BILL NUMBER: AB 1422 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 28, 2011
AMENDED IN SENATE JUNE 1, 2011
INTRODUCED BY Assembly Member Perea
MARCH 22, 2011
An act to add and repeal Section 6377 of the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy. An act to add Section 7044.3 to the Business and
Professions Code, to amend Sections 11005, 11005.2, 11007.1,
11011.13, and 14255 of the Government Code, to amend Section 1720 of
the Labor Code, and to amend Sections 10106, 10107, and 10295 of the
Public Contract Code, relating to high-speed rail.
LEGISLATIVE COUNSEL'S DIGEST
AB 1422, as amended, Perea. Sales and use taxes:
exemption: manufacturing and research and development.
High-speed rail.
Existing law, the California High-Speed Train Act, creates the
High-Speed Rail Authority to develop and implement a high-speed train
system in the state, with specified powers and duties. Existing law,
the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st
Century, approved by the voters as Proposition 1A at the November 4,
2008, general election, provides for the issuance of $9.95 billion in
general obligation bonds for high-speed rail and related purposes.
Existing law generally requires the approval of the Department of
General Services before a state agency may acquire, hire, dispose of,
or let real property in fee or in a lesser interest, subject to
certain exceptions, including real property obtained for highway
purposes by the Department of Transportation. Existing law requires
the Department of General Services to inventory state-owned property,
other than property owned by the Department of Transportation and
certain other state agencies. Existing law provides that property
acquired by the Department of Transportation for highway purposes and
leased back for commercial or business uses to the former owner for
a term exceeding 6 months may be insured for loss by fire at the
request of the former owner with the premium for insurance included
in the rent.
This bill would enact similar exceptions, authorizations, and
exemptions relative to real property obtained for high-speed rail
purposes by the High-Speed Rail Authority. The bill would make
various other additional conforming changes.
Existing law provides that the Department of General Services is
the responsible agency for projects under the Public Contract Code,
and generally requires all contracts entered into by state agencies
to first be approved by the department, except with respect to
projects and contracts under the jurisdiction of other specified
state agencies.
This bill would provide that the High-Speed Rail Authority is the
responsible agency for projects and contracts under its jurisdiction
and does not require the approval of the Department of General
Services in that regard.
Existing law defines "public works" for purposes of requirements
relating to wages, working hours, and other aspects of employment.
This bill would include high-speed rail systems of the High-Speed
Rail Authority within the definition of public works for the purposes
described above.
Existing law provides for the licensing and regulation of
contractors by the Contractors' State License Board.
This bill would provide that these provisions do not apply to an
entity that is a party to a franchise contract with the High-Speed
Rail Authority if all actual construction work under the franchise
contract is performed by licensed contractors.
The Sales and Use Tax Law imposes a tax on retailers measured by
the gross receipts from the sale of tangible personal property sold
at retail in this state, or on the storage, use, or other consumption
in this state of tangible personal property purchased from a
retailer for storage, use, or other consumption in this state. That
law provides various exemptions from those taxes.
This bill would exempt from those taxes the sale of, and the
storage, use, or other consumption in this state, of tangible
personal property, as defined, purchased for use by a qualified
person, as defined, primarily in any stage of manufacturing,
processing, refining, fabricating, or recycling of property; in
research and development; to maintain, repair, measure, or test
specified property; and by a contractor for use in a construction
contract with a qualified person, as specified.
The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes
counties and cities to impose local sales and use taxes in conformity
with the Sales and Use Tax Law, and the Transactions and Use Tax Law
authorizes districts, as specified, to impose transactions and use
taxes in conformity with the Sales and Use Tax Law. Exemptions from
state sales and use taxes are incorporated in these laws.
This bill would specify that this exemption does not apply to
local sales and use taxes, transactions and use taxes, specified
state sales and use taxes. This bill would further specify, for a
qualified person that is not a new trade or business, that this
exemption only applies to 20% of other specified state sales and use
taxes.
This bill would take effect immediately as a tax levy, but would
be operative only so long as state sales and use taxes at the rate of
1% that are enacted during the 2011-12 Legislative Sessions are
operative.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 7044.3 is added to the
Business and Professions Code , to read:
7044.3. This chapter does not apply to an entity that is a party
to a franchise contract with the High-Speed Rail Authority under the
authority of Chapter 3 (commencing with Section 185030) of Division
19.5 of the Public Utilities Code, provided all actual construction
work under the franchise contract is performed by contracts that are
duly licensed at the time of contractors and performance of the work.
SEC. 2. Section 11005 of the Government
Code is amended to read:
11005. (a) Unless the Legislature specifically provides that
approval is not required, every gift or dedication to the state of
personal property, or every gift to the state of real property in fee
or in any lesser estate or interest, shall be approved by the
Director of Finance, and every contract for the acquisition or hiring
of real property in fee or in any lesser estate or interest, entered
into by or on behalf of the state, shall be approved by the Director
of General Services. Any contract entered into in violation of this
section is void. This section applies to any state agency that, by
general or specific statute, is expressly or impliedly authorized to
enter into transactions referred to in this section.
(b) This section does not apply (1) to unconditional gifts of
money, (2) to the acquisition or hiring by the Department of
Transportation of real property in fee or in any lesser estate or
interest for highway purposes, but does apply to the hiring by that
department of office space in any office building, (3) to contracts
entered into under the authority of Chapter 4 (commencing with
Section 11770) of Part 3 of Division 2 of the Insurance Code, (4) to
the receipt of donated, unencumbered personal property from private
sources received in conjunction with the administration of the
Federal Surplus Personal Property Program by the Department of
General Services, (5) to the receipt of gifts of personal property in
the form of interpretive or historical objects, each valued at
fifteen thousand dollars ($15,000) or less, by the Department of
Parks and Recreation, or (6) to the
acceptance by the State Coastal Conservancy of offers to dedicate
public accessways made pursuant to Division 20 (commencing with
Section 30000) of the Public Resources Code , or (7) to the
acquisition or hiring by the High-Speed Rail Authority of real
property in fee or in any lesser estate or interest for high-speed
rail purposes, but does apply to the hiring by that
authority of office space in any office building .
SEC. 3. Section 11005.2 of the
Government Code is amended to read:
11005.2. Unless the Legislature specifically provides that
approval by the Director of General Services is not required, every
conveyance, contract, or agreement whereby an interest of the state
in any real property is conveyed, demised, or let to any person,
shall, before the conveyance, contract, or agreement is executed or
entered into, be approved by the Director of General Services. Any
conveyance, contract, or agreement executed or entered into in
violation of this section is void. This section shall apply to any
state agency which, by general or specific statute, is expressly or
impliedly authorized to enter into transactions referred to in this
section.
This section does not apply to real property acquired by the
Department of Transportation for highway purposes ,
real property acquired by the High-Speed Rail Authority for
high-speed rail purposes, or real property administered by the
State Lands Commission, the Controller, or the State Compensation
Insurance Fund.
SEC. 4. Section 11007.1 of the
Government Code is amended to read:
11007.1. (a) The Department of
Transportation, when it has acquired title to any real property for
highway purposes and leases such that
property for commercial or business uses to the former owner for a
term exceeding six months, may secure insurance against the risk of
damage or destruction by fire where the former owner requests this
coverage and the premium therefor is included in the rental agreed to
be paid.
(b) The High-Speed Rail Authority, when it has acquired title to
any real property for high-speed rail purposes and leases that
property for commercial or business uses to the former owner for a
term exceeding six months, may secure insurance against the risk of
damage or destruction by fire where the former owner requests this
coverage and the premium therefor is included in the rental agreed to
be paid.
SEC. 5. Section 11011.13 of the
Government Code is amended to read:
11011.13. For purposes of Section 11011.15, the following
definitions shall apply:
(a) "Agency" means a state agency, department, division, bureau,
board, commission, district agricultural association, and the
California State University. "Agency" does not mean the Legislature,
the University of California, the State Lands Commission, or
the Department of Transportation , or the High-Speed
Rail Authority .
(b) "Fully utilized" means that 100 percent of the property is
being appropriately utilized by a program of an agency every business
day of the year.
(c) "Partially utilized" means one or more of the following:
(1) Less than 100 percent of the property is appropriately
utilized by a program of an agency.
(2) The property is not used every business day of the year by an
agency.
(3) The property is used by other nonstate governmental entities
or private parties.
(d) "Excess land" means property that is no longer needed for
either an existing or ongoing state program or a function of an
agency.
SEC. 6. Section 14255 of the Government
Code is amended to read:
14255. Whenever provision is made by law for any project
which that is not under the jurisdiction of the
Department of Water Resources, the Department of Boating and
Waterways pursuant to Article 2.5 (commencing with Section 65) of
Chapter 2 of Division 1 of the Harbors and Navigation Code, the
Department of Corrections pursuant to Chapter 11 (commencing with
Section 7000) of Title 7 of Part 3 of the Penal Code, the
High-Speed Rail Authority, or the Department of General
Services, the project shall be under the sole charge and direct
control of the Department of Transportation.
SEC. 7. Section 1720 of the Labor Code
is amended to read:
1720. (a) As used in this chapter, "public works" means:
(1) Construction, alteration, demolition, installation, or repair
work done under contract and paid for in whole or in part out of
public funds, except work done directly by any public utility company
pursuant to order of the Public Utilities Commission or other public
authority. For purposes of this paragraph, "construction" includes
work performed during the design and preconstruction phases of
construction including, but not limited to, inspection and land
surveying work.
(2) Work done for irrigation, utility, reclamation, and
improvement districts, and other districts of this type. "Public work"
does not include the operation of the irrigation or drainage system
of any irrigation or reclamation district, except as used in Section
1778 relating to retaining wages.
(3) Street, sewer, or other improvement work done under the
direction and supervision or by the authority of any officer or
public body of the state, or of any political subdivision or district
thereof, whether the political subdivision or district operates
under a freeholder's charter or not.
(4) The laying of carpet done under a building lease-maintenance
contract and paid for out of public funds.
(5) The laying of carpet in a public building done under contract
and paid for in whole or in part out of public funds.
(6) Public transportation demonstration projects authorized
pursuant to Section 143 of the Streets and Highways Code.
(7) High-speed rail systems authorized pursuant to Division 19.5
(commencing with Section 185000) of the Public Utilities Code.
(b) For purposes of this section, "paid for in whole or in part
out of public funds" means all of the following:
(1) The payment of money or the equivalent of money by the state
or political subdivision directly to or on behalf of the public works
contractor, subcontractor, or developer.
(2) Performance of construction work by the state or political
subdivision in execution of the project.
(3) Transfer by the state or political subdivision of an asset of
value for less than fair market price.
(4) Fees, costs, rents, insurance or bond premiums, loans,
interest rates, or other obligations that would normally be required
in the execution of the contract, that are paid, reduced, charged at
less than fair market value, waived, or forgiven by the state or
political subdivision.
(5) Money loaned by the state or political subdivision that is to
be repaid on a contingent basis.
(6) Credits that are applied by the state or political subdivision
against repayment obligations to the state or political subdivision.
(c) Notwithstanding subdivision (b):
(1) Private residential projects built on private property are not
subject to the requirements of this chapter unless the projects are
built pursuant to an agreement with a state agency, redevelopment
agency, or local public housing authority.
(2) If the state or a political subdivision requires a private
developer to perform construction, alteration, demolition,
installation, or repair work on a public work of improvement as a
condition of regulatory approval of an otherwise private development
project, and the state or political subdivision contributes no more
money, or the equivalent of money, to the overall project than is
required to perform this public improvement work, and the state or
political subdivision maintains no proprietary interest in the
overall project, then only the public improvement work shall thereby
become subject to this chapter.
(3) If the state or a political subdivision reimburses a private
developer for costs that would normally be borne by the public, or
provides directly or indirectly a public subsidy to a private
development project that is de minimis in the context of the project,
an otherwise private development project shall not thereby become
subject to the requirements of this chapter.
(4) The construction or rehabilitation of affordable housing units
for low- or moderate-income persons pursuant to paragraph (5) or (7)
of subdivision (e) of Section 33334.2 of the Health and Safety Code
that are paid for solely with moneys from a Low and Moderate Income
Housing Fund established pursuant to Section 33334.3 of the Health
and Safety Code or that are paid for by a combination of private
funds and funds available pursuant to Section 33334.2 or 33334.3 of
the Health and Safety Code do not constitute a project that is paid
for in whole or in part out of public funds.
(5) "Paid for in whole or in part out of public funds" does not
include tax credits provided pursuant to Section 17053.49 or 23649 of
the Revenue and Taxation Code.
(6) Unless otherwise required by a public funding program, the
construction or rehabilitation of privately owned residential
projects is not subject to the requirements of this chapter if one or
more of the following conditions are met:
(A) The project is a self-help housing project in which no fewer
than 500 hours of construction work associated with the homes are to
be performed by the homebuyers.
(B) The project consists of rehabilitation or expansion work
associated with a facility operated on a not-for-profit basis as
temporary or transitional housing for homeless persons with a total
project cost of less than twenty-five thousand dollars ($25,000).
(C) Assistance is provided to a household as either mortgage
assistance, downpayment assistance, or for the rehabilitation of a
single-family home.
(D) The project consists of new construction, or expansion, or
rehabilitation work associated with a facility developed by a
nonprofit organization to be operated on a not-for-profit basis to
provide emergency or transitional shelter and ancillary services and
assistance to homeless adults and children. The nonprofit
organization operating the project shall provide, at no profit, not
less than 50 percent of the total project cost from nonpublic
sources, excluding real property that is transferred or leased. Total
project cost includes the value of donated labor, materials,
architectural, and engineering services.
(E) The public participation in the project that would otherwise
meet the criteria of subdivision (b) is public funding in the form of
below-market interest rate loans for a project in which occupancy of
at least 40 percent of the units is restricted for at least 20
years, by deed or regulatory agreement, to individuals or families
earning no more than 80 percent of the area median income.
(d) Notwithstanding any provision of this section to the contrary,
the following projects shall not, solely by reason of this section,
be subject to the requirements of this chapter:
(1) Qualified residential rental projects, as defined by Section
142 (d) of the Internal Revenue Code, financed in whole or in part
through the issuance of bonds that receive allocation of a portion of
the state ceiling pursuant to Chapter 11.8 of Division 1 (commencing
with Section 8869.80) of the Government Code on or before December
31, 2003.
(2) Single-family residential projects financed in whole or in
part through the issuance of qualified mortgage revenue bonds or
qualified veterans' mortgage bonds, as defined by Section 143 of the
Internal Revenue Code, or with mortgage credit certificates under a
Qualified Mortgage Credit Certificate Program, as defined by Section
25 of the Internal Revenue Code, that receive allocation of a portion
of the state ceiling pursuant to Chapter 11.8 of Division 1
(commencing with Section 8869.80) of the Government Code on or before
December 31, 2003.
(3) Low-income housing projects that are allocated federal or
state low-income housing tax credits pursuant to Section 42 of the
Internal Revenue Code, Chapter 3.6 of Division 31 (commencing with
Section 50199.4) of the Health and Safety Code, or Section 12206,
17058, or 23610.5 of the Revenue and Taxation Code, on or before
December 31, 2003.
(e) If a statute, other than this section, or a regulation, other
than a regulation adopted pursuant to this section, or an ordinance
or a contract applies this chapter to a project, the exclusions set
forth in subdivision (d) do not apply to that project.
(f) For purposes of this section, references to the Internal
Revenue Code mean the Internal Revenue Code of 1986, as amended, and
include the corresponding predecessor sections of the Internal
Revenue Code of 1954, as amended.
(g) The amendments made to this section by either Chapter 938 of
the Statutes of 2001 or the act adding this subdivision shall not be
construed to preempt local ordinances requiring the payment of
prevailing wages on housing projects.
SEC. 8. Section 10106 of the Public
Contract Code is amended to read:
10106. For purposes of this chapter:
(a) "Department" means any of the following:
(1) The Department of Water Resources as to any project under the
jurisdiction of that department.
(2) The Department of Transportation as to any project under the
jurisdiction of that department.
(3) The Department of Boating and Waterways as to any project
under the jurisdiction of that department pursuant to Article 2.5
(commencing with Section 65) of Chapter 2 of Division 1 of the
Harbors and Navigation Code.
(4) The Department of Corrections and Rehabilitation with
respect as to any project under its
jurisdiction pursuant to Chapter 11 (commencing with Section 7000) of
Title 7 of Part 3 of the Penal Code.
(5) The Military Department as to any project under the
jurisdiction of that department.
(6) The High-Speed Rail Authority as to any project under the
jurisdiction of that authority.
(6)
(7) The Department of General Services as to all other
projects.
(b) "Director" means the director of each department as defined
herein respectively.
SEC. 9. Section 10107 of the Public
Contract Code is amended to read:
10107. Whenever provision is made by law for any project that is
not under the jurisdiction of the Department of Water Resources, the
Department of Boating and Waterways pursuant to Article 2.5
(commencing with Section 65) of Chapter 2 of Division 1 of the
Harbors and Navigation Code, the Department of Corrections and
Rehabilitation pursuant to Chapter 11 (commencing with Section 7000)
of Title 7 of Part 3 of the Penal Code, the Department of
Transportation, the High-Speed Rail Authority, or the
Military Department, the project shall be under the sole charge and
direct control of the Department of General Services.
SEC. 10. Section 10295 of the Public
Contract Code is amended to read:
10295. (a) All contracts entered into by any state agency for (1)
the acquisition of goods or elementary school textbooks, (2)
services, whether or not the services involve the furnishing or use
of goods or are performed by an independent contractor, (3) the
construction, alteration, improvement, repair, or maintenance of
property, real or personal, or (4) the performance of work or
services by the state agency for or in cooperation with any person,
or public body, are void unless and until approved by the department.
Every contract shall be transmitted with all papers, estimates, and
recommendations concerning it to the department and, if approved by
the department, shall be effective from the date of the approval.
(b) This section applies to any state agency that by general or
specific statute is expressly or impliedly authorized to enter into
transactions referred to in this section.
(c) This section does not apply to the following:
(1) Any transaction entered into by the Trustees of the California
State University, by the Board of Governors of the California
Community Colleges, or by a department under the State Contract Act
or the California State University Contract Law.
(2) Any contract of a type specifically mentioned and authorized
to be entered into by the Department of Transportation under Section
14035 or 14035.5 of the Government Code, Sections 99316 to 99319,
inclusive, of the Public Utilities Code, or the Streets and Highways
Code.
(3) Any contract entered into by the Department of Transportation
that is not funded by money derived by state tax sources but, rather,
is funded by money derived from federal or local tax sources.
(4) Any contract entered into by the Department of Personnel
Administration for state employee benefits, occupational health and
safety, training services, or combination thereof.
(5) Any contract let by the Legislature.
(6) Any contract entered into under the authority of Chapter 4
(commencing with Section 11770) of Part 3 of Division 2 of the
Insurance Code.
(7) Any contract entered into by the High-Speed Rail Authority
pursuant to subdivisions (b) or (f) of Section 185036 of the Public
Utilities Code. All matter omitted in this version of the bill
appears in the bill as amended in the Senate, June 1, 2011. (JR11)