Amended in Senate July 8, 2013

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, andbegin delete V. Manuel Pérez)end deletebegin insert V. Manuel Pérez)end insert

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 forbegin delete projectsend deletebegin insert projects, as defined,end insert 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. The act prohibits the sales and use tax exclusions granted from exceeding $100,000,000 for each calendar year.

This billbegin insert would redefine “project” to include, but not be limited to, machinery and equipment purchased and utilized in the state, and, for purposes of the sales and use tax exclusion, would redefine “project” to mean tangible personal property that is purchased and utilized in the state for the design, manufacture, production, or assembly of advanced manufacturing, advanced transportation technologies, or alternative source products, components, or systems. The billend insert 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. 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. 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:

P3    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.

16(iv) Nanotechnology.

17(v) Additive manufacturing.

18(vi) Industrial biotechnology.

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

20(i) Systems that result from substantive advancement, whether
21incremental or breakthrough, beyond the current industry standard,
22in the production of materials and products. These advancements
23include improvements in manufacturing processes and systems
24that are often referred to as “smart” or “intelligent” manufacturing
25systems, which integrate computational predictability and
26operational efficiency.

27(ii) (I) Sustainable manufacturing systems and manufacturing
28technologies that minimize the use of resources while maintaining
29or improving cost and performance.

30(II) Sustainable manufacturing systems and manufacturing
31technologies do not include those required to be undertaken
32pursuant to state or federal law or regulations, air district rules or
33regulations, memoranda of understanding with a governmental
34entity, or legally binding agreements or documents. The State Air
35Resources Board shall advise the authority to ensure that the
36requirements of this clause are met.

37(2) (A) “Advanced transportation technologies” means
38emerging commercially competitive transportation-related
P4    1technologies identified by the authority as capable of creating
2long-term, high value-added jobs for Californians while enhancing
3the state’s commitment to energy conservation, pollution and
4greenhouse gas emissions reduction, and transportation efficiency.

5(B) “Advanced transportation technologies” does not include
6those projects required to be undertaken pursuant to state or federal
7law or regulations, air district rules or regulations, memoranda of
8understanding with a governmental entity, or legally binding
9agreements or documents. The State Air Resources Board shall
10advise the authority regarding projects that are excluded pursuant
11to this subparagraph.

12(3) (A) “Alternative sources” means devices or technologies
13used for a renewable electrical generation facility, as defined in
14paragraph (1) of subdivision (a) of Section 25741, a combined
15heat and power system, as defined in Section 2840.2 of the Public
16Utilities Code, distributed generation and energy storage
17technologies eligible under the self-generation incentive program
18pursuant to Section 379.6 of the Public Utilities Code, as
19determined by the Public Utilities Commission, or a facility
20designed for the production of renewable fuels, the efficient use
21of which reduce the use of fossil or nuclear fuels, and energy
22efficiency devices or technologies that reduce the need for new
23electric generation and reduce emissions of toxic and criteria
24pollutants and greenhouse gases.

25(B) “Alternative sources” does not include a hydroelectric
26facility that does not meet state laws pertaining to the control,
27appropriation, use, and distribution of water, including, but not
28limited to, the obtaining of applicable licenses and permits.

29(4) “Authority” means the California Alternative Energy and
30Advanced Transportation Financing Authority established pursuant
31to Section 26004, and any board, commission, department, or
32officer succeeding to the functions of the authority, or to which
33the powers conferred upon the authority by this division shall be
34given.

35(5) “Cost” as applied to a project or portion of the project
36financed under this division means all or part of the cost of
37construction and acquisition of all lands, structures, real or personal
38property or an interest in the real or personal property, rights,
39rights-of-way, franchises, easements, and interests acquired or
40 used for a project; the cost of demolishing or removing any
P5    1buildings or structures on land so acquired, including the cost of
2acquiring any lands to which those buildings or structures may be
3moved; the cost of all machinery, equipment, and furnishings,
4financing charges, interest prior to, during, and for a period after,
5completion of construction as determined by the authority;
6provisions for working capital; reserves for principal and interest
7and for extensions, enlargements, additions, replacements,
8renovations, and improvements; the cost of architectural,
9engineering, financial, accounting, auditing and legal services,
10plans, specifications, estimates, administrative expenses, and other
11expenses necessary or incident to determining the feasibility of
12constructing any project or incident to the construction, acquisition,
13or financing of a project.

14(6) “Financial assistance” includes, but is not limited to, loans,
15loan loss reserves, interest rate reductions, proceeds of bonds issued
16by the authority, bond insurance, loan guarantees or other credit
17enhancements or liquidity facilities, contributions of money, or a
18combination thereof, as determined by, and approved by the
19resolution of, the board.

20(7) (A) “Participating party” means a person, federal or state
21agency, department, board, authority, or commission, state or
22community college, or university, or a city or county, regional
23agency, public district, school district, or other political entity
24engaged in the business or operations in the state, whether
25organized for profit or not for profit, that applies for financial
26assistance from the authority for the purpose of implementing a
27project.

28(B) (i) For the purposes of Section 6010.8 of the Revenue and
29Taxation Code, “participating party” means an entity specified in
30subparagraph (A) that seeks financial assistance pursuant to Section
3126011.8.

32(ii) For purposes of Section 6010.8 of the Revenue and Taxation
33Code, an entity located outside of the state, including an entity
34located overseas, is considered to be a participating party and is
35eligible to apply for financial assistance pursuant to Section
3626011.8 if the participating party commits to, and demonstrates
37that, the party will be opening a manufacturing facility in the state.

38(iii) It is the intent of the Legislature by adding clause (ii) to
39clarify existing law and ensure that an out-of-state entity or
P6    1overseas entity is eligible to apply for financial assistance pursuant
2to Section 26011.8.

3(8) (A) “Project” means a land, building, improvement to the
4land or building, rehabilitation, work, property, or structure, real
5or personal, stationary or mobile, including, but not limited to,
6machinery and equipmentbegin insert purchased and utilized in the stateend insert,
7whether or not in existence or under construction, that utilizes, or
8is designed to utilize, an alternative source, or that is utilized for
9the design, technology transfer, manufacture, production, assembly,
10distribution, or service of advanced transportation technologies or
11alternative source components.

12(B) “Project,” for purposes of Section 26011.8 and Section
136010.8 of the Revenue and Taxation Code, means tangible personal
14 property that isbegin delete utilizedend deletebegin insert purchased and utilized in the stateend insert for the
15design, manufacture, production, or assembly of advanced
16manufacturing, advanced transportation technologies, or alternative
17source products, components, or systems.

18(9) “Revenue” means all rents, receipts, purchase payments,
19loan repayments, and all other income or receipts derived by the
20authority from a project, or the sale, lease, or other disposition of
21alternative source or advanced transportation technology facilities,
22or the making of loans to finance alternative source or advanced
23transportation technology facilities, and any income or revenue
24 derived from the investment of money in any fund or account of
25the authority.

26(b) This section shall become inoperative on July 1, 2016, and,
27as of January 1, 2017, is repealed, unless a later enacted statute,
28that becomes operative on or before January 1, 2017, deletes or
29extends the dates on which it becomes inoperative and is repealed.

30

SEC. 2.  

Section 26003 of the Public Resources Code, as added
31by Section 6 of Chapter 677 of the Statutes of 2012, is amended
32to read:

33

26003.  

(a) As used in this division, unless the context
34otherwise requires:

35(1) (A)  “Advanced transportation technologies” means
36emerging commercially competitive transportation-related
37technologies identified by the authority as capable of creating
38long-term, high value-added jobs for Californians while enhancing
39the state’s commitment to energy conservation, pollution and
40greenhouse gas emissions reduction, and transportation efficiency.

P7    1(B) “Advanced transportation technologies” does not include
2those projects required to be undertaken pursuant to state or federal
3law or regulations, air district rules or regulations, memoranda of
4understanding with a governmental entity, or legally binding
5agreements or documents. The State Air Resources Board shall
6advise the authority regarding projects that are excluded pursuant
7to this subparagraph.

8(2) (A) “Alternative sources” means devices or technologies
9used for a renewable electrical generation facility, as defined in
10paragraph (1) of subdivision (a) of Section 25741, a combined
11heat and power system, as defined in Section 2840.2 of the Public
12Utilities Code, distributed generation and energy storage
13technologies eligible under the self-generation incentive program
14pursuant to Section 379.6 of the Public Utilities Code, as
15determined by the Public Utilities Commission, or a facility
16designed for the production of renewable fuels, the efficient use
17of which reduce the use of fossil or nuclear fuels, and energy
18efficiency devices or technologies that reduce the need for new
19electric generation and reduce emissions of toxic and criteria
20pollutants and greenhouse gases.

21(B) “Alternative sources” does not include a hydroelectric
22facility that does not meet state laws pertaining to the control,
23appropriation, use, and distribution of water, including, but not
24limited to, the obtaining of applicable licenses and permits.

25(3) “Authority” means the California Alternative Energy and
26Advanced Transportation Financing Authority established pursuant
27to Section 26004, and any board, commission, department, or
28officer succeeding to the functions of the authority, or to which
29the powers conferred upon the authority by this division shall be
30given.

31(4) “Cost” as applied to a project or portion of the project
32financed under this division means all or part of the cost of
33construction and acquisition of all lands, structures, real or personal
34property or an interest in the real or personal property, rights,
35rights-of-way, franchises, easements, and interests acquired or
36used for a project; the cost of demolishing or removing any
37buildings or structures on land so acquired, including the cost of
38acquiring any lands to which those buildings or structures may be
39moved; the cost of all machinery, equipment, and furnishings,
40financing charges, interest prior to, during, and for a period after,
P8    1completion of construction as determined by the authority;
2provisions for working capital; reserves for principal and interest
3and for extensions, enlargements, additions, replacements,
4renovations, and improvements; the cost of architectural,
5engineering, financial, accounting, auditing and legal services,
6plans, specifications, estimates, administrative expenses, and other
7expenses necessary or incident to determining the feasibility of
8constructing any project or incident to the construction, acquisition,
9or financing of a project.

10(5) “Financial assistance” includes, but is not limited to, loans,
11loan loss reserves, interest rate reductions, proceeds of bonds issued
12by the authority, bond insurance, loan guarantees or other credit
13enhancements or liquidity facilities, contributions of money, or a
14combination thereof, as determined by, and approved by the
15resolution of, the board.

16(6) (A) “Participating party” means a person, federal or state
17agency, department, board, authority, or commission, state or
18community college, or university, or a city or county, regional
19agency, public district, school district, or other political entity
20engaged in the business or operations in the state, whether
21organized for profit or not for profit, that applies for financial
22assistance from the authority for the purpose of implementing a
23project.

24(B) (i) For purposes of Section 6010.8 of the Revenue and
25Taxation Code, “participating party” means an entity specified in
26subparagraph (A) that seeks financial assistance pursuant to Section
2726011.8.

28(ii) For purposes of Section 6010.8 of the Revenue and Taxation
29Code, an entity located outside of the state, including an entity
30located overseas, is considered to be a participating party and is
31eligible to apply for financial assistance pursuant to Section
3226011.8 if the participating party commits to, and demonstrates
33that, the party will be opening a manufacturing facility in the state.

34(iii) It is the intent of the Legislature by adding clause (ii) to
35clarify existing law and ensure that an out-of-state entity or
36overseas entity is eligible to apply for financial assistance pursuant
37to Section 26011.8.

38(7) (A) “Project” means a land, building, improvement to the
39land or building, rehabilitation, work, property, or structure, real
40or personal, stationary or mobile, including, but not limited to,
P9    1machinery and equipmentbegin insert purchased and utilized in the stateend insert,
2whether or not in existence or under construction, that utilizes, or
3is designed to utilize, an alternative source, or that is utilized for
4the design, technology transfer, manufacture, production, assembly,
5distribution, or service of advanced transportation technologies or
6alternative source components.

7(B) “Project,” for purposes of Section 26011.8 and Section
86010.8 of the Revenue and Taxation Code, means tangible personal
9property that isbegin delete utilizedend deletebegin insert purchased and utilized in the stateend insert for the
10design, manufacture, production, or assembly of advanced
11transportation technologies or alternative source products,
12components, or systems.

13(8) “Revenue” means all rents, receipts, purchase payments,
14loan repayments, and all other income or receipts derived by the
15authority from a project, or the sale, lease, or other disposition of
16alternative source or advanced transportation technology facilities,
17or the making of loans to finance alternative source or advanced
18transportation technology facilities, and any income or revenue
19derived from the investment of money in any fund or account of
20the authority.

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

22

SEC. 3.  

Section 26011.8 of the Public Resources Code, as
23amended by Section 12 of Chapter 677 of the Statutes of 2012, is
24amended to read:

25

26011.8.  

(a) The purpose of this section is to promote the
26creation of California-based manufacturing, California-based jobs,
27advanced manufacturing, the reduction of greenhouse gases, or
28reductions in air and water pollution or energy consumption. In
29furtherance of this purpose, the authority may approve a project
30for financial assistance in the form of the sales and use tax
31exclusion established in Section 6010.8 of the Revenue and
32Taxation Code.

33(b) For purposes of this section, “project” means a project as
34defined in subparagraph (B) of paragraph (8) of subdivision (a) of
35Section 26003.

36(c) The authority shall publish notice of the availability of
37project applications and deadlines for submission of project
38applications to the authority.

39(d) The authority shall evaluate project applications based upon
40all of the following criteria:

P10   1(1) The extent to which the project develops manufacturing
2facilities, or purchases equipment for manufacturing facilities,
3located in California.

4(2) The extent to which the anticipated benefit to the state from
5the project equals or exceeds the projected benefit to the
6participating party from the sales and use tax exclusion.

7(3) The extent to which the project will create new, permanent
8jobs in California.

9(4) To the extent feasible, the extent to which the project, or the
10product produced by the project, results in a reduction of
11greenhouse gases, a reduction in air or water pollution, an increase
12in energy efficiency, or a reduction in energy consumption, beyond
13what is required by any federal or state law or regulation.

14(5) The extent of unemployment in the area in which the project
15is proposed to be located.

16(6) Any other factors the authority deems appropriate in
17accordance with this section.

18(e) At a duly noticed public hearing, the authority shall approve,
19by resolution, project applications for financial assistance.

20(f) Notwithstanding subdivision (j), and without regard to the
21actual date of any transaction between a participating party and
22the authority, any project approved by the authority by resolution
23for the sales and use tax exclusion pursuant to Section 6010.8 of
24the Revenue and Taxation Codebegin delete prior toend deletebegin insert beforeend insert March 24, 2010,
25shall not be subject to this section.

26(g) The Legislative Analyst’s Office shall report to the Joint
27Legislative Budget Committee on the effectiveness of this program,
28on or before January 1, 2019, by evaluating factors, including, but
29not limited to, the following:

30(1) The number of jobs created by the program in California.

31(2) The number of businesses that have remained in California
32or relocated to California as a result of this program.

33(3) The amount of state and local revenue and economic activity
34generated by the program.

35(4) The types of advanced manufacturing, as defined in
36paragraph (1) of subdivision (a) of Section 26003, utilized.

37(5) The amount of reduction in greenhouse gases, air pollution,
38water pollution, or energy consumption.

39(h) The exclusions granted pursuant to Section 6010.8 of the
40Revenue and Taxation Code for projects approved by the authority
P11   1pursuant to this section shall not exceed one hundred million dollars
2($100,000,000) for each calendar year. Any portion of the one
3hundred million dollars ($100,000,000) in exclusions not granted
4in the assigned calendar year shall be available to be granted in
5the subsequent calendar year provided that the total amount
6available in any year does not exceed two hundred million dollars
7($200,000,000).

8(i) (1) The authority shall study the efficacy and cost benefit
9of the sales and use tax exemption as it relates to advanced
10manufacturing projects. The study shall include the number of jobs
11created, the costs of each job, and the annual salary of each job.
12The study shall also consider a dynamic analysis of the economic
13output to the state that would occur without the sales and use tax
14exemption. Before January 1, 2017, the authority shall submit to
15the Legislature, consistent with Section 9795 of the Government
16Code, the result of the study.

17(2) Before January 1, 2015, the authority shall, consistent with
18Section 9795 of the Government Code, submit to the Legislature
19an interim report on the efficacy of the program conducted pursuant
20to this section. The study shall include recommendations on
21program changes that would increase the program’s efficacy in
22creating permanent and temporary jobs, and whether eligibility
23for the program should be extended or narrowed to other
24manufacturing types. The authority may work with the Legislative
25Analyst’s Office in preparing the report and its recommendations.

26(j) (1) Except as provided in paragraph (2), this section shall
27become inoperative on July 1, 2016, and, as of January 1, 2017,
28is repealed, unless a later enacted statute, that becomes operative
29on or before January 1, 2017, deletes or extends the dates on which
30it becomes inoperative and is repealed. The sale or purchase of
31tangible personal property of a project approvedbegin delete prior toend deletebegin insert beforeend insert
32 June 30, 2016, shall continue to be excluded from sales and use
33taxes pursuant to Section 6010.8 of the Revenue and Taxation
34Code for the period of time set forth in the authority’s resolution
35approving the project pursuant to this section.

36(2) Notwithstanding paragraph (1), the authority’s obligation
37to submit to the Legislature a report pursuant to paragraph (2) of
38subdivision (i) shall remain operative until the submission of the
39report.

P12   1

SEC. 4.  

Section 26011.8 of the Public Resources Code, as
2added by Section 13 of Chapter 677 of the Statutes of 2012, is
3amended to read:

4

26011.8.  

(a) The purpose of this section is to promote the
5creation of California-based manufacturing, California-based jobs,
6the reduction of greenhouse gases, or reductions in air and water
7pollution or energy consumption. In furtherance of this purpose,
8the authority may approve a project for financial assistance in the
9form of the sales and use tax exclusion established in Section
106010.8 of the Revenue and Taxation Code.

11(b) For purposes of this section, “project” means a project as
12defined in subparagraph (B) of paragraph (7) of subdivision (a) of
13Section 26003.

14(c) The authority shall publish notice of the availability of
15project applications and deadlines for submission of project
16applications to the authority.

17(d) The authority shall evaluate project applications based upon
18a net benefits test that includes all of the following criteria:

19(1) The extent to which the project develops manufacturing
20facilities, or purchases equipment for manufacturing facilities,
21located in California.

22(2) The extent to which the anticipated benefit to the state from
23the project equals or exceeds the projected benefit to the
24participating party from the sales and use tax exclusion.

25(3) The extent to which the project will create new, permanent
26jobs in California.

27(4) To the extent feasible, the extent to which the project, or the
28product produced by the project, results in a reduction of
29greenhouse gases, a reduction in air or water pollution, an increase
30in energy efficiency, or a reduction in energy consumption, beyond
31what is required by any federal or state law or regulation.

32(5) The extent of unemployment in the area in which the project
33is proposed to be located.

34(6) Any other factors the authority deems appropriate in
35accordance with this section.

36(e) At a duly noticed public hearing, the authority shall approve,
37by resolution, project applications for financial assistance.

38(f) Notwithstanding subdivision (j), and without regard to the
39actual date of any transaction between a participating party and
40the authority, any project as defined in paragraph (7) of subdivision
P13   1(a) of Section 26003 approved by the authority by resolution for
2the sales and use tax exclusion pursuant to Section 6010.8 of the
3Revenue and Taxation Codebegin delete prior toend deletebegin insert beforeend insert March 24, 2010, shall
4not be subject to this section.

5(g) The Legislative Analyst’s Office shall report to the Joint
6Legislative Budget Committee on the effectiveness of this program,
7on or before January 1, 2019, by evaluating factors, including, but
8not limited to, the following:

9(1) The number of jobs created by the program in California.

10(2) The number of businesses that have remained in California
11or relocated to California as a result of this program.

12(3) The amount of state and local revenue and economic activity
13generated by the program.

14(4) The amount of reduction in greenhouse gases, air pollution,
15water pollution, or energy consumption.

16(h) The exclusions granted pursuant to Section 6010.8 of the
17Revenue and Taxation Code for projects approved by the authority
18pursuant to this section shall not exceed one hundred million dollars
19($100,000,000) for each calendar year. Any portion of the one
20hundred million dollars ($100,000,000) in exclusions not granted
21in the assigned calendar year shall be available to be granted in
22the subsequent calendar year provided that the total amount
23available in any year does not exceed two hundred million dollars
24($200,000,000).

25(i) The authority shall make every effort to expedite the
26operation of this section, and shall adopt regulations for purposes
27of implementing the section as emergency regulations in
28accordance with Chapter 3.5 (commencing with Section 11340)
29of Part 1 of Division 3 of Title 2 of the Government Code. For
30purposes of that Chapter 3.5, including Section 11349.6 of the
31Government Code, the adoption of the regulations shall be
32considered by the Office of Administrative Law to be necessary
33for the immediate preservation of the public peace, health and
34safety, and general welfare.

35(j) This section shall become operative on July 1, 2016, and
36 shall remain in effect only until January 1, 2021, and as of that
37date is repealed. The sale or purchase of tangible personal property
38of a project approvedbegin delete prior toend deletebegin insert beforeend insert January 1, 2021, shall continue
39to be excluded from sales and use taxes pursuant to Section 6010.8
40of the Revenue and Taxation Code for the period of time set forth
P14   1in the authority’s resolution approving the project pursuant to this
2section.

3

SEC. 5.  

Section 1 of Chapter 677 of the Statutes of 2012 is
4repealed.



O

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