in a distressed area.161 This corresponds in and 2022-23 state budgets that support 65 programs scale to Fresno DRIVE’s investment plan, which calls and investments across 21 departments and for more than $4 billion in regional investments agencies that could directly help advance regional between 2020 and 2030. Meanwhile, the State of development strategies in inland and rural regions Pennsylvania committed over $280 million in the through support for workforce training, clean energy late 1980s to initiate the revitalization of Pittsburgh— transition, business investment, and innovation more than $650 million in 2022 dollars.162 Similarly, and entrepreneurship. (For a detailed listing of in 2016, the State of New York allocated $500 million these programs and investments, see Appendix: to the central New York region for regional economic CERF, State Programs, and Regional Economic development.163 Notably, these investments in Development.) Pennsylvania and New York were roughly on the same scale as CERF, but were each focused only on a ...beyond helping regions single metropolitan area, rather than an entire state align funding streams, state of 40 million people. government also needs to Coordination deploy funding streams Significant funding for regional development is in ways that complement available. Federal pandemic relief funds and new federal funding for advanced technology and regional strategies. clean energy, including the CHIPS Act and Inflation Reduction Act, together with state surpluses have The current windfall of state and federal funding is created an investable windfall with potential to thus an opportunity and a challenge for the CERF transform regional economies. State investments in program.164 Mary Collins explained that CERF intends regional research and training centers—including to help regions access and align funding. State the transformation of Humboldt State University programs and funding streams come, however, into a polytechnic campus (Cal Poly Humboldt) with different requirements, regulatory frameworks, and funding for an energy innovation center at and administrative processes. Programmatic goals, California State University, Bakersfield and for the moreover, may not align with regional economic Riverside Community College District’s Inland Empire development priorities. Derek Kirk, Community- Trade Technical Center—already promise to direct Based Solutions Supervisor at GO-Biz, related that significant funds toward regional assets that can CERF’s leadership aims to partner with agencies support regional development priorities. Yet the and encourage them to factor CERF into their extent to which these investments advance regional programming. Nevertheless, it is unclear how far economies will depend on alignment with existing state agencies will go, in practice, to coordinate and emerging regional industries and coordination around regional investment plans or facilitate with broader regional development strategies. implementation of regional strategies.165 Funding that can support regional economic Witnesses emphasized that, beyond helping development, meanwhile, is spread across dozens regions align funding streams, state government EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 31 also needs to deploy funding streams in ways that as well as substantial federal investments in complement regional strategies.166 Marek Gootman infrastructure, advanced technology, and clean advised that state agencies need to organize around energy. Funding is a necessary precondition for regional priorities, warning the Commission that regional economic development. That funding state government cannot expect, “regions to say, is currently available. Moreover, federal funding ‘I need this,’ and then wander around the halls in opportunities coincide with growing concern within Sacramento trying to get eight different people to both government and industry about the durability say, ‘Okay. Well, maybe.’”167 of critical global supply chains. Consequently, this may be a rare moment when market forces CAN THIS TIME BE DIFFERENT? and governmental resources align and enable CERF underscores a new emphasis on regional transformational change in regional economies. economic development on the part of California state government and represents a significant Second, regional initiatives have created real state investment in regional economies. The momentum in many parts of California and are program integrates key lessons learned in regional building the stakeholder coalitions necessary for development efforts both in California and in other implementing and sustaining development projects. states. Nevertheless, the issues and challenges DRIVE, IEGO, and other initiatives are in early stages facing CERF deserve careful attention. Regional of planning and implementation. Some participants economic plans often never move from paper to cautioned that these initiatives are still in early execution. Many countries, regions, and other states days, while others were apprehensive about the have embarked on ambitious programs of regional ability of initiatives to effect structural and systemic economic development with disappointing or change. On the other hand, many participants in limited results.168 In cases where regional economic these projects point to ways in which they have development efforts have succeeded, development already begun to change how regional organizations has frequently failed to lift up more disadvantaged and groups work together.171 Critically, these or marginalized communities.169 Meanwhile, some initiatives seek to knit together systems, services, economists argue that the scale of macroeconomic and community organizations and develop more forces behind growing regional divergence is such collaborative, coordinated approaches to addressing that state and regional initiatives have little chance of regional challenges.172 actually reducing regional disparities.170 Moreover, while balancing priorities within triple- As California embarks upon CERF and commits bottom-line approaches is always challenging, substantial funding to regional economic planning, regional initiatives have begun to create spaces both state policymakers and regional stakeholders, where stakeholders can address those tensions. especially in less prosperous regions, have good They have also begun to center conversations reason to ask: can this program support meaningful about economic development on inclusion and and enduring regional economic development? job quality.173 Lee Ann Eager observed that Fresno County EDC, in its work around business attraction, There are two reasons why California may be is asking which industries and businesses are cautiously optimistic about the potential for CERF to willing to look at social justice and sustainability.174 help bend regional economic trajectories. Similarly, Genelle Taylor Kumpe, CEO of the San Joaquin Valley Manufacturing Alliance and COO of First, as noted above, CERF accompanies significant the Fresno Business Council, explained that part of federal funding for local and regional governments, 32 | LITTLE HOOVER COMMISSION the goal of Career Nexus, a DRIVE upskilling initiative localized projects but that ultimately has limited which places young adults in paid internships, is to transformational impact? encourage employers to see the value of investing in their employees. Within the initiative, Ms. Kumpe “One-time funds will not reported, “We emphasize to employers that their people are their greatest asset.”175 erase the historical and current inequities that plague Although CERF faces challenges, it has real potential to build on foundations laid by Regions Rise and by too many of our cities and various regional initiatives. It can help strengthen and neighborhoods nor the build-out existing coalitions and accelerate already challenges with job quality emerging projects. With appropriate state leadership and commitment, it could also help to catalyze more or workforce development.” significant changes in regional economies. - Jackie Melendez, Executive V. Committing to Equitable Director, Inland Economic Regional Economic Growth and Opportunity (IEGO) Development CERF is a potentially vital investment in regional Witnesses identified several key steps that California capacity building for inclusive economic can take to provide ongoing, durable support for development. It is an opportunity for regions to inclusive regional economic development and make coordinate and draw down sources of investment meaningful progress in closing regional economic and funding. Jackie Melendez observed: “We stand disparities. at the cusp of a new era for California and the Inland PRIORITIZE MORE DISADVANTAGED Empire. CERF will help to transform our communities REGIONS AND SUBREGIONS and help us leverage the dollars needed for critical It makes sense that California is approaching CERF projects.” However, Ms. Melendez also warned, “We as a statewide project. More inclusive economic don’t know how deep these dollar will penetrate or growth and planning is needed across the state, how long they will last,” and she further advised, in both its most prosperous regions and its most “One-time funds will not erase the historical and disadvantaged. High levels of inequality and high current inequities that plague too many of our cities rates of poverty are, after all, statewide challenges. and neighborhoods nor the challenges with job All regions can benefit from closer cross-sectoral quality or workforce development.”176 partnerships and better coordination among industry, communities, labor, and local government, An overarching challenge is the question of how especially with regard to connecting disinvested state government will sustain and scale regional communities with economic opportunities.177 collaboration and regional economic development beyond CERF. How can state government best Nevertheless, the core challenge that California ensure that CERF supports enduring, long-term, recognized in the Regions Rise Together initiative and impactful strategies around regional economic remains: California’s is a tale of two economies, and development, rather than becoming yet another some regions and subregions need substantially one-time program that supports some helpful, more support to grow their economies than others. EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 33 Providing the same sized planning grants to the San where possible, with regional development priorities Francisco Bay Area and Orange County as to the in regions with the greatest need. State government Inland Empire and Central San Joaquin Valley may be should work to ensure that relevant programs equal, but it is not equitable. provide funding for more disadvantaged regions, with the goal of directing equitable funding to less Economists indicate that the impact of investments prosperous regions and of coordinating funding to in regional economic development is likely to maximize its impact. be greatest in places with the most depressed employment levels, suggesting that California will get PROVIDE GREATER CLARITY AND STRATEGIC FOCUS TO CERF the “biggest bang for its buck” by prioritizing CERF The experience of regional initiatives illustrates funds for more disadvantaged regions.178 Moreover, how hard it is to maintain equal emphasis on the these are regions that are likely to need greater three elements of triple-bottom-line approaches. support in creating regional and institutional capacity The Commission applauds the commitment to for securing investment, competing for funding, and social equity and environmental sustainability pursuing inclusive economic development.179 demonstrated thus far in CERF. State agencies need The CERF interagency team should thus consider to ensure that economic development receives interregional equity when deploying CERF co-equal attention. Especially for less prosperous implementation funds and prioritize more regions, interventions that make regional economies disadvantaged regions for CERF funding. In addition, more competitive and more innovative and that the team should deploy CERF funding with the long- encourage growth in industries with a high share of term goal of narrowing regional disparities. middle-skill jobs will be vital for expanding economic opportunity. As Marek Gootman observed, “You In addition to prioritizing more disadvantaged cannot train people to jobs that do not exist.”180 regions for CERF funding, state government can Meanwhile, economic growth also generates wealth also ensure that these regions are equitably funded and tax revenue for investments in infrastructure, through programs that can support economic education, affordable housing, and other public development strategies in the longer term. The goods and services.181 Governor and Legislature deserve credit for strategic investments like those in Lithium Valley (that is, Witnesses and initiative participants report that lithium recovery around the Salton Sea), the Fresno- successfully integrating economic and community Merced Future of Food Innovation (F3) initiative (See development is one of the most challenging aspects Box on pages 35-36), California State University, of inclusive economic development. For example, Bakersfield’s new Energy Innovation Center, and labor and community advocates in the Fresno area the Inland Empire Trade Technical Center. However, advised that the Fresno-Merced Future of Food more resources will be needed to support growth Innovation initiative could do more to bring worker and job creation. Ongoing programs like the voice to the table and questioned the initiative’s California Competes Tax Credit, the community emphasis on innovation and agricultural technology, college Strong Workforce Program, the California rather than worker engagement. Conversely, some Energy Commission’s EPIC program, and IBank’s participants in the initiative suggested that its various small business loan programs can support regional community-oriented elements might distract from development efforts—if relevant agencies and the work around innovation and commercialization— institutions align this funding, where appropriate and work that is needed to make the regional economy 34 | LITTLE HOOVER COMMISSION Fresno-Merced Future of Food Innovation (F3) Initiative The Fresno-Merced Future of Food Innovation initiative provides an example of how state government can support and participate in regional economic development initiatives. F3 is one of the component initiatives of Fresno DRIVE and is led by a coalition of state and regional partners that includes the Central Valley Community Foundation, City of Fresno, California Department of Food and Agriculture, UC Division of Agriculture and Natural Resources, UC Merced, Fresno State, Merced College (as well as seven other area community colleges), and the Fresno Area Hispanic Foundation. The initiative received $30 million in state funding as part of the 2020-21 budget and recently received a $65 million federal grant through the U.S. Economic Development Agency’s Build Back Better Regional Challenge competition. California’s Central Valley is home to some of the most productive agricultural land and enterprises in the country and in the world. With just 1 percent of U.S. farmland, the Central Valley produces 25 percent of the nation’s food. Yet, as Fresno DRIVE observes, “The agricultural economy remains predominantly commodity-based and slow-growing, failing to produce the quality jobs its residents need.”182 Moreover, the San Joaquin Valley lacks a robust ecosystem for innovation, with UC Merced and Fresno State together accounting for $54 million in R&D expenditures in 2020, compared to $816 million for UC Davis.183 This has prevented the San Joaquin Valley region from moving up the value chain in the agricultural sector and limited its ability to produce quality jobs for residents. F3 aims address these challenges and to make regional agriculture more innovative and sustainable by establishing a world-class “climate-smart agrifood technology and engineering cluster” in the San Joaquin Valley.184 F3 will advance agricultural technology in the Fresno-Merced region. Moreover, it seeks to promote both economic growth and inclusion through stimulating entrepreneurship, engaging small farmers and entrepreneurs alongside larger companies, increasing the number of higher quality jobs within the agricultural and food production sector, and working with community organizations to build local markets and increase access to healthy food. The initiative is composed of three interrelated projects: 1. Center for Research in Engineering, Ag-Food Technology, and Entrepreneurship (iCReate)—This project aims to encourage innovation and entrepreneurship in Fresno’s agricultural economy. It aims to leverage technological innovation and applied research in data science, robotics, and manufacturing to “jump start” a more advanced and sustainable agricultural industry, especially with respect to precision agriculture and smart food processing. This work includes establishing a physical innovation center in Fresno for research and entrepreneurship in agricultural technology.185 EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 35 2. Local Farm and Food Innovation—This element of F3 engages small farmers and entrepreneurs in the innovation process, as well as providing investment and technical assistance for food entrepreneurs, food vendors, and small farms. A goal of this work, Genoveva Islas, Executive Director of Cultiva La Salud, explained, is to change the “food landscape” of Fresno by creating markets and economic opportunity for small, local growers, expanding pathways of opportunity for food vendors, and building the supply of affordable, healthy food for underserved communities. “How magnificent would it be,” Ms. Islas asked, with respect to efforts to increase the local sourcing of food at Fresno Unified School District, “if we aggregated all of these small farmers, where they could become a real viable mechanism for us to be able to get locally-grown fresh fruit onto the plates for our student population?”186 3. Agrifood Technology and Engineering Collaborative (AgTEC)—F3 also aims to facilitate the use and application of agricultural technology through investments in upskilling for incumbent agricultural workers and training for the next generation workforce. The initiative emphasizes innovative approaches to training, including the development of industry-aligned training pathways, the use of competency-based education, and the development of training facilities that can provide simulated training. Dr. Chris Vitelli, Superintendent/President of Merced College, further observed that F3 provides an opportunity to align training with industry and workforce needs at a regional level: “The Central Valley of California really is a region that needs to have more collaboration and to bring in large industry partners, mid-sized and small local farmers, incumbent worker voice, and listen to the needs of the region, and then make sure as a region…that we develop curricula that’s really going to prepare a workforce that can make a difference regardless of where they work.”187 In addition to offering an example of an inclusive cluster initiative that aims to integrate support for entrepreneurship and technological innovation with community development, F3 also offers an example of how state government and statewide institutions can partner with regional coalitions to support regional economic development. Dr. Glenda Humiston, UC Vice President for Agriculture and Natural Resources, explained that F3 illustrates how the University of California can bring its resources and expertise to bear on regional economic development initiatives statewide: “I think F3 is an exciting initiative. The folks in the Fresno-Merced region have done an amazing job of building up to this initiative over several years. But they are not the only ones. One of the things we are really interested in is finding ways that we can support these types of regional industry clusters throughout the state. And also have them be a bit of a network, sharing best practices and information and leveraging each other.”188 36 | LITTLE HOOVER COMMISSION more competitive, lift it from commodity-based These regional conversations about economic growth production into higher value-add activities, allow should be inclusive. Some community advocates it to tap into the growing global market around reported that they hoped regional planning and agricultural technology, and help make regional strategy development would explore potential drivers agriculture more sustainable. of regional growth that do not traditionally feature in economic development planning. For example, Alex It makes sense that disadvantaged communities Avila in the Inland Empire suggested that he would focus on community building and neighborhood like to see more discussion about how the region development. As Ashley Swearengin observed can leverage the arts and media for both community regarding poverty and exclusion in Fresno, “It’s like building and for supporting economic growth.192 smoke in a casino… Place matters.”189 Ms. Swearengin Regions need a conversation based in data, lived explained that the DRIVE coalition wrestled for experience, and community desires about where a year with the question of whether to prioritize there are opportunities to grow middle-skill jobs and quality economic growth or community building and connect young people to solid career pathways. inclusion, before deciding to start with inclusion. Ms. Swearengin observed that starting with inclusion Care is needed to ensure that regions do not scatter made it possible to build trust and create the funds over too many priorities and that they identify opportunity to move forward together.190 growth strategies that are feasible and capable of attracting private investment. Yet when it comes In the long run, however, supporting less to identifying potential drivers of regional growth, economically prosperous regions will take both state government can help stakeholders in regions growth and inclusion. The work of inclusive get to the point where they say “both/and” to viable development initiatives is to navigate this tension. strategies advocated by different interests, rather than “either/or.” State government can support this balancing act by clearly placing equal importance on growth and INCREASE REGIONAL CAPACITY FOR inclusion. By calling on regions to focus on traded INCLUSIVE DEVELOPMENT sectors, leverage innovation, improve regional As many witnesses observed, the work of inclusive productivity, and advance industries up the value economic development is hard.193 Jackie Melendez chain, state government and agencies involved in advised the Commission, “This is the hard work, this CERF can encourage wider understanding of the is the work that is uncomfortable but necessary if we drivers of regional growth and of why regions need are going to move the needle.”194 Ashley Swearengin to focus on those economic drivers if they are to similarly commented on the challenges of managing produce quality jobs at scale. At the same time, a regional coalition: “Honestly, collaboration is as strategic investments in training, research and much about mediation and conflict resolution as development, infrastructure, and entrepreneurship anything… There are no shortcuts. Gosh, I wish offer a means to incentivize industry buy-in and there were, but there are no shortcuts here.”195 It participation. Critically, this is an opportunity to requires significant time, energy, and commitment move beyond existing coalitions when it comes to to manage cross-sector relationships, build trust high road approaches, and to build wider regional and understanding, and maintain common purpose partnerships that encourage more businesses to among stakeholders with different interests, invest in their workers and expand the supply of priorities, and expectations. Regions need capacity to quality jobs.191 sustain development efforts. Not all regions currently have the institutional alignment or resources for this. EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 37 Especially in less well-resourced regions, continued investment for disinvested communities in state support and funding for capacity building San Bernardino and voices frustration at the beyond CERF is likely to be necessary. This funding is concentration of the warehouse industry in the a vital investment in the institutional infrastructure Inland Empire.198 CERF, meanwhile, has generated for inclusive development. It makes possible ongoing competing applications, which in some cases reflect leadership and allows conveners to build and divisions between labor and industry or between maintain staff, develop expertise, expand outreach community groups and institutional stakeholders. and engagement with stakeholders, and enhance There will always be divisions, even as local and their ability to build relationships and trust among regional leaders and stakeholders work to find collaborators.196 opportunities to get people around the same table. Nevertheless, these fractures underscore the challenge of building and maintaining cross-sector “Honestly, collaboration is as and cross-interest collaboration. much about mediation and State government and regions need to work together conflict resolution as anything… to ensure that regions build and maintain regional There are no shortcuts. Gosh, I platforms that can break down siloes and move beyond collaborations of the already like-minded. wish there were, but there are Most importantly, state government needs to ensure no shortcuts here.” - Ashley that regions have platforms that are genuinely able Swearengin, Former Mayor of to hold in tension the goals of economic growth, social equity, and environmental sustainability and Fresno; President and CEO, sustain real dialogue among different interests. Central Valley Community Then, as the CERF process unfolds, state government needs to commit to supporting these platforms Foundation on an ongoing basis both through funding and through recognizing regional economic development Moreover, state government needs to recognize that priorities. CERF will offer lessons about what works consistent funding and support is vital to sustaining in California’s various regions. Other states can cross-sector collaboratives. As Jobs for the Future also offer models regarding structuring the state’s has observed, the lesson of past state initiatives relationship to regional economic development in the like the Career Pathways Trust is that cross-sector long term. collaborations that come together for one-time IMPROVE STATE COORDINATION money often do not survive the expiration of funding, California needs to coordinate agencies and at which point constituent organizations begin to programs around regional development strategies pursue other priorities and funding opportunities.197 and align resources, funding, and programs in Current initiatives illustrate the challenges of support of regional plans and priorities. In other maintaining cross-sectoral coalitions. The original words, state government needs to position itself IEGO coalition, for example, fractured with some as an enabling partner to regions in facilitating labor and community advocates leaving to develop implementation of regional strategies. GO-Biz’s the People’s Plan for Economic Inclusion—a establishment of regional economic coordinators document which calls for more funding and to assist with inclusive regional development is a 38 | LITTLE HOOVER COMMISSION step in this direction and may help regions access on the strengths of each.202 To give one example and leverage state and federal funding.199 Witnesses suggested to Commission staff: the San Francisco emphasized, however, that what regions need is Bay Area is in a housing crisis, while the Central genuine state leadership in advancing regional Valley needs jobs but has strengths in manufacturing. strategies. Could state government help facilitate greater use of modular housing built in the Central Valley to Paul Granillo and Tomás Morales, President of address coastal housing needs? California State University, San Bernardino, made this point with regard to advancing sustainable logistics “There needs to be a czar at the in the Inland Empire. President Morales related that members of IEGO visited Georgia Tech, which is a top that says, this is something leading center for research and innovation around that we’re going to make a the logistics industry. According to President Morales, “The difference that we found is that when we visited reality. And then you need to Georgia Tech’s operation, they were partnering with invest in it.” - Paul Granillo, multiple state agencies. That’s the big difference.”200 President and CEO, Inland Mr. Granillo, meanwhile, suggested that the Inland Empire could be leading the country in creating Empire Economic Partnership and building the automated systems used within warehouses, but that currently those systems are Similarly, regional leaders observed that state and built in Georgia and the Carolinas and then brought federal funding may create opportunities to build to California. As a result, an opportunity to advance clean energy supply chains in California that can the regional logistics industry into higher value-add generate private investment and quality jobs in activities is being lost. Granillo suggested that, in regions that need them.203 In the Inland Empire, order to seize this kind of opportunity, “The state regional stakeholders noted the potential for Lithium needs to look at the opportunity that exists and say, Valley to change the economy of Imperial County and ‘We’re serious about this.’ There needs to be a czar at of the Inland Empire by creating a green technology the top that says, this is something that we’re going ecosystem that would extend from lithium recovery to make a reality. And then you need to invest in it.”201 to battery and vehicle manufacturing.204 Yet there is Although Regions Rise and CERF are an important concern that lithium recovery from the Salton Sea step in the direction of greater state coordination might succeed, only for the lithium produced to be with respect to regional development, regional shipped from California to Arizona, Nevada, or other leaders and stakeholders report that more states: California would supply the lithium, while coordination is needed, and that state government investment, value-adding activities, and quality jobs must do more to align resources around regional would flow elsewhere. The challenge, in part, is that opportunities. regulatory processes and requirements can create delays and uncertainties that make it very difficult Regional stakeholders emphasized that there is for regions to compete with other states that have significant potential in improving interregional less regulations with respect to permitting and coordination between coastal and inland California, developing production facilities. and in identifying opportunities to connect and build EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 39 Acknowledging this does not mean abandoning This is much easier said than done. The specific California’s commitment to the high road. It does, actions and elements to advance potential regional however, mean that state government needs to opportunities for economic development are better align resources, incentives, stakeholders, and beyond the scope of this study. However, as a first regulatory agencies to help regions advance their step, supporting regional economic development economic priorities and turn regional economic will require state government to start aligning opportunities into reality.205 State government will its programming with regional priorities. It will need to help regions find the appropriate balance require state government to make investments in that provides economic inclusion and environmental infrastructure, innovation, and training.207 It will protection, while encouraging and supporting the also require state agencies to orient policies and economic development that can bring wealth and regulations toward realizing regional economic quality jobs to a region.206 opportunities. Advancing Regional Economies: Examples from Life Sciences Initiatives The life sciences sector, which employs more Californians than any technology sector other than information technology, illustrates the potential for regions outside dominant centers of technological innovation to build on existing strengths and leverage regional assets, including geographic location and anchor institutions like colleges and universities, in order to expand into advanced industries with potential to fuel the creation of quality jobs.208 The life sciences are a frequent target for cluster initiatives. Although these efforts often disappoint because relatively few regions have deep, competitive strengths in life sciences or biotechnology, several inland regions nationally have had success developing life sciences clusters by capitalizing on regional advantages and by building partnerships that encompass universities, medical centers, and existing industry.209 Since the early 2000s, Central Indiana, for example, has established a notable life sciences cluster, with strengths in pharmaceutical manufacturing and in medical devices and equipment—concentrations that reflect Indiana’s broader strengths in manufacturing.2010 Similarly, strategic initiatives in Ohio have demonstrated recent progress in the Columbus region in both attracting and fostering biomanufacturing firms.211 In California, Solano County, at the border of the San Francisco Bay Area and the Central Valley, has leveraged proximity to the Bay Area’s life sciences industry and to UC Berkeley and UC Davis, availability of land, and investments in workforce training to attract pharmaceutical manufacturing and laboratory facilities.212 Meanwhile, the Sacramento area is working to establish itself as a center for the life sciences—efforts anchored by UC Davis’s Aggie Square project, which aims to establish a life and health sciences innovation hub at the UC Davis Medical Center in Sacramento. Notably, this latter project also suggests how regional economic development initiatives can align with place-based community development strategies. The Aggie Square development includes a community benefits agreement that prioritizes local residents for jobs and training pathways and provides for investment in affordable housing.213 40 | LITTLE HOOVER COMMISSION programming and funding so as to advance regional VI. Recommendations priorities and agendas. California today stands at a confluence of 1. The Governor, Legislature, and relevant opportunities that collectively have potential to help state agencies should prioritize historically lift up those regions that least shared in the state’s disadvantaged regions for funding within enormous prosperity over the past few decades. CERF and related programs. The Commission Regional initiatives around the state have positioned recommends that in awarding CERF implementation key stakeholders to work together to achieve more funds, California should give priority to those inclusive regional growth, while significant federal regions that have been most “left behind” in the past funding promises to fuel investments in innovation, decades. The metrics relating to regional economic clean energy, infrastructure, and new supply chains. health discussed below under Recommendation #7 With CERF, California has the tool to bring these could provide a basis for evaluating which regions elements together and catalyze transformative should receive priority for CERF funds. development projects in inland and rural portions of the state. To ensure that funding for economic development, clean technologies, and workforce training will This is a moment ripe with possibility—and urgency. help to redress longstanding regional inequities, Marian Kaanon related that she tells people with the Legislature should further introduce regional regard to Stanislaus 2030 and the work to advance reporting requirements for major programs that inclusive economic development in Stanislaus have potential to support regional economic County, “This may be our last best shot.”214 Jackie development, such as CERF, the California Competes Melendez, meanwhile, warned, “Today, we look at Tax Credit, the Climate Innovation Grant Program, CERF for answers and for hope. Yesterday it was and IBank’s Expanding Venture Capital Access and the CARES Act and ARPA and Build Back Better and Small Business Loan Guarantee programs. For Regions Rise. The list goes on... And if we do not work these programs, the Legislature should require that together today, we will simply transmit our hopes relevant agencies report back annually about the to a new funding source tomorrow, forever chasing distribution of funding by region, document how our dreams and the next funding source, working funding has supported the development of industrial piecemeal on problems that require targeted and clusters identified as priorities by regions, and long-term funding, strategy, and collaboration.”215 provide explanation when disadvantaged regions In order to capitalize on the current moment, state receive a share of funding that is less than their share government should approach CERF as a first down of the state’s population. payment in long-term support for inclusive regional 2. Policymakers should provide greater clarity economic development. California must recognize and strategic focus to CERF. The Commission that inclusive regional economic development, applauds CERF’s emphasis on inclusive and especially for less prosperous and more community-centered economic planning. Yet, disadvantaged regions, will be the work of decades. with a number of programmatic priorities, CERF is California should commit to supporting regional potentially everything to everybody. economic development and to closing regional economic disparities, and should put in place The Commission recommends focusing CERF more institutional frameworks to sustain this work into the clearly on the creation of quality jobs in sustainable future. State government also needs to coordinate its industries with high growth potential. In proposing EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 41 this recommendation, the Commission understands term. The Commission also encourages GO-Biz that the specific use of CERF funds can and should and the Governor’s Office, when articulating state vary by region and project, and by the availability government’s support for regional economic of alternative funding sources. It also strongly development, to emphasize the importance of endorses CERF’s intent to establish a planning and traded sectors as drivers for regional economic implementation process that is genuinely inclusive growth. Finally, the Commission recommends that and provides for community leadership. However, the Legislature further direct state support toward given a myriad of potential regional priorities and traded sectors by encouraging training programs limited CERF funds, the agencies administering CERF and partnerships to prioritize alignment with those should focus the program and regional stakeholders traded sectors that regions identify as priorities. toward: 1) identifying and supporting opportunities 4. State government should coordinate state to invest in sustainable industries with significant funding and programs in support of regional potential to attract additional private and public economic development strategies. CERF is a drop dollars, lift up regional economies, and create in the bucket. In order to create meaningful regional quality jobs at scale; 2) aligning those investments economic transformation, state government must with strategies and programs that will ensure coordinate funding streams to give regions the disadvantaged communities are able to access the resources and support they need to pursue their quality jobs created; and 3) sharing a portion of CERF economic development agendas. State government funds with community-based organizations, with must also coordinate across agencies to facilitate the the goal of building their capacity to participate in implementation of regional development strategies. regional economic development planning and help The guiding principle for state government and connect communities with quality jobs and economic state agencies in this work should be the goal of opportunity. empowering all parts of California to design and 3. State government should strongly encourage achieve their own economic destinies. and support regional investment in traded The Commission offers two specific sectors. Tradable sectors feature businesses that recommendations toward this end: sell goods and services outside the economic region. They thus have a strong multiplier effect a. The Governor should create a single, senior and the potential to enjoy high rates of growth. The point of leadership for regional economic Commission appreciates that CERF guidelines direct development. Dividing state leadership across regions to create economic strategies focused on multiple agencies, as is done in CERF, is not an developing industrial clusters. However, in light of approach that is likely to lead to efficient and the potential of tradable industries to drive regional coordinated support for regions in the long term. economic growth, the Commission believes that state California needs a single leader responsible government should specifically encourage regions to for working with state agencies to facilitate the focus their development strategies on these sectors. implementation of regional economic agendas. California also needs a single leader who can The Commission recommends that state agencies assist, when necessary, with driving regional and administering CERF explicitly emphasize the interregional projects forward. program’s support for traded sectors that align with CERF’s programmatic goals and that have b. The Governor and Legislature should potential to grow regional economies in the long encourage and, where appropriate, direct 42 | LITTLE HOOVER COMMISSION state agencies to consider regional economic end of the CERF planning phase. This funding development strategies as they design and can be at a lower scale than the CERF planning implement statewide policies and regulations. grants, but will give convening organizations predictable resources for building inclusive In addition, regions should not be expected networks, sustaining partnerships, and updating to align funding opportunities on their own. regional strategies. The funding will also give Instead, the Governor and Legislature should conveners continuing access to technical support direct programs and agencies to dedicate and outside expertise. Since genuine cross- dollars toward supporting regional economic sector partnership is a vital precondition for the development strategies. For example, GO-Biz success of regional approaches to economic should reserve a portion of funding for the development, the Commission recommends California Competes Tax Credit for investments making a portion of this funding contingent that align with CERF implementation projects, and on regions securing a partial funding match the Legislature should target a portion of funding from local government and from industry as a for programs supporting the development and demonstration of public and private sector buy- manufacture of clean energy technologies toward in. This match should, however, be optional for historically underinvested regions. less well-resourced regions and should be waived in the event of economic downturns. When a 5. California should build regional capacity to region is otherwise unable to attain a match, pursue inclusive regional economic development. GO-Biz and other relevant state agencies should The Commission recommends that the Governor’s deploy their convening power to help build a Office and relevant agencies approach CERF not as stronger regional partnership. a one-time program, but rather as the foundation for an ongoing strategy for supporting regional 6. The Legislature should allocate ongoing economic development. funding to better enable institutions of higher education to act as leaders in regional economic a. The Governor and Legislature should create a development. As anchor institutions and centers pathway for institutionalizing CERF partnerships of innovation and technical expertise, California’s as permanent entities. The Commission suggests colleges and universities provide a key foundation determining the precise form of these entities for sustaining regional development strategies in based on the initial experience of the CERF the long term. Yet coordination between institutions process. California should, however, maintain of higher education and regional economies can official regional entities that incorporate be limited or uneven. Moreover, CERF guidelines representation from industry, labor, community mention institutions of higher education only in organizations, local government, higher passing. Although institutions of higher education education, and other stakeholders, and that promise to play a leading role in many CERF will be responsible for facilitating cross-sector collaboratives, state government should take steps planning and coordination around inclusive both to help sustain this leadership and encourage regional economic development. greater alignment between colleges and universities b. The Legislature should further dedicate and regional economies. ongoing funding for regional collaboratives, a. State government should use CERF as an especially those in less well-resourced regions, opportunity to build closer partnerships between with this funding becoming available at the EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 43 institutions of higher education, especially fully capture the economic health and dynamism public universities, and other regional economic of regions and the extent of economic disparities stakeholders. The agencies administering among them. CERF should strongly encourage colleges and The Commission recommends that, in reporting universities to participate as leaders in regional on regional economic data, state government collaboratives. State leaders should also strongly include data relative to per capita income, median encourage universities to align new funding for household income, unemployment and employment research and climate initiatives with regional rates (in order to understand relative levels of labor priorities as identified by CERF collaboratives. force participation), and poverty rate (both with b. In order to help institutions of higher respect to the official federal poverty rate and the education leverage and participate in federal supplemental poverty measure or California CERF and improve alignment with regional Poverty Measure). In addition, state government economies, the Legislature should appropriate should consider partnering with outside research ongoing funding to support universities and organizations, like the Brookings Metropolitan colleges’ engagement with regional economic Policy Program, to further include metrics on the development strategies. Priority for this funding productivity of regional economies, the share of should be given to campuses in rural and inland traded sectors within regional economies, and the regions. This funding should be directed toward percentage of struggling families within regions, enabling colleges and universities to grow their as well as on the degree of racial inclusion within institutional capacity to more fully align with regional economies. regional economies and to take leading roles in regional economic development. It should also be tied to clearly defined outcome goals and well- crafted strategies for increasing alignment with regional economies. 7. State policymakers should institutionalize the regular reporting of metrics relating to the health of regional economies and the extent of regional economic disparities. This should include metrics for 2022 (at the start of the CERF process), in 2026 (at the close of the CERF program), and in regular intervals thereafter. Institutionalizing the reporting of key regional economic metrics will help maintain focus on regional economic development and the need to address regional economic disparities even after the CERF program has ended. GO-Biz has taken a first step towards compiling and reporting regional economic data with its new Community & Place Based Data Tool. However, California needs a broader set of metrics that more 44 | LITTLE HOOVER COMMISSION Appendix: CERF, State Programs, and Regional Economic Development The following table highlights major programs that ◊ This table does not include general business tax align with CERF’s goals and could help advance credits or exemptions, like California’s Research regional economic development strategies, especially and Development tax credit (worth about $2.9 in inland and rural regions. Commission staff billion in 2019217) or the Manufacturing and identified $9.3 billion in one-time funding216 and Research & Development Equipment Exemption. $1.2 billion in annual continuing funding from the ◊ It generally does not include funding for physical 2021-22 and 2022-23 state budgets for 65 programs infrastructure, broadband expansion, or and investments that support workforce training, transportation. Although infrastructure is a key clean energy transition, business investment, and enabler for economic growth, this table focuses innovation and entrepreneurship. These programs on specific programmatic funding that has and investments span 21 departments and agencies. potential to more directly support CERF-aligned regional economic development projects. The Commission released an earlier version of this compilation in its August 2022 Issue Brief, Major ◊ It does not include programs that support State Programs that Can Support Regional Economic training or workforce development in health care, Development. The Commission has updated the education, or human services, sectors which may compilation to reflect the finalized 2022-2023 State be sources of quality jobs but that are unlikely to Budget. drive regional economic growth or assist directly with the diversification of regional economies. Readers should note that the programs in the table ◊ Finally, it only includes major programs, as below do not encompass all state dollars that may defined by those that have received $15 million help support inclusive regional economic strategies: or more in funding. Program Agency Description Funding Community Economic GO-Biz, Statewide initiative to support regional economic The 2021-22 budget provides $600 mil- Resilience Fund (CERF) LWDA, planning and the development of more equitable and lion one-time GF. and OPR sustainable regional economies. Regional Initiative for CalOSBA Provides financial and technical assistance to employ- $25 million one-time GF provided in the Social Enterprises ment social enterprises, which give on-the-job training 2022-23 budget. Program (CA Rise) and specialized supports to people who face high barri- ers to work. California Investment CPCFA Provides grants to community development financial $50 million one-time GF provided in the and Innovation Program institutions (CDFIs) to provide technical assistance and 2022-23 budget. capital access to economically disadvantaged communi- ties in the state. Capital Access Program CPCFA Encourages participating financial institutions to make The ARP provides $118 million in SSBCI for Small Business loans to small businesses that have difficulty obtaining funds. financing by helping cover potential losses. Collateral Support CPCFA Helps cover collateral shortfalls for loans made by par- The ARP provides $472 million in SSBCI Program ticipating financial institutions to small businesses that funds. have too little collateral, but would otherwise meet the institutions' standards for receiving a loan. Social Entrepreneurs for CWDB Provides microgrants, entrepreneurial training, and tech- $20 million one-time GF provided in the Economic Development nical assistance to target populations to support them in 2021-22 budget. Grant awards were (SEED) starting or maintaining a small business that addresses a announced around Spring 2022 and social problem or community need. the anticipated grant term is June 2022 through May 2024. EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 45 California Competes Go-Biz Tax credit available to businesses that want to locate The 2021-22 budget increases the tax (CalCompetes) Tax in California or stay and grow in the state and provide credit by $110 million (from $180 million Credit quality, full-time jobs. to $290 million) for the 2021-22 fiscal year. The 2022-23 budget extends the tax credit program from 2023-24 through 2027-28 at the current level of $180 million per year (previously set to sunset in 2022-2023). California Competes Go-Biz Provides grants to eligible businesses that want to locate $120 million one-time GF provided in the (CalCompetes) Grant in California or to stay, grow, and create quality full-time 2021-22 budget. The application period Program jobs in the state. for 2021-22 FY funding was open in early 2022. The 2022-23 budget provides $120 mil- lion one-time GF for a second year of the grant program. Inclusive Innovation Hub Go-Biz Designates and awards 10 entities (and an additional $2.5 million one-time GF provided in Program (iHub2) three per the 2022-23 budget) to nurture, develop, and the 2021-22 budget to revive the iHub provide seed funding to technology and science-based program. firms in underserved communities. The 2022-23 budget provides an addi- tional $20 million GF, to be spent over four years. Expanding Venture iBank Invests in underrepresented venture capital managers, The ARP provides $200 million ($150 Capital Access Program underrepresented and underserved entrepreneurs million to venture capital funds and $50 and business owners, and geographic areas that are million to businesses) in SSBCI funds. socio-economically disadvantaged or that receive very limited venture capital funding. Small Business Loan iBank Provides loan guarantees (of up to 80 percent of the The ARP provides $390 million in SSBCI Guarantee Program loan) to qualifying small businesses in low-to-moderate funds. income communities. Forest Health Program CAL FIRE Provides grants for projects that improve forest health $159 million one-time GF/GGRF provided and reduce greenhouse gas emissions in forests across in the 2021-22 budget. the state. The 2022-23 budget provides $240 million GF/GGRF, split evenly over two years. Fire Prevention Grant CAL FIRE Provides funding for fire prevention projects and activi- $120 million one-time GF/GGRF provided Program ties in and near fire-threatened communities that focus in the 2021-22 budget. on increasing the protection of people, structures, and communities. The 2022-23 budget provides $232 million one-time GF/GGRF, split over two years. Urban Forestry Grant CAL FIRE Provides grants to local governments and nonprofits $20 million one-time GF/GGRF provided Program for projects that include the planting of trees or other in the 2021-22 budget. vegetation, improving long-term forest management, or better utilizing wood waste. The 2022-23 budget provides $30 million one-time GF, split over two years. Incentives for Alter- CARB Provides incentives to support farmers in the San Joa- The 2021-22 budget provided $180 natives to Agricultural quin Valley in the transition from open burning to alter- million one-time GF, to be spent over Burning in the San native practices for the disposal of agricultural biomass. three years. Joaquin Valley Healthy Soils Program CDFA Provides grants for the implementation of conservation The 2021-22 budget provided $160 management practices that improve soil health, seques- million one-time, split between 2021-22 ter carbon, and reduce greenhouse gas (GHG) emissions. ($75 million) and 2022-23 ($85 million). Funding is a mix of GF ($135) and GGRF ($25 million). The 2022-23 budget provides $10 million in 2023-24. State Water Efficiency CDFA Provides incentives for farmers to implement irrigation $100 million one-time GF provided in the and Enhancement systems that conserve water and reduce GHG emissions 2021-22 budget, split evenly between Program (SWEEP) from irrigation water pumping. 2021-22 and 2022-23. The 2022-23 budget provides $60 million one-time GF, split over two years. 46 | LITTLE HOOVER COMMISSION Farm to School CDFA Competitive grant program that awards projects that cul- The 2021-22 budget provides $60 million Incubator Grant tivate equity, nurture students, build climate resilience, one-time GF, split evenly between 2021- Program and create scalable and sustainable change. 22 and 2022-23. The 2022-23 budget provides an addi- tional $30 million one-time GF, and $3 million ongoing GF. Fresno-Merced Future CDFA Seed funding for developing a regional hub to stimulate $30 million in one-time GF provided in of Food Innovation (F3) innovation in sustainable agriculture production and the 2021-22 budget. Initiative processing. Climate Innovation CEC Provides grants to California-based companies that The 2022-23 budget provides $525 Grant Program conduct research activities focused on technologies that million over four years ($100 million in help the state achieve its climate goals. 2022, 2023, and 2024 and $225 million in 2025). Zero-Emission Vehicle CEC Provides incentives and grants to eligible entities to de- The 2021-22 budget provided $250 mil- Package: Manufacturing velop advanced clean vehicle and fueling infrastructure lion one-time GF, evenly split between Grants technology. two years. Energy Package: Indus- CEC Provides funding to purchase and use commercial- The 2022-23 budget provides $100 mil- trial Decarbonization ly-available advanced technologies or develop new strat- lion one-time GF. Grant Program egies to reduce emissions at industrial facilities. Energy Package: Long CEC Incentivizes demonstrations and early-stage deployment The 2022-23 budget provides $140 mil- Duration Storage of nearly-commercialized long-duration energy storage lion one-time GF. Projects projects. Carbon Removal CEC Provides matching funding to supplement grants for The 2022-23 budget provides $100 Innovation research, development, and demonstration of carbon million one-time GF, split evenly over capture projects. two years. Energy Package: Green CEC Provides funding to advance the use and production of The 2022-23 budget provides $100 Hydrogen Projects green hydrogen technology. million GF to support the Hydrogen Pro- gram (CEC), plus $5 million GF to support hydrogen hubs (Go-Biz). Lithium Incentives CEC Provides incentives for projects that manufacture, The 2022-23 budget authorizes an ad- process, or recover lithium through a sales and use tax ditional $45 million of sales and use tax exclusion. exclusions ($15 million in the 2022, 2023, and 2024 calendar years). Electric Program Invest- CEC Funds investment to advance clean energy technologies The program renewed in September ment Charge (EPIC) Fund and approaches. 2020 for an additional 10 years by the CPUC with an annual budget of $147 mil- lion for the first five years. The program is funded through charges to electricity and natural gas users. Low Carbon Economy CWDB Funds projects that seek to provide comprehensive, The 2022-23 budget provides $45 million Grant Program high-quality workforce development to priority popula- one-time GF, available over three years. tions and facilitate GHG emission reductions. Regional Forest and Fire DOC Provides block grants to regional and statewide entities $60 million one-time GF/GGRF provided Capacity Program to facilitate regional coordination for forest health and in the 2021-22 budget. wildfire resilience. The 2022-23 budget provides $40 million one-time GF/GGRF, split evenly over two years. Climate Catalyst iBank Lends money to public and private entities for climate- The 2021-22 budget provided $31 mil- Revolving Loan Fund related projects. lion one-time GF in 2021-22 for forestry projects and $25 million one-time GF in 2022-23 for climate-related projects in the agriculture industry. The budget also made the revolving fund continuously appropriated and required iBank to adopt a financing plan. EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 47 Transformative Climate OPR The Transformative Climate Communities (TCC) Program The 2021-22 budget provides $420 mil- Communities Program funds development and infrastructure projects that lion one-time GF over three years, $115 achieve major environmental, health, and economic ben- million in 2021-22, $165 million in 2022- efits in California’s most disadvantaged communities. 23, and $140 million in 2023-24. Integrated Climate Ad- OPR Grant program open to local, regional, and tribal govern- The 2021-22 budget provided $25 aptation and Resiliency ments to implement regional projects aligned with the million in one-time funding, split be- Program (ICARP) Plan- priorities of the Integrated Climate Adaptation and Resil- tween 2021-22 ($10 million), 2022-23 ning Grants iency Program (ICARP), which seeks to improve regional ($10 million) and 2023-24 ($5 million). climate resilience and reduce risks from climate impacts. Applications for the first round are due in Fall 2022. Regional Climate SGC Assists disadvantaged and low-income communities The 2021-22 budget provided $20 mil- Collaboratives Program in accessing funding for climate change mitigation and lion in one-time GF, split evenly between adaptation projects by creating regional collaboratives. 2021-22 and 2022-23. California Renewable CCC Supports the creation of the California Renewable Ener- $50 million one-time Prop 98 GF provid- Energy Center of Excel- gy Center of Excellence in the Kern Community College ed in the 2022-23 budget. lence District. Inland Empire Technical CCC Supports acquisition of land on part of the Riverside $33 million one-time Prop 98 GF provid- Trade Center Community College District for construction of a future ed in the 2022-23 budget. Inland Empire Technical Trade Center. Clovis Community Col- CCC Supports construction of a new Applied Technology $25 million one-time GF provided in the lege Applied Technology building at Clovis Community College to support studies 2021-22 budget. Building in environmental, health occupation, water and waste- water, food processing, and electro-mechanical technol- ogies. Agri-food Technology CCC Supports the Agri-food Technology and Engineering $15 million one-time Prop 98 GF provid- and Engineering Work- Workforce Collaborative at Merced College. ed in the 2022-23 budget. force Collaborative Humboldt State CSU Supports Humboldt State University’s transition to be- The 2021-22 budget provided $433 University Polytechnic come a polytechnic university. million one-time GF to support Hum- Transition boldt State's transition to a polytechnic university, and $25 million ongoing GF to support the addition of academic programs, such as cybersecurity, wildfire management, and climate resilience. CSU Bakersfield Energy CSU Supports construction of the CSU Bakersfield Energy $83 million one-time GF provided in the Center Innovation Center. 2022-23 budget. Brawley Center, San CSU Expands the San Diego State University, Brawley Center $80 million one-time GF provided in the Diego State University in the Imperial Valley to support a local workforce pipe- 2022-23 budget. line. CSU University Farms CSU Supports equipment and facilities upgrades at the CSU $75 million one-time GF provided in the Upgrades University Farms. 2022-23 budget. UC Climate Initiatives UC Includes funding for seed and matching grants for The 2022-23 budget provides $100 climate-related research, regional climate technology million one-time GF for climate action incubators, and regional workforce and training hubs. research seed and matching grants, and grants for projects at UC Innovation and Entrepreneurship Centers to incentiv- ize and expand climate innovation and entrepreneurship. As well as $47 million one-time GF for cli- mate initiatives at UC Riverside and $18 million one-time GF for climate initiatives at UC Merced. UC Riverside Center of UC Funding supports the UC Riverside Center for Environ- $15 million one-time GF provided in the Environmental Research mental Research and Technology, a research center that 2021-22 budget. and Technology Facilities seeks to address environmental challenges in air quality, climate change, energy, and transportation. Workforce Training CAL FIRE & Supports community colleges and vocational training $18 million one-time GF/GGRF provided CWDB programs to train, develop, and certify forestry profes- in the 2021-22 budget. sionals and expand the workforce. The 2022-23 budget provides $30 million one-time GF, split evenly over two years. California Apprentice- CCC Supports the creation of new apprenticeships and Increase of $15 million Prop 98 GF pro- ship Initiative pre-apprenticeships in high-growth industries. vided in the 2021-2022 budget for a total of $30 million ongoing. Strong Workforce CCC Provides funding to improve and implement regionally- Increase of $42 million Prop 98 GF in Program aligned community college career technical education the 2021-22 budget for a total of $290 programs. million in ongoing funding. 48 | LITTLE HOOVER COMMISSION K-12 Strong Workforce CCC Provides grant funding to K-12 local education agencies This program receives $150 million Program (such as school boards) to create, support, or expand ongoing Prop 98 GF for grants. regionally-aligned career technical education programs. California Career Techni- CDE Competitive grant program open to local education Increase of $150 million ongoing Prop 98 cal Education Incentive agencies that seek to provide K-12 students with the GF provided in the 2021-22 budget for a Grant Program knowledge and skills needed to transition to employ- total of $300 million ongoing Prop 98 GF. ment and postsecondary education. California Partnership CDE A three-year program for students in grades 10-12 that This program receives $21 million ongo- Academies incorporates academic and career technical education, ing Prop 98 GF. partnerships with employers, internships, and mentor programs. Learning-Aligned CSAC Offers eligible students opportunities to earn money $500 million one-time GF provided in the Employment Program for their education costs while obtaining career-related 2021-22 budget, split between 2021-22 experienced in their area of study. ($200 million) and 2022-23 ($300 mil- lion). Supporting campuses will imple- ment the funds in the 2022-23 academic year. The 2022-23 budget provides an in- crease of $300 million one-time GF. Golden State Education CSAC Supports Californians who lost their jobs due to the The 2021-22 budget provided $500 and Training Grant pandemic with a grant for reskilling, up-skilling, and million ($472.5 million in one-time ARP Program accessing educational programs. funds and $27.5 million one-time GF). Full implementation is planned for late 2022. High Road Training CWDB Expands the High Road Training Partnership Program, The 2021-22 budget provided $100 mil- Partnership Program which provides funding for training programs to build lion one-time GF. Applications are open Expansion career pathways in a variety of fields, into new sectors. on a quarterly basis. California Youth Lead- CWDB Supports youth community pathway programs at select The 2022-23 budget provides $60 mil- ership Corps Earn-and- community colleges across California. lion one-time GF ($20 million annually Learn Pathways through 2024-25). Collaboration with Com- CWDB Builds new partnerships between the Workforce Devel- $60 million one-time GF provided in the munity Colleges opment Board and community colleges. Includes funding 2021-22 budget. for data improvements, High Road Training Partnerships aligned with community college curricula, and equity partnerships between local boards and community colleges. Regional Equity and CWDB Competitive grant program that bolsters partnerships $25 one-time GF provided in the 2021-22 Recovery Partnerships between local workforce development boards and com- budget. Grant awards were announced Grant (RERP Grant) munity college regional consortia aiming to incorporate in June 2022 and the estimated grant "high road" approaches to existing sector strategies and term is from December 2022 through career pathway programs. September 2025. The budget also includes $10 million Prop 98 GF for the state's community colleges to participate in these efforts. Breaking Barriers to CWDB Provides individuals with barriers to employment the $30 million one-time GF provided in the Employment services they need to enter, participate in, and complete 2021-22 budget. Applications are due in workforce programs aligned with regional labor market September 2022, awards are announced needs. in October 2022, and the grant term lasts from January 2023 to April 2024. Prison to Employment CWDB Supports regional and local planning and implementa- $20 million one-time GF provided in the tion efforts to integrate re-entry, workforce, and direct 2021-22 budget. Applications for funding services to formerly incarcerated and justice-involved are due in August 2022, and the estimat- individuals. ed grant term is from January 2023 to December 2025. Well-Capping Workforce CWDB Funds development of a workforce training pilot pro- The 2022-23 budget provides $20 million Pilot for Displaced Oil gram to train displaced oil and gas workers in remediat- one-time GF. and Gas Workers ing legacy oil infrastructure. Regional K-16 Education DGS Competitive grant program designed to support regional $250 million one-time GF provided in the Collaboratives K-16 collaboratives that create streamlined pathways 2021-22 budget. The K-16 Program uses from high school to postsecondary education to in- a two-phase approach. Phase one grants demand jobs. were awarded in Spring 2022. Phase two planning grant applications are due in Fall 2022 and implementation grant applications are due in Fall 2023. California Youth Appren- DIR Supports the expansion of apprenticeship and pre- The 2022-23 budget provides $65 million ticeship Program apprenticeship opportunities for 16- to 24-year-olds one-time GF ($20 million in 2022-23 and who are unhoused, in the welfare or juvenile justice 2023-24, and $25 million in 2024-25). systems, or otherwise facing barriers to labor market participation. EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 49 Employment Training EDD Provides training grants to businesses in support of The program is typically funded by a 0.1 Panel workforce training for new and existing employees. percent statewide payroll tax (funding about $100 million in programs annu- ally). Additionally, the 2021-22 budget provided $65 million one-time GF, $15 million of which is directed toward train- ing programs that align with community college workforce training programs. Apprenticeship Innova- LWDA Invests in and expands non-traditional apprenticeships. The 2022-23 budget provides $175 tion Funding Program million one-time GF, split between three years ($55 million in 2022-23, and $60 million in 2023-24 and 2024-25). Californians for All Col- OPR Provides paid service opportunities for college students The 2021-22 budget provided $146.3 lege Service Program to address statewide challenges. million in one-time funding ($18.8 GF and $127.5 ARP). Implementation for 2021-22 budget funding is split into two cohorts, the first is from August 2022 to July 2023 and the second is from August 2023 to June 2024. The 2022-23 budget provides $146.2 million one-time GF ($73.1 million each in 2024-25 and 2025-26). California Volunteers: OPR Provides funds to administer grants to cities and coun- $200 one-time ARP funds provided in Youth Workforce Devel- ties to develop or expand youth job opportunities. Pro- the 2021-22 budget. Funding applica- opment grams that focus on climate, food insecurity, and local tions were due and approved in early pandemic recovery will receive preferential scoring. 2022. All funds must be obligated by June 2024. California Volunteers: OPR Provides job training and employment services as well as $25 million one-time GF provided in the Summer Youth Jobs job opportunities for youth in areas including COVID-19 2022-23 budget to continue the Jobs Programs recovery, food insecurity, and climate action. Corps program. Regional Business Clean Energy and Investments in Training, Workforce Economic Development Climate-Related Institutions of Development, and Development and Incentives Programs Higher Education Career Pathways STATE AGENCY & DEPARTMENT ABBREVIATIONS ◊ EDD = Employment Development Department ◊ Cal Fire = Department of Fire and Forestry ◊ Go-Biz = Governor’s Office of Business and Economic Development ◊ CCC = California Community Colleges ◊ iBank = California Infrastructure and Economic Development ◊ CalOSBA = California Office of the Small Business Advocate Bank ◊ CARB = California Air Resources Board ◊ LWDA = Labor and Workforce Development Agency ◊ CDE = California Department of Education ◊ OPR = Governor’s Office of Planning and Research ◊ CDFA = California Department of Food and Agriculture ◊ SGC = Strategic Growth Council ◊ CEC = California Energy Commission ◊ UC = University of California ◊ CPCFA = California Pollution Control Financing Authority ◊ CSAC = California Student Aid Commission FUND ABBREVIATIONS ◊ CSU = California State University ◊ ARP = American Rescue Plan ◊ CWDB = California Workforce Development Board ◊ GF = General Fund ◊ DGS = Department of General Services ◊ GGRF = Greenhouse Gas Reduction Fund ◊ DIR = Department of Industrial Relations ◊ SSBCI = State Small Business Credit Initiative ◊ DOC = Department of Conservation 50 | LITTLE HOOVER COMMISSION Funding by Program Categories Number of Number of Number of Percent Programs Percent Programs Total Programs Total of Total Receiving BOTH of Total Category Receiving One-Time Receiving JUST Continuing One-Time One-Time and Continuing JUST One- Funding: Continuing Funding: Funding Continuing Funding Time Funding Funding Funding Regional Economic 1 $600 Million 6% 0 0 $0 0% Development Business Development and 9 $1.6 Billion 18% 1 0 $180 Million 14% Incentives Clean Energy and Climate-Related 20 $3.4 Billion 36% 1 1 $150 Million 12% Programs Investments in Institutions of 9 $974 Million 10% 1 0 $25 Million 2% Higher Education Training, Workforce Development, and 16 $2.7 Billion 29% 1 5 $891 Million 72% Career Pathways Total: 55 $9.3 Billion 100% 4 6 $1.2 Billion 100% EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 51 Notes 1. How the eight counties of the San Joaquin Valley New Threats Loom for Economy,” The Sacramento region would rank among states in terms of income Bee (September 26, 2019), https://www.sacbee.com/ varies depending on data source and measure. U.S. news/california/big-valley/article233551287.html. Census Bureau and Bureau of Economic Analysis 3. Egon Terplan, Former Senior Advisor for Economic measures for per capita income differ, but both Development and Transportation, California Strategic would appear to place the San Joaquin Valley Growth Council, Testimony to the Commission, June among the states with lowest per capita incomes. 23, 2022. According to data from the Bureau of Economic Analysis, average estimated per capita income in 4. Sean Randolph and Brian Brennan, The Future of the San Joaquin Valley in early 2020 was $47,399— Advanced Technology and Basic Research: A California greater only than Mississippi ($42,716), West Virginia, 100 Report on Policies and Future Scenarios (California ($45,240), Alabama ($46,179) New Mexico ($46,760), 100, March 2022), pp. 24-25. Retrieved from: https:// Arkansas ($47,154), Meanwhile, according to data california100.org/app/uploads/2022/03/The-Future- from the U.S. Census Bureau, average estimated of-Advanced-Technology-and-Basic-Research- per capita income in the San Joaquin Valley in 2021 ISSUE-REPORT-Single-pages-Round-3-2.pdf. Arielle was about $27,800, lower than any state other than Pardes, “Is Silicon Valley Dead? Not According to Mississippi ($26,950). The San Joaquin Valley fares Venture Dollars,” Wired (April 14, 2021), https://www. better in comparison to states, however, when wired.com/story/silicon-valley-dead-not-according- looking at median household income. According to to-venture-capital/. California Manufacturing the U.S. Census Bureau, average estimated median Technology Consulting, “5 Statistics that Show household income for the San Joaquin Valley was California Manufacturing is Alive and Well,” (October $65,621 in 2021, significantly higher than median 13, 2022), https://www.cmtc.com/blog/statistics- household income in Mississippi ($48,716) or West california-manufacturing-jobs. Virginia ($51,248) and more comparable to median household income in Ohio ($62,262) and Maine 5. Randolph and Brennan, The Future of Advanced ($64,767). On the basis of average median household Technology and Basic Research, pp. 21-22, see endnote income, the San Joaquin Valley would appear to fall 4. For anecdotal discussion of California state at the bottom of the middle quintile of states by support for innovation and commercialization, see median household income. Data on income is from Dustin Gardiner, “Newsom Says ‘There is No Tesla the Federal Reserve Economic Data Source, at the St. without’ California. Here’s How Much Money it Has Louis Federal Reserve Bank, https://fred.stlouisfed. Received from the State,” The San Francisco Chronicle org/series/PPAACA06029A156NCEN and from the (September 28, 2022), https://www.sfchronicle.com/ U.S. Census Bureau, 2021 American Community politics/article/Does-Tesla-owe-all-its-success-to- Survey 1-Year Estimates, Tables B19013 and B19301, California-17473046.php. https://data.census.gov/cedsci/table?q=Table%20 B19013 and https://data.census.gov/cedsci/ 6. Egon Terplan, see endnote 3. table?q=Table%20B19301. 7. Joseph Parilla, Opportunity for Growth: How 2. For examples, see “The Appalachia of the West,” Reducing Barriers to Economic Inclusion Can Benefit The Economist (January 21, 2010), https://www. Workers, Firms, and Local Economies (Brookings economist.com/united-states/2010/01/21/the- Institution, September 2017), p. 8. Retrieved appalachia-of-the-west; Dale Kasler, “How the Central from: https://www.brookings.edu/wp-content/ Valley Became the ‘Appalachia of the West.’ Now, uploads/2017/09/metro_20170927_opportunity-for- 52 | LITTLE HOOVER COMMISSION growth-iedl-report-parilla-final.pdf. Assessment Data Book and Findings (March 2021), pp. 31, 40, 54. Retrieved from: https://b3kprosperity. 8. Joseph Parilla, Ryan Donahue, and Sarena org/wp-content/uploads/2022/06/B3K-Market- Martinez, Institutionalizing Inclusive Growth: Rewiring Assessment-FINAL_031821-3.pdf. Sarah Bohn, Systems to Rebuild Local Economies (Brookings Marisol Cuellar Mejia, and Julien Lafortune, “Farms, Institution, April 2022), p. 21. Retrieved from: https:// Freight, and Retail Support the Recovery in Central www.brookings.edu/research/institutionalizing- California,” (Public Policy Institute of California, Blog inclusive-growth-rewiring-systems-to-rebuild-local- Post, April 22, 2021), https://www.ppic.org/blog/ economies/. farms-freight-and-retail-support-the-recovery-in- central-california/. 9. Enrico Moretti, The New Geography of Jobs (Boston and New York: Houghton Mifflin Harcourt, 2012), 14. For recent discussion of the controversies pp. 1-3. Lenny Mendonca, former Chief Economic around the expansion of warehouses, see Steven and Business Advisor to Governor Gavin Newsom, Scauzillo, “Pushback against Warehouses in the Testimony to the Commission, May 26, 2022. Inland Empire Gains Momentum,” The Press-Enterprise (October 7, 2021), https://www.pe.com/2021/10/07/ 10. Ryan Nunn, Jana Parsons, and Jay Shambaugh, pushback-against-warehouses-in-the-inland-empire- “The Geography of Prosperity,” in Jay Shambaugh gains-momentum/. Kurtis Lee, “As Warehouses and Ryan Nunn, eds., Place-Based Policies for Multiply, Some Cities Say: Enough,” The New York Shared Economic Growth (The Hamilton Project, Times (October 10, 2022), https://www.nytimes. September 2018), p. 38. Retrieved from: https:// com/2022/10/10/business/economy/warehouses- www.hamiltonproject.org/assets/files/ES_THP_PBP_ moratorium-california.html. book_20190425.pdf. Robert D. Atkinson, Mark Muro, and Jacob Whiton, The Case for Growth Centers: How 15. Christopher Thornberg, Rising High Requires To Spread Tech Innovation across America (Brookings the Right Foundation: Understanding the Economies Institution and Information Technology & Innovation of Inland California (UC Riverside Center for Foundation, December 2019), pp. 10-12. Retrieved Economic Forecasting & Development, Economy from: https://www.brookings.edu/wp-content/ White Paper Series, October 2019), pp. 3-4, 9. uploads/2019/12/Full-Report-Growth-Centers_PDF_ Retrieved from: https://ucreconomicforecast. BrookingsMetro-BassCenter-ITIF.pdf. org/wp-content/uploads/2019/10/UCR_CEFD_ White_Paper_Regions_Rise_10_2019.pdf. Shearer, 11. Atkinson, Muro, and Whiton, The Case for Growth Shah, and Gootman, Advancing Opportunity in Centers, p. 18, see endnote 10. California’s Inland Empire, pp. 14-18, see endnote 13. 12. Randolph and Brennan, The Future of Advanced Stanislaus 2030, Stanislaus 2030 Market Assessment Technology and Basic Research, p. 26, see endnote 4. (February 9, 2022 – Draft), pp. 1-2, 8. Retrieved from: https://www.stanislaus2030.com/_files/ 13. Chad Shearer, Isha Shah, and Marek Gootman, ugd/0c11f8_145126125e3a44d3994e31f5f4ac49d4. Advancing Opportunity in California’s Inland Empire pdf. Stanislaus 2030, Stanislaus 2030 Investment (Brookings Institution, February 26, 2019). Retrieved Blueprint & Action Plan (2022), pp. 6-9. Retrieved from: https://www.brookings.edu/wp-content/ from: https://www.stanislaus2030.com/_files/ uploads/2019/02/Full-Report_Opportunity-Industries_ ugd/109bc6_058b19f743d14f8d946f021a9f382e03. Inland-California_Final_Shearer-Shah-Gootman.pdf. A pdf. Better Bakersfield and Boundless Kern (B3K), Market EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 53 16. Data on struggling families by region is from Sifan 22. Fresno DRIVE (Developing the Region’s Inclusive Liu and Joseph Parilla, How Family Sustaining Jobs and Vibrant Economy), Greater Fresno Region 10- Can Power an Inclusive Recovery in America’s Regional Year Investment Plan (October 31, 2019), pp. 18-20. Economies (Brookings Institution, February 18, 2021), Retrieved from: https://www.fresnodrive.org/_files/ https://www.brookings.edu/essay/how-family- ugd/69d6c8_96962f42d00c4bbe8482ef2a7bb17f80. sustaining-jobs-can-power-an-inclusive-recovery-in- pdf. americas-cities/. 23. For example, see Derek Thompson, “The 17. U.S. Bureau of Labor Statistics, Unemployment Superstar Cities Are in Trouble,” The Atlantic (February Rates for Metropolitan Areas, https://www.bls.gov/ 1, 2021), https://www.theatlantic.com/ideas/ web/metro/laummtrk.htm. Employment rates (which, archive/2021/02/remote-work-revolution/617842/. unlike the unemployment rate, include the entire This commentary is also summarized in Mark Muro working-age population and not just those who are et al., “Remote Work Won’t Save the Heartland,” employed or looking for work) in inland regions Brookings – The Avenue, June 24, 2021, https://www. also tend to be significantly lower than in coastal brookings.edu/blog/the-avenue/2021/06/24/remote- metropolises, suggesting that these regions have work-wont-save-the-heartland/. more residents who have dropped out of the labor 24. Marek Gootman, Senior Fellow at the Brookings market. For regional employment rates, see the Institution, Testimony to the Commission, May 26, Brookings Metro Monitor, https://www.brookings. 2022. edu/interactives/metro-monitor-2021/. 25. Mark Muro and Yang You, Superstars, Rising 18. U.S. Census Bureau, 2021 American Community Stars, and the Rest: Pandemic Trends and Shifts in Survey 1-Year Estimates, Table B15002, https:// the Geography of Tech (Brookings Institution, March data.census.gov/cedsci/table?q=Table%20 8, 2022), https://www.brookings.edu/research/ B15002&tid=ACSDT1Y2021.B15002. superstars-rising-stars-and-the-rest-pandemic- 19. Sarah Bohn, Dean Bonner, Julien Lafortune, trends-and-shifts-in-the-geography-of-tech/. and Tess Thorman, Income Inequality and Economic 26. The rate of growth in tech employment in Opportunity in California (PPIC, December 2020). Stockton, for example, increased in 2020, but, Retrieved from: https://www.ppic.org/wp-content/ according to data reported by Brookings, this uploads/incoming-inequality-and-economic- amounted to a gain of nine tech workers. Muro opportunity-in-california-december-2020.pdf. Sarah and You, Superstars, Rising Stars, and the Rest, Data Bohn, Tess Thorman, and Joseph Herrera, Income Appendix, see endnote 25. Inequality in California (PPIC, Fact Sheet, July 2022). Retrieved from: https://www.ppic.org/wp-content/ 27. Conor Dougherty, “The Californians Are Coming. uploads/income-inequality-in-california.pdf. So Is Their Housing Crisis,” The New York Times (February 12, 2021, updated October 8, 2021), https:// 20. Shearer, Shah, and Gootman, Advancing www.nytimes.com/2021/02/12/business/economy/ Opportunity in California’s Inland Empire, p. 21, see california-housing-crisis.html. Researchers at the endnote 13. Federal Reserve Bank of San Francisco attribute most 21. B3K, Market Assessment Data Book and Findings, p. of the surge in housing prices between 2019 and 47, see endnote 13. 2021 to the increase in remote work, in combination with migration to places attractive to remote work. 54 | LITTLE HOOVER COMMISSION John Mondragon and Johannes Wieland, “Housing 34. Timothy J. Bartik, Should Place-Based Jobs Policies Demand and Remote Work,” NBER Working Paper Be Used to Help Distressed Communities? (Upjohn Series (Working Paper 30041, May 2022). Retrieved Institute Working Papers, August 1, 2019), pp. 10- from: https://www.nber.org/system/files/working_ 13, 25-26. Retrieved from: https://research.upjohn. papers/w30041/w30041.pdf. Augustus Kmetz, org/cgi/viewcontent.cgi?article=1326&context=up_ John Mondragon, and Johannes Wieland, “Remote workingpapers. Timothy J. Bartik, Bringing Jobs to the Work and Housing Demand,” Federal Reserve Bank People: Improving Local Economic Development Policies of San Francisco Economic Letter (September 26, (The Aspen Institute – Economic Strategy Group, 2022), https://www.frbsf.org/economic-research/ August 5, 2020), pp. 142-143, 155-159. Retrieved publications/economic-letter/2022/september/ from: https://live-aspen-economic-strategy-group. remote-work-and-housing-demand/. pantheonsite.io/wp-content/uploads/2020/12/6.- Bartik.pdf. 28. Fresno DRIVE, Greater Fresno Region 10-Year Investment Plan, p. 17, see endnote 22. Shearer, Shah, 35. Marek Gootman, see endnote 24. These and Gootman, Advancing Opportunity in California’s components are discussed in detail in the Stanislaus Inland Empire, pp. 6, 8, 13, 34-35, see endnote 13. 2030 Market Assessment, pp. 4-5, and Stanislaus B3K, Market Assessment Data Book and Findings (March 2030 Investment Blueprint, p. 11, see endnote 2021), pp. 25-26, see endnote 13. Stanislaus 2030, 15. See also, Joseph Parilla, Sifan Liu, and Marek Stanislaus 2030 Market Assessment, pp. 9-13, and Gootman, Charting a Course to the Sacramento Stanislaus 2030, Stanislaus 2030 Investment Blueprint Region’s Future Economic Prosperity (Brookings & Action Plan, pp. 5-6, see endnote 15. Institution, April 2018). Retrieved from: https:// www.brookings.edu/wp-content/uploads/2018/04/ 29. Paul Granillo, President and CEO of the Inland sacramentoregioneconomicprosperity_fullreport.pdf. Empire Economic Partnership, Testimony to the Commission, May 26, 2022. 36. Bartik, Should Place-Based Jobs Policies Be Used to Help Distressed Communities?, pp. 10-13, 25-26, and 30. Marek Gootman, see endnote 24. Bartik, Bringing Jobs to the People, pp. 142-143, 155- 159, see endnote 34. 31. For example: Parilla, Opportunity for Growth, see endnote 7. Parilla, Donahue, and Martinez, 37. Bartik, Bringing Jobs to the People, pp. 159-160, see Institutionalizing Inclusive Growth, see endnote 8. Erika endnote 34. Poethig, et al., Inclusive Recovery in US Cities (Urban Institute, April 2018). Retrieved from: https://www. 38. Ryan Donahue, Joseph Parilla, and Brad urban.org/research/publication/inclusive-recovery- McDearman, Rethinking Cluster Initiatives (Brookings us-cities. Molly Dow, Sarah Hooker Bentley, and Institution, July 2018), pp. 7-8, 38-39. Retrieved Alison Schmitt, Co-Designing a Recovery for All: A Vision from: https://www.brookings.edu/wp-content/ for Inclusive Regional Economic Development (Jobs for uploads/2018/07/201807_Brookings-Metro_ the Future, January 2021). Retrieved from: https:// Rethinking-Clusters-Initiatives_Full-report-final.pdf. www.jff.org/documents/3719/Co-Designing_a_ 39. Bartik, Bringing Jobs to People, p. 160, see endnote Recovery_for_All.pdf. 34. 32. Marek Gootman, see endnote 24. 40. Bartik, Bringing Jobs to People, p. 160, see endnote 33. Marek Gootman, see endnote 24. 34. Donahue, Parilla, and McDearman, Rethinking EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 55 Cluster Initiatives, pp. 42-43, see endnote 38. Office of Community Planning and Development, https://www.hud.gov/program_offices/comm_ 41. Dr. Rosibel Ochoa, Associate Vice Chancellor, planning/communitydevelopment. Accessed October Office of Technology Partnerships, UC Riverside, 5, 2022. Conversation with Commission staff, June 28, 2022; Helle Peterson, Director, WET Center at California 46. Melissa James, President and CEO of REACH, State University, Fresno, Conversation with Interview with Commission staff, July 13, 2022. Commission staff, August 8, 2022. 47. Ashley Swearengin, President and CEO, Central 42. Timothy J. Bartik, “Using Place-Based Jobs Policies Valley Community Foundation, Testimony to the to Help Distressed Communities,” Journal of Economic Commission, May 26, 2022. Perspectives 34, no. 3 (Summer 2020), p. 112. 48. Liu and Parilla, How Family Sustaining Jobs Can Retrieved from https://www.aeaweb.org/articles/pdf/ Power an Inclusive Recovery in America’s Regional doi/10.1257/jep.34.3.99. Bartik, Bringing Jobs to the Economies, p. 13, see endnote 16. People, p. 160, see endnote 34. Donahue, Parilla, and McDearman, Rethinking Cluster Initiatives, p. 43, see 49. Egon Terplan, see endnote 3. endnote 38. 50. Inland regions generally appear to have notable 43. Bartik, Bringing Jobs to the People, pp. 165- strengths in manufacturing. Between 2010 and 167, see endnote 34; Martin Neil Baily and 2019, jobs in manufacturing grew by 15.3 percent Nicholas Montalbano, Clusters and Innovation in Fresno and by 21.2 percent in the Inland Empire, Districts: Lessons from the United States Experience significantly outpacing manufacturing job growth in (Economic Studies at Brookings, May 2018), pp. California (7.8 percent) and the national average (12.8 26-9. Retrieved from: https://www.brookings. percent). California Manufacturers and Technology edu/wp-content/uploads/2018/05/es_20180508_ Association, State of California Manufacturing bailyclustersandinnovation.pdf. (February 28, 2020). Retrieved from: https://cmta.net/ multimedia/state_of_mfg.pdf. 44. The Congressional Research Service observes that there is no common definition for economic 51. Fresno DRIVE, Greater Fresno Region 10-Year development. The definition used here is derived Investment Plan, pp. 30-32, 41-21, see endnote 22. from that used by the U.S. Economic Development Deborah Nankivell, CEO, Fresno Business Council, Administration and from the discussion of economic Conversation with Commission staff, March 30, 2022. development in other reports and studies cited. Congressional Research Service, Federal Resources 52. Shearer, Shah, and Gootman, Advancing for State and Local Economic Development (R46683, Opportunity in California’s Inland Empire, pp. 52- Updated December 22, 2021), p. 1. Retrieved from: 53, see endnote 13. Inland Economic Growth and https://crsreports.congress.gov/product/pdf/R/ Opportunity (IEGO), Middle-Class Jobs for a Fast- R46683. U.S. Economic Development Administration, Growing Region (April 2019). Retrieved from: https:// Key Definitions, https://eda.gov/performance/key- iegocollab.com/wp-content/uploads/2022/06/IEGO- definitions/. Accessed October 5, 2022. april2019.pdf. 45. The definition for community development 53. B3K, Market Assessment Data Book and Findings, used here is adapted from that used by the U.S. pp. 35-41, see endnote 13. Nick Ortiz, President and Department of Housing and Urban Development’s CEO, Greater Bakersfield Chamber of Commerce, 56 | LITTLE HOOVER COMMISSION Conversation with Commission staff, May 20, 2022. 62. Donahue, Parilla, and McDearman, Rethinking Cluster Initiatives, p. 35, see endnote 38. 54. Stanislaus 2030, Stanislaus 2030 Market Assessment, pp. 21-25, and Stanislaus 2030, Stanislaus 63. Mikhail Zinshteyn, “Will California Make Up 2030 Investment Blueprint & Action Plan, pp. 38-40, see for UC Riverside Being Less Popular with Out-Of- endnote 15. State Students?” CalMatters (June 15, 2022), https:// calmatters.org/education/higher-education/2022/06/ 55. Fresno DRIVE, Greater Fresno Region 10-Year uc-riverside-funding/. Investment Plan, pp. 36-38, see endnote 22. B3K, Market Assessment Data Book and Findings, pp. 85- 64. E. Jason Baron, Shawn Kantor, and Alexander 87, see endnote 13. Stanislaus 2030, Stanislaus 2030 Whalley, “Extending the Reach of Research Market Assessment, pp. 13-14, 46-47, and Stanislaus Universities: A Proposal for Productivity Growth in 2030, Stanislaus 2030 Investment Blueprint & Action Lagging Communities,” in Jay Shambaugh and Ryan Plan, pp. 17-24, see endnote 15. Nunn, eds., Place-Based Policies for Shared Economic Growth (The Hamilton Project, September 2018). 56. Organisation for Economic Co-operation Retrieved from: https://www.hamiltonproject.org/ and Development (OECD), “Thinking Global, assets/files/ES_THP_PBP_book_20190425.pdf. Developing Local: Tradable Sectors, Cities, and Their Role for Catching Up,” in Productivity and Jobs 65. Baron, Kantor, and Whalley, “Extending the Reach in a Globalised World: (How) Can All Regions Benefit? of Research Universities,” pp. 165-170, see endnote (OECD, April 2018), p. 62. Accessed from: https:// 64. www.oecd-ilibrary.org/employment/productivity- 66. Baron, Kantor, and Whalley, “Extending the Reach and-jobs-in-a-globalised-world/thinking-global- of Research Universities,” pp. 166, 171-172, see developing-local-tradable-sectors-cities-and-their- endnote 64. role-for-catching-up_9789264293137-5-en. 67. Ben Armstrong, “Brass Cities: Innovation 57. OECD, “Thinking Global, Developing Local: Policy and Local Economic Transformation” Tradable Sectors, Cities, and Their Role for Catching (PhD Dissertation: MIT, 2019), pp. 161-162, 272- Up,” pp. 60, 76, see endnote 56. 273. Retrieved from: https://dspace.mit.edu/ 58. Marek Gootman, see endnote 24. handle/1721.1/122404. 59. Lenny Mendonca, see endnote 9. 68. Marek Gootman, see endnote 24. 60. Chad Shearer and Isha Shah, Opportunity 69. Ana Gutierrez, Senior Director, Jobs for the Industries: Exploring the Industries that Concentrate Future, Conversation with Commission staff, April 20, Good and Promising Jobs in Metropolitan America 2022. (Brookings Institution, December 2018). Retrieved 70. Alison Schmitt, Ana Gutierrez, and Sarah Hooker, from: https://www.brookings.edu/wp-content/ Inclusive Economic Development: Good for Growth and uploads/2018/12/2018.12_BrookingsMetro_ Good for Communities (Jobs for the Future, January Opportunity-Industries_Report_Shearer-Shah.pdf. 9, 2020), p. 5. Retrieved from https://www.jff.org/ 61. Marek Gootman, see endnote 24. Lenny resources/inclusive-economic-development-good- Mendonca, see endnote 9. growth-and-good-communities/. EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 57 71. Parilla, Opportunity for Growth, pp. 9-22, see Retrieved from: https://www.nber.org/system/files/ endnote 7. working_papers/w28736/w28736.pdf. 72. Ryan Donahue, Brad McDearman, and Rachel 79. Brett Theodos, Examining the Assumptions behind Barker, Committing to Inclusive Growth: Lessons for Place-Based Programs (Urban Institute, June 2021), Metro Areas from the Inclusive Economic Development p. 9. Retrieved from: https://www.urban.org/sites/ Lab (Brookings Institution, September 2017), pp. default/files/publication/104334/examining-the- 14-17. Retrieved from: https://www.brookings.edu/ assumptions-behind-place-based-programs2.pdf. wp-content/uploads/2017/09/metro_20170927_ 80. Karen Suarez, Testimony to the Commission, May committing-to-inclusive-growth-iedl-report.pdf. 26, 2022. 73. Lee Ann Eager, President and CEO, Fresno County 81. Marek Gootman, see endnote 24. EDC, Conversation with Commission staff, June 16, 2022. 82. Karen Suarez, see endnote 80. 74. Karen Suarez, Director, Uplift San Bernardino, and 83. Fresno DRIVE, Greater Fresno Region 10-Year Co-Chair, IEGO, Conversation with Commission staff, Investment Plan, see endnote 22. April 25, 2022; Tremaine Mitchell, Executive Director of the Youth Action Project in San Bernardino, 84. Darrene Hackler, Fresno DRIVE: Drilling Down Conversation with Commission staff, May 10, 2022. to Address a History of Inequitable Growth (Pew Alison Schmitt and Molly Dow, How Can California’s Charitable Trusts: December 2020), pp. 2-4. Retrieved Regional Investments Catalyze Inclusive Economic from: https://smartincentives.org/wp-content/ Development? (Jobs for the Future, June 2022), p. 6. uploads/Fresno-DRIVE-Case-Study.pdf. Retrieved from: https://www.jff.org/documents/3766/ Irvine_Better_Careers_Policy.pdf. 85. Fresno DRIVE, Greater Fresno Region 10-Year Investment Plan, p. 21, see endnote 22. 75. Cassandra Little, CEO, Fresno Metro Black Chamber of Commerce, Conversation with 86. Fresno DRIVE, Greater Fresno Region 10-Year Commission staff, August 25, 2022. Tahra Goraya, Investment Plan, p. 27, see endnote 22. President and CEO, Monterey Bay Economic 87. Lindsay Fox, President and CEO, United Way Partnership, Conversation with Commission Staff, Fresno and Madera Counties, Conversation with September 13, 2022. Commission staff, May 5, 2022 76. Parilla, Opportunity for Growth, pp. 17-18, 30-32, 88. Hackler, Fresno DRIVE, pp. 4-5, 19-22, see endnote see endnote 7. Poethig, et al., Inclusive Recovery in US 84. Cities, pp. 36-37, see endnote 31. 89. Shearer, Shah, and Gootman, Advancing 77. Parilla, Opportunity for Growth, pp. 18-21, 32- Opportunity in California’s Inland Empire, see endnote 35, see endnote 7. Schmitt, Gutierrez, and Hooker, 13. Inclusive Economic Development, p. 6, see endnote 70. 90. IEGO, Middle-Class Jobs for a Fast-Growing Region, 78. Dani Rodrik and Stefanie Stantcheva, “A Policy see endnote 52. Matrix for Inclusive Prosperity,” NBER Working Paper Series (Working Paper 28736, April 2021), p. 2. 91. Lenny Mendonca, see endnote 9. 58 | LITTLE HOOVER COMMISSION 92. Lenny Mendonca, see endnote 9. California 101. Marian Kaanon, President and CEO, Stanislaus Forward, Empowering Communities through Inclusive, Community Foundation, Conversation with Regional Economic Development (California Forward Commission staff, May 17, 2022. and California Stewardship Network, May 2022), 102. Alex Avila, Co-Founder, Black Brown Economic pp. 13, 23. Retrieved from: https://cafwd.box.com/ Empowerment Partnership and the Inland shared/static/co1tyduapdv1896y8n0u8kdij8r59kn4. Empire Multicultural Collective, Conversation with pdf. Commission staff, July 25, 2022. 93. Dr. Tania Pacheco-Werner, Co-Director, Central 103. Alex Avila, see endnote 102. Valley Health Policy Institute, Conversation with Commission staff, June 1, 2022. 104. Lenny Mendonca, see endnote 9. 94. Cassandra Little, see endnote 75. 105. Bartik, Bringing Jobs to the People, p. 23, see endnote 34. B3K, Market Assessment Data Book and 95. Lindsay Fox, see endnote 87; Carlos Huerta, Findings, p. 115, see endnote 13. Associate Director, Center for Community Transformation at Fresno Pacific University, 106. Ashley Swearengin, see endnote 47. Conversation with Commission staff, June 28, 2022; Lynisha Senegal, Executive Director, Helping Others 107. Paul Granillo, see endnote 29; Annalisa Siregar- Pursue Excellence, Conversation with Commission Wurm, Associate Director of Regional Stewardship, staff, July 11, 2022. California Forward, Conversation with Commission staff, June 2, 2022. California Forward, Empowering 96. Will Oliver, Vice President of Business Services, Communities through Inclusive, Regional Economic Fresno County EDC, and Christopher Zeitz, Development, p. 24, see endnote 92. Special Projects Coordinator, Fresno County EDC, Conversation with Commission staff, May 12, 2022. 108. Dr. Tania Pacheco-Werner, see endnote 93; Cassandra Little, see endnote 75. 97. Kurt Madden, CEO of Career Nexus, Conversation with Commission staff, April 27, 2022. 109. Quoted in Chantel Rush, Joseph Schilling, and Gretchen Moore, “A Strategic Plan to Rebalance 98. Genelle Taylor Kumpe, CEO of the San Joaquin Power in Fresno for Inclusive and Equitable Growth,” Valley Manufacturing Alliance and COO of the Fresno Stanford Social Innovation Review (November 4, 2020), Business Council, Conversation with Commission https://ssir.org/articles/entry/a_strategic_plan_to_ staff, May 4, 2022. rebalance_power_in_fresno_for_inclusive_and_ equitable_growth. Lindsay Fox, see endnote 87. 99. Quoted in Erika Poethig, “Shining Light on Inclusive Recovery in the Aftermath of COVID-19,” 110. Michelle Decker, CEO and President, Inland https://www.urban.org/research-action-lab/projects/ Empire Community Foundation, and Jackie inclusive-recovery-insights/shining-light-on-inclusive- Melendez, Executive Director, IEGO, Conversation recovery-in-the-aftermath-of-covid-19. Accessed May with Commission staff, May 2, 2022. Rebecca Ruan- 10, 2022. O’Shaughnessy and Alison Schmitt, Decision Points for IEGO’s Path Forward: An Implementation Blueprint 100. J.P. Lake, Executive Director, B3K, Conversation to Spur Inclusive Growth. Part 2: Analysis and Decision with Commission Staff, May 31, 2022. Points (Jobs for the Future, April 2020), p. 7. Retrieved EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 59 from: https://iegocollab.com/assets/pdf/Part-2- 123. Alex Avila, see endnote 102. Analysis-and-Decision-Points.pdf. 124. Alex Avila, see endnote 102; Karen Suarez, see 111. Alex Avila, Testimony to the Commission, May endnotes 74 and 80. 26, 2022. 125. Paul Granillo, see endnote 29. Judith Innes and 112. Alex Avila, see endnote 111. Jane Rongerude, Collaborative Regional Initiatives: Civic Entrepreneurs Work to Fill the Governance Gap 113. Alex Avila, see endnote 111. (The James Irvine Foundation, November 2005). Retrieved from: https://folio.iupui.edu/bitstream/ 114. Michelle Decker and Jackie Melendez, see handle/10244/46/insight_CRI.pdf?sequence=1. endnote 110. 126. Paul Granillo, see endnote 29. 115. Alison Schmitt, Molly Dow, and Sanjana Seth, Cluster-Based, Inclusive Regional Economic 127. California Partnership for the San Joaquin Development: Lessons from California’s Inland Empire Valley, The San Joaquin Valley: California’s 21st Century (Jobs for the Future, April 2022), pp. 12-13. California Opportunity (Strategic Action Proposal, October 2006). Forward, Empowering Communities through Inclusive, Retrieved from: http://www.sjvpartnership.org/wp- Regional Economic Development, p. 11, 16, see content/uploads/2013/08/Partnership_SAP.pdf. endnote 92. 128. Peter Weber, Founder and Chair, California 116. Marek Gootman, see endnote 24. Parilla, Bridge Academies, and former Co-Chair, California Donahue, and Martinez, Institutionalizing Inclusive Forward, Conversation with Commission staff, May 3, Growth, pp. 20, 25-26, see endnote 8. 2022. 117. Alex Avila, see endnotes 102 and 111; Karen 129. Armstrong, “Brass Cities,” see endnote 67. New Suarez, see endnote 74; Ana Gutierrez, Senior York Citizens Budget Commission, Raising the REDC Director, and Alison Schmitt, Associate Director, Jobs Bar (December 17, 2019), Appendix B: Regional for the Future, Conversation with Commission staff, Economic Development Case Studies, https://cbcny. April 20, 2022. org/research/raising-redc-bar. 118. Marek Gootman, see endnote 24; Alex Avila, see 130. New York State, Regional Economic endnote 111. Development Councils, https://regionalcouncils. ny.gov/. Accessed September 28, 2022. 119. Marek Gootman, see endnote 24. 131. David F. Damore, et al., Nevada Economic 120. Ashley Swearengin, see endnote 47. Development and Public Policy 2022-2026: A Sustainable 121. Ashley Swearengin, see endnote 47. Future for All Nevadans (The Lincy Institute and Brookings Mountain West, 2022), pp. 7-10. Retrieved 122. Parilla, Donahue, and Martinez, Institutionalizing from: https://digitalscholarship.unlv.edu/brookings_ Inclusive Growth, pp. 8-9, 25-26, see endnote 8. See policybriefs_reports/10/. also, California Forward, Empowering Communities through Inclusive, Regional Economic Development, p. 132. Indiana Economic Development Corporation, 16, see endnote 92. Indiana READI, https://www.iedc.in.gov/program/ indiana-readi/overview#skip-header. Accessed 60 | LITTLE HOOVER COMMISSION October 3, 2022. 143. In addition to providing planning grants and implementation funds to the 13 CERF regions, the 133. New York Citizens Budget Commission, Raising CERF interagency leadership team has reserved $20 the REDC Bar, see endnote 129. million in CERF funds for the CERF Tribal Funding Opportunity, which will support tribal-led economic 134. Damore, et al., Nevada Economic Development recovery and resilience projects. and Public Policy, 2022-2026, p. 61, see endnote 131. 144. CERF Phase I – Notices of Intent. Retrieved from: 135. Damore, et al., Nevada Economic Development https://edd.ca.gov/siteassets/files/jobs_and_training/ and Public Policy 2022-2026, pp. 62-63, see endnote pubs/wsin22-01att1.pdf. 131. 145. LWDA Press Release, “State Announced 136. Micah Weinberg, CEO, California Forward, Funding to Support Sustainable and Resilient Conversation with Commission staff, June 8, 2022. Regional Economies Across California,” (October 20, Paul Granillo, Conversation with Commission staff, 2022), https://www.labor.ca.gov/2022/10/20/state- April 18, 2022. announces-funding-to-support-sustainable-and- 137. Lenny Mendonca and Kate Gordon, “Regions resilient-regional-economies-across-california/. Rise Together: Building a Plan for Inclusive, 146. Daron Acemoglu, It’s Good Jobs, Stupid Sustainable Growth across California,” The (Economics for Inclusive Prosperity, Research Press-Enterprise (May 10, 2019), https://www. Brief, June 2019). Retrieved from: https://econfip. pe.com/2019/05/10/regions-rise-together-building- org/wp-content/uploads/2019/06/Its-Good-Jobs- a-plan-for-inclusive-sustainable-growth-across- Stupid.pdf. Dani Rodrik, An Industrial Policy for california/. Good Jobs (The Hamilton Project and Brookings 138. Egon Terplan, see endnote 3. Institution, September 2022), pp. 2-6. Retrieved from: https://www.brookings.edu/wp-content/ 139. Mendonca and Gordon, “Regions Rise Together,” uploads/2022/09/20220928_THP_Proposal_Rodrik_ see endnote 137. GoodJobs.pdf. 140. Egon Terplan, see endnote 3. 147. Egon Terplan, see endnote 3. LWDA, OPR, and GO-Biz, Proposed Economic Regions for High 141. Employment Development Department (EDD), Road Transition Planning Grants: Released for Public in coordination with the Labor and Workforce Comments. Retrieved from: https://edd.ca.gov/Jobs_ Development Agency (LWDA), Governor’s Office of and_Training/pubs/wsin21-20att1.pdf. Planning and Research (OPR), and Governor’s Office of Business and Economic Development (GO-Biz), 148. California Research Bureau, “Regional Community Economic Resilience Fund Program – Designations among California’s Governments,” Program Year 2022-24, Solicitation for Proposals (May (Updated: June 18, 2022), https://public.tableau. 2022). Retrieved from: https://edd.ca.gov/siteassets/ com/app/profile/california.research.bureau/viz/ files/jobs_and_training/notices/docs/wssfp21-06.pdf. OPREconomicRegions/BasicMap. 142. Mary Collins, Senior Advisor for Climate and 149. EDD, in coordination with LWDA, OPR, and GO- Economy, OPR, Testimony to the Commission, June Biz, Community Economic Resilience Fund Program – 23, 2022. Program Year 2022-24, Solicitation for Proposals, p. 15, EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 61 see endnote 141. The priority industries identified in 158. Including the Northern San Joaquin Valley, SB 162 and in the Solicitation for Proposals include: Central San Joaquin Valley, and Kern County renewable energy, energy efficiency, carbon removal, CERF regions. These estimates are based on the zero-emission vehicles, advanced manufacturing, assumption that there will be about $500 million agriculture, forestry, artificial intelligence, and climate available for implementation efforts, after funding is restoration. allocated for planning grants ($65 million), the Tribal Funding Opportunity ($20 million), and programmatic 150. Marek Gootman, see endnote 24; Marek overhead. Gootman, Conversation with Commission staff, May 3, 2022. 159. Mary Collins, see endnote 142. 151. B3K, Market Assessment Data Book and Findings, 160. Donahue, Parilla, and McDearman, Rethinking p. 35, see endnote 13. Cluster Initiatives, p. 14, see endnote 38. Benjamin Austin, Edward Glaeser, and Lawrence Summers, Jobs 152. According to the National Renewable Energy for the Heartland: Place-Based Policies in 21st-Century Laboratory, installation represents about 10 percent America (Brookings Papers on Economic Activity, of the cost of a utility-scale photovoltaic system array, Spring 2018), pp. 210-211. Retrieved from: https:// with the solar modules and electrical components www.brookings.edu/wp-content/uploads/2018/03/ accounting for approximately 50-to-60 percent of the AustinEtAl_Text.pdf. cost. Vignesh Ramasamy, et al., U.S. Solar Photovoltaic System and Energy Storage Cost Benchmarks: Q1 2021 161. Bartik, Bringing Jobs to the People, p. 23, see (National Renewable Energy Laboratory, 2021), p. endnote 34. 19. Retrieved from: https://www.nrel.gov/docs/ 162. Armstrong, “Brass Cities,” pp. 164-165, see fy22osti/80694.pdf. B3K, Market Assessment Data Book endnote 67. and Findings, p. 38, see endnote 13. 163. The State of New York, Empire State 153. B3K, Market Assessment Data Book and Findings, Development, The Upstate Revitalization Initiative, pp. 35-36, see endnote 13. https://esd.ny.gov/about-us/signature-projects/ 154. Paul Granillo and Jackie Melendez both indicated upstate-revitalization-initiative. Accessed October 14, that approximately $1 million a year can sustain 2022. New York Citizens Budget Commission, Raising regional economic planning and convening. CERF the REDC Bar, see endnote 129. planning grants will provide $5 million over 18 to 164. Mary Collins, see endnote 142. 24 months. Paul Granillo, see endnote 29; Jackie Melendez, Testimony to the Commission, May 26, 165. Derek Kirk, Community-Based Solutions 2022. Supervisor, GO-Biz, Testimony to the Commission, June 23, 2022. 155. Marek Gootman, see endnote 24. 166. Lenny Mendonca, see endnote 9. 156. Donahue, Parilla, and McDearman, Rethinking Cluster Initiatives, p. 29, see endnote 38. 167. Marek Gootman, see endnote 24. 157. The CERF interagency leadership team has not 168. B3K, Market Assessment Data Book and Findings, yet announced how CERF implementation funding p. 115, see endnote 13. Austin, Glaeser, and will be allocated among regions. 62 | LITTLE HOOVER COMMISSION Summers, Jobs for the Heartland, pp. 210-211, 214 and cgi?article=1269&context=tfr. Dow, Hooker Bentley, Comments and Discussion, pp. 249-250, see endnote and Schmitt, Co-Designing a Recovery for All, p. 3, see 160. With respect to cluster strategies and regional endnote 31. economic development: see Donahue, Parilla, and 178. Austin, Glaeser, and Summers, Jobs for the McDearman, Rethinking Cluster Initiatives, pp. 8, 38, Heartland, p. 223, see endnote 160. Bartik, Bringing see endnote 38. See also, Gilles Duranton, “California Jobs to People, p. 150-151, and Bartik, Should Dreamin’: The Feeble Case for Cluster Policies,” Place-Based Jobs Policies Be Used to Help Distressed Review of Economic Analysis 3 (2011). Retrieved from: Communities?, p. 25, see endnote 34. https://repository.upenn.edu/cgi/viewcontent. cgi?article=1088&context=real-estate_papers. 179. Ashley Swearengin, see endnote 47; Egon Terplan, see endnote 3. 169. Armstrong, “Brass Cities,” pp. 175-177, see endnote 67. Sarah Treuhaft, Equitable Development: 180. Marek Gootman, see endnote 24. Dani Rodrik The Path to an All-In Pittsburgh (PolicyLink, 2016), p. 3. and Stefanie Stantcheva, “Fixing Capitalism’s Good Retrieved from: https://allincities.org/sites/default/ Jobs Problem,” Oxford Review of Economic Policy 37, files/report_pittsburgh_FINAL_PDF.pdf. no. 4 (2021), pp. 827-828. Retrieved from: https:// drodrik.scholar.harvard.edu/files/dani-rodrik/files/ 170. Thornberg, Rising High Requires the Right fixing_capitalisms_good_jobs_problem.pdf. Foundation, p. 7, see endnote 15. 181. Parilla, Opportunity for Growth, pp. 26-27, see 171. Lindsay Fox, see endnote 87; Marian Kaanon, endnote 7. see endnote 101; Dr. Tania Pacheco-Werner, see endnote 93; Carlos Huerta, see endnote 95; Melissa 182. Fresno DRIVE, Greater Fresno Region 10-Year James, see endnote 46. Investment Plan, p. 30, see endnote 22. 172. Deborah Nankivell, Conversations with 183. National Science Foundation, Academic Commission staff, March 30, 2022 and April 20, Institution Profiles, Rankings by Total R&D 2022, see endnote 51. Michelle Decker and Jackie Expenditures, https://ncsesdata.nsf.gov/profiles/ Melendez, see endnote 110. site?method=rankingBySource&ds=herd. Accessed October 10, 2022. 173. Parilla, Opportunity for Growth, p. 32, see endnote 7. 184. Central Valley Community Foundation, Fresno-Merced Future of Food Innovation (F3), EDA 174. Lee Ann Eager, see endnote 73. Build Back Better Regional Challenge Application. 175. Genelle Taylor Kumpe, see endnote 98. Also, Submitted March 15, 2022. Retrieved from: https:// Kurt Madden, see endnote 97. eda.gov/files/arpa/build-back-better/finalists/ narratives/F3_Fresno_Merced_Future_of_Food.pdf. 176. Jackie Melendez, see endnote 154. 185. Dr. Ram Nunna, Dean, Lyles College of 177. John M. Ferris and Elwood Hopkins, “Place- Engineering, California State University, Fresno, Based Initiatives: Lessons from Five Decades of Testimony to the Commission, June 23, 2022. Experimentation and Experience,” The Foundation Review 7, Issue 4 (December 2015), p. 97. Retrieved 186. Genoveva Islas, Executive Director, Cultiva La from: https://scholarworks.gvsu.edu/cgi/viewcontent. Salud, Testimony to the Commission, June 23, 2022. EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 63 Also, Yery Olivares, Chief Operating Office and CDFI Joel Vargas, The California Career Pathways Trust: Executive Director, Fresno Area Hispanic Foundation, Lessons About the State Role in Sustaining Efforts to Testimony to the Commission, June 23, 2022. Improve Economic Advancement (Jobs for the Future, November 2018). 187. Dr. Chris Vitelli, Superintendent/President, Merced College, Testimony to the Commission, June 198. Just San Bernardino, The People’s Plan for 23, 2022. Economic Inclusion (May 2022). Retrieved from: https://indd.adobe.com/view/e741df2b-72cb-4d67- 188. Dr. Glenda Humiston, Vice President, Agriculture ac61-d5f3a5dab215. and Natural Resources, University of California Office of the President, Testimony to the Commission, June 199. Derek Kirk, see endnote 165. 23, 2022. 200. Tomás Morales, President, California State 189. Ashley Swearengin, see endnote 47. University, San Bernardino, Testimony to the Commission, May 26, 2022. 190. Ashley Swearengin, see endnote 47. In the case of F3, additional engagement with some community 201. Paul Granillo, see endnote 29. organizations may have provided opportunity to 202. Genelle Taylor Kumpe, see endnote 98; Deborah more fully include farmworker perspective in the Nankivell, Conversations with Commission staff, initiative—that said, the Commission understands March 30, 2022 and July 15, 2022, see endnote 51. that the work of inclusive economic development is a process. 203. Suzanne Holland, Director of the Riverside County Office of Economic Development, 191. Rodrik and Stantcheva, “Fixing Capitalism’s Good Testimony to the Commission, May 26, 2022. Jobs Problem,” pp. 829-831, see endnote 180. Rodrik, Melissa James, see endnote 46. See also, Stephen An Industrial Policy for Good Jobs, see endnote 146. F. Hamilton, et al., Economic Impact of Offshore 192. Alex Avila, see endnote 102. Wind Farm Development on the Central Coast of California (California Polytechnic State University 193. Lenny Mendonca, see endnote 9; Paul Granillo, and REACH, April 3, 2021), p. 7. Retrieved from: see endnote 29. https://reachcentralcoast.org/wp-content/uploads/ Economic_Value_OSW_REACH.pdf. Ken Alston, 194. Jackie Melendez, see endnote 154. et al., Building Lithium Valley: Opportunities and Challenges Ahead for Developing California’s Battery 195. Ashley Swearengin, see endnote 47. Manufacturing Ecosystem (New Energy Nexus, 196. Alison Schmitt, Associate Director, Jobs for the September 2020), p. 5. Retrieved from: https://www. Future, Conversation with Commission staff, July 18, newenergynexus.com/wp-content/uploads/2020/10/ 2022. Schmitt and Dow, How Can California’s Regional New-Energy-Nexus_Building-Lithium-Valley. Investments Catalyze Inclusive Economic Development? pdf. Patrick Adler, Brady Allardice, and Andrew pp. 5-7, see endnote 74. Yu, Greening the Golden Workforce: Progress and Pathways toward Green Jobs Leadership (UC Riverside 197. Schmitt and Dow, How Can California’s Regional Center for Economic Forecasting & Development, Investments Catalyze Inclusive Economic Development? Economy White Paper Series, June 2022), pp. 22-24. pp. 3-4, see endnote 74. Marty Alvarado and Retrieved from: https://ucreconomicforecast.org/ 64 | LITTLE HOOVER COMMISSION wp-content/uploads/2022/06/UCR_WP_Greening_ amgen-selects-newest-location-in-us-manufacturing- Workforce_6_21_2022.pdf. network-expansion-plan. Accessed October 25, 2022. 204. Jackie Melendez, see endnote 154. Suzanne 212. Collaborative Economics, Solano County’s Life Holland, see endnote 203. Science Cluster (Solano Economic Development Corporation, February 2009). Retrieved from: https:// 205. Ken Alston, et al., Building Lithium Valley, p. 26, www.solanocounty.com/SubApp/SolanoIndex/ see endnote 203. Reports/Solano_LifeSciences.pdf. Solano Economic Development Corporation, Biotech and Biomedical, 206. Marek Gootman, see endnote 24. https://solanoedc.org/key-industries/biotech- 207. Paul Granillo, Conversation with Commission biomedical. Accessed October 26, 2022. staff, August 15, 2022; Lance Hastings, President 213. Randy Diamond, “Sacramento’s ‘Biggest and CEO, California Manufacturers & Technology Economic Initiative’—$1Billion Aggie Square Project— Association, Conversation with Commission staff, Breaks Grounds,” The Sacramento Bee (February 19, August 30, 2022. 2022), https://www.sacbee.com/news/business/ 208. California Life Sciences Association and PwC’s article258457303.html. City of Sacramento, Aggie Pharmaceutical and Life Sciences Industry Group, Square Partnership, http://www.cityofsacramento. California Life Sciences Sector Report-2020 (California org/aggiesquare. Accessed October 25, 2022. Life Sciences Association, October, 2020), pp. 1, 2. 214. Marian Kaanon, see endnote 101. Retrieved from: https://www.califesciences.org/wp- content/uploads/2021/06/CLSA-PWC-2020-Sector- 215. Jackie Melendez, see endnote 154. Report.pdf. 216. The total for one-time funding includes $1.1 209. Donahue, Parilla, and McDearman, Rethinking billion in federal funding from the State Small Cluster Initiatives, p. 16, see endnote 38. Business Credit Initiative which will be awarded in tranches over a period of eight years and which 210. TEconomy Partners, LLC., Essential: The will support recapitalization of ongoing state small Impact of the Healthcare and Life Sciences Sector business loan funds. in Central Indiana (BioCrossroads, August 2021), pp. 12-14. Retrieved from: https://biocrossroads. 217. California Franchise Tax Board, Tax Expenditure com/wp-content/uploads/2021/08/TEConomy- Reports C-7, Tax Credits Allowed All Corporations, BioCrossroads-Essential-fullreport-Final-August-2021. https://data.ftb.ca.gov/California-Corporation-Tax/C- pdf. TEconomy Partners, LLC., BioCrossroads and the 7-Tax-Credits-Allowed-All-Corporations/5guv-7bft/ Indiana Life Sciences Ecosystem: Tracking Two Decades data. Accessed October 18, 2022. of Progress and Charting a Path for Sustained Success (BioCrossroads, September 2022), pp. 1, 14. Retrieved from: https://biocrossroads.com/wp-content/ uploads/2022/09/BioCrossroads-Ecosystem2022- webready.pdf. 211. Amgen, “Amgen Selects Newest Location in U.S. Manufacturing Network Expansion Plan,” (June 28, 2021), https://www.amgen.com/stories/2021/06/ EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 65 This page was intentionally left blank. 66 | LITTLE HOOVER COMMISSION Little Hoover Commission Members CHAIRMAN PEDRO NAVA | Santa Barbara ASM. PHILLIP CHEN | Yorba Linda Appointed to the Commission by Speaker of the Assembly Appointed to the Commission by Speaker of the Assembly John Pérez in April 2013 and reappointed by Speaker Anthony Rendon in October 2021. Elected in November of the Assembly Anthony Rendon in 2017 and again 2016 to represent 55th District. Represents portions of Los in 2021. Government relations advisor. Former State Angeles, Orange and San Bernardino counties and the Assemblymember from 2004 to 2010, civil litigator, cities of Brea, Chino Hills, Diamond Bar, La Habra, Industry, deputy district attorney and member of the state Coastal Placentia, Rowland Heights, Walnut, West Covina and Yorba Commission. Elected chair of the Commission in March Linda. 2014. BILL EMMERSON | Redlands VICE CHAIRMAN SEAN VARNER | Riverside Appointed to the Commission by Governor Edmund G. Appointed to the Commission by Governor Edmund G. Brown Jr. in December 2018. Former senior vice president Brown Jr. in April 2016 and reappointed in January 2018. of state relations and advocacy at the California Hospital Managing partner at Varner & Brandt LLP where he Association, State Senator from 2010 to 2013, State practices as a transactional attorney focusing on mergers Assemblymember from 2004 to 2010, and orthodonist. and acquisitions, finance, real estate, and general counsel work. Elected vice chair of the Commission in March 2017. GIL GARCETTI | LOS ANGELES Appointed to the Commission by Governor Gavin Newsom DION ARONER | Berkeley in November 2021. Professional photographer and author Appointed to the Commission by the Senate Rules of ten books. Former Los Angeles County District Attorney, Committee in April 2019. Partner for Aroner, Jewel, and teaching Fellow at Harvard University’s Kennedy School, Ellis. Former State Assemblymember from 1996 to 2002, and president of the California Science Center Foundation’s chief of staff for Assemblymember Tom Bates, social Board of Trustees. worker for Alameda County, and the first female president of Service Employees International Union 535. SEN. DAVE MIN | Irvine Appointed to the Commission by the Senate Rules DAVID BEIER | San Francisco Committee in September 2021. Elected in November 2020 Appointed to the Commission by Governor Edmund G. to represent the 37th Senate District. Represents Anaheim Brown Jr. in June 2014 and reappointed in January 2018. Hills, Costa Mesa, Huntington Beach, Irvine, Laguna Beach, Managing director of Bay City Capital. Former senior officer Laguna Woods, Lake Forest, Newport Beach, Orange, of Genentech and Amgen, and counsel to the U.S. House of Tustin, and Villa Park. Representatives Committee on the Judiciary. SEN. JIM NIELSEN | Gerber ASM. TASHA BOERNER HORVATH | Encinitas Appointed to the Commission by the Senate Rules Appointed to the Commission by Speaker of the Assembly Committee in March 2019. Elected in January 2013 to Anthony Rendon in October 2021. Elected in November represent the 4th Senate District. Represents Chico, Oroville, 2018 to represent the 76th Assembly District. Represents Paradise, Red Bluff, Yuba City, and surrounding areas. Camp Pendleton, Oceanside, Vista, Carlsbad, and Encinitas. JANNA SIDLEY | Los Angeles CYNTHIA BUIZA | Los Angeles Appointed to the Commission by Governor Edmund Appointed to the Commission by Speaker of the Assembly G. Brown Jr. in April 2016 and reappointed in February Anthony Rendon in October 2018. Executive director of the 2020. General counsel at the Port of Los Angeles since California Immigrant Policy Center. Former policy director 2013. Former deputy city attorney at the Los Angeles City for the American Civil Liberties Union, San Diego, and Attorney’s Office from 2003 to 2013. policy and advocacy director at the Coalition for Humane Immigrant Rights of Los Angeles. Full biographies are available on the Commission’s website at www.lhc.ca.gov. ANTHONY CANNELLA | Ceres Appointed to the Commission by the Senate Rules Committee in March 2022. Civil engineer and principal with Northstar Engineering Group. Former State Senator from 2010 to 2018. Previously served on the Ceres City Council and was twice elected mayor of that city. EQUITABLE ECONOMIC DEVELOPMENT ACROSS CALIFORNIA | 67 “DEMOCRACY ITSELF IS A PROCESS OF CHANGE, AND SATISFACTION AND COMPLACENCY ARE ENEMIES OF GOOD GOVERNMENT.” By Governor Edmund G. “Pat” Brown, addressing the inaugural meeting of the Little Hoover Commission, April 24,1962, Sacramento, California Milton Marks Commission on California State Government Organization and Economy www.lhc.ca.gov