BILL ANALYSIS
AB 579
Page 1
Date of Hearing: January 24, 2008
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mark Leno, Chair
AB 579 (Swanson) - As Amended: January 17, 2008
Policy Committee: Jobs Vote:7 - 0
Revenue and Taxation 8 - 1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill makes changes to the operation of the Local Agency
Military Base Recovery Area (LAMBRA) program. Specifically, this
bill:
1)Removes the condition that a business located in a LAMBRA must
provide a net increase in jobs within the LAMBRA within the
first two years of the business' operation in order to claim
the sales and use tax credits.
2)Requires the governing body of each LAMBRA to update its
economic development plan on or before January 1, 2010.
3)Outlines specific minimal requirements that must be included
in each economic development plan.
FISCAL EFFECT
This bill will likely result in General Fund revenue losses of
up to $150,000 in the first year, growing to $250,000 in the
second year.
COMMENTS
1)Rationale . This bill is intended to address a problem that
local agencies have in attracting new businesses to LAMBRAs
due to the fact that the businesses are unable to meet the
condition that they will increase the net number of jobs
within the area within two years. Compounding the problem is
the fact that other Geographically-Targeted Economic
Development Areas (G-TEDA), such as Enterprise Zones, do not
AB 579
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have the same requirement, thus making it difficult for
LAMBRAs to "compete" for private businesses with other
G-TEDAs. By removing the requirement, the LAMBRA program will
be similar to the other programs.
This bill would also require the local governing bodies to
update their development plans to include specific criteria
that will make their plans consistent with the requirements of
other plans. According to the author, his intent is to ensure
that LAMBRAs continue to be held to high standards of economic
development despite the removal of the job increase
requirement.
2)The LAMBRA program was enacted by AB 693 (Cannella), Chapter
1216, Statutes of 1993. Under the program, local governments
apply for LAMBRA designation for lands comprising all or part
of a military base closed pursuant to the various base closure
acts. The Housing and Community Development currently
administers the program, which is limited to eight LAMBRA
designations statewide. Each LAMBRA designation is valid for a
period of eight years. All LAMBRAs are scheduled to expire
between 2007 and 2012.
3)G-TEDA programs . The Geographically-Targeted Economic
Development Area (G-TEDA) programs are based on the economic
principle that targeting significant incentives to lower
income communities allows these communities to more
effectively compete for new businesses and retain existing
businesses, which may result in increased tax revenues, less
reliance on social services, and lower public safety costs.
Residents and businesses also directly benefit from these more
sustainable economic conditions through improved
neighborhoods, business expansion, and job creation. G-TEDA
programs include LAMBRAs, Enterprise Zones, Manufacturing
Enhancement Zones, and Targeted Tax Areas.
Under the G-TEDA programs, businesses and other entities
located within the area are eligible for a variety of local
and state incentives. Local government incentives can include
writing down the costs of development, funding related
infrastructure improvements, providing job training to
prospective employees, or establishing streamlined processes
for obtaining permits. The state also offers a number of
incentives, including tax credits, special tax provisions,
priority notification in the sale of state surplus lands,
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access to certain Brownfield clean-up programs, and
preferential treatment for state contracts.
4)Related Legislation . AB 1398 (Arambula) is an effort to
simplify and update various provisions of the hiring credit
authorized for use by taxpayers located in a G-TEDA. In
addition, it contains the same provision as this bill to
delete the job increase requirement for LAMBRAs. That bill is
currently pending in this committee.
AB 1550 (Arambula; Chapter 718, Statutes of 2006) makes a
number of significant changes to the management and oversight
of the G-TEDA programs. This bill was the result of oversight
hearings by JEDE and R&T, as well as discussions with
stakeholder groups
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081