Amended in Senate August 26, 2013

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

This bill would redefine “project” to include, but not be limited to, machinery and equipmentbegin delete purchased andend delete utilized in the state, and, for purposes of the sales and use tax exclusion, would redefine “project” to mean tangible personal property that isbegin delete purchased andend delete 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 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. The bill wouldbegin delete 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 wouldend delete 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 extentbegin insert to whichend insert the project will create new, permanent jobs in California and the extentbegin insert to whichend insert 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 ofbegin delete thisend deletebegin insert theseend insert 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 improvebegin delete existing,end deletebegin insert existingend insert or create entirely new
8materials, products, and processes through the use of science,
9engineering, or information technologies, high-precision tools and
10methods, a high-performance workforce, and innovative business
11or organizational models utilizing any of the following technology
12areas:

13(i) begin deleteMicro- end deletebegin insertMicroelectronics end insertand nanoelectronics, including
14semiconductors.

15(ii) Advanced materials.

16(iii) Integrated computational materials engineering.

17(iv) Nanotechnology.

18(v) Additive manufacturing.

19(vi) Industrial biotechnology.

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

21(i) Systems that result from substantive advancement, whether
22incremental or breakthrough, beyond the current industry standard,
23in the production of materials and products. These advancements
24include improvements in manufacturing processes and systems
25that are often referred to as “smart” or “intelligent” manufacturing
26systems, which integrate computational predictability and
27operational efficiency.

28(ii) (I) Sustainable manufacturing systems and manufacturing
29technologies that minimize the use of resources while maintaining
30or improving cost and performance.

31(II) Sustainable manufacturing systems and manufacturing
32technologies do not include those required to be undertaken
33pursuant to state or federal law or regulations, air district rules or
34regulations, memoranda of understanding with a governmental
35entity, or legally binding agreements or documents. The State Air
36Resources Board shall advise the authority to ensure that the
37requirements of this clause are met.

P4    1(2) (A) “Advanced transportation technologies” means
2emerging commercially competitive transportation-related
3technologies identified by the authority as capable of creating
4long-term, high value-added jobs for Californians while enhancing
5the state’s commitment to energy conservation, pollution and
6greenhouse gas emissions reduction, and transportation efficiency.

7(B) “Advanced transportation technologies” does not include
8those projects required to be undertaken pursuant to state or federal
9law or regulations, air district rules or regulations, memoranda of
10understanding with a governmental entity, or legally binding
11agreements or documents. The State Air Resources Board shall
12advise the authority regarding projects that are excluded pursuant
13to this subparagraph.

14(3) (A) “Alternative sources” means devices or technologies
15used for a renewable electrical generation facility, as defined in
16paragraph (1) of subdivision (a) of Section 25741, a combined
17heat and power system, as defined in Section 2840.2 of the Public
18Utilities Code, distributed generation and energy storage
19technologies eligible under the self-generation incentive program
20pursuant to Section 379.6 of the Public Utilities Code, as
21determined by the Public Utilities Commission, or a facility
22designed for the production of renewable fuels, the efficient use
23of which reduce the use of fossil or nuclear fuels, and energy
24efficiency devices or technologies that reduce the need for new
25electric generation and reduce emissions of toxic and criteria
26pollutants and greenhouse gases.

27(B) “Alternative sources” does not include a hydroelectric
28facility that does not meet state laws pertaining to the control,
29appropriation, use, and distribution of water, including, but not
30limited to, the obtaining of applicable licenses and permits.

31(4) “Authority” means the California Alternative Energy and
32Advanced Transportation Financing Authority established pursuant
33to Section 26004, and any board, commission, department, or
34officer succeeding to the functions of the authority, or to which
35the powers conferred upon the authority by this division shall be
36given.

37(5) “Cost” as applied to a project or portion of the project
38financed under this division means all or part of the cost of
39construction and acquisition of all lands, structures, real or personal
40property or an interest in the real or personal property, rights,
P5    1rights-of-way, franchises, easements, and interests acquired or
2used for a project; the cost of demolishing or removing any
3buildings or structures on land so acquired, including the cost of
4acquiring any lands to which those buildings or structures may be
5moved; the cost of all machinery, equipment, and furnishings,
6financing charges, interest prior to, during, and for a period after,
7 completion of construction as determined by the authority;
8provisions for working capital; reserves for principal and interest
9and for extensions, enlargements, additions, replacements,
10renovations, and improvements; the cost of architectural,
11engineering, financial, accounting, auditing and legal services,
12plans, specifications, estimates, administrative expenses, and other
13expenses necessary or incident to determining the feasibility of
14constructing any project or incident to the construction, acquisition,
15or financing of a project.

16(6) “Financial assistance” includes, but is not limited to, loans,
17loan loss reserves, interest rate reductions, proceeds of bonds issued
18by the authority, bond insurance, loan guarantees or other credit
19enhancements or liquidity facilities, contributions of money, or a
20combination thereof, as determined by, and approved by the
21resolution of, the board.

22(7) (A) “Participating party” means a person, federal or state
23agency, department, board, authority, or commission, state or
24community college, or university, or a city or county, regional
25agency, public district, school district, or other political entity
26engaged in the business or operations in the state, whether
27organized for profit or not for profit, that applies for financial
28assistance from the authority for the purpose of implementing a
29project.

30(B) (i) Forbegin delete theend delete purposes of Section 6010.8 of the Revenue and
31Taxation Code, “participating party” means an entity specified in
32subparagraph (A) that seeks financial assistance pursuant to Section
3326011.8.

34(ii) For purposes of Section 6010.8 of the Revenue and Taxation
35Code, an entity located outside of the state, including an entity
36located overseas, is considered to be a participating party and is
37eligible to apply for financial assistance pursuant to Section
3826011.8 if the participating party commits to, and demonstrates
39that, the party will be opening a manufacturing facility in the state.

P6    1(iii) It is the intent of the Legislature by adding clause (ii) to
2clarify existing law and ensure that an out-of-state entity or
3overseas entity is eligible to apply for financial assistance pursuant
4to Section 26011.8.

5(8) (A) “Project” means a land, building, improvement to the
6land or building, rehabilitation, work, property, or structure, real
7or personal, stationary or mobile, including, but not limited to,
8machinery and equipmentbegin delete purchased andend delete utilized in the state,
9 whether or not in existence or under construction, that utilizes, or
10is designed to utilize, an alternative source, or that is utilized for
11the design, technology transfer, manufacture, production, assembly,
12distribution, or service of advanced transportation technologies or
13alternative source components.

14(B) “Project,” for purposes of Section 26011.8 and Section
156010.8 of the Revenue and Taxation Code, means tangible personal
16property that isbegin delete purchased andend delete utilized in the state for the design,
17manufacture, production, or assembly of advanced manufacturing,
18advanced transportation technologies, or alternative source
19products, components, or systems.

20(9) “Revenue” means all rents, receipts, purchase payments,
21loan repayments, and all other income or receipts derived by the
22authority from a project, or the sale, lease, or other disposition of
23alternative source or advanced transportation technology facilities,
24or the making of loans to finance alternative source or advanced
25transportation technology facilities, and any income or revenue
26derived from the investment of money in any fund or account of
27the authority.

28(b) This section shall become inoperative on July 1, 2016, and,
29as of January 1, 2017, is repealed, unless a later enacted statute,
30that becomes operative on or before January 1, 2017, deletes or
31extends the dates on which it becomes inoperative and is repealed.

32

SEC. 2.  

Section 26003 of the Public Resources Code, as added
33by Section 6 of Chapter 677 of the Statutes of 2012, is amended
34to read:

35

26003.  

(a) As used in this division, unless the context
36otherwise requires:

37(1) (A)  “Advanced transportation technologies” means
38emerging commercially competitive transportation-related
39technologies identified by the authority as capable of creating
40long-term, high value-added jobs for Californians while enhancing
P7    1the state’s commitment to energy conservation, pollution and
2greenhouse gas emissions reduction, and transportation efficiency.

3(B) “Advanced transportation technologies” does not include
4those projects required to be undertaken pursuant to state or federal
5law or regulations, air district rules or regulations, memoranda of
6understanding with a governmental entity, or legally binding
7agreements or documents. The State Air Resources Board shall
8advise the authority regarding projects that are excluded pursuant
9to this subparagraph.

10(2) (A) “Alternative sources” means devices or technologies
11used for a renewable electrical generation facility, as defined in
12paragraph (1) of subdivision (a) of Section 25741, a combined
13heat and power system, as defined in Section 2840.2 of the Public
14Utilities Code, distributed generation and energy storage
15technologies eligible under the self-generation incentive program
16pursuant to Section 379.6 of the Public Utilities Code, as
17determined by the Public Utilities Commission, or a facility
18designed for the production of renewable fuels, the efficient use
19of which reduce the use of fossil or nuclear fuels, and energy
20efficiency devices or technologies that reduce the need for new
21electric generation and reduce emissions of toxic and criteria
22pollutants and greenhouse gases.

23(B) “Alternative sources” does not include a hydroelectric
24facility that does not meet state laws pertaining to the control,
25appropriation, use, and distribution of water, including, but not
26limited to, the obtaining of applicable licenses and permits.

27(3) “Authority” means the California Alternative Energy and
28Advanced Transportation Financing Authority established pursuant
29to Section 26004, and any board, commission, department, or
30officer succeeding to the functions of the authority, or to which
31the powers conferred upon the authority by this division shall be
32given.

33(4) “Cost” as applied to a project or portion of the project
34financed under this division means all or part of the cost of
35construction and acquisition of all lands, structures, real or personal
36property or an interest in the real or personal property, rights,
37rights-of-way, franchises, easements, and interests acquired or
38used for a project; the cost of demolishing or removing any
39buildings or structures on land so acquired, including the cost of
40acquiring any lands to which those buildings or structures may be
P8    1moved; the cost of all machinery, equipment, and furnishings,
2financing charges, interest prior to, during, and for a period after,
3completion of construction as determined by the authority;
4provisions for working capital; reserves for principal and interest
5and for extensions, enlargements, additions, replacements,
6renovations, and improvements; the cost of architectural,
7engineering, financial, accounting, auditing and legal services,
8plans, specifications, estimates, administrative expenses, and other
9expenses necessary or incident to determining the feasibility of
10constructing any project or incident to the construction, acquisition,
11or financing of a project.

12(5) “Financial assistance” includes, but is not limited to, loans,
13loan loss reserves, interest rate reductions, proceeds of bonds issued
14by the authority, bond insurance, loan guarantees or other credit
15enhancements or liquidity facilities, contributions of money, or a
16combination thereof, as determined by, and approved by the
17resolution of, the board.

18(6) (A) “Participating party” means a person, federal or state
19agency, department, board, authority, or commission, state or
20community college, or university, or a city or county, regional
21agency, public district, school district, or other political entity
22engaged in the business or operations in the state, whether
23organized for profit or not for profit, that applies for financial
24assistance from the authority for the purpose of implementing a
25project.

26(B) (i) For purposes of Section 6010.8 of the Revenue and
27Taxation Code, “participating party” means an entity specified in
28subparagraph (A) that seeks financial assistance pursuant to Section
2926011.8.

30(ii) For purposes of Section 6010.8 of the Revenue and Taxation
31Code, an entity located outside of the state, including an entity
32located overseas, is considered to be a participating party and is
33eligible to apply for financial assistance pursuant to Section
3426011.8 if the participating party commits to, and demonstrates
35that, the party will be opening a manufacturing facility in the state.

36(iii) It is the intent of the Legislature by adding clause (ii) to
37clarify existing law and ensure that an out-of-state entity or
38overseas entity is eligible to apply for financial assistance pursuant
39to Section 26011.8.

P9    1(7) (A) “Project” means a land, building, improvement to the
2land or building, rehabilitation, work, property, or structure, real
3or personal, stationary or mobile, including, but not limited to,
4machinery and equipmentbegin delete purchased andend delete utilized in the state,
5whether or not in existence or under construction, that utilizes, or
6is designed to utilize, an alternative source, or that is utilized for
7the design, technology transfer, manufacture, production, assembly,
8distribution, or service of advanced transportation technologies or
9alternative source components.

10(B) “Project,” for purposes of Section 26011.8 and Section
116010.8 of the Revenue and Taxation Code, means tangible personal
12property that isbegin delete purchased andend delete utilized in the state for the design,
13manufacture, production, or assembly of advanced transportation
14technologies or alternative source products, components, or
15systems.

16(8) “Revenue” means all rents, receipts, purchase payments,
17loan repayments, and all other income or receipts derived by the
18authority from a project, or the sale, lease, or other disposition of
19alternative source or advanced transportation technology facilities,
20or the making of loans to finance alternative source or advanced
21transportation technology facilities, and any income or revenue
22derived from the investment of money in any fund or account of
23the authority.

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

25

SEC. 3.  

Section 26011.8 of the Public Resources Code, as
26amended by Section 12 of Chapter 677 of the Statutes of 2012, is
27amended to read:

28

26011.8.  

(a) The purpose of this section is to promote the
29creation of California-based manufacturing, California-based jobs,
30advanced manufacturing, the reduction of greenhouse gases, or
31reductions in air and water pollution or energy consumption. In
32furtherance of this purpose, the authority may approve a project
33for financial assistance in the form of the sales and use tax
34exclusion established in Section 6010.8 of the Revenue and
35Taxation Code.

36(b) For purposes of this section, “project” means a project as
37defined in subparagraph (B) of paragraph (8) of subdivision (a) of
38Section 26003.

P10   1(c) The authority shall publish notice of the availability of
2project applications and deadlines for submission of project
3applications to the authority.

4(d) The authority shall evaluate project applications based upon
5all of the following criteria:

6(1) The extent to which the project develops manufacturing
7facilities, or purchases equipment for manufacturing facilities,
8located in California.

9(2) The extent to which the anticipated benefit to the state from
10the project equals or exceeds the projected benefit to the
11participating party from the sales and use tax exclusion.

12(3) The extent to which the project will create new, permanent
13jobs in California.

14(4) To the extent feasible, the extent to which the project, or the
15product produced by the project, results in a reduction of
16greenhouse gases, a reduction in air or water pollution, an increase
17in energy efficiency, or a reduction in energy consumption, beyond
18what is required bybegin delete anyend delete federal or state law or regulation.

19(5) The extent of unemployment in the area in which the project
20is proposed to be located.

21(6) Any other factors the authority deems appropriate in
22accordance with this section.

23(e) At a duly noticed public hearing, the authority shall approve,
24by resolution, project applications for financial assistance.

25(f) Notwithstanding subdivision (j), and without regard to the
26actual date of any transaction between a participating party and
27the authority, any project approved by the authority by resolution
28 for the sales and use tax exclusion pursuant to Section 6010.8 of
29the Revenue and Taxation Code before March 24, 2010, shall not
30be subject to this section.

31(g) The Legislative Analyst’s Office shall report to the Joint
32Legislative Budget Committee on the effectiveness of this program,
33on or before January 1, 2019, by evaluating factors, including, but
34not limited to, the following:

35(1) The number of jobs created by the program in California.

36(2) The number of businesses that have remained in California
37or relocated to California as a result of this program.

38(3) The amount of state and local revenue and economic activity
39generated by the program.

P11   1(4) The types of advanced manufacturing, as defined in
2paragraph (1) of subdivision (a) of Section 26003, utilized.

3(5) The amount of reduction in greenhouse gases, air pollution,
4water pollution, or energy consumption.

5(h) The exclusions granted pursuant to Section 6010.8 of the
6Revenue and Taxation Code for projects approved by the authority
7pursuant to this section shall not exceed one hundred million dollars
8($100,000,000) for each calendar year.begin delete Any portion of the one
9hundred million dollars ($100,000,000) in exclusions not granted
10in the assigned calendar year shall be available to be granted in
11the subsequent calendar year provided that the total amount
12available in any year does not exceed two hundred million dollars
13($200,000,000).end delete

14(i) (1) The authority shall study the efficacy and cost benefit
15of the sales and use tax exemption as it relates to advanced
16manufacturing projects. The study shall include the number of jobs
17created, the costs of each job, and the annual salary of each job.
18The study shall also consider a dynamic analysis of the economic
19output to the state that would occur without the sales and use tax
20exemption. Before January 1, 2017, the authority shall submit to
21the Legislature, consistent with Section 9795 of the Government
22Code, the result of the study.

23(2) Before January 1, 2015, the authority shall, consistent with
24Section 9795 of the Government Code, submit to the Legislature
25an interim report on the efficacy of the program conducted pursuant
26to this section. The study shall include recommendations on
27program changes that would increase the program’s efficacy in
28creating permanent and temporary jobs, and whether eligibility
29for the program should be extended or narrowed to other
30manufacturing types. The authority may work with the Legislative
31Analyst’s Office in preparing the report and its recommendations.

32(j) (1) Except as provided in paragraph (2), this section shall
33become inoperative on July 1, 2016, and, as of January 1, 2017,
34is repealed, unless a later enacted statute, that becomes operative
35on or before January 1, 2017, deletes or extends the dates on which
36it becomes inoperative and is repealed. The sale or purchase of
37tangible personal property of a project approved before June 30,
382016, shall continue to be excluded from sales and use taxes
39pursuant to Section 6010.8 of the Revenue and Taxation Code for
P12   1the period of time set forth in the authority’s resolution approving
2the project pursuant to this section.

3(2) Notwithstanding paragraph (1), the authority’s obligation
4to submit to the Legislature a report pursuant to paragraph (2) of
5subdivision (i) shall remain operative until the submission of the
6report.

7

SEC. 4.  

Section 26011.8 of the Public Resources Code, as
8added by Section 13 of Chapter 677 of the Statutes of 2012, is
9amended to read:

10

26011.8.  

(a) The purpose of this section is to promote the
11creation of California-based manufacturing, California-based jobs,
12the reduction of greenhouse gases, or reductions in air and water
13pollution or energy consumption. In furtherance of this purpose,
14the authority may approve a project for financial assistance in the
15form of the sales and use tax exclusion established in Section
166010.8 of the Revenue and Taxation Code.

17(b) For purposes of this section, “project” means a project as
18defined in subparagraph (B) of paragraph (7) of subdivision (a) of
19Section 26003.

20(c) The authority shall publish notice of the availability of
21project applications and deadlines for submission of project
22applications to the authority.

23(d) The authority shall evaluate project applications based upon
24a net benefits test that includes all of the following criteria:

25(1) The extent to which the project develops manufacturing
26facilities, or purchases equipment for manufacturing facilities,
27located in California.

28(2) The extent to which the anticipated benefit to the state from
29the project equals or exceeds the projected benefit to the
30participating party from the sales and use tax exclusion.

31(3) The extent to which the project will create new, permanent
32jobs in California.

33(4) To the extent feasible, the extent to which the project, or the
34product produced by the project, results in a reduction of
35greenhouse gases, a reduction in air or water pollution, an increase
36in energy efficiency, or a reduction in energy consumption, beyond
37what is required bybegin delete anyend delete federal or state law or regulation.

38(5) The extent of unemployment in the area in which the project
39is proposed to be located.

P13   1(6) Any other factors the authority deems appropriate in
2accordance with this section.

3(e) At a duly noticed public hearing, the authority shall approve,
4by resolution, project applications for financial assistance.

5(f) Notwithstanding subdivision (j), and without regard to the
6actual date of any transaction between a participating party and
7the authority, any project as defined in paragraph (7) of subdivision
8(a) of Section 26003 approved by the authority by resolution for
9the sales and use tax exclusion pursuant to Section 6010.8 of the
10Revenue and Taxation Code before March 24, 2010, shall not be
11subject to this section.

12(g) The Legislative Analyst’s Office shall report to the Joint
13Legislative Budget Committee on the effectiveness of this program,
14on or before January 1, 2019, by evaluating factors, including, but
15not limited to, the following:

16(1) The number of jobs created by the program in California.

17(2) The number of businesses that have remained in California
18or relocated to California as a result of this program.

19(3) The amount of state and local revenue and economic activity
20generated by the program.

21(4) The amount of reduction in greenhouse gases, air pollution,
22water pollution, or energy consumption.

23(h) The exclusions granted pursuant to Section 6010.8 of the
24Revenue and Taxation Code for projects approved by the authority
25pursuant to this section shall not exceed one hundred million dollars
26($100,000,000) for each calendar year. begin delete Any portion of the one
27hundred million dollars ($100,000,000) in exclusions not granted
28in the assigned calendar year shall be available to be granted in
29the subsequent calendar year provided that the total amount
30available in any year does not exceed two hundred million dollars
31($200,000,000).end delete

32(i) The authority shall make every effort to expedite the
33operation of this section, and shall adopt regulations for purposes
34of implementing the section as emergency regulations in
35accordance with Chapter 3.5 (commencing with Section 11340)
36of Part 1 of Division 3 of Title 2 of the Government Code. For
37purposes of that Chapter 3.5, including Section 11349.6 of the
38Government Code, the adoption of the regulations shall be
39considered by the Office of Administrative Law to be necessary
P14   1for the immediate preservation of the public peace, health and
2safety, and general welfare.

3(j) This section shall become operative on July 1, 2016, and
4shall remain in effect only until January 1, 2021, and as of that
5date is repealed. The sale or purchase of tangible personal property
6of a project approved before January 1, 2021, shall continue to be
7excluded from sales and use taxes pursuant to Section 6010.8 of
8the Revenue and Taxation Code for the period of time set forth in
9the authority’s resolution approving the project pursuant to this
10section.

11

SEC. 5.  

Section 1 of Chapter 677 of the Statutes of 2012 is
12repealed.



O

    94