Amended in Senate June 19, 2013

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 amend Sections 26003 and 26011.8 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.begin insert The act prohibits the sales and use tax exclusions granted from exceeding $100,000,000 for each calendar year.end insert

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.begin insert The bill would require that any portion of the $100,000,000 not granted through the sales and use tax exclusions be available to be granted in the subsequent calendar year, provided that the total amount available in any year does not exceed $200,000,000.end insert This bill would also make technical, nonsubstantive changes to these provisions.

(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.

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

(3) 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
P3    1high-performance workforce, and innovative business or
2organizational models utilizing any of the following technology
3areas:

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

5(ii) Advanced materials.

6(iii) Integrated computational materials engineering.

7(iv) Nanotechnology.

8(v) Additive manufacturing.

9(vi) Industrial biotechnology.

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

11(i) Systems that result from substantive advancement, whether
12incremental or breakthrough, beyond the current industry standard,
13in the production of materials and products. These advancements
14include improvements in manufacturing processes and systems
15that are often referred to as “smart” or “intelligent” manufacturing
16systems, which integrate computational predictability and
17operational efficiency.

18(ii) (I) Sustainable manufacturing systems and manufacturing
19technologies that minimize the use of resources while maintaining
20or improving cost and performance.

21(II) Sustainable manufacturing systems and manufacturing
22technologies do not include those required to be undertaken
23pursuant to state or federal law or regulations, air district rules or
24regulations, memoranda of understanding with a governmental
25entity, or legally binding agreements or documents. The State Air
26Resources Board shall advise the authority to ensure that the
27requirements of this clause are met.

28(2) (A) “Advanced transportation technologies” means
29emerging commercially competitive transportation-related
30technologies identified by the authority as capable of creating
31long-term, high value-added jobs for Californians while enhancing
32the state’s commitment to energy conservation, pollution and
33greenhouse gas emissions reduction, and transportation efficiency.

34(B) “Advanced transportation technologies” does not include
35those projects required to be undertaken pursuant to state or federal
36law or regulations, air district rules or regulations, memoranda of
37understanding with a governmental entity, or legally binding
38agreements or documents. The State Air Resources Board shall
39advise the authority regarding projects that are excluded pursuant
40to this subparagraph.

P4    1(3) (A) “Alternative sources” means devices or technologies
2used for a renewable electrical generation facility, as defined in
3paragraph (1) of subdivision (a) of Section 25741, a combined
4heat and power system, as defined in Section 2840.2 of the Public
5Utilities Code, distributed generation and energy storage
6technologies eligible under the self-generation incentive program
7pursuant to Section 379.6 of the Public Utilities Code, as
8determined by the Public Utilities Commission, or a facility
9designed for the production of renewable fuels, the efficient use
10of which reduce the use of fossil or nuclear fuels, and energy
11efficiency devices or technologies that reduce the need for new
12electric generation and reduce emissions of toxic and criteria
13pollutants and greenhouse gases.

14(B) “Alternative sources” does not include a hydroelectric
15facility that does not meet state laws pertaining to the control,
16appropriation, use, and distribution of water, including, but not
17limited to, the obtaining of applicable licenses and permits.

18(4) “Authority” means the California Alternative Energy and
19Advanced Transportation Financing Authority established pursuant
20to Section 26004, and any board, commission, department, or
21officer succeeding to the functions of the authority, or to which
22the powers conferred upon the authority by this division shall be
23given.

24(5) “Cost” as applied to a project or portion of the project
25financed under this division means all or part of the cost of
26construction and acquisition of all lands, structures, real or personal
27property or an interest in the real or personal property, rights,
28rights-of-way, franchises, easements, and interests acquired or
29used for a project; the cost of demolishing or removing any
30buildings or structures on land so acquired, including the cost of
31acquiring any lands to which those buildings or structures may be
32moved; the cost of all machinery, equipment, and furnishings,
33financing charges, interest prior to, during, and for a period after,
34completion of construction as determined by the authority;
35provisions for working capital; reserves for principal and interest
36and for extensions, enlargements, additions, replacements,
37renovations, and improvements; the cost of architectural,
38engineering, financial, accounting, auditing and legal services,
39plans, specifications, estimates, administrative expenses, and other
40expenses necessary or incident to determining the feasibility of
P5    1constructing any project or incident to the construction, acquisition,
2or financing of a project.

3(6) “Financial assistance” includes, but is not limited to, loans,
4loan loss reserves, interest rate reductions, proceeds of bonds issued
5by the authority, bond insurance, loan guarantees or other credit
6enhancements or liquidity facilities, contributions of money, or a
7combination thereof, as determined by, and approved by the
8resolution of, the board.

9(7) (A) “Participating party” means a person, federal or state
10agency, department, board, authority, or commission, state or
11community college, or university, or a city or county, regional
12agency, public district, school district, or other political entity
13engaged in the business or operations in the state, whether
14organized for profit or not for profit, that applies for financial
15assistance from the authority for the purpose of implementing a
16project.

17(B) (i) For the purposes of Section 6010.8 of the Revenue and
18Taxation Code, “participating party” means an entity specified in
19subparagraph (A) that seeks financial assistance pursuant to Section
2026011.8.

21(ii) For purposes of Section 6010.8 of the Revenue and Taxation
22Code, an entity located outside of the state, including an entity
23located overseas, is considered to be a participating party and is
24eligible to apply for financial assistance pursuant to Section
2526011.8 if the participating party commits to, and demonstrates
26that, the party will be opening a manufacturing facility in the state.

27(iii) It is the intent of the Legislature by adding clause (ii) to
28clarify existing law and ensure that an out-of-state entity or
29overseas entity is eligible to apply for financial assistance pursuant
30to Section 26011.8.

31(8) (A) “Project” means a land, building, improvement to the
32land or building, rehabilitation, work, property, or structure, real
33or personal, stationary or mobile, including, but not limited to,
34machinery and equipment, whether or not in existence or under
35construction, that utilizes, or is designed to utilize, an alternative
36source, or that is utilized for the design, technology transfer,
37manufacture, production, assembly, distribution, or service of
38advanced transportation technologies or alternative source
39components.

P6    1(B) “Project,” for purposes of Section 26011.8 and Section
26010.8 of the Revenue and Taxation Code, means tangible personal
3 property that is utilized for the design, manufacture, production,
4or assembly of advanced manufacturing, advanced transportation
5technologies, or alternative source products, components, or
6systems.

7(9) “Revenue” means all rents, receipts, purchase payments,
8loan repayments, and all other income or receipts derived by the
9authority from a project, or the sale, lease, or other disposition of
10alternative source or advanced transportation technology facilities,
11or the making of loans to finance alternative source or advanced
12transportation technology facilities, and any income or revenue
13 derived from the investment of money in any fund or account of
14the authority.

15(b) This section shall become inoperative on July 1, 2016, and,
16as of January 1, 2017, is repealed, unless a later enacted statute,
17that becomes operative on or before January 1, 2017, deletes or
18extends the dates on which it becomes inoperative and is repealed.

19

SEC. 2.  

Section 26003 of the Public Resources Code, as added
20by Section 6 of Chapter 677 of the Statutes of 2012, is amended
21to read:

22

26003.  

(a) As used in this division, unless the context
23otherwise requires:

24(1) (A)  “Advanced transportation technologies” means
25emerging commercially competitive transportation-related
26technologies identified by the authority as capable of creating
27long-term, high value-added jobs for Californians while enhancing
28the state’s commitment to energy conservation, pollution and
29greenhouse gas emissions reduction, and transportation efficiency.

30(B) “Advanced transportation technologies” does not include
31those projects required to be undertaken pursuant to state or federal
32law or regulations, air district rules or regulations, memoranda of
33understanding with a governmental entity, or legally binding
34agreements or documents. The State Air Resources Board shall
35advise the authority regarding projects that are excluded pursuant
36to this subparagraph.

37(2) (A) “Alternative sources” means devices or technologies
38used for a renewable electrical generation facility, as defined in
39paragraph (1) of subdivision (a) of Section 25741, a combined
40heat and power system, as defined in Section 2840.2 of the Public
P7    1Utilities Code, distributed generation and energy storage
2technologies eligible under the self-generation incentive program
3pursuant to Section 379.6 of the Public Utilities Code, as
4determined by the Public Utilities Commission, or a facility
5designed for the production of renewable fuels, the efficient use
6of which reduce the use of fossil or nuclear fuels, and energy
7efficiency devices or technologies that reduce the need for new
8electric generation and reduce emissions of toxic and criteria
9pollutants and greenhouse gases.

10(B) “Alternative sources” does not include a hydroelectric
11facility that does not meet state laws pertaining to the control,
12appropriation, use, and distribution of water, including, but not
13limited to, the obtaining of applicable licenses and permits.

14(3) “Authority” means the California Alternative Energy and
15Advanced Transportation Financing Authority established pursuant
16to Section 26004, and any board, commission, department, or
17officer succeeding to the functions of the authority, or to which
18the powers conferred upon the authority by this division shall be
19given.

20(4) “Cost” as applied to a project or portion of the project
21financed under this division means all or part of the cost of
22construction and acquisition of all lands, structures, real or personal
23property or an interest in the real or personal property, rights,
24rights-of-way, franchises, easements, and interests acquired or
25used for a project; the cost of demolishing or removing any
26buildings or structures on land so acquired, including the cost of
27acquiring any lands to which those buildings or structures may be
28moved; the cost of all machinery, equipment, and furnishings,
29financing charges, interest prior to, during, and for a period after,
30completion of construction as determined by the authority;
31provisions for working capital; reserves for principal and interest
32and for extensions, enlargements, additions, replacements,
33renovations, and improvements; the cost of architectural,
34engineering, financial, accounting, auditing and legal services,
35plans, specifications, estimates, administrative expenses, and other
36expenses necessary or incident to determining the feasibility of
37constructing any project or incident to the construction, acquisition,
38or financing of a project.

39(5) “Financial assistance” includes, but is not limited to, loans,
40loan loss reserves, interest rate reductions, proceeds of bonds issued
P8    1by the authority, bond insurance, loan guarantees or other credit
2enhancements or liquidity facilities, contributions of money, or a
3combination thereof, as determined by, and approved by the
4resolution of, the board.

5(6) (A) “Participating party” means a person, federal or state
6agency, department, board, authority, or commission, state or
7community college, or university, or a city or county, regional
8agency, public district, school district, or other political entity
9engaged in the business or operations in the state, whether
10organized for profit or not for profit, that applies for financial
11assistance from the authority for the purpose of implementing a
12project.

13(B) (i) For purposes of Section 6010.8 of the Revenue and
14Taxation Code, “participating party” means an entity specified in
15subparagraph (A) that seeks financial assistance pursuant to Section
1626011.8.

17(ii) For purposes of Section 6010.8 of the Revenue and Taxation
18Code, an entity located outside of the state, including an entity
19located overseas, is considered to be a participating party and is
20eligible to apply for financial assistance pursuant to Section
2126011.8 if the participating party commits to, and demonstrates
22that, the party will be opening a manufacturing facility in the state.

23(iii) It is the intent of the Legislature by adding clause (ii) to
24clarify existing law and ensure that an out-of-state entity or
25overseas entity is eligible to apply for financial assistance pursuant
26to Section 26011.8.

27(7) (A) “Project” means a land, building, improvement to the
28land or building, rehabilitation, work, property, or structure, real
29or personal, stationary or mobile, including, but not limited to,
30machinery and equipment, whether or not in existence or under
31construction, that utilizes, or is designed to utilize, an alternative
32source, or that is utilized for the design, technology transfer,
33manufacture, production, assembly, distribution, or service of
34advanced transportation technologies or alternative source
35components.

36(B) “Project,” for purposes of Section 26011.8 and Section
376010.8 of the Revenue and Taxation Code, means tangible personal
38property that is utilized for the design, manufacture, production,
39or assembly of advanced transportation technologies or alternative
40source products, components, or systems.

P9    1(8) “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
7derived from the investment of money in any fund or account of
8the authority.

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

10

SEC. 3.  

Section 26011.8 of the Public Resources Code, as
11amended by Section 12 of Chapter 677 of the Statutes of 2012, is
12amended to read:

13

26011.8.  

(a) The purpose of this section is to promote the
14creation of California-based manufacturing, California-based jobs,
15advanced manufacturing, the reduction of greenhouse gases, or
16reductions in air and water pollution or energy consumption. In
17furtherance of this purpose, the authority may approve a project
18for financial assistance in the form of the sales and use tax
19exclusion established in Section 6010.8 of the Revenue and
20Taxation Code.

21(b) For purposes of this section, “project” means a project as
22defined in subparagraph (B) of paragraph (8) of subdivision (a) of
23Section 26003.

24(c) The authority shall publish notice of the availability of
25project applications and deadlines for submission of project
26applications to the authority.

27(d) The authority shall evaluate project applications based upon
28all of the following criteria:

29(1) The extent to which the project develops manufacturing
30facilities, or purchases equipment for manufacturing facilities,
31located in California.

32(2) The extent to which the anticipated benefit to the state from
33the project equals or exceeds the projected benefit to the
34participating party from the sales and use tax exclusion.

35(3) The extent to which the project will create new, permanent
36jobs in California.

37(4) To the extent feasible, the extent to which the project, or the
38product produced by the project, results in a reduction of
39greenhouse gases, a reduction in air or water pollution, an increase
P10   1in energy efficiency, or a reduction in energy consumption, beyond
2what is required by any federal or state law or regulation.

3(5) The extent of unemployment in the area in which the project
4is proposed to be located.

5(6) Any other factors the authority deems appropriate in
6accordance with this section.

7(e) At a duly noticed public hearing, the authority shall approve,
8by resolution, project applications for financial assistance.

9(f) Notwithstanding subdivision (j), and without regard to the
10actual date of any transaction between a participating party and
11the authority, any project approved by the authority by resolution
12for the sales and use tax exclusion pursuant to Section 6010.8 of
13the Revenue and Taxation Code prior to March 24, 2010, shall not
14be subject to this section.

15(g) The Legislative Analyst’s Office shall report to the Joint
16Legislative Budget Committee on the effectiveness of this program,
17on or before January 1, 2019, by evaluating factors, including, but
18not limited to, the following:

19(1) The number of jobs created by the program in California.

20(2) The number of businesses that have remained in California
21or relocated to California as a result of this program.

22(3) The amount of state and local revenue and economic activity
23generated by the program.

24(4) The types of advanced manufacturing, as defined in
25paragraph (1) of subdivision (a) of Section 26003, utilized.

26(5) The amount of reduction in greenhouse gases, air pollution,
27water pollution, or energy consumption.

28(h) The exclusions granted pursuant to Section 6010.8 of the
29Revenue and Taxation Code for projects approved by the authority
30pursuant to this section shall not exceed one hundred million dollars
31($100,000,000) for each calendar year.begin insert Any portion of the one
32hundred million dollars ($100,000,000) in exclusions not granted
33in the assigned calendar year shall be available to be granted in
34the subsequent calendar year provided that the total amount
35available in any year does not exceed two hundred million dollars
36($200,000,000).end insert

37(i) (1) The authority shall study the efficacy and cost benefit
38of the sales and use tax exemption as it relates to advanced
39manufacturing projects. The study shall include the number of jobs
40created, the costs of each job, and the annual salary of each job.
P11   1The study shall also consider a dynamic analysis of the economic
2output to the state that would occur without the sales and use tax
3exemption. Before January 1, 2017, the authority shall submit to
4the Legislature, consistent with Section 9795 of the Government
5Code, the result of the study.

6(2) Before January 1, 2015, the authority shall, consistent with
7Section 9795 of the Government Code, submit to the Legislature
8an interim report on the efficacy of the program conducted pursuant
9to this section. The study shall include recommendations on
10program changes that would increase the program’s efficacy in
11creating permanent and temporary jobs, and whether eligibility
12for the program should be extended or narrowed to other
13manufacturing types. The authority may work with the Legislative
14Analyst’s Office in preparing the report and its recommendations.

15(j) (1) Except as provided in paragraph (2), this section shall
16become inoperative on July 1, 2016, and, as of January 1, 2017,
17is repealed, unless a later enacted statute, that becomes operative
18on or before January 1, 2017, deletes or extends the dates on which
19it becomes inoperative and is repealed. The sale or purchase of
20tangible personal property of a project approved prior to June 30,
212016, shall continue to be excluded from sales and use taxes
22pursuant to Section 6010.8 of the Revenue and Taxation Code for
23the period of time set forth in the authority’s resolution approving
24the project pursuant to this section.

25(2) Notwithstanding paragraph (1), the authority’s obligation
26to submit to the Legislature a report pursuant to paragraph (2) of
27subdivision (i) shall remain operative until the submission of the
28report.

29

SEC. 4.  

Section 26011.8 of the Public Resources Code, as
30added by Section 13 of Chapter 677 of the Statutes of 2012, is
31amended to read:

32

26011.8.  

(a) The purpose of this section is to promote the
33creation of California-based manufacturing, California-based jobs,
34the reduction of greenhouse gases, or reductions in air and water
35pollution or energy consumption. In furtherance of this purpose,
36the authority may approve a project for financial assistance in the
37form of the sales and use tax exclusion established in Section
386010.8 of the Revenue and Taxation Code.

P12   1(b) For purposes of this section, “project” means a project as
2defined in subparagraph (B) of paragraph (7) of subdivision (a) of
3Section 26003.

4(c) The authority shall publish notice of the availability of
5project applications and deadlines for submission of project
6applications to the authority.

7(d) The authority shall evaluate project applications based upon
8a net benefits test that includes all of the following criteria:

9(1) The extent to which the project develops manufacturing
10facilities, or purchases equipment for manufacturing facilities,
11located in California.

12(2) The extent to which the anticipated benefit to the state from
13the project equals or exceeds the projected benefit to the
14participating party from the sales and use tax exclusion.

15(3) The extent to which the project will create new, permanent
16jobs in California.

17(4) To the extent feasible, the extent to which the project, or the
18product produced by the project, results in a reduction of
19greenhouse gases, a reduction in air or water pollution, an increase
20in energy efficiency, or a reduction in energy consumption, beyond
21what is required by any federal or state law or regulation.

22(5) The extent of unemployment in the area in which the project
23is proposed to be located.

24(6) Any other factors the authority deems appropriate in
25accordance with this section.

26(e) At a duly noticed public hearing, the authority shall approve,
27by resolution, project applications for financial assistance.

28(f) Notwithstanding subdivision (j), and without regard to the
29actual date of any transaction between a participating party and
30the authority, any project as defined in paragraph (7) of subdivision
31(a) of Section 26003 approved by the authority by resolution for
32the sales and use tax exclusion pursuant to Section 6010.8 of the
33Revenue and Taxation Code prior to March 24, 2010, shall not be
34subject to this section.

35(g) The Legislative Analyst’s Office shall report to the Joint
36Legislative Budget Committee on the effectiveness of this program,
37on or before January 1, 2019, by evaluating factors, including, but
38not limited to, the following:

39(1) The number of jobs created by the program in California.

P13   1(2) The number of businesses that have remained in California
2or relocated to California as a result of this program.

3(3) The amount of state and local revenue and economic activity
4generated by the program.

5(4) The amount of reduction in greenhouse gases, air pollution,
6water pollution, or energy consumption.

7(h) The exclusions granted pursuant to Section 6010.8 of the
8Revenue and Taxation Code for projects approved by the authority
9pursuant to this section shall not exceed one hundred million dollars
10($100,000,000) for each calendar year.begin insert Any portion of the one
11hundred million dollars ($100,000,000) in exclusions not granted
12in the assigned calendar year shall be available to be granted in
13the subsequent calendar year provided that the total amount
14available in any year does not exceed two hundred million dollars
15($200,000,000).end insert

16(i) The authority shall make every effort to expedite the
17operation of this section, and shall adopt regulations for purposes
18of implementing the section as emergency regulations in
19accordance with Chapter 3.5 (commencing with Section 11340)
20of Part 1 of Division 3 of Title 2 of the Government Code. For
21purposes of that Chapter 3.5, including Section 11349.6 of the
22Government Code, the adoption of the regulations shall be
23considered by the Office of Administrative Law to be necessary
24for the immediate preservation of the public peace, health and
25safety, and general welfare.

26(j) This section shall become operative on July 1, 2016, and
27 shall remain in effect only until January 1, 2021, and as of that
28date is repealed. The sale or purchase of tangible personal property
29of a project approved prior to January 1, 2021, shall continue to
30be excluded from sales and use taxes pursuant to Section 6010.8
31of the Revenue and Taxation Code for the period of time set forth
32in the authority’s resolution approving the project pursuant to this
33section.

34

SEC. 5.  

Section 1 of Chapter 677 of the Statutes of 2012 is
35repealed.



O

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