BILL ANALYSIS
AB 1554
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Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel Perez, Chair
AB 1554 (Economic Development Committee) - As Introduced:
March 11, 2009
SUBJECT : Geographically Targeted Economic Development Areas
code maintenance
SUMMARY : This bill makes technical changes to the statutes
related to the Geographically Targeted Economic Development
Areas (G-TEDAs). Specifically, the bill:
1)Makes grammatical corrections.
2)Revises the due date, by which the California Department of
Housing and Community Development (HCD) must submit the
required 5-year report, to reflect only those years HCD
administered the programs and excludes the years when the now
defunct Technology, Trade and Commerce Agency administered the
G-TEDA programs.
3)Eliminates an obsolete reference to an annual work plan.
EXISTING LAW : Provides for the establishment of G-TEDA programs
to stimulate business and industrial growth, and create jobs in
depressed areas of the state. Specifically, existing law:
1)Establishes the Enterprise Zone (EZ) Program with a maximum of
42 EZs, each designated for an initial 15-year period by HCD.
HCD is authorized to approve one five-year extension for EZs
designated prior to January 1, 1990.
2)Establishes the Local Agency Military Base Realignment Area
(LAMBRA) Program with a maximum of eight LAMBRAs, each
designated for an eight-year period by HCD. Limits
designation to one LAMBRA per geographical region of the
state.
3)Establishes the Manufacturing Enhancement Area (MEA) Program
with a maximum of two MEAs, each designated for a 14-year
period by HCD. Limits MES designation to impoverished areas
along the California-Mexico border.
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4)Established the Targeted Tax Area (TTA) Program, administered
by HCD, within the County of Tulare for a 15-year period.
FISCAL EFFECT : Unknown.
COMMENTS :
1)Purpose of the bill : This bill is a reintroduction of AB 1720
(Arambula) from 2008. To the committee's knowledge, there
were no controversial issues, the bill simply fell victim to
the budget delay. Committees typically carry measures that
are code clean up bills that contain technical changes. The
bill makes technical, changes to the Government Code
pertaining to G-TEAs. Nothing in this bill is intended to be
controversial. If language becomes controversial, it will be
removed.
2)Status report on the G-TEDA programs : The EZ program and the
other G-TEDAs are among the largest state economic development
programs in California. HCD administers four G-TEDA programs
including programs for the EZs, MEAs, LAMBRAs, and one TTA.
The G-TEDA programs are based on the principle that targeting
significant economic incentives to low-income communities
allows these communities to more effectively compete for new
businesses and retain existing businesses, resulting in
increased tax revenues, less reliance on social services, and
lower public safety costs. Residents and businesses also
directly benefit from these more sustainable economic
conditions through improved neighborhoods, business expansion,
and job creation.
Under the G-TEDA programs, businesses and other entities
located within targeted areas are eligible for a variety of
local and state provided incentives. Local governments often
write down the costs of development. They may also fund
related infrastructure improvements, provide job training to
prospective employees, or establish a streamlined process of
obtaining permits. Additionally, the state offers a number of
incentives, including: tax credits; special tax provisions;
priority notification when selling state surplus lands; access
to certain brownfield clean-up programs; and, preferential
treatment for state contracts.
The Assembly Committee on Jobs, Economic Development, and the
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Economy (JEDE), and the Assembly Revenue and Taxation
Committee (R&T) undertook a comprehensive, four-month
examination of the EZ Program and other G-TEDAs during the
2005-06 Session. A summary of the hearing can be found on the
JEDE website at: www.assembly.ca.gov . AB 1550 (Arambula and
Karnette), Chapter 718, Statutes of 2006 was enacted to
implement many of the management and oversight related
recommendations from these hearings. This bill currently
provides a vehicle for non-controversial clean-up to AB 1550.
4 Related legislation : Below is a list of bills relating to tax
incentives.
a) AB 579 (Swanson): Chapter 529, Statutes of 2007: This
bill authorizes a financial institution to claim an
investment credit for loans made to a business located in a
LAMBRA.
b) AB 1134 (Dymally): This bill authorizes the Office of
Statewide Health Planning and Development to designate up
to 10 medical enterprise zones in medically underserved
areas. Status: Filed with the Chief Clerk pursuant to
Joint Rule 56.
c) AB 1398 (Arambula) : This bill harmonizes the hiring
credit requirements between the EZ, LAMBRA, TTA, and the
MEA. Status: Filed with the Chief Clerk pursuant to Joint
Rule 56.
d) AB 1651 (Arambula) : This bill authorizes a tax credit
for tax payers located in an enterprise zones for capital
outlay projects that achieve superior environmental
efficiencies. Status: Filed with the Chief Clerk pursuant
to Joint Rule 56.
e) SB 341 (Lowenthal) : Chapter 643, Statutes of 2007:
This bill expands the methods by which an initially
designated EZ may meet the requirements of the California
Environmental Quality Act by authorizing the use of
negative declarations and mitigated negative declarations.
f) AB 1550 (Arambula) : Chapter 718, Statutes of 2006: This
bill makes a number of significant changes to the
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management and oversight of the G-TEDA programs. This bill
is the result of extensive oversight hearings by JEDE and
R&T, and extended discussions with stakeholder groups.
g) AB 2398 (Maze ): Chapter 423, Statutes of 2004: This
bill allows for the expansion of a targeted tax area (TTA)
territory by up to 15% upon meeting specified criteria.
Adds additional incentives to the TTA program.
h) SB 763 (Lowenthal) : Chapter 634, Statutes of 2006: This
bill expands HCD's fee authority for the purpose of
off-setting the cost of administering the G-TEDA programs.
REGISTERED SUPPORT / OPPOSITION :
Support
Assembly Committee on Jobs, Economic Development, and the
Economy, (sponsor)
Opposition
None received
Analysis Prepared by : Toni Symonds / Mercedes Flores / J.,
E.D. & E. / (916) 319-2090