Amended in Senate June 4, 2013

Amended in Assembly April 15, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 1422


Introduced by Committee on Jobs, Economic Development, and the Economy (Medina (Chair), Daly, Fong, Fox, and V. Manuel Pérez)

March 21, 2013


An act to amendbegin delete Sectionend deletebegin insert Sectionsend insert 26003begin insert and 26011.8end insert of the Public Resources Code, and to repeal Section 1 of Chapter 677 of the Statutes of 2012, relating to energy.

LEGISLATIVE COUNSEL’S DIGEST

AB 1422, as amended, Committee on Jobs, Economic Development, and the Economy. California Alternative Energy and Advanced Transportation Financing Authority: participating party.

(1) Existing law, the California Alternative Energy and Advanced Transportation Financing Authority Act, establishes the California Alternative Energy and Advanced Transportation Financing Authority and requires the authority to establish programs to provide financial assistance to participating parties for projects related to sustainable and renewable energy sources, energy efficiency, and advanced transportation projects. The act provides financial assistance, in the form of a sales and use tax exclusion, to participating parties for these types of projects.

This bill would clarify that for purposes of the sales and use tax exclusion, an entity located outside of the state, including an entity located overseas, is considered to be a participating party and is eligible to apply for financial assistance if the participating party commits to, and demonstrates that the participating party will be opening a manufacturing facility in the state. This bill would also make technical, nonsubstantive changes to these provisions.

begin insert

(2) Existing law requires the authority to evaluate project applications based on certain criteria, including, but not limited to, the extent the project will create new, permanent jobs in California and the extent the project results in a reduction in greenhouse gases, a reduction in air or water pollution, an increase in energy efficiency, or a reduction in energy consumption. Existing law requires the authority to work with the University of California or the California State University to perform a peer review of this criteria, as specified.

end insert
begin insert

This bill would repeal the requirement to perform a peer review.

end insert
begin delete

(2)

end delete

begin insert(3)end insert Existing law requires the Governor’s Office of Business and Economic Development to review and identify efficient and cost-effective methods for the state to create jobs in advanced manufacturing, as specified, and to report its findings to the Legislature on or before January 1, 2017.

This bill would repeal this reporting requirement.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 26003 of the Public Resources Code, as
2amended by Section 5 of Chapter 677 of the Statutes of 2012, is
3amended to read:

4

26003.  

(a) As used in this division, unless the context
5otherwise requires:

6(1) (A) “Advanced manufacturing” means manufacturing
7processes that improve existing, or create entirely new materials,
8products, and processes through the use of science, engineering,
9or information technologies, high-precision tools and methods, a
10high-performance workforce, and innovative business or
11organizational models utilizing any of the following technology
12areas:

13(i) Micro- and nanoelectronics, including semiconductors.

14(ii) Advanced materials.

15(iii) Integrated computational materials engineering.

P3    1(iv) Nanotechnology.

2(v) Additive manufacturing.

3(vi) Industrial biotechnology.

4(B) “Advanced manufacturing” includes any of the following:

5(i) Systems that result from substantive advancement, whether
6incremental or breakthrough, beyond the current industry standard,
7in the production of materials and products. These advancements
8include improvements in manufacturing processes and systems
9that are often referred to as “smart” or “intelligent” manufacturing
10systems, which integrate computational predictability and
11operational efficiency.

12(ii) (I) Sustainable manufacturing systems and manufacturing
13technologies that minimize the use of resources while maintaining
14or improving cost and performance.

15(II) Sustainable manufacturing systems and manufacturing
16technologies do not include those required to be undertaken
17pursuant to state or federal law or regulations, air district rules or
18regulations, memoranda of understanding with a governmental
19entity, or legally binding agreements or documents. The State Air
20Resources Board shall advise the authority to ensure that the
21requirements of this clause are met.

22(2) (A) “Advanced transportation technologies” means
23emerging commercially competitive transportation-related
24technologies identified by the authority as capable of creating
25long-term, high value-added jobs for Californians while enhancing
26the state’s commitment to energy conservation, pollution and
27greenhouse gas emissions reduction, and transportation efficiency.

28(B) “Advanced transportation technologies” does not include
29those projects required to be undertaken pursuant to state or federal
30law or regulations, air district rules or regulations, memoranda of
31understanding with a governmental entity, or legally binding
32agreements or documents. The State Air Resources Board shall
33advise the authority regarding projects that are excluded pursuant
34to this subparagraph.

35(3) (A) “Alternative sources” means devices or technologies
36used for a renewable electrical generation facility, as defined in
37paragraph (1) of subdivision (a) of Section 25741, a combined
38heat and power system, as defined in Section 2840.2 of the Public
39Utilities Code, distributed generation and energy storage
40technologies eligible under the self-generation incentive program
P4    1pursuant to Section 379.6 of the Public Utilities Code, as
2determined by the Public Utilities Commission, or a facility
3designed for the production of renewable fuels, the efficient use
4of which reduce the use of fossil or nuclear fuels, and energy
5efficiency devices or technologies that reduce the need for new
6electric generation and reduce emissions of toxic and criteria
7pollutants and greenhouse gases.

8(B) “Alternative sources” does not include a hydroelectric
9facility that does not meet state laws pertaining to the control,
10appropriation, use, and distribution of water, including, but not
11limited to, the obtaining of applicable licenses and permits.

12(4) “Authority” means the California Alternative Energy and
13Advanced Transportation Financing Authority established pursuant
14to Section 26004, and any board, commission, department, or
15officer succeeding to the functions of the authority, or to which
16the powers conferred upon the authority by this division shall be
17given.

18(5) “Cost” as applied to a project or portion of the project
19financed under this division means all or part of the cost of
20construction and acquisition of all lands, structures, real or personal
21property or an interest in the real or personal property, rights,
22rights-of-way, franchises, easements, and interests acquired or
23used for a project; the cost of demolishing or removing any
24buildings or structures on land so acquired, including the cost of
25acquiring any lands to which those buildings or structures may be
26moved; the cost of all machinery, equipment, and furnishings,
27financing charges, interest prior to, during, and for a period after,
28completion of construction as determined by the authority;
29provisions for working capital; reserves for principal and interest
30and for extensions, enlargements, additions, replacements,
31renovations, and improvements; the cost of architectural,
32engineering, financial, accounting, auditing and legal services,
33plans, specifications, estimates, administrative expenses, and other
34expenses necessary or incident to determining the feasibility of
35constructing any project or incident to the construction, acquisition,
36or financing of a project.

37(6) “Financial assistance” includes, but is not limited to, loans,
38loan loss reserves, interest rate reductions, proceeds of bonds issued
39by the authority, bond insurance, loan guarantees or other credit
40enhancements or liquidity facilities, contributions of money, or a
P5    1combination thereof, as determined by, and approved by the
2resolution of, the board.

3(7) (A) “Participating party” means a person, federal or state
4agency, department, board, authority, or commission, state or
5community college, or university, or a city or county, regional
6agency, public district, school district, or other political entity
7engaged in the business or operations in the state, whether
8organized for profit or not for profit, that applies for financial
9assistance from the authority for the purpose of implementing a
10project.

11(B) (i) For the purposes of Section 6010.8 of the Revenue and
12Taxation Code, “participating party” means an entity specified in
13subparagraph (A) that seeks financial assistance pursuant to Section
1426011.8.

15(ii) For purposes of Section 6010.8 of the Revenue and Taxation
16Code, an entity located outside of the state, including an entity
17located overseas, is considered to be a participating party and is
18eligible to apply for financial assistance pursuant to Section
1926011.8 if the participating party commits to, and demonstrates
20that, the party will be opening a manufacturing facility in the state.

21(iii) It is the intent of the Legislature by adding clause (ii) to
22clarify existing law and ensure that an out-of-state entity or
23overseas entity is eligible to apply for financial assistance pursuant
24to Section 26011.8.

25(8) (A) “Project” means a land, building, improvement to the
26land or building, rehabilitation, work, property, or structure, real
27or personal, stationary or mobile, including, but not limited to,
28machinery and equipment, whether or not in existence or under
29construction, that utilizes, or is designed to utilize, an alternative
30source, or that is utilized for the design, technology transfer,
31manufacture, production, assembly, distribution, or service of
32advanced transportation technologies or alternative source
33components.

34(B) “Project,” for purposes of Section 26011.8 and Section
356010.8 of the Revenue and Taxation Code, means tangible personal
36 property that is utilized for the design, manufacture, production,
37or assembly of advanced manufacturing, advanced transportation
38technologies, or alternative source products, components, or
39systems.

P6    1(9) “Revenue” means all rents, receipts, purchase payments,
2loan repayments, and all other income or receipts derived by the
3authority from a project, or the sale, lease, or other disposition of
4alternative source or advanced transportation technology facilities,
5or the making of loans to finance alternative source or advanced
6transportation technology facilities, and any income or revenue
7 derived from the investment of money in any fund or account of
8the authority.

9(b) This section shall become inoperative on July 1, 2016, and,
10as of January 1, 2017, is repealed, unless a later enacted statute,
11that becomes operative on or before January 1, 2017, deletes or
12extends the dates on which it becomes inoperative and is repealed.

13

SEC. 2.  

Section 26003 of the Public Resources Code, as added
14by Section 6 of Chapter 677 of the Statutes of 2012, is amended
15to read:

16

26003.  

(a) As used in this division, unless the context
17otherwise requires:

18(1) (A)  “Advanced transportation technologies” means
19emerging commercially competitive transportation-related
20technologies identified by the authority as capable of creating
21long-term, high value-added jobs for Californians while enhancing
22the state’s commitment to energy conservation, pollution and
23greenhouse gas emissions reduction, and transportation efficiency.

24(B) “Advanced transportation technologies” does not include
25those projects required to be undertaken pursuant to state or federal
26law or regulations, air district rules or regulations, memoranda of
27understanding with a governmental entity, or legally binding
28agreements or documents. The State Air Resources Board shall
29advise the authority regarding projects that are excluded pursuant
30to this subparagraph.

31(2) (A) “Alternative sources” means devices or technologies
32used for a renewable electrical generation facility, as defined in
33paragraph (1) of subdivision (a) of Section 25741, a combined
34heat and power system, as defined in Section 2840.2 of the Public
35Utilities Code, distributed generation and energy storage
36technologies eligible under the self-generation incentive program
37pursuant to Section 379.6 of the Public Utilities Code, as
38determined by the Public Utilities Commission, or a facility
39designed for the production of renewable fuels, the efficient use
40of which reduce the use of fossil or nuclear fuels, and energy
P7    1efficiency devices or technologies that reduce the need for new
2electric generation and reduce emissions of toxic and criteria
3pollutants and greenhouse gases.

4(B) “Alternative sources” does not include a hydroelectric
5facility that does not meet state laws pertaining to the control,
6appropriation, use, and distribution of water, including, but not
7limited to, the obtaining of applicable licenses and permits.

8(3) “Authority” means the California Alternative Energy and
9Advanced Transportation Financing Authority established pursuant
10to Section 26004, and any board, commission, department, or
11officer succeeding to the functions of the authority, or to which
12the powers conferred upon the authority by this division shall be
13given.

14(4) “Cost” as applied to a project or portion of the project
15financed under this division means all or part of the cost of
16construction and acquisition of all lands, structures, real or personal
17property or an interest in the real or personal property, rights,
18rights-of-way, franchises, easements, and interests acquired or
19used for a project; the cost of demolishing or removing any
20buildings or structures on land so acquired, including the cost of
21acquiring any lands to which those buildings or structures may be
22moved; the cost of all machinery, equipment, and furnishings,
23financing charges, interest prior to, during, and for a period after,
24completion of construction as determined by the authority;
25provisions for working capital; reserves for principal and interest
26and for extensions, enlargements, additions, replacements,
27renovations, and improvements; the cost of architectural,
28engineering, financial, accounting, auditing and legal services,
29plans, specifications, estimates, administrative expenses, and other
30expenses necessary or incident to determining the feasibility of
31constructing any project or incident to the construction, acquisition,
32or financing of a project.

33(5) “Financial assistance” includes, but is not limited to, loans,
34loan loss reserves, interest rate reductions, proceeds of bonds issued
35by the authority, bond insurance, loan guarantees or other credit
36enhancements or liquidity facilities, contributions of money, or a
37combination thereof, as determined by, and approved by the
38resolution of, the board.

39(6) (A) “Participating party” means a person, federal or state
40agency, department, board, authority, or commission, state or
P8    1community college, or university, or a city or county, regional
2agency, public district, school district, or other political entity
3engaged in the business or operations in the state, whether
4organized for profit or not for profit, that applies for financial
5assistance from the authority for the purpose of implementing a
6project.

7(B) (i) Forbegin delete theend delete purposes of Section 6010.8 of the Revenue and
8Taxation Code, “participating party” means an entity specified in
9subparagraph (A) that seeks financial assistance pursuant to Section
1026011.8.

11(ii) For purposes of Section 6010.8 of the Revenue and Taxation
12Code, an entity located outside of the state, including an entity
13located overseas, is considered to be a participating party and is
14eligible to apply for financial assistance pursuant to Section
1526011.8 if the participating party commits to, and demonstrates
16that, the party will be opening a manufacturing facility in the state.

17(iii) It is the intent of the Legislature by adding clause (ii) to
18clarify existing law and ensure that an out-of-state entity or
19overseas entity is eligible to apply for financial assistance pursuant
20to Section 26011.8.

21(7) (A) “Project” means a land, building, improvement to the
22land or building, rehabilitation, work, property, or structure, real
23or personal, stationary or mobile, including, but not limited to,
24machinery and equipment, whether or not in existence or under
25construction, that utilizes, or is designed to utilize, an alternative
26source, or that is utilized for the design, technology transfer,
27manufacture, production, assembly, distribution, or service of
28advanced transportation technologies or alternative source
29components.

30(B) “Project,” for purposes of Section 26011.8 and Section
316010.8 of the Revenue and Taxation Code, means tangible personal
32property that is utilized for the design, manufacture, production,
33or assembly of advanced transportation technologies or alternative
34source products, components, or systems.

35(8) “Revenue” means all rents, receipts, purchase payments,
36loan repayments, and all other income or receipts derived by the
37authority from a project, or the sale, lease, or other disposition of
38alternative source or advanced transportation technology facilities,
39or the making of loans to finance alternative source or advanced
40transportation technology facilities, and any income or revenue
P9    1derived from the investment of money in any fund or account of
2the authority.

3(b) This section shall become operative on July 1, 2016.

4begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 26011.8 of the end insertbegin insertPublic Resources Codeend insertbegin insert, as
5amended by Section 12 of Chapter 677 of the Statutes of 2012, is
6amended to read:end insert

7

26011.8.  

(a) The purpose of this section is to promote the
8creation of California-based manufacturing, California-based jobs,
9advanced manufacturing, the reduction of greenhouse gases, or
10reductions in air and water pollution or energy consumption. In
11furtherance of this purpose, the authority may approve a project
12for financial assistance in the form of the sales and use tax
13exclusion established in Section 6010.8 of the Revenue and
14Taxation Code.

15(b) For purposes of this section, “project” means a project as
16defined in subparagraph (B) of paragraph (8) of subdivision (a) of
17Section 26003.

18(c) The authority shall publish notice of the availability of
19project applications and deadlines for submission of project
20applications to the authority.

21(d) The authority shall evaluate project applications based upon
22all of the following criteria:

23(1) The extent to which the project develops manufacturing
24facilities, or purchases equipment for manufacturing facilities,
25located in California.

26(2) The extent to which the anticipated benefit to the state from
27the project equals or exceeds the projected benefit to the
28participating party from the sales and use tax exclusion.

29(3) The extent to which the project will create new, permanent
30jobs in California.

31(4) To the extent feasible, the extent to which the project, or the
32product produced by the project, results in a reduction of
33greenhouse gases, a reduction in air or water pollution, an increase
34in energy efficiency, or a reduction in energy consumption, beyond
35what is required by any federal or state law or regulation.

36(5) The extent of unemployment in the area in which the project
37is proposed to be located.

38(6) Any other factors the authority deems appropriate in
39accordance with this section.

P10   1(e) At a duly noticed public hearing, the authority shall approve,
2by resolution, project applications for financial assistance.

3(f) Notwithstanding subdivisionbegin delete (k)end deletebegin insert (j)end insert, and without regard to
4the actual date of any transaction between a participating party
5and the authority, any project approved by the authority by
6resolution for the sales and use tax exclusion pursuant to Section
76010.8 of the Revenue and Taxation Code prior to March 24, 2010,
8shall not be subject to this section.

9(g) The Legislative Analyst’s Office shall report to the Joint
10Legislative Budget Committee on the effectiveness of this program,
11on or before January 1, 2019, by evaluating factors, including, but
12not limited to, the following:

13(1) The number of jobs created by the program in California.

14(2) The number of businesses that have remained in California
15or relocated to California as a result of this program.

16(3) The amount of state and local revenue and economic activity
17generated by the program.

18(4) The types of advanced manufacturing, as defined in
19paragraph (1) of subdivision (a) of Section 26003, utilized.

20(5) The amount of reduction in greenhouse gases, air pollution,
21water pollution, or energy consumption.

22(h) The exclusions granted pursuant to Section 6010.8 of the
23Revenue and Taxation Code for projects approved by the authority
24pursuant to this section shall not exceed one hundred million dollars
25($100,000,000) for each calendar year.

26(i) (1) The authority shall study the efficacy and cost benefit
27of the sales and use tax exemption as it relates to advanced
28manufacturing projects. The study shall include the number of jobs
29created, the costs of each job, and the annual salary of each job.
30The study shall also consider a dynamic analysis of the economic
31output to the state that would occur without the sales and use tax
32exemption. Before January 1, 2017, the authority shall submit to
33the Legislature, consistent with Section 9795 of the Government
34Code, the result of the study.

begin delete

35(2) Before January 1, 2014, and within six months of any
36significant change to the net benefits test as described in
37subdivision (d), the authority shall work with the University of
38California or the California State University to perform a peer
39review of the net benefits test currently used to evaluate applicants
40applying pursuant to this section.

end delete
begin delete

P11   1(3)

end delete

2begin insert(2)end insert Before January 1, 2015, the authority shall, consistent with
3Section 9795 of the Government Code, submit to the Legislature
4an interim report on the efficacy of the program conducted pursuant
5to this section. The study shall include recommendations on
6program changes that would increase the program’s efficacy in
7creating permanent and temporary jobs, and whether eligibility
8for the program should be extended or narrowed to other
9manufacturing types. The authority may work with the Legislative
10Analyst’s Office in preparing the report and its recommendations.

11(j) (1) Except as provided in paragraph (2), this section shall
12become inoperative on July 1, 2016, and, as of January 1, 2017,
13is repealed, unless a later enacted statute, that becomes operative
14on or before January 1, 2017, deletes or extends the dates on which
15it becomes inoperative and is repealed. The sale or purchase of
16tangible personal property of a project approved prior to June 30,
172016, shall continue to be excluded from sales and use taxes
18pursuant to Section 6010.8 of the Revenue and Taxation Code for
19the period of time set forth in the authority’s resolution approving
20the project pursuant to this section.

21(2) Notwithstanding paragraph (1), the authority’s obligation
22to submit to the Legislature a report pursuant to paragraphbegin delete (3)end deletebegin insert (2)end insert
23 of subdivision (i) shall remain operative until the submission of
24the report.

25begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 26011.8 of the end insertbegin insertPublic Resources Codeend insertbegin insert, as
26added by Section 13 of Chapter 677 of the Statutes of 2012, is
27amended to read:end insert

28

26011.8.  

(a) The purpose of this section is to promote the
29creation of California-based manufacturing, California-based jobs,
30the reduction of greenhouse gases, or reductions in air and water
31pollution or energy consumption. In furtherance of this purpose,
32the authority may approve a project for financial assistance in the
33form of the sales and use tax exclusion established in Section
346010.8 of the Revenue and Taxation Code.

35(b) For purposes of this section, “project” means a project as
36defined in subparagraph (B) of paragraph (7) of subdivision (a) of
37Section 26003.

38(c) The authority shall publish notice of the availability of
39project applications and deadlines for submission of project
40applications to the authority.

P12   1(d) The authority shall evaluate project applications based upon
2a net benefits test that includes all of the following criteria:

3(1) The extent to which the project develops manufacturing
4facilities, or purchases equipment for manufacturing facilities,
5located in California.

6(2) The extent to which the anticipated benefit to the state from
7the project equals or exceeds the projected benefit to the
8participating party from the sales and use tax exclusion.

9(3) The extent to which the project will create new, permanent
10jobs in California.

11(4) To the extent feasible, the extent to which the project, or the
12product produced by the project, results in a reduction of
13greenhouse gases, a reduction in air or water pollution, an increase
14in energy efficiency, or a reduction in energy consumption, beyond
15what is required by any federal or state law or regulation.

16(5) The extent of unemployment in the area in which the project
17is proposed to be located.

18(6) Any other factors the authority deems appropriate in
19accordance with this section.

20(e) At a duly noticed public hearing, the authority shall approve,
21by resolution, project applications for financial assistance.

22(f) Notwithstanding subdivisionbegin delete (k)end deletebegin insert (j)end insert, and without regard to
23the actual date of any transaction between a participating party
24and the authority, any project as defined in paragraph (7) of
25subdivision (a) of Section 26003 approved by the authority by
26resolution for the sales and use tax exclusion pursuant to Section
276010.8 of the Revenue and Taxation Code prior to March 24, 2010,
28shall not be subject to this section.

29(g) The Legislative Analyst’s Office shall report to the Joint
30Legislative Budget Committee on the effectiveness of this program,
31on or before January 1, 2019, by evaluating factors, including, but
32not limited to, the following:

33(1) The number of jobs created by the program in California.

34(2) The number of businesses that have remained in California
35or relocated to California as a result of this program.

36(3) The amount of state and local revenue and economic activity
37generated by the program.

38(4) The amount of reduction in greenhouse gases, air pollution,
39water pollution, or energy consumption.

P13   1(h) The exclusions granted pursuant to Section 6010.8 of the
2Revenue and Taxation Code for projects approved by the authority
3pursuant to this section shall not exceed one hundred million dollars
4($100,000,000) for each calendar year.

5(i) The authority shall make every effort to expedite the
6operation of this section, and shall adopt regulations for purposes
7of implementing the section as emergency regulations in
8accordance with Chapter 3.5 (commencing with Section 11340)
9of Part 1 of Division 3 of Title 2 of the Government Code. For
10purposes of that Chapter 3.5, including Section 11349.6 of the
11Government Code, the adoption of the regulations shall be
12considered by the Office of Administrative Law to be necessary
13for the immediate preservation of the public peace, health and
14safety, and general welfare.

begin delete

15(j) If any significant changes are made to the net benefits test,
16as described in subdivision (d), the authority shall work with the
17University of California or the California State University to
18perform a peer review of the net benefits test currently used to
19evaluate applicants applying pursuant to this section.

end delete
begin delete

20(k)

end delete

21begin insert(j)end insert This section shall become operative on July 1, 2016, and
22 shall remain in effect only until January 1, 2021, and as of that
23date is repealed. The sale or purchase of tangible personal property
24of a project approved prior to January 1, 2021, shall continue to
25be excluded from sales and use taxes pursuant to Section 6010.8
26of the Revenue and Taxation Code for the period of time set forth
27in the authority’s resolution approving the project pursuant to this
28section.

29

begin deleteSEC. 3.end delete
30begin insertSEC. 5.end insert  

Section 1 of Chapter 677 of the Statutes of 2012 is
31repealed.



O

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