BILL ANALYSIS
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THIRD READING
Bill No: AB 904
Author: V. Manuel Perez (D)
Amended: 7/9/09 in Senate
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 5-0, 07/08/09
AYES: Wiggins, Cox, Aanestad, Kehoe, Wolk
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 79-0, 05/28/09 - See last page for vote
SUBJECT : Local capital investment incentives: qualified
manufacturing
SOURCE : Author
DIGEST : This bill expands the definition of a qualified
manufacturing facility eligible for local capital
investment incentive payments to include a facility
operated by a business engaged in the manufacturing of
parts or components related to the production of
electricity using solar, wind, biomass, hydropower, or
geothermal resources on or after July 1, 2010.
ANALYSIS : Existing law, the Capital Investment Incentive
Program (CIIP) authorizes the governing body of a county,
city and county, or a city to establish a capital
investment incentive program whereby the local agency would
pay a capital investment incentive amount to the proponent
CONTINUED
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of a qualified manufacturing facility for up to 15
consecutive fiscal years upon the approval of a written
request from the proponent. Existing law provides that the
annual amount of the capital investment incentive would be
the local agency's share of the property tax on the
facility's assessed value in excess of $150 million.
Existing law also provides that the proponent must enter
into a community services agreement with the local agency,
which shall include the payment by the proponent to the
local agency of a community services fee equal to 25
percent of the capital investment incentive amount, up to
$2 million. Existing law allows multiple agencies to
establish the program (i.e., the county and a city could
establish the program for the same facility).
This bill expands the definition of a qualified
manufacturing facility eligible for local capital
investment incentive payments to include a facility
operated by a business engaged in the manufacturing of
parts or components related to the production of
electricity using solar, wind, biomass, hydropower, or
geothermal resources on or after July 1, 2010.
This bill deletes provisions of current law permitting
school districts to rebate property tax revenue by
participating in a CIIP.
This bill provides that legislative authority for CIIP
programs will sunset January 1, 2017.
This bill replaces outdated references to the Trade and
Commerce Agency with references to the Business,
Transportation and Housing Agency.
Background
Counties and cities can pay a "capital investment incentive
amount" for 15 years to attract qualified manufacturing
facilities. A proponent pays property taxes on no less
than the first $150 million of the facility's value and
then receives a property tax rebate for the taxes paid on
the facility's value above that amount.
In return for this property tax rebate, the proponent must
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pay a community service fee equal to 25 percent of the
capital incentive amount, up to $2 million a year. The
proponent must sign a community services agreement that
spells out the fee, payment conditions, a job creation
plan, and provisions to recapture the incentive payments if
the proponent fails to run the facility as agreed.
A city, special district, or school district may pay the
county or city an amount equal to the amount of property
tax revenue that the local government receives from the
facility's property taxes paid on the facility's value over
$150 million.
To qualify for this tax rebate program, a qualified
manufacturing facility must:
1.Have an initial investment in real and personal property
over $150 million, certified by the State Trade and
Commerce Agency.
2.Be within the county or city offering the capital
incentive program.
3.Be operated by either a high-technology business or a
business that recovers minerals from geothermal
resources.
4.Be engaged in commercial production or manufacture of
products.
The Legislature originally passed the tax rebate program to
help Placer County officials attract an Intel plant, but
they never used the law (SB 566, Thompson, Chapter 616,
Statutes of 1997). Legislators expanded the definition of
a qualified manufacturing facility to include CalEnergy
Company's plan to extract minerals from geothermal brine
(SB 133, Kelley, Chapter 24, Statutes of 1999). While
Imperial County paid some property tax rebates to that
project, CalEnergy was unable to bring the mineral
extraction plant into operation and the rebates were
subsequently repaid to the County. With the exception of
this one unsuccessful attempt, the tax rebate program has
never been used. Imperial County officials want to use the
program to attract manufacturers of components for
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renewable electricity generation technologies.
Prior Legislation
Three recent attempts to extend the CIIP's reach, and one
recent attempt to repeal the CIIP, have all failed.
Legislators rejected a bill that would have expanded the
definition of a qualified manufacturing facility to include
an electricity plant that uses solar, wind, geothermal,
solid-fuel biomass, or digester gas (AB 2129, Kelley,
2002). Similar legislation to extend the program to
alternative electricity generation plants also failed (AB
1966, Garcia, 2006 and AB 133, Garcia, 2007).
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/18/09)
CalEnergy Operating Corporation
Clean Power Campaign
Imperial County Board of Supervisors
Ormat Technologies
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi,
Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,
Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza,
Miller, Monning, Nava, Nestande, Niello, Nielsen, John A.
Perez, V. Manuel Perez, Portantino, Price, Ruskin, Salas,
Silva, Skinner, Smyth, Solorio, Audra Strickland,
Swanson, Torlakson, Torres, Torrico, Tran, Villines,
Yamada, Bass
NO VOTE RECORDED: Saldana
AGB:nl 8/18/09 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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