BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 1422
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          AB 1422 (Jobs, Economic Development, and the Economy Committee)
          As Amended  August 26, 2013
          Majority vote 
          |ASSEMBLY:  |70-0 |(May 16, 2013)  |SENATE: |38-0 |(September 9,  |
          |           |     |                |        |     |2013)          |
           Original Committee Reference:    J., E.D. & E.

          SUMMARY  :  Makes a variety of technical and programmatic changes  
          to the sales and use tax program (SUTE) administered by the  
          California Alternative Energy and Advanced Transportation  
          Financing Authority (Finance Authority).  

           The Senate amendments  remove a requirement for a peer reviewed  
          study on any changes in the Finance Authority's net benefit's  
          test.  This was a condition of the Governor's signature of SB  
          1128 (Padilla), Chapter 677, Statutes of 2012.  
           EXISTING LAW  :
           1)Establishes the Finance Authority for the purpose of providing  
            and promoting the establishment of facilities utilizing  
            alternative sources of energy and facilities needed for the  
            development and commercialization of advanced transportation  

          2)Authorizes the Finance Authority to administer a SUTE program  
            for any tangible personal property that is utilized for the  
            design, manufacture, production, or assembly of advanced  
            manufacturing, advanced transportation technologies, or  
            alternative source products, components, or systems.  The SUTE  
            program is capped at a total of $100 million in tax exclusion  
            benefits for all projects per calendar year.  

          3)Requires the Governor's Office of Business and Economic  
            Development (GO-Biz) to review and identify cost-effective  
            methods for the state to create jobs in advanced manufacturing  
            and report its findings to the Legislature on or before  
            January 1, 2017.

           FISCAL EFFECT  :  According to the Senate Appropriations  


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          Committee, pursuant to Senate Rule 28.8, negligible state costs.  

           COMMENTS  :  The Finance Authority was established in 1980 for the  
          purpose of providing capital for facilities utilizing  
          alternative methods and sources of energy and facilities needed  
          for the development and commercialization of advanced  
          transportation technologies.  The Finance Authority oversees a  
          range of financial products including conduit bond and revenue  
          bond financings, loan guarantees, loan loss reserve accounts  
          among other financial products that support the development and  
          commercialization of technologies that conserve energy, reduce  
          air pollution, and promote economic development and jobs. 

          Examples of some of the Finance Authority's more unique  
          financial products include $381 million in Qualified Energy  
          Conservation Bonds authorized under the federal American  
          Recovery and Reinvestment Act and the SB 77 (Pavley), Chapter  
          15, Statutes of 2010, Property Assessed Clean Energy (PACE) Bond  
          Program.  Governor Arnold Schwarzenegger used the Finance  
          Authority to assist a joint venture between Tesla Motors and  
          Toyota Motors to purchase the Nummi assembly plant in Fremont,  
          California, where the two companies focus on manufacturing  
          hybrid and electric vehicles, including the TESLA brand. 

          Most recently, the role of the Finance Authority was expanded to  
          include administration of the SUTE program which provides for a  
          state sales and use tax exclusion for property used in the  
          "design, manufacture, production, or assembly" of either  
          advanced transportation technologies or alternative energy  
          source products, components or systems (SB 71 (Padilla), Chapter  
          10, Statutes of 2010).  In 2012, the program was expanded to  
          include advanced manufacturing (SB 1128).

          Since the inception of the SUTE program, the Finance Authority  
          has approved a total of 50 applications, of which 40 are active.  
           These 40 applications have been approved for $1.16 billion in  
          anticipated qualified purchases, with an estimated result of  
          $98.5 million in sales and use tax exclusions.  These projects  
          have produced an estimated $72.5 million in environmental  
          benefits and $125.7 million in fiscal benefits across 14  
          counties, resulting in approximately $99.7 million in net  


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           Analysis Prepared by  :    Toni Symonds and Zach Hutsell / J.,  
          E.D. & E. / (916) 319-2090