BILL NUMBER: SB 830 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 12, 2011
INTRODUCED BY Senator Wright
(Principal coauthor: Assembly Member Bradford)
FEBRUARY 18, 2011
An act to add and repeal Sections 17057.6, 17057.7,
23670, and 23671 17057.6 and 23670 of the Revenue
and Taxation Code, relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
SB 830, as amended, Wright. Income taxes: credit: trade
infrastructure investment : import-export cargo .
The Personal Income Tax Law and the Corporation Tax Law authorize
various credits against the taxes imposed by those laws.
This bill would, subject to a subsequent act authorizing
a the total amount of credit, authorize
2 credits a credit against those taxes for each
taxable year beginning on or after January 1, 2011, and before
January 1, 2021, with the first credit in an
amount not to exceed 50% of the total capital costs of a project
relating to port or harbor activity, as provided , and the
2nd credit in an amount not to exceed the product of $5 and the
number of tons of additional qualified cargo, as provided .
This bill would require the Legislative Analyst to evaluate the
effectiveness of this tax credit, as provided. This bill would
require the Franchise Tax Board to certify qualifying projects
and qualified cargo upon making specified findings
and the receipt of a resolution, as specified, which determines that
there would be sufficient revenues received by the state as a result
of the economic impacts of these projects and cargo
, to offset the costs to the state of providing the tax
credits.
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. The Legislature finds and declares all of the
following:
(a) The primary purpose of this act is to encourage the
development and growth of California-originated export cargoes and
California-destined import cargoes, and to encourage and help finance
the further investment in, and subsequent increased use of,
California's public port facilities and districts.
(b) The need to continually invest in California's exports and
imports and California's public port infrastructure is predicated on
the fact that California's public seaports and the international
trade that they facilitate are critical components of the state
economy, directly or indirectly employing millions of Californians,
contributing billions of dollars in economic activity, and generating
significant local and state tax revenues as a result of this
activity. As such, our ports must be given the ability to
successfully compete for cargo volume, attract new trade, and
continue to grow.
(c) The development, improvement, expansion , and
maintenance of the state's public ports and port infrastructure
facilities, and the utilization of public port facilities for the
export and import of cargo to or from distribution, manufacturing,
fabrication, assembly, processing, transloading, and warehousing
sites in California are essential to the growth of the state's
economic well-being and the ability of those businesses and workers
associated with trade-related industries to continue to compete cost
effectively on a regional, national, and global scale.
SEC. 2. This act shall be known, and may be cited, as the
Export-Import Incentive and Public Port Infrastructure
Investment Act of 2011.
SEC. 3. Section 17057.6 is added to the Revenue and Taxation Code,
to read:
17057.6. (a) Subject to subdivision (g), for each taxable year
beginning on or after January 1, 2011, and before January 1, 2021,
there shall be allowed to a qualified taxpayer as a trade
infrastructure investment tax credit against the "net tax," as
defined by Section 17039, an amount of up to, but not to exceed, 50
percent of the total capital costs of each qualifying project
constructed in this state, and only up to 5 percent each year subject
to the terms, conditions, and qualifications established by this
section.
(1) A qualified taxpayer may claim up to, but not to exceed, 5
percent of the total capital costs for each year beginning on or
after 2011, and before 2021.
(2) This credit shall be allowed to a qualified taxpayer that has
completed a qualified project.
(b) For purposes of this section:
(1) "Breakbulk or bulk cargo" means any nonliquid commodities,
automobiles, trucks, lumber, agricultural products and commodities,
machinery, equipment, materials, products, or other cargo transported
as palletized or unpalletized bagged, packaged, wrapped, drummed,
baled, or crated goods, or that are loaded in bulk directly into the
hold of a ship that are shipped via oceangoing vessel. Breakbulk or
bulk cargo shall not include any liquid commodities that are handled
in bulk or any containerized cargo.
(2) "Capital costs" means all costs and expenses incurred
prior to the date on which the qualifying project was placed in
service by one or more qualified taxpayers in connection with
the acquisition, construction, installation, and equipping of a
qualifying project, including any environmental mitigation undertaken
specifically to reduce the impacts of a qualifying project, during
the period commencing with the date on which the acquisition,
construction, installation, and equipping commences and
ending on the date on which the qualifying project is placed in
service. installation, or equipping began.
(A) Capital costs shall include, but not be limited to, the
following:
(i) The costs of acquiring, constructing, installing, equipping,
and financing a qualifying project, including all obligations
incurred for labor and to contractors, subcontractors, builders, and
materialmen.
(ii) The costs of acquiring land or rights in land and any cost
incidental thereto, including recording fees.
(iii) The costs of contract bonds and of insurance of any kind
that may be required or necessary during the acquisition,
construction, or installation of a qualifying project.
(iv) The costs of architectural and engineering services,
including test borings, surveys, estimates, plans, specifications,
preliminary investigations, environmental mitigation, and supervision
of construction, as well as for the performance of all the duties
required by or consequent upon the acquisition, construction, and
installation of a qualifying project.
(v) The costs associated with installation of fixtures and
equipment, surveys, including archaeological and environmental
surveys, site tests and inspections, subsurface site work,
excavation, removal of structures, roadways, and other surface
obstructions, filling, grading, paving, and provisions for drainage,
stormwater retention, installation of utilities, including water,
sewerage treatment, gas, electricity, communications, and similar
facilities, and offsite construction of utility extensions to the
boundaries of the property.
(vi) The costs of completing any environmental mitigation
associated with the completion of the project which is capital in
nature, and not an ongoing operating cost, including, but not limited
to, the following:
(I) The replacement, repower, or retrofit of heavy-duty diesel
trucks.
(II) The replacement, repower, or retrofit of diesel locomotive
engines.
(III) The replacement, repower, or retrofit of harbor craft.
(IV) The provision of on-shore electrical power for ocean freight
carriers calling at the state's seaports, which reduce the use of
auxiliary and main engine ship power.
(V) Mobile or portable shoreside distributed power generation
projects that eliminate the need of oceangoing vessels to use the
electricity grid.
(VI) The replacement, repower, or retrofit of cargo handling
equipment.
(VII) Electrification infrastructure to reduce engine idling and
use of internal combustion auxiliary power systems by trucks and
cargo handling equipment.
(VIII) The installation of solar power systems.
(IX) The installation of alternative fueling systems or
acquisition of alternative fueling equipment.
(vii) All other costs of a nature comparable to those described,
including, but not limited to, all project costs required to be
capitalized for federal income tax purposes pursuant to the
provisions of Section 263(a) of Title 26 of the United States Code.
(viii) Costs otherwise defined as capital costs incurred by the
taxpayer where the qualifying taxpayer is the lessee under a lease
that contains a term of not less than five years and is characterized
as a capital lease for federal income tax purposes.
(B) Capital costs shall not include property
the following:
(i) Property owned or leased by
the qualifying taxpayer or a related entity before the commencement
of the acquisition, construction, installation, or equipping of the
qualified project, unless the property was physically located outside
the state for a period of at least one year prior to the date on
which the qualifying project was placed in service.
(ii) Expenses, costs, or profits of any kind incurred by a
qualifying taxpayer incurred after the date in which the project is
placed in service.
(C) Capital costs shall not include those project
(iii) Projects costs that were
expended prior to January 1, 2011.
(3) "Containerized cargo" shall mean any machinery, equipment,
materials, products, commodities, or any other cargo transported by
containers, which are rigid, sealable, and reusable metal boxes built
to a recognized international standard, in which goods are shipped
via oceangoing vessel.
(4) "Export" means any breakbulk or bulk cargo or containerized
cargo which is shipped in interstate or foreign commerce from the
State of California to a foreign country or a domestic noncontiguous
state or territory via oceangoing vessel.
(5) "Import" means any breakbulk or bulk cargo or containerized
cargo that is shipped in interstate or foreign commerce to the State
of California from a foreign country or from a domestic noncontiguous
state or territory via oceangoing vessel.
(6) "Oceangoing vessel" means a vessel, ship, or barge engaged,
for compensation, in transporting breakbulk or bulk cargo or
containerized cargo in interstate or foreign commerce.
(7) "Port or port and harbor activity" means any trade or business
conducted on premises in which a public port or harbor district has
an ownership, leasehold, or other possessory interest and those
premises are used as part of the regular cargo-related operations of
a public port or proposed to be used as part of pending construction
of a qualifying project.
(8) "Project" means any land, building, or other improvement, and
all real and personal properties deemed necessary or useful in
connection therewith, whether or not previously in existence, located
or to be located on public port property or within the planning
jurisdiction of a public port in this state.
(9) "Public port" means any port or harbor operating under grant
from the state, subject to the restrictions of the tidelands trust,
or any other public port or harbor district established by a
political subdivision of the state for the purposes of conducting
interstate or foreign trade.
(10) "Qualifying investment" means the undertaking by one or more
qualifying taxpayers of a qualifying project.
(11) "Qualifying project" means a project to be
undertaken completed by one or more qualifying
taxpayers that has a capital cost of not less than five million
dollars ($5,000,000) and at which the predominant trade or business
activity conducted will constitute industrial, warehousing, or port
and harbor operations and cargo handling, including any port or port
and harbor activity, and which is certified by the Franchise Tax
Board pursuant to the terms of this section.
(12) "Qualified taxpayer" means a taxpayer, who is qualified by
the Franchise Tax Board for the receipt of a credit pursuant to this
section.
(c) (1) A qualifying taxpayer seeking certification of a
qualifying project shall submit an application to the Franchise Tax
Board that includes the following information:
(A) A detailed description of the qualifying project, including
a statement of project completion, including the date
on which the project was placed in service, and a summary of
total actual capital costs prepared by an independent certified
public accountant.
(B) A statement that the proposed project meets the requirements
of this section, as well as any subsequent requirements adopted by
the Franchise Tax Board to facilitate the administration of this
section, to be classified as a qualifying project, and accompanied by
any relevant evidence or supporting documents necessary to the
statement.
(C) The name of each taxpayer or the name or names of its
shareholders, partners, members, owners, or beneficiaries that will
become entitled to the tax credit.
(D) The amount of total tax credits sought per year, not to exceed
5 percent of total capital costs annually.
(E) Any other information required by the Franchise Tax Board.
(2) If the application is incomplete, additional information may
be requested prior to further action by the Franchise Tax Board.
(3) The Franchise Tax Board may develop a standard form,
instructions, or form and instructions to facilitate the submission
of applications pursuant to this paragraph.
(4) The applicant shall remit a fee paid to the Franchise Tax
Board that shall cover the costs of the Franchise Tax Board's review
and evaluation of the project application and certification.
(d) (1) The Franchise Tax Board shall issue a certification to a
qualified project upon making a finding that the terms of this
section have been met.
(2) The certification shall include:
(A) A unique identifying number for each qualifying project.
(B) The maximum annual amount of tax credits that could possibly
be claimed in a given taxable year by the qualifying taxpayer under
the terms of this section
(C) The annual amount that could possibly be claimed by the
qualifying taxpayer under this section, not to exceed 5 percent of
total capital costs each taxable year.
(D) A statement advising the qualifying taxpayer that no credits
may be claimed by the taxpayer for any tax
taxable year for any qualified project until the taxpayer is in
receipt of a notification issued by the Franchise Tax Board pursuant
to paragraph (3) of subdivision (g) advising the taxpayer of the
amount of the credit authorized by the Legislature and the taxpayer's
pro rata share of that authorization for the current tax
taxable year.
(3) The Franchise Tax Board shall submit notice of its
certification of a project as a qualifying project to the Department
of Finance, the Joint Legislative Budget Committee, and the
Legislative Analyst.
(e) The Franchise Tax Board shall not certify a project unless it
receives a resolution adopted pursuant to subdivision (f) from the
public port where the project is located which determines that there
will be sufficient revenue received by the state as a result of the
economic impacts resulting from the completion of the project and
from increased port or port and harbor activity resulting from the
completion of the project, whether because of the grant of the tax
credit or otherwise, to offset the cost to the state of providing the
tax credit.
(f) (1) If a public port adopts a resolution in order to estimate
the economic impacts resulting from the completion of a qualifying
project pursuant to subdivision (e), the findings adopted shall be
based on estimates in a report prepared pursuant to paragraph
(2) of this subdivision that includes, but is not limited to,
the following:
(A) The total state tax revenues generated by the project and
project-related economic activity.
(B) The total local tax and user fee revenues generated by the
project and project-related economic activity.
(C) The total jobs created by the project and project-related
economic activity, including the specific impact of the project on
the employment of California residents.
(2) All estimates and projections made in a report under this
paragraph shall be made based on, and consistent with, one or more of
the following:
(A) Official statements or annual disclosure documents or other
similar financial disclosure documents issued by the public port to
its creditors, underwriters, or other bondholders or lienholders in
the normal course of business.
(B) Economic impact studies, reports, or evaluations that were
completed by a third party, based on a published, or otherwise
peer-reviewed, economic impact methodology and made available to the
public in a previous meeting of the public port's governing body.
(2) (A) Prior to making any estimates or projections in a report
under this paragraph upon which a port resolution may be based, a
port may adopt guidelines for the preparation of a project's economic
impact study. These guidelines shall be completed by a third party
economist, based on a published economic impact methodology. The
guidelines and published economic impact methodology shall be
incorporated into the findings of a peer review conducted pursuant to
subparagraph (B), and shall be adopted in a public meeting of the
governing body of the port with a finding that the guidelines and
methodology were developed in a manner consistent with this section.
(B) A peer review of the economic impact study and the economic
methodology to be adopted under this section shall be peer reviewed
and evaluated by an independent party that is selected through a
competitive bid process and without any financial association with
the third-party that completed the economic impact study and economic
methodology. The peer review shall evaluate the adequacy of the
guidelines and make specific recommendations regarding the
methodologies, which should be incorporated into the peer review by
the port upon adoption.
(C) Official statements or annual disclosure documents or other
similar financial disclosure documents issued by the public port to
its creditors, underwriters, or other bondholders or lienholders in
the normal course of its business may be relied on to conclusively
substantiate any facts regarding operations at a public port.
(D) This paragraph shall not prohibit a public port from relying
on and utilizing guidelines for study preparation developed by a
third-party for another public port as long as the final guidelines
are adopted pursuant to subparagraph (A).
(3) If a port chooses to adopt a resolution pursuant to paragraph
(1) of this subdivision, it shall make findings regarding the
estimated improvements to the freight transportation system of the
state which may result from the qualifying project with respect to
the following factors:
(A) "Velocity," which means the speed by which large cargo would
travel from the port through the distribution system.
(B) "Throughput," which means the volume of cargo that would move
from the port through the distribution system.
(C) "Reliability," which means a reasonably consistent and
predictable amount of time for cargo to travel from one point to
another on a given day or at a given time in California.
(D) "Congestion reduction," which means the reduction in recurrent
daily hours of delay to be achieved.
(3)
(4) This section shall not be construed to require any
public port to prepare a report or adopt a resolution except at its
own discretion.
(g) (1) A qualified taxpayer may not claim the credit authorized
under this section until the Legislature enacts a statute specifying
the total amount of the credit allowed to be claimed by the qualified
taxpayer for the preceding taxable year.
(2) If the aggregate amount of credits certified by the Franchise
Tax Board for qualified projects under this section for the taxable
year is greater than the amount authorized for the credit by the
Legislature pursuant to paragraph (1), then the Franchise Tax Board
shall allocate the total amount of the credit on a prorated basis,
based on each qualified project's percentage of the total tax credits
certified by the Franchise Tax Board as of July 1 of each year.
(3) The Franchise Tax Board shall notify all qualified taxpayers
of the amount of the credit authorized by the Legislature and the pro
rata share of that authorization. The Franchise Tax Board shall make
all notifications pursuant to this paragraph within 90 days of any
tax credit authorization legislation being signed by the Governor.
(h) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and the 10 succeeding years if necessary,
until the credit is exhausted.
(i) If a qualifying taxpayer that claims a credit under this
section sells, transfers, or otherwise disposes of, either directly
or indirectly, a qualifying project within 10 years of the taxable
year during which the taxpayer first claimed the credit, there shall
be added to the "net tax" of the qualifying taxpayer during the
taxable year of sale, transfer, or disposition an amount equal to the
total credit claimed multiplied by a fraction, the numerator of
which is the remaining term of 10 years and the denominator of which
is 10, unless an equivalent balance of the credit is expressly
assigned to the new owner of the qualified project in question and
the assignment is approved by the Franchise Tax Board.
(j) The Franchise Tax Board may audit any certified qualifying
project or inspect the physical site of the qualifying project in
order to verify claims and costs presented to the Franchise Tax Board
by a qualifying taxpayer in an application.
(k) (1) If the Franchise Tax Board finds the funds for which a
qualifying taxpayer received credits according to this section are
not invested in and expended with respect to capital costs of a
qualifying investment, the qualifying taxpayer's tax for that taxable
year shall be increased by an amount necessary for the recapture of
credit provided by this section.
(2) Interest that may be assessed and collected on recovered
credits computed from the original due date of the return on which
the credit was taken.
(l) By January 1, 2020, the Legislative Analyst shall prepare an
evaluation of the effectiveness of the infrastructure investment tax
credit, which shall include the overall impact of the tax credits,
the amount of the tax credits issued, the number of new jobs created,
the amount of California payroll created, the economic impact of the
tax credits on the port and maritime industry located in this state
and regionally, the amount of new infrastructure that has been
developed in the state, and any other factors that describe the
impact of the program.
(m) This credit shall be in lieu of the credit allowed under
Section 17057.7.
(n) This section shall remain in effect only until December 1,
2022, and as of that date is repealed, unless a later enacted
statute, that is enacted before December 1, 2022, deletes or extends
that date.
SEC. 4. Section 17057.7 is added to the Revenue
and Taxation Code, to read:
17057.7. (a) Subject to the enactment of a statute as described
in subdivision (d), for each taxable year beginning on or after
January 1, 2011, and before January 1, 2021, there shall be allowed
to a qualified taxpayer as an import-export cargo tax credit against
the "net tax," as defined by Section 17039, of an amount equal to no
more than the product of five dollars ($5) and the qualified taxpayer'
s number of tons of additional qualified cargo for the taxable year.
(b) For purposes of this section the following shall apply:
(1) "Additional cargo" means the amount of qualified cargo moved
in the current taxable year over and above the cargo moved in the
preceding taxable year.
(2) "Breakbulk or bulk cargo" means any nonliquid commodities,
automobiles, trucks, lumber, agricultural products and commodities,
machinery, equipment, materials, products, or other cargo transported
as palletized or unpalletized bagged, packaged, wrapped, drummed,
baled, or crated goods, or that are loaded in bulk directly into the
hold of a ship that are shipped via oceangoing vessel. Breakbulk or
bulk cargo shall not include any liquid commodities that are handled
in bulk or any containerized cargo.
(3) "Containerized cargo" shall mean any machinery, equipment,
materials, products, commodities, or any other cargo transported by
containers, which are rigid, sealable, and reusable metal boxes built
to a recognized international standard, in which goods are shipped
via oceangoing vessel.
(4) "Export" means any breakbulk or bulk cargo or containerized
cargo which is shipped in interstate or foreign commerce from the
State of California to a foreign country or a domestic noncontiguous
state or territory via oceangoing vessel.
(5) "Import" means any breakbulk or bulk cargo or containerized
cargo that is shipped in interstate or foreign commerce to the State
of California from a foreign country or from a domestic noncontiguous
state or territory via oceangoing vessel.
(6) "Oceangoing vessel" means a vessel, ship, or barge engaged,
for compensation, in transporting breakbulk or bulk cargo or
containerized cargo in interstate or foreign commerce.
(7) "Public port" means any port or harbor operating under grant
from the state, subject to the restrictions of the tidelands trust,
or any other public port or harbor district established by a
political subdivision of the state for the purposes of conducting
interstate or foreign trade.
(8) "Qualified business entity" means a commercial entity, all or
a portion of whose activities involve the import or export of
breakbulk or bulk cargo or containerized cargo to or from cargo
facilities located within California. For purposes of this section, a
marine terminal, intermodal rail terminal, or truck terminal which
handles cargo, but which is not a usual and regular final destination
or origination point of those cargoes, shall not be considered a
qualified business entity.
(9) "Qualified cargo" means any breakbulk or bulk cargo or
containerized cargo that is imported or exported to or from a
manufacturing, fabrication, assembly, distribution, processing, or
warehouse facility located in California and that is moved by way of
an oceangoing vessel berthed at a public port facility in California
during the taxable year and certified by the Franchise Tax Board as
meeting the terms of this section. For purposes of this section all
agricultural products and commodities shipped from or to California
by way of an oceangoing vessel berthed at a public port facility in
California shall be considered qualified cargo.
(10) "Qualified taxpayer" means a qualified business entity that
is certified by the Franchise Tax Board to receive an Import-Export
Cargo Tax Credit pursuant to this section.
(11) "Ton" means a net ton of 2,000 pounds and, in the case of
containerized cargo, shall exclude the weight of the container.
(c) (1) A qualified business entity seeking certification of a
qualified cargo shall submit an application to
the Franchise Tax Board that includes the
following information:
(A) A verified statement of additional cargo volume data for the
taxable year for which the credit is being sought and the cargo
volumes for the taxable year prior to the taxable year of the
application, specifically including the total annual volume and tons
of breakbulk or containerized cargo imported and exported from or to,
manufacturing, fabrication, assembly, distribution, processing, or
warehousing facilities located in California.
(B) Any other information required by the Franchise Tax Board.
(2) If the application is incomplete, additional information may
be requested prior to further action by the Franchise Tax Board.
(3) The Franchise Tax Board may develop a standard form,
instructions, or form and instructions to facilitate the submission
of applications pursuant to this paragraph.
(4) The applicant shall remit a fee paid to the Franchise Tax
Board, which shall cover the costs of the Franchise Tax Board's
review and evaluation of the project application and certification.
(d) The Franchise Tax Board shall issue a certification to a
qualifying business entity as a qualified taxpayer upon making a
finding that the terms of this section have been met, subject to the
Legislature enacting a statute specifying the total amount of the
credit allowable to all qualified taxpayers for taxable years
beginning before January 1, 2021.
(e) The Franchise Tax Board shall not certify qualified cargo
unless it receives a resolution adopted pursuant to subdivision (f)
from a public port which determines that there will be sufficient
revenue received by the state as a result of the economic impacts
from the additional qualified cargo import or export activity,
whether because of the grant of the tax credit or otherwise, to
offset the cost to the state of providing the tax credit.
(f) (1) If a public port adopts a resolution in order to estimate
the economic impacts resulting from the additional qualifying cargo
identified pursuant to subdivision (e), the findings adopted shall be
based on estimates in a report that includes, but is not limited to,
the following:
(A) The total state tax revenues generated by the additional cargo
and cargo-related economic activity.
(B) The total local tax and user fee revenues generated by the
cargo and cargo-related economic activity.
(C) The total jobs created by the cargo and cargo-related economic
activity, including the impact of the cargo on the employment of
California residents.
(2) All estimates and projections made in a report under this
paragraph shall be made based on, and consistent with, one or more of
the following:
(A) Official statements or annual disclosure documents or other
similar financial disclosure documents issued by the public port to
its creditors, underwriters, or other bondholders or lienholders in
the normal course of business.
(B) Economic impact studies, reports, or evaluations that were
completed by a third party, based on a published, or otherwise
peer-reviewed, economic impact methodology and made available to the
public in a previous meeting of the public port's governing body.
(3) This section shall not be construed to require any public port
to prepare a report or adopt a resolution except at its own
discretion.
(g) (1) The amount available to be applied to any additional
qualified cargo shall never exceed five dollars ($5) per ton of
additional cargo, but may be less than five dollars ($5) per ton if
the cumulative amount of credits certified by the Franchise Tax Board
under this section in a fiscal year is greater than the amount
authorized for the credit by the Legislature pursuant to subdivision
(d), then the Franchise Tax Board shall allocate the total amount of
the credit on a prorated basis equal to the qualifying business
entity's share of the total amount of additional qualified cargo
certified by the Franchise Tax Board as of July 1 of each year.
(2) The Franchise Tax Board shall notify a qualifying business
entity with additional qualified cargo applications submitted prior
to July 1 of each year of the amount of the credit authorized by the
Legislature and the pro rata share for each qualified taxpayer of
that authorization during the fiscal year.
(h) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and the 10 succeeding years if necessary,
until the credit is exhausted.
(i) The Franchise Tax Board may promulgate rules and regulations
as necessary to implement the provisions of this section.
(j) The Franchise Tax Board may audit any qualified business
entity in order to verify claims presented to the Franchise Tax Board
in an application submitted pursuant to this section.
(k) (1) If the Franchise Tax Board finds that any claims regarding
additional cargo for which a qualified business entity received
credits according to this section were inaccurate, the qualified
business entity's tax for that taxable period shall be increased by
an amount necessary for the recapture of credit provided by this
section.
(2) Interest that may be assessed and collected on recovered
credits computed from the original due date of the return on which
the credit was taken.
(3) The provisions of this section shall be in addition to and
shall not limit the authority of the Franchise Tax Board to assess or
to collect under any other provision of law.
(l) By January 1, 2020, the Legislative Analyst shall prepare an
evaluation of the effectiveness of the import-export cargo tax credit
which shall include the overall impact of the tax credits, the
amount of the tax credits issued, the number of new jobs created, the
amount of California payroll created, the economic impact of the tax
credits on the port and maritime industry located in this state and
regionally, the amount of new infrastructure that has been developed
in the state, and any other factors that describe the impact of the
program.
(m) This credit shall be in lieu of the credit allowed under
Section 17057.6.
(n) This section shall remain in effect only until December 1,
2022, and as of that date is repealed, unless a later enacted
statute, that is enacted before December 1, 2022, deletes or extends
that date.
SEC. 5. SEC. 4. Section 23670 is
added to the Revenue and Taxation Code, to read:
23670. (a) Subject to subdivision (g), for each taxable year
beginning on or after January 1, 2011, and before January 1, 2021,
there shall be allowed to a qualified taxpayer as a trade
infrastructure investment tax credit against the "tax," as defined by
Section 23036, an amount of up to, but not to exceed, 5 percent of
the total capital costs of each qualifying project constructed in
this state, subject to the terms, conditions, and qualifications
established by this section.
(1) A qualified taxpayer may claim up to, but not to exceed, 5
percent of the total capital costs for each year beginning on or
after 2011, and before 2021.
(2) This credit shall be allowed to a qualified taxpayer that has
completed a qualified project.
(b) For purposes of this section:
(1) "Breakbulk or bulk cargo" means any nonliquid commodities,
automobiles, trucks, lumber, agricultural products and commodities,
machinery, equipment, materials, products, or other cargo transported
as palletized or unpalletized bagged, packaged, wrapped, drummed,
baled, or crated goods, or that are loaded in bulk directly into the
hold of a ship that are shipped via oceangoing vessel. Breakbulk or
bulk cargo shall not include any liquid commodities that are handled
in bulk or any containerized cargo.
(2) "Capital costs" means all costs and expenses incurred
prior to the date on which the qualifying project was
placed in service by one or more qualified taxpayers in
connection with the acquisition, construction, installation, and
equipping of a qualifying project, including any environmental
mitigation undertaken specifically to reduce the impacts of a
qualifying project, during the period commencing with the date on
which the acquisition, construction, installation, and
equipping commences and ending on the date on which the qualifying
project is placed in service. installation, or
equipping began.
(A) Capital costs shall include, but not be limited to, the
following:
(i) The costs of acquiring, constructing, installing, equipping,
and financing a qualifying project, including all obligations
incurred for labor and to contractors, subcontractors, builders, and
materialmen.
(ii) The costs of acquiring land or rights in land and any cost
incidental thereto, including recording fees.
(iii) The costs of contract bonds and of insurance of any kind
that may be required or necessary during the acquisition,
construction, or installation of a qualifying project.
(iv) The costs of architectural and engineering services,
including test borings, surveys, estimates, plans, specifications,
preliminary investigations, environmental mitigation, and supervision
of construction, as well as for the performance of all the duties
required by or consequent upon the acquisition, construction, and
installation of a qualifying project.
(v) The costs associated with installation of fixtures and
equipment, surveys, including archaeological and environmental
surveys, site tests and inspections, subsurface site work,
excavation, removal of structures, roadways, and other surface
obstructions, filling, grading, paving, and provisions for drainage,
stormwater retention, installation of utilities, including water,
sewerage treatment, gas, electricity, communications, and similar
facilities, and offsite construction of utility extensions to the
boundaries of the property.
(vi) The costs of completing any environmental mitigation
associated with the completion of the project which is capital in
nature, and not an ongoing operating cost, including, but not limited
to, the following:
(I) The replacement, repower, or retrofit of heavy-duty diesel
trucks.
(II) The replacement, repower, or retrofit of diesel locomotive
engines.
(III) The replacement, repower, or retrofit of harbor craft.
(IV) The provision of on-shore electrical power for ocean freight
carriers calling at the state's seaports, which reduce the use of
auxiliary and main engine ship power.
(V) Mobile or portable shoreside distributed power generation
projects that eliminate the need of oceangoing vessels to use the
electricity grid.
(VI) The replacement, repower, or retrofit of cargo handling
equipment.
(VII) Electrification infrastructure to reduce engine idling and
use of internal combustion auxiliary power systems by trucks and
cargo handling equipment.
(VIII) The installation of solar power systems.
(IX) The installation of alternative fueling systems or
acquisition of alternative fueling equipment.
(vii) All other costs of a nature comparable to those described,
including, but not limited to, all project costs required to be
capitalized for federal income tax purposes pursuant to the
provisions of Section 263(a) of Title 26 of the United States Code.
(viii) Costs otherwise defined as capital costs incurred by the
taxpayer where the qualifying taxpayer is the lessee under a lease
that contains a term of not less than five years and is characterized
as a capital lease for federal income tax purposes.
(B) Capital costs shall not include property
the following:
(i) Property owned or leased by
the qualifying taxpayer or a related entity before the commencement
of the acquisition, construction, installation, or equipping of the
qualified project, unless the property was physically located outside
the state for a period of at least one year prior to the date on
which the qualifying project was placed in service.
(ii) Expenses, costs, or profits of any kind incurred by a
qualifying taxpayer incurred after the date in which the project is
placed in service.
(C) Capital costs shall not include those project
(iii) Projects costs that were
expended prior to January 1, 2011.
(3) "Containerized cargo" shall mean any machinery, equipment,
materials, products, commodities, or any other cargo transported by
containers, which are rigid, sealable, and reusable metal boxes built
to a recognized international standard, in which goods are shipped
via oceangoing vessel.
(4) "Export" means any breakbulk or bulk cargo or containerized
cargo which is shipped in interstate or foreign commerce from the
State of California to a foreign country or a domestic noncontiguous
state or territory via oceangoing vessel.
(5) "Import" means any breakbulk or bulk cargo or containerized
cargo that is shipped in interstate or foreign commerce to the State
of California from a foreign country or from a domestic noncontiguous
state or territory via oceangoing vessel.
(6) "Oceangoing vessel" means a vessel, ship, or barge engaged,
for compensation, in transporting breakbulk or bulk cargo or
containerized cargo in interstate or foreign commerce.
(7) "Port or port and harbor activity" means any trade or business
conducted on premises in which a public port or harbor district has
an ownership, leasehold, or other possessory interest and those
premises are used as part of the regular cargo-related operations of
a public port or proposed to be used as part of pending construction
of a qualifying project.
(8) "Project" means any land, building, or other improvement, and
all real and personal properties deemed necessary or useful in
connection therewith, whether or not previously in existence, located
or to be located on public port property or within the planning
jurisdiction of a public port in this state.
(9) "Public port" means any port or harbor operating under grant
from the state, subject to the restrictions of the tidelands trust,
or any other public port or harbor district established by a
political subdivision of the state for the purposes of conducting
interstate or foreign trade.
(10) "Qualifying investment" means the undertaking by one or more
qualifying taxpayers of a qualifying project.
(11) "Qualifying project" means a project to be
undertaken completed by one or more qualifying
taxpayers that has a capital cost of not less than five million
dollars ($5,000,000) and at which the predominant trade or business
activity conducted will constitute industrial, warehousing, or port
and harbor operations and cargo handling, including any port or port
and harbor activity, and which is certified by the Franchise Tax
Board pursuant to the terms of this section.
(12) "Qualified taxpayer" means a taxpayer, who is qualified by
the Franchise Tax Board for the receipt of a credit pursuant to this
section.
(c) (1) A qualifying taxpayer seeking certification of a
qualifying project shall submit an application to the Franchise Tax
Board that includes the following information:
(A) A detailed description of the qualifying project, including
a statement of project completion, including the date on which
the project was placed in service, and a summary of total
actual capital costs prepared by an independent certified public
accountant.
(B) A statement that the proposed project meets the requirements
of this section, as well as any subsequent requirements adopted by
the Franchise Tax Board to facilitate the administration of this
section, to be classified as a qualifying project, and accompanied by
any relevant evidence or supporting documents necessary to the
statement.
(C) The name of each taxpayer or the name or names of its
shareholders, partners, members, owners, or beneficiaries that will
become entitled to the tax credit.
(D) The amount of total tax credits sought per year, not to exceed
5 percent of total capital costs annually.
(E) Any other information required by the Franchise Tax Board.
(2) If the application is incomplete, additional information may
be requested prior to further action by the Franchise Tax Board.
(3) The Franchise Tax Board may develop a standard form,
instructions, or form and instructions to facilitate the submission
of applications pursuant to this paragraph.
(4) The applicant shall remit a fee paid to the Franchise Tax
Board that shall cover the costs of the Franchise Tax Board's review
and evaluation of the project application and certification.
(d) (1) The Franchise Tax Board shall issue a certification to a
qualified project upon making a finding that the terms of this
section have been met.
(2) The certification shall include:
(A) A unique identifying number for each qualifying project.
(B) The maximum annual amount of tax credits that could possibly
be claimed in a given taxable year by the qualifying taxpayer under
the terms of this section.
(C) The annual amount that could possibly be claimed by the
qualifying taxpayer under this section, not to exceed 5 percent of
total capital costs each taxable year.
(D) A statement advising the qualifying taxpayer that no credits
may be claimed by the taxpayer for any tax
taxa ble year for any qualified project until the
taxpayer is in receipt of a notification issued by the Franchise Tax
Board pursuant to paragraph (3) of subdivision (g) advising the
taxpayer of the amount of the credit authorized by the Legislature
and the taxpayer's pro rata share of that authorization for the
current tax taxable year.
(3) The Franchise Tax Board shall submit notice of its
certification of a project as a qualifying project to the Department
of Finance, the Joint Legislative Budget Committee, and the
Legislative Analyst.
(e) The Franchise Tax Board shall not certify a project unless it
receives a resolution adopted pursuant to subdivision (f) from the
public port where the project is located which determines that there
will be sufficient revenue received by the state as a result of the
economic impacts resulting from the completion of the project and
from increased port or port and harbor activity resulting from the
completion of the project, whether because of the grant of the tax
credit or otherwise, to offset the cost to the state of providing the
tax credit.
(f) (1) If a public port adopts a resolution in order to estimate
the economic impacts resulting from the completion of a qualifying
project pursuant to subdivision (e), the findings adopted shall be
based on estimates in a report prepared pursuant to paragraph
(2) that includes, but is not limited to, the following:
(A) The total state tax revenues generated by the project and
project-related economic activity.
(B) The total local tax and user fee revenues generated by the
project and project-related economic activity.
(C) The total jobs created by the project and project-related
economic activity, including the specific impact of the project on
the employment of California residents.
(2) All estimates and projections made in a report under
this paragraph shall be made based on, and consistent with, one or
more of the following:
(A) Official statements or annual disclosure documents or
other similar financial disclosure documents issued by the public
port to its creditors, underwriters, or other bondholders or
lienholders in the normal course of business.
(B) Economic impact studies, reports, or evaluations that
were completed by a third party, based on a published, or otherwise
peer-reviewed, economic impact methodology and made available to the
public in a previous meeting of the public port's governing body.
(2) (A) Prior to making any estimates or projections in a
report under this paragraph upon which a port resolution may be
based, a port may adopt guidelines for the preparation of a project's
economic impact study. These guidelines shall be completed by a
third party economist, based on a published economic impact
methodology. The guidelines and published economic impact methodology
shall be incorporated into the findings of a peer review conducted
pursuant to subparagraph (B), and shall be adopted in a public
meeting of the governing body of the port with a finding that the
guidelines and methodology were developed in a manner consistent with
this section.
(B) A peer review of the economic impact study and the
economic methodology to be adopted under this section shall be peer
reviewed and evaluated by an independent party that is selected
through a competitive bid process and without any financial
association with the third-party that completed the economic impact
study and economic methodology. The peer review shall evaluate the
adequacy of the guidelines and make specific recommendations
regarding the methodologies, which should be incorporated into the
peer review by the port upon adoption.
(C) Official statements or annual disclosure documents or
other similar financial disclosure documents issued by the public
port to its creditors, underwriters, or other bondholders or
lienholders in the normal course of its business may be relied on to
conclusively substantiate any facts regarding operations at a public
port.
(D) This paragraph shall not prohibit a public port from
relying on and utilizing guidelines for study preparation developed
by a third-party for another public port as long as the final
guidelines are adopted pursuant to subparagraph (A).
(3) If a port chooses to adopt a resolution pursuant to
paragraph (1) of this subdivision, it shall make findings regarding
the estimated improvements to the freight transportation system of
the state which may result from the qualifying project with respect
to the following factors:
(A) "Velocity," which means the speed by which large cargo
would travel from the port through the distribution system.
(B) "Throughput," which means the volume of cargo that would
move from the port through the distribution system.
(C) "Reliability," which means a reasonably consistent and
predictable amount of time for cargo to travel from one point to
another on a given day or at a given time in California.
(D) "Congestion reduction," which means the reduction in
recurrent daily hours of delay to be achieved.
(3)
(4) This section shall not be construed to require any
public port to prepare a report or adopt a resolution except at its
own discretion.
(g) (1) A qualified taxpayer may not claim the credit authorized
under this section until the Legislature enacts a statute specifying
the total amount of the credit allowed to be claimed by the qualified
taxpayer for the preceding taxable year.
(2) If the aggregate amount of credits certified by the Franchise
Tax Board for qualified projects under this section for the taxable
year is greater than the amount authorized for the credit by the
Legislature pursuant to paragraph (1), then the Franchise Tax Board
shall allocate the total amount of the credit on a prorated basis,
based on each qualified project's percentage of the total tax credits
certified by the Franchise Tax Board as of July 1 of each year.
(3) The Franchise Tax Board shall notify all qualified taxpayers
of the amount of the credit authorized by the Legislature and the pro
rata share of that authorization. The Franchise Tax Board shall make
all notifications pursuant to this paragraph within 90 days of any
tax credit authorization legislation being signed by the Governor.
(h) In the case where the credit allowed by this section exceeds
the "tax," the excess may be carried over to reduce the "tax" in the
following year, and the 10 succeeding years if necessary, until the
credit is exhausted.
(i) If a qualifying taxpayer that claims a credit under this
section sells, transfers, or otherwise disposes of, either directly
or indirectly, a qualifying project within 10 years of the taxable
year during which the taxpayer first claimed the credit, there shall
be added to the "tax" of the qualifying taxpayer during the taxable
year of sale, transfer, or disposition an amount equal to the total
credit claimed multiplied by a fraction, the numerator of which is
the remaining term of 10 years and the denominator of which is 10,
unless an equivalent balance of the credit is expressly assigned to
the new owner of the qualified project in question and the assignment
is approved by the Franchise Tax Board.
(j) The Franchise Tax Board may audit any certified qualifying
project or inspect the physical site of the qualifying project in
order to verify claims and costs presented to the Franchise Tax Board
by a qualifying taxpayer in an application.
(k) (1) If the Franchise Tax Board finds that funds for which a
qualifying taxpayer received credits according to this section are
not invested in and expended with respect to capital costs of a
qualifying investment, the qualifying taxpayer's tax for that taxable
year shall be increased by an amount necessary for the recapture of
credit provided by this section.
(2) Interest that may be assessed and collected on recovered
credits computed from the original due date of the return on which
the credit was taken.
(l) By January 1, 2020, the Legislative Analyst shall prepare an
evaluation of the effectiveness of the infrastructure investment tax
credit, which shall include the overall impact of the tax credits,
the amount of the tax credits issued, the number of new jobs created,
the amount of California payroll created, the economic impact of the
tax credits on the port and maritime industry located in this state
and regionally, the amount of new infrastructure that has been
developed in the state, and any other factors that describe the
impact of the program.
(m) This credit shall be in lieu of the credit allowed under
Section 23671.
(n) This section shall remain in effect only until December 1,
2022, and as of that date is repealed, unless a later enacted
statute, that is enacted before December 1, 2022, deletes or extends
that date.
SEC. 6. Section 23671 is added to the Revenue
and Taxation Code, to read:
23671. (a) Subject to the enactment of a statute as described in
subdivision (d), for each taxable year beginning on or after January
1, 2011, and before January 1, 2021, there shall be allowed to a
qualified taxpayer as an import-export cargo tax credit against the
"tax," as defined by Section 23036, of an amount equal to no more
than the product of five dollars ($5) and the qualified taxpayer's
number of tons of additional qualified cargo for the taxable year.
(b) For purposes of this section the following shall apply:
(1) "Additional cargo" means the amount of qualified cargo moved
in the current taxable year over and above the cargo moved in the
preceding taxable year.
(2) "Breakbulk or bulk cargo" means any nonliquid commodities,
automobiles, trucks, lumber, agricultural products and commodities,
machinery, equipment, materials, products, or other cargo transported
as palletized or unpalletized bagged, packaged, wrapped, drummed,
baled, or crated goods, or that are loaded in bulk directly into the
hold of a ship that are shipped via oceangoing vessel. Breakbulk or
bulk cargo shall not include any liquid commodities that are handled
in bulk or any containerized cargo.
(3) "Containerized cargo" shall mean any machinery, equipment,
materials, products, commodities, or any other cargo transported by
containers, which are rigid, sealable, and reusable metal boxes built
to a recognized international standard, in which goods are shipped
via oceangoing vessel.
(4) "Export" means any breakbulk or bulk cargo or containerized
cargo which is shipped in interstate or foreign commerce from the
State of California to a foreign country or a domestic noncontiguous
state or territory via oceangoing vessel.
(5) "Import" means any breakbulk or bulk cargo or containerized
cargo that is shipped in interstate or foreign commerce to the State
of California from a foreign country or from a domestic noncontiguous
state or territory via oceangoing vessel.
(6) "Oceangoing vessel" means a vessel, ship, or barge engaged,
for compensation, in transporting breakbulk or bulk cargo or
containerized cargo in interstate or foreign commerce.
(7) "Public port" means any port or harbor operating under grant
from the state, subject to the restrictions of the tidelands trust,
or any other public port or harbor district established by a
political subdivision of the state for the purposes of conducting
interstate or foreign trade.
(8) "Qualified business entity" means a commercial entity, all or
a portion of whose activities involve the import or export of
breakbulk or bulk cargo or containerized cargo to or from cargo
facilities located within California. For purposes of this section, a
marine terminal, intermodal rail terminal, or truck terminal which
handles cargo, but which is not a usual and regular final destination
or origination point of those cargoes, shall not be considered a
qualified business entity.
(9) "Qualified cargo" means any breakbulk or bulk cargo or
containerized cargo that is imported or exported to or from a
manufacturing, fabrication, assembly, distribution, processing, or
warehouse facility located in California and that is moved by way of
an oceangoing vessel berthed at a public port facility in California
during the taxable year and certified by the Franchise Tax Board as
meeting the terms of this section. For purposes of this section all
agricultural products and commodities shipped from or to California
by way of an oceangoing vessel berthed at a public port facility in
California shall be considered qualified cargo.
(10) "Qualified taxpayer" means a qualified business entity that
is certified by the Franchise Tax Board to receive an Import-Export
Cargo Tax Credit pursuant to this section.
(11) "Ton" means a net ton of 2,000 pounds and, in the case of
containerized cargo, shall exclude the weight of the container.
(c) (1) A qualified business entity seeking certification of a
qualified cargo shall submit an application to the Franchise Tax
Board that includes the following information:
(A) A verified statement of additional cargo volume data for the
taxable year for which the credit is being sought and the cargo
volumes for the taxable year prior to the taxable year of the
application, specifically including the total annual volume and tons
of breakbulk or containerized cargo imported and exported from or to,
manufacturing, fabrication, assembly, distribution, processing, or
warehousing facilities located in California.
(B) Any other information required by the Franchise Tax Board.
(2) If the application is incomplete, additional information may
be requested prior to further action by the Franchise Tax Board.
(3) The Franchise Tax Board may develop a standard form,
instructions, or form and instructions to facilitate the submission
of applications pursuant to this paragraph.
(4) The applicant shall remit a fee paid to the Franchise Tax
Board, which shall cover the costs of the Franchise Tax Board's
review and evaluation of the project application and certification.
(d) The Franchise Tax Board shall issue a certification to a
qualifying business entity as a qualified taxpayer upon making a
finding that the terms of this section have been met, subject to the
Legislature enacting a statute specifying the total amount of the
credit allowable to all qualified taxpayers for taxable years
beginning before January 1, 2021.
(e) The Franchise Tax Board shall not certify qualified cargo
unless it receives a resolution adopted pursuant to subdivision (f)
from a public port which determines that there will be sufficient
revenue received by the state as a result of the economic impacts
from the additional qualified cargo import or export activity,
whether because of the grant of the tax credit or otherwise, to
offset the cost to the state of providing the tax credit.
(f) (1) If a public port adopts a resolution in order to estimate
the economic impacts resulting from the additional qualifying cargo
identified pursuant to subdivision (e), the findings adopted shall be
based on estimates in a report that includes, but is not limited to,
the following:
(A) The total state tax revenues generated by the additional cargo
and cargo-related economic activity.
(B) The total local tax and user fee revenues generated by the
cargo and cargo-related economic activity.
(C) The total jobs created by the cargo and cargo-related economic
activity, including the impact of the cargo on the employment of
California residents.
(2) All estimates and projections made in a report under this
paragraph shall be made based on, and consistent with, one or more of
the following:
(A) Official statements or annual disclosure documents or other
similar financial disclosure documents issued by the public port to
its creditors, underwriters, or other bondholders or lienholders in
the normal course of business.
(B) Economic impact studies, reports, or evaluations that were
completed by a third party, based on a published, or otherwise
peer-reviewed, economic impact methodology and made available to the
public in a previous meeting of the public port's governing body.
(3) This section shall not be construed to require any public port
to prepare a report or adopt a resolution except at its own
discretion.
(g) (1) The amount available to be applied to any additional
qualified cargo shall never exceed five dollars ($5) per ton of
additional cargo, but may be less than five dollars ($5) per ton if
the cumulative amount of credits certified by the Franchise Tax Board
under this section in a fiscal year is greater than the amount
authorized for the credit by the Legislature pursuant to subdivision
(d), then the Franchise Tax Board shall allocate the total amount of
the credit on a prorated basis equal to the qualifying business
entity's share of the total amount of additional qualified cargo
certified by the Franchise Tax Board as of July 1 of each year.
(2) The Franchise Tax Board shall notify a qualifying business
entity with additional qualified cargo applications submitted prior
to July 1 of each year of the amount of the credit authorized by the
Legislature and the pro rata share for each qualified taxpayer of
that authorization during the fiscal year.
(h) In the case where the credit allowed by this section exceeds
the "tax," the excess may be carried over to reduce the "tax" in the
following year, and the 10 succeeding years if necessary, until the
credit is exhausted.
(i) The Franchise Tax Board may promulgate rules and regulations
as necessary to implement the provisions of this section.
(j) The Franchise Tax Board may audit any qualified business
entity in order to verify claims presented to the Franchise Tax Board
in an application submitted pursuant to this section.
(k) (1) If the Franchise Tax Board finds that any claims regarding
additional cargo for which a qualified business entity received
credits according to this section were inaccurate, the qualified
business entity's tax for that taxable period shall be increased by
an amount necessary for the recapture of credit provided by this
section.
(2) Interest that may be assessed and collected on recovered
credits computed from the original due date of the return on which
the credit was taken.
(3) The provisions of this section shall be in addition to and
shall not limit the authority of the Franchise Tax Board to assess or
to collect under any other provision of law.
(l) By January 1, 2020, the Legislative Analyst shall prepare an
evaluation of the effectiveness of the import-export cargo tax credit
which shall include the overall impact of the tax credits, the
amount of the tax credits issued, the number of new jobs created, the
amount of California payroll created, the economic impact of the tax
credits on the port and maritime industry located in this state and
regionally, the amount of new infrastructure that has been developed
in the state, and any other factors that describe the impact of the
program.
(m) This credit shall be in lieu of the credit allowed under
Section 23670.
(n) This section shall remain in effect only until December 1,
2022, and as of that date is repealed, unless a later enacted
statute, that is enacted before December 1, 2022, deletes or extends
that date.