BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



           ----------------------------------------------------------------- 
          |SENATE RULES COMMITTEE            |                       AB 1422|
          |Office of Senate Floor Analyses   |                              |
          |1020 N Street, Suite 524          |                              |
          |(916) 651-1520         Fax: (916) |                              |
          |327-4478                          |                              |
           ----------------------------------------------------------------- 
           
                                           
                                    THIRD READING


          Bill No:  AB 1422
          Author:   Committee on Jobs, Economic Development and the  
          Economy 
          Amended:  8/26/13 in Senate
          Vote:     21


           SENATE GOVERNANCE & FINANCE COMMITTEE  :  7-0, 7/3/13
          AYES:  Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           ASSEMBLY FLOOR  :  70-0, 5/16/13 (Consent) - See last page for  
            vote


           SUBJECT  :    California Alternative Energy and Advanced  
          Transportation                                               
          Finance Authority:  participating authority

           SOURCE  :     Author


           DIGEST  :    This bill provides code maintenance and technical  
          clean-up to the sales and use tax exemption (SUTE) program  
          administered through the California Alternative Energy and  
          Advanced transportation Financing Authority (CAEATFA).

           Senate Floor Amendments  of 8/26/13 delete the provisions that  
          require equipment be "purchased in" this state for purposes of  
          the SUTE.

           ANALYSIS  :    The CAEATFA provides financing through conduit or  
                                                                CONTINUED





                                                                    AB 1422
                                                                     Page  
          2

          revenue bonds, loan guarantees, loan loss reserves and a SUTE  
          for facilities that use alternative energy sources and  
          technologies.  CAEATFA also provides these financing mechanisms  
          for facilities needed to develop and commercialize advanced  
          transportation technologies that conserve energy, reduce air  
          pollution, and promote economic development and jobs.  CAEATFA's  
          board, composed of the Treasurer, the Controller, the Director  
          of Finance, the Chairperson of the Energy Commission, and the  
          President of the Public Utilities Commission, decides which  
          projects to assist.  On March 24, 2010, Governor Arnold  
          Schwarzenegger signed SB 71 (Padilla, Chapter 10, Statutes of  
          2010) which authorizes the CAEATFA to provide eligible projects  
          financial assistance in the form of a SUTE on property used for  
          the "design, manufacture, production, or assembly" of either  
          advanced transportation technologies or alternative energy  
          source products, components or system.

          The SB 71 program promotes the creation of California-based  
          manufacturing, California-based jobs, and the reduction of  
          greenhouse gases, air and water pollution, or energy  
          consumption.  To date, CAEATFA has approved financial assistance  
          for private entities in the following fields: electric vehicle  
          manufacturing, solar photovoltaic manufacturing, landfill gas  
          capture and production, biogas capture and production (dairies  
          and waste water treatment plants), demonstration hydrogen fuel  
          production, electric vehicle battery manufacturing, biomass  
          processing and fuel production, and others.   In 2012, the  
          Legislature added "advanced manufacturing" to the list of  
          projects eligible for the exemption, and capped the amount of  
          exemptions awarded annually to $100 million.  The Legislature  
          also approved a study by the Governor's Office of Business and  
          Economic Development (GO-Biz) in conjunction with the study (SB  
          1128, Padilla, Chapter 677, Statutes of 2012).

          This bill:

          1.Makes several changes to the CAEATFA statute to clarify  
            existing law, broadens aspects of the program within the cap,  
            and changes aspects of the cap.

          2.Clarifies that an entity that is located outside the state,  
            including those located overseas, is considered a  
            "participating party" for the purpose of the Finance  
            Authority's SUTE program if the equipment is purchased and  

                                                                CONTINUED





                                                                    AB 1422
                                                                     Page  
          3

            utilized within the state.

          3.Deletes a requirement that GO-Biz review and identify  
            efficient and cost-effective methods for the state to create  
            jobs in advanced manufacturing and report their findings to  
            the Legislature by January 1, 2017.

          4.Modifies the definition of advanced manufacturing to include  
            either of the following rather than both of the following:

             A.   Systems that result from substantive advancement, beyond  
               the current industry standard, in the production of  
               materials and products.

             B.   Sustainable manufacturing systems and manufacturing  
               technologies that minimize the use of resources while  
               maintaining or improving cost and performance.  These  
               systems and manufacturing technologies may not include  
               those required to be undertaken pursuant to state or  
               federal law or regulations.

          1.Redefines "project" to mean a land, building, improvement to  
            the land or building, rehabilitation, work, property, or  
            structure, real or personal, stationary or mobile, including,  
            but not limited to, machinery and equipment utilized in the  
            state, whether or not in existence or under construction, that  
            utilizes, or is designed to utilize an alternative source, or  
            that is utilized for the design, technology transfer,  
            manufacture, production, assembly, distribution, or service of  
            advanced transportation technologies or alternative source  
            components.

             A.   "Project," for purposes of Section 26011.8 and Section  
               6010.8 of the Revenue and Taxation Code, means 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.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           ASSEMBLY FLOOR  :  70-0, 5/16/13

                                                                CONTINUED





                                                                    AB 1422
                                                                     Page  
          4

          AYES:  Achadjian, Alejo, Ammiano, Atkins, Bigelow, Bloom,  
            Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown, Ian  
            Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,  
            Dahle, Daly, Dickinson, Donnelly, Fong, Fox, Frazier, Garcia,  
            Gatto, Gomez, Gordon, Gorell, Gray, Hagman, Hall, Harkey,  
            Roger Hernández, Jones, Jones-Sawyer, Levine, Linder, Logue,  
            Lowenthal, Maienschein, Mansoor, Medina, Mitchell, Mullin,  
            Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea,  
            V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,  
            Ting, Torres, Wagner, Waldron, Weber, Wieckowski, Wilk,  
            Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Allen, Buchanan, Eggman, Beth Gaines, Grove,  
            Holden, Melendez, Morrell, Stone, Vacancy

          AB:ej  8/27/13   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  NONE RECEIVED

                                   ****  END  ****


























                                                                CONTINUED