BILL ANALYSIS Ó
AB 28
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Date of Hearing: April 23, 2013
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Jose Medina, Chair
AB 28 (V. Manuel Pérez) - As Amended: March 4, 2013
SUBJECT : Economic Development: Enterprise Zones
SUMMARY : Makes six programmatic/fiscal improvements to the
geographically-targeted economic development area programs, (G-TEDAs)
relating to cost, transparency and accountability including, but not
limited to:
1)De-designation of poor performing zones;
2)Better tracking of local financial and nonfinancial contributions to
zone activities;
3)Restricting eligible areas for new zones to low-income census tracks;
4)Limiting size of new zones, in areas where previous zones had existed;
5)Better linkages between state funded job programs and G-TEDA
businesses; and
6)Expansion of state-level reporting on job creation and business
development.
Specifically, this bill :
1)Requires new enterprise zone designations to only include eligible
areas comprised of low income census tracts. Existing law allows
applicants to choose among several economic distress factors,
including low income households. Communities can still use other
criteria to determine eligibility, but one criterion must be low
household income. The reforms also modify the application bonus point
system to better target lowest income neighborhoods.
2)Limits the size of a new zone that includes an area from an existing
or pervious zone to 115% of the size of the existing or previous zone.
For rural areas, as defined, the size of the new zone is limited to
125%. In addition, for proposed new zones that includes area from two
or more current or previous zones, the size of the zone is limited to
115% of the largest current or previous zones.
3)Authorizes the Department of Housing and Community Development (HCD)
to increase the state fee that is assessed on each hire credit voucher
submitted for certification from $15 to as high as $20, based on the
actual increase in program costs. HCD currently has sufficient moneys
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to oversee these program changes, in the future; however, costs may
increase and should be covered. HCD receives no General Fund moneys
to administer the G-TEDA program.
4)Links each zone's required biennial progress report to the HCD audit
and zone de-designation process. Currently, there are no specified
penalties for a zone that fails to submit its biennial progress report
or that fails to meet goals and objectives, as outlined in its
memorandum of understanding with the state. By linking poor
performance with the existing HCD audit procedures, a process is
established to identify and de-designate poor performing zones.
5)Requires local governments to identify in its application the types of
local resources they are committing to use in implementing its
economic development strategy and then have each zone document in its
biennial progress report the actual amount of local resources
(including incentives) that were dedicated to zone activities.
6)Requires state agencies and departments, when developing workforce
programs and services to consider how the enterprise zone program
could be better integrated into serving their target client including
Career One-Stop Offices, CalWORKS and the Department of Education.
7)Requires a more comprehensive review of the program based on
information from the zones and affiliated state agencies. New areas
of information would include the type of businesses being served in
zones, the amount of capital investments being made by zone
businesses, and wage rates of employees on which hiring credits are
claimed.
EXISTING LAW:
1)Provides for the establishment of G-TEDA programs to stimulate
business and industrial growth, and create jobs in depressed areas of
the state. Specifically, existing law:
a) Establishes the Enterprise Zone (EZ) Program with a maximum of
42 EZs, each designated for an initial 15-year period by HCD;
b) Establishes the Local Agency Military Base Realignment Area
(LAMBRA) Program with a maximum of eight LAMBRAs, each designated
for an eight-year period by HCD. Limits designation to one LAMBRA
per geographical region of the state;
c) Establishes the Manufacturing Enhancement Area (MEA) Program
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with a maximum of two MEAs, each designated for a 14-year period by
HCD. Limits MEA designation to impoverished areas along the
California-Mexico border; and
d) Establishes the Targeted Tax Area (TTA) Program, administered by
HCD, within the County of Tulare for a 15-year period.
2)Provides legislative intent that the "health, safety, and welfare of
the people of California depend upon the development, stability, and
expansion of private business, industry, and commerce, and there are
certain areas within the state that are economically depressed due to
a lack of investment in the private sector. Therefore, it is declared
to be the purpose of this chapter to stimulate business and industrial
growth in the depressed areas of the state by relaxing regulatory
controls that impede private investment. Further, that is in the
economic interest of the state to have one strong, combined, and
business-friendly incentive program to help attract business and
industry to the state, to help retain and expand existing state
business and industry, and to create increased job opportunities for
all Californians. "
FISCAL EFFECT : Unknown
COMMENTS :
1)Framing the Policy Issue : The measure seeks to increase the
transparency and accountability of the G-TEDA programs. As currently
drafted, the bill does not address proposed chances to the G-TEDA tax
provisions, however staff understands those issues are under
discussion.
This analysis includes background on the G-TEDA programs including a
discussion on the impact of the program on California communities and
a history of the quest for a comprehensive reform package.
2)The California Enterprise Zone Program : The EZ and the other G-TEDA
programs are among the largest state economic development programs in
California. HCD administers four G-TEDA programs including programs
for the EZs, MEAs, LAMBRAs, and one TTA.
HCD is authorized to designate up to 42 enterprise zones based on a
statutory list of criteria related to poverty and economic
dislocation. The 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
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businesses and retain existing businesses, resulting in increased tax
revenues, decreased 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.
Enterprise zones are located in portions of 54 Assembly Districts and
32 Senate Districts. Enterprise zones range in size from one square
mile to 70 square miles and in geographic locations ranging from
Eureka and Shasta Valley near the Oregon border to San Diego and
Calexico along the Mexican border.
Under the program, businesses and other entities located within the
area are eligible for a variety of local and state incentives. In its
application, a prospective enterprise zone is required to identify
specific local government incentives that will be made available to
businesses located in the proposed zone. The local incentives can,
among other things, include, writing down the costs of development,
funding related infrastructure improvements, providing job training to
prospective employees, and/or establishing streamlined processes for
obtaining permits.
The state additionally offers a number of incentives, including tax
credits, special tax provisions, priority notification in the sale of
state surplus lands, access to certain Brownfield clean-up programs,
and preferential treatment for state contracts. In addition to
enterprise zones, the state is also authorized to administer several
other G-TEDAs including a TTA, MEA and LAMBRA. Below is a chart
comparing the state tax incentives offered to businesses located in a
G-TEDA.
----------------------------------------------------------
| Comparison of State Tax Benefits by Targeted Area |
----------------------------------------------------------
|-----------+------+---------+---------+----------+---------|
| |Hiring|Longer |Sales |Accelerate|Lender |
| | |NOL<1> |and Use |d |Interest |
| |Credit|Carry- |Tax |Depreciati|Deduction|
| | |Forward |Credit |on | |
| | |Period | | | |
|-----------+------+---------+---------+----------+---------|
|Enterprise | X | X | X | X | X |
|Zone | | | | | |
---------------------------------
<1> NOL= Net Operating Loss
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|-----------+------+---------+---------+----------+---------|
|Manufacturi| X | | | | |
|ng | | | | | |
|Enhancement| | | | | |
| Zone | | | | | |
|-----------+------+---------+---------+----------+---------|
|Targeted | X | X | X | X | |
|Tax Area | | | | | |
|-----------+------+---------+---------+----------+---------|
|Local | X | X | X | X | |
|Agency | | | | | |
|Military | | | | | |
|Base | | | | | |
|Recovery | | | | | |
|Area | | | | | |
-----------------------------------------------------------
----------------------------------------------------------
|Source: Legislative Analyst's Office |
----------------------------------------------------------
The Franchise Tax Board (FTB) reported that in 2010 - the most current
comprehensive data available - $721.5 million in enterprise zone
business incentives were claimed through corporate and personal income
tax (PIT) returns. Additionally, FTB reported hundreds of millions in
carryover credits have been earned by businesses, but have not been
claimed. Below is a chart that displays the dollar amount of
enterprise zone incentives claimed through each of the tax incentives.
-------------------------------------------------------------------
| Enterprise Zone Tax Incentive Usage* |
| Source: |
|http://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2011_Tables_M|
| emo.pdf |
|http://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2011_Table_2_|
| EZPA.pdf |
| |
| http://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Rev_Est_Exhibits_1212.pdf |
-------------------------------------------------------------------
|---------+------+------+------+-------+-------+--------+-----+-----|
| | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 |2010 |2011 |
| | | | | | | | | |
|---------+------+------+------+-------+-------+--------+-----+-----|
|Hiring |$349,1|$362,6|$385,6|$430,93|$462,68|$458,912|$697,|$476,|
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|and |27 |20 |77 |4 | 2 | | 912 |205* |
|Sales | | | | | | | | |
|Tax | | | | | | | | |
|Credit | | | | | | | | |
|---------+------+------+------+-------+-------+--------+-----+-----|
|NOL |$72,32|$74,02|$126,1|$207,99|$50,418| $5,588 |$6,52| -- |
|Deduction|6 |4 |06 |3 | | | 1 | |
|s | | | | | | | | |
|---------+------+------+------+-------+-------+--------+-----+-----|
|Tax |$5,171|$5,966|$11,35|$15,807|$3,433 | $359 |$523 | -- |
|Impact | | |1 | | | | | |
|---------+------+------+------+-------+-------+--------+-----+-----|
|Net |$432,8|$490,1|$517,3|$520,37|$264,54|$265,683|$335,| -- |
|Interest |67 |29 |10 |2 | 7 | | 982 | |
|Deduction| | | | | | | | |
|s | | | | | | | | |
|---------+------+------+------+-------+-------+--------+-----+-----|
|Tax |$29,10|$32,39|$34,15|$34,438|$17,282|$12,268 |$22,9| -- |
|Impact |3 |5 |6 | | | | 86 | |
|---------+------+------+------+-------+-------+--------+-----+-----|
|Business |$4,387|$4,770|$4,463|$5,136 |$5,637 | $4,365 |$4,48| -- |
|Expense | | | | | | | 1 | |
|Deduction| | | | | | | | |
|s | | | | | | | | |
|---------+------+------+------+-------+-------+--------+-----+-----|
|Tax |$222 |$200 |$188 |$197 | $199 | $163 |$159 | -- |
|Impact | | | | | | | | |
|---------+------+------+------+-------+-------+--------+-----+-----|
|Total |$383,6|$401,1|$431,3|$481,37|$483,59|$474,515|$721,| -- |
|Tax |24 |81 |71 |6 | 6 | | 580 | |
|Impact | | | | | | | | |
-------------------------------------------------------------------
-------------------------------------------------------------------
| *Data shown in Thousands|
|-------------------------------------------------------------------|
| Data Provided by the Franchise Tax Board 4/2013|
| *Estimated based on preliminary data (returns processed through |
|November 11, 2012) |
| |
-------------------------------------------------------------------
Across the U.S., 37 other states have G-TEDA type programs. Economic
developers have testified that the G-TEDA programs are among the
state's last remaining marketing tools for attracting new businesses
and investment to California. Others, however, remain unconvinced and
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have suggested that this level of tax expenditure could be better
spent elsewhere.
3)Assessments of the California Enterprise Zone Program : Measuring the
success and failure of the enterprise zone and other G-TEDA programs
has been central to the debate on whether to expand or limit, as in
this case of this measure, the G-TEDA programs. Complicating the
matter is that much of the discussion around the relative success or
failure of the G-TEDA programs is anecdotal. The academic attempts to
assess the state's G-TEDA programs have produced mixed results. Some
of the variance among study findings can be attributed to the limited
access to good data sets. Research generally requires development of
a set of assumptions to undertake a study. The assumptions made in
the case of the G-TEDAs have, however, left most, if not all, of the
methodological approaches open to debate. Moreover, the problems in
assessing the G-TEDA programs have been further complicated by a lack
of consensus on why the programs were established and what objectives
they were designed to achieve.
Responding to the differing reports, HCD commissioned its own study in
2006, which looked at the impact of the enterprise zone program on
neighborhood poverty, income, rents, and vacancy rates. The report
showed that, on average, within enterprise zones between 1990 and
2000:
Poverty rates declined 7.35% more than the rest of the
state;
Unemployment rates declined 1.2% more than the rest of the
state;
Household incomes increased 7.1% more than the rest of the
state; and
Wage and salary income increased 3.5% more than the rest of
the state.
Since HCD's 2006 report, two additional reports have been released.
One report found favorable impacts of the enterprise zone program and
another found the program lacking in its ability to stimulate jobs.
In November 2008 and later revised and re-released in March 2009,
economists from the University of Southern California (USC) found that
federal empowerment zones, federal enterprise communities, and state
enterprise zones have "positive, statistically significant impacts on
local labor markets in terms of the unemployment rate, the poverty
rate, the fraction with wage and salary income, and employment."
The Public Policy Institute of California (PPIC) released its study of
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the enterprise zone program in June 2009, examining whether the
program had been successful in creating more jobs than would have
otherwise been established without the enterprise zone. The main
finding of this report was that, "enterprise zones have no
statistically significant effect on either business creation or
employment growth rates."
The PPIC report also noted that the effects of the program differed
among enterprise zones, appearing to have a greater effect on job
creation in zones with lesser amounts of manufacturing and those where
the administrators spent a greater amount of time on marketing and
outreach activities. The report further stated that the PPIC
encouraged a more critical evaluation of the program overall and on
individual zones using both employment and other metrics such as
poverty, unemployment, and property values.
It is important to note, however, that while the USC and PPIC reports
discussed above were released in 2008 and 2009, the business
development data used to form the statistical analyses were from 2004
and earlier. This date is significant, as both HCD and the
Legislature approved significant reforms to the program in 2006
(discussed below), and only two of the 42 current zones were subject
to the study, raising the question as to whether either two of the
studies accurately reflect the impact of the enterprise zone program
today.
1)The Pursuit of Comprehensive Reforms (list of bills is under comment
7) : While the G-TEDA programs have been around for decades, it was
not until the winter of 2005 that the first comprehensive legislative
oversight hearings were held. The impetus for these hearings, jointly
held by the Assembly Committee on Jobs, Economic Development and the
Economy (JEDE) and the Assembly Committee on Revenue and Taxation
(R&T), was the introduction of several comprehensive and controversial
reform efforts in 2004. During the course of these first oversight
hearings, the committees struggled to develop a framework for
evaluating the state's return on investment.
Due to the lack of clear data and the state's poor administration of
the program when it was overseen by the now defunct Technology, Trade
and Commerce Agency, JEDE's focus shifted to improving the
transparency and accountability of the G-TEDA programs as a first step
toward broader reform efforts. Following the three hearings,
publication of a final report, and extended work group meetings led by
JEDE, legislation was negotiated and approved by the Senate and
Assembly Floors on 40-0 and 77-0 votes [AB 1550 (Arambula and
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Karnette), Chapter 718, Statutes of 2006].
The requirements of the 2006 reforms were just coming into effect when
there were new calls for further G-TEDA reforms in 2009. In preparing
to vote on another set of comprehensive reforms, JEDE initiated a
second round of hearings, which included an examination of how the
prior reforms were progressing and what additional areas were in need
of improvement. During the course of its 2009 review, JEDE held three
public hearings, met with a variety of stakeholder groups, and
produced an updated report that detailed the structure and activities
of the G-TEDA program. In addition to the authors of the USC and PPIC
reports, speakers included economic development practioners,
researchers, nonprofit organizations, local governments, labor, and
business leaders.
A final summary report of the proceedings was released by JEDE in
January 2010; it included a comparative review of how California's
program stacked up against other state's enterprise zone programs,
summaries of each hearing and a list of 100 reform recommendations.
The JEDE report made five key findings, including the need for more
structure and accountability mechanisms within the tax incentives and
the need to better link workforce development into the overall G-TEDA
framework.
In March 2010, at the request of the Speaker, JEDE convened a working
group to review the final report recommendations and develop a
comprehensive set of reforms to the G-TEDA programs. The work group,
comprised of representatives from local governments, labor and the
business community, met extensively through the spring and summer of
2010 on the premise that they would put forward a consensus-based set
of reforms. Key program revisions under discussion included:
a) Increasing accountability of the program;
b) Tighter targeting of tax incentives to low income households;
c) Reforms to structure the hiring credit including targeted higher
wage and manufacturing-related jobs; and
d) Increased integration of the enterprise zone program with other
state and local community development programs, including public
programs that support workforce development and job placement.
Ultimately, one of the primary stakeholder groups withdrew from the
negotiations based on their position that the overall reform package
must result in a substantially smaller program and perhaps be only
limited to the state's rural areas.
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2)2011-12 Enterprise Zone Actions : In January 2011, Governor Brown
released, as part of his 2011-12 proposed budget, a proposal to
eliminate the G-TEDA programs, including any previously earned credits
that had not yet been applied toward tax liability. His proposal was
met with both support from the critics of the program, including
labor, and opposition from supporters of the program, including local
government and business representatives.
Responding to the Governor's proposal, an comprehensive reform measure
was introduced, AB 231 (V. Manuel Pérez and Alejo), which included
many of the reform recommendations from the 2009 hearings and working
group meetings, including proposals for reducing the overall cost of
the program and increasing transparency and accountability. In the
Governor's May 2011 budget report, his G-TEDA proposal was modified
from eliminating all the G-TEDA programs to eliminating the
requirement that the hire credit be targeted toward underserved
populations, limited the hire credit to only net new hires (similar to
the provisions in SB 412), and reducing the value of the individual
hiring credit from $37, 400 over five years to a one-time credit of
$5,000. The Legislature did not take action on the Governor's May
revision proposal.
In addition to the Governor's proposal and AB 231, three other
measures tried to advance reform efforts. First, a narrowly focused
reform measure was advanced through the Senate, SB 301 (DeSaulnier),
which limited the size of new enterprise zones in instances where the
new zone would include areas that were previously included within a
zone. In July 2011, the provisions of SB 301 were amended into AB
1411 (V. Manuel Pérez and Alejo) which was a second, although less
comprehensive, reform measure. Responding to a local plant closure, a
third measure, AB 1278 (Hill), was amended to prohibit hire credits
for employees that replace workers who lost their job as a result of a
plant relocation. The AB 1278 provisions were similar, but more
restrictive than the AB 231 relocation provisions, and AB 1278 failed
move to out of JEDE in 2011.
In the fall of 2011, HCD announced that no new zones would be
designated until major reforms were implemented and scheduled
listening sessions around the state to help in the development of a
comprehensive set of regulations that would "increase transparency,
accountability, cost effectiveness, and to more effectively stimulate
job growth in California." In deference to the Governor's renewed
interest in developing a reform compromise, the author did not set AB
231 in JEDE for the January 2012 two-year bill hearing. AB 484
(Alejo) was later amended to allow for the extension of two enterprise
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zones (Watsonville and Antelope Valley) that were expiring and would
not have an opportunity to re-apply due to the designation black-out.
Later in the year, the author tried to move AB 1411 through the
Senate, but it was ultimately held in Senate Rules Committee. By the
end of the 2011-2012 Session, all the enterprise measures had been
held or died.
The regulation package, expected in February 2012, was not published
until January 2013. Key elements in the regulations include:
a) Require voucher applications to be made within one year from the
date of hire. A one-year catch-up period was proposed for existing
hires;
b) Modify supporting documentation to the voucher application, most
significantly, prohibit the use of a W-4 form for documenting
residence of an employee;
c) Require, for the first time, HCD to collect data from zone
administrator on vouchering statistics;
d) Create audit procedure including a process to allow audit
failures result in zone decertification; and
e) Update the voucher application fee from $10 to the $15, maximum
allowed by statute.
Upon publication, the local government and business community
stakeholders expressed significant concerns that the regulations went
beyond existing statutory authority and represented programmatic
policy changes that were more appropriately within the purview of the
Legislature. No response has been made from HCD since the public
comment period ended on February 28, 2013.
3)Why Continue Seeking Reforms? In California, poverty is primarily
concentrated among communities of color which have a statistical
correlation with lower levels of educational attainment and access to
basic health care. This creates a significant socioeconomic disparity
within our society, which has led to two separate and unequal
societies. Research by the California Endowment shows that more than
half of the Latinos in this country and nearly 65% of African
Americans live in neighborhoods of color, generally low-income
communities.
Economically distressed communities typically lack jobs, good schools,
and safe and well-maintained housing. Conversely, these areas often
have high crime rates, gang violence, and unemployment. Moreover,
they do not have the sufficient social support to eliminate or
overcome these obstacles on their own. Narrow focused programs are
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generally ineffective because there is an array of complex issues that
drive poverty. Comprehensive programs, however, are expensive an can
be difficult to measure impacts. Yet, leaving poverty unaddressed
results in its expansion, creating higher unemployment levels and
increasing disparity within the broader community.
Research shows that effective solutions to poverty must be deep,
long-term and center on policies which provide economic opportunities
and individual and neighborhood empowerment. As a framework, the
enterprise zone program could provide such a community development
program.
4)Related Legislation : Below is a list of current and prior
legislation.
a) AB 9 (Holden) Wage Base Reforms : This bill modifies the
enterprise zone hire credit conditions by requiring employees
receive a qualified wage that exceeds an average monthly wage
$2,000 and expands the definition of a qualified employee by
expanding the dislocated worker requirements to reflect recent
economic considerations. Status: Two-year bill in JEDE.
b) SB 113 (DeSaulnier) Size Limitations on New Zones : This bill
prohibits a jurisdiction which applies for an enterprise zone
designation, on or after January 1, 2012, that includes area that
was once within a previously designated zone from receiving a new
zone designation that has a geographic area of more than 115% of
the size of the previous zone. The bill also limits new zone
designations in cases where the proposed zone area had been within
one or more previously designated zones to 115% of the largest of
those zones. Status: Pending in Senate Committee on
Transportation and Housing.
c) SB 434 (Hill) Capped and Allocated Hire Credit : This bill
converts the hire credit to a capped and allocated credit; revises
the percentage of qualified wages allowed per year of employment;
limits the hire credit available to relocated businesses; and
prohibits a person from charging a contingent fee for services
rendered in connection with a G-TEDA tax credit. Status: Pending
in the Senate Committee on Governance and Finance.
Legislation from prior Sessions
d) AB 231 (V. Manuel Pérez and Alejo) Enterprise Zone Reforms : This
bill would have made a number of changes to the California
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Enterprise Zone Program including the following:
i) Reforms to reduce the cost and size of the program
including, but not limited to: limiting the use of the tax
credits and deductions to 50% of tax liability for the 2011 and
2012 tax years, requiring vouchering of qualified employees
within 36 months of employment, reducing the five-year credit to
three years, limiting the hiring credit for relocating
businesses, scaling back the size of the targeted tax area,
limiting the carry forward of credits to 15 years, requiring new
zones to exclusively designated based on lower income households,
and limiting the merging of zones.
ii) Reforms to increase program accountability including, but
not limited to, de-designation of poor performing zones,
prohibiting "bad actor" businesses from accessing tax incentives,
tracking local resources dedicated to zone activities, and
expanding state-level reporting.
Status: Held by JEDE in 2012.
e) AB 1139 (John A. Pérez) Enterprise Zone Hiring Credit : This
bill would have made four changes to the G-TEDA programs:
i) Establishing a two-tier hiring credit - one funding level
for jobs with health care and another for those without;
ii) Requiring applications for hiring credit certification to be
submitted to the certifying agency within 21 days of the
commencement of employment;
iii) Removing from the hiring credit qualified employee list,
employees who reside within a targeted employment area; and
iv) Requiring annual reporting from tax payers who have
certified an employee under the hiring credit.
Status: Held in JEDE in 2010.
f) AB 1159 (V. Manuel Pérez) Enhancement of Sales and Use Credit
for Cleantech Projects : This bill would have established the
California Cleantech Advantage Act of 2008 providing a targeted
incentive to strengthen California's competitive edge in the
leading emerging clean technologies. Status: Held in Assembly
Committee on Appropriations in 2010.
g) AB 1278 (Hill) G-TEDA Hiring Credits : This bill, as it was
heard in JEDE, would have limited the application of the new hire
credit in instances where the tax payer has relocated from one area
of California to a G-TEDA on or after January 1, 2011. Under this
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circumstance, a G-TEDA hire credit would only be allowed for
qualified employees who represent a net increase to the total
number of California workers employed by the tax payer over the
previous tax year. Further, the tax payer would be is required to
have also made a bona fide offer of employment at the new work
location to each employee at the old location that was displaced by
the move. The bill did not pass JEDE in this form. The G-TEDA
language was stripped from the bill and different language was
included which changed its jurisdiction. Status: Vetoed by the
Governor, 2012.
h) AB 1411 (V. Manuel Pérez and Alejo) Accountability Reforms :
This bill would have made a number of changes to the enterprise
zone program related to accountability and transparency including,
but not limited to, limiting new zone designations to lower income
census tracts, increasing reporting of the programs impact, and
de-designating poor performing zones. Status: Held in Senate
Rules Committee in 2012.
i) AB 1550 (Arambula) Final Enterprise Zone Reform Act from 2005-06
Session : This bill made a number of significant changes to the
management and oversight of the G-TEDA programs. The bill was the
result of extensive oversight hearings held by JEDE and R&T, as
well as extended discussions with stakeholder groups. Status:
Signed by the Governor, Chapter 718, Statutes of 2006.
j) AB 2589 (Runner) Aggregate Credits to Offset Tax Liability
within Zones : This bill would have authorized a business to use
credits generated in an enterprise zone to offset taxes
attributable to the business from any enterprise zone. Status:
Held in the Revenue and Tax in 2006.
aa) AB 2476 (V. Manuel Pérez) Reform of TEA : This bill would have
tightened the criteria for designating a TEA for the purposes of
establishing one of the thirteen worker eligibility criteria under
the enterprise zone hiring tax credit requirements. Status: Held
in the Assembly Committee on Appropriations in 2010.
bb) AB 301 (DeSaulnier) Size of Zones : This bill would have
prohibited a jurisdiction which applies for an enterprise zone
designation, on or after January 1, 2012, that includes area that
was once within a previously designated zone from receiving a new
zone designation that has a geographic area of more than 115% of
the size of the previous zone. The bill also limits new zone
designations in cases where the proposed zone area had been within
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one or more previously designated zones to 115% of the largest of
those zones. Status: Amended into another subject matter.
cc) SB 974 (Steinberg) Career Pathways Credit and Hiring Credit
Swap : This bill would have established a new Career Pathways
Investment Credit for qualifying business entities that partner
with local education agency programs to develop and support career
pathway programs, as specified. Funding for the credit would be
provided by limiting the eligibility criteria on the existing
enterprise zone hiring credit. Status: Held in JEDE in 2010.
dd) SB 1008 (Ducheny) Initial Enterprise Reform Act from 2005-06
Session : This bill would have made a number of significant changes
to the G-TEDA programs including streamlining the selection
criteria, authorizing noncontiguous zones, extending certain zone
designations, and tightening up of the TEA. Status: Held in JEDE
in 2006.
5)Double Referral : This measure was referred by the Assembly Rules
Committee to policy committees. Should this measure pass JEDE, AB 28
will be referred to the Assembly Committee on Revenue and Taxation for
further consideration.
REGISTERED SUPPORT / OPPOSITION :
Support
CalChamber
California Asian Pacific Chamber of Commerce
California Association of Local Economic Development
California Business Properties Association
California Manufacturers & Technology Association
California Retailers Association
El Centro and Brawley Chambers of Commerce
League of California Cities
Pacific Merchant and Shipping Association
SSA Marine
Opposition
None received
Analysis Prepared by : Toni Symonds and Edith Gonzalez/ J., E.D. & E.
/ (916) 319-2090
AB 28
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