BILL ANALYSIS �
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THIRD READING
Bill No: AB 796
Author: Blumenfield (D)
Amended: 8/24/12 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
SENATE GOVERNANCE & FINANCE COMMITTEE : 9-0, 6/20/12
AYES: Wolk, Dutton, DeSaulnier, Fuller, Hernandez, Kehoe,
La Malfa, Liu, Yee
SENATE ENERGY, UTILITIES & COMMUNIC. COMM. : 10-0, 7/3/12
AYES: Padilla, Fuller, Corbett, De Le�n, DeSaulnier,
Kehoe, Pavley, Rubio, Strickland, Wright
NO VOTE RECORDED: Berryhill, Emmerson, Simitian
SUBJECT : Financial assistance: Clean Energy Economy and
Jobs
Incentive Program
SOURCE : Author
DIGEST : This bill requires the California Alternative
Energy and Advanced Transportation Financing Authority
(CAEATFA) to establish the Clean Energy Economy and Jobs
Incentive Program to provide financial assistance to
eligible California-based entities for the manufacturing of
eligible technologies until January 1, 2018.
Senate Floor Amendments 8/24/12 Define "Advanced
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transportation technologies" to be consistent with SB 1128
(Padilla; (2) clarify when the State Treasurer's Office
shall implement the provisions of the bill.
ANALYSIS : Existing law creates the CAEATFA for the
purpose of promoting the development and utilization of
alternative energy sources and the development and
commercialization of advanced transportation technologies
and authorizes up to $1 billion in revenue or prepayment
bonds to fund projects.
Existing law authorizes CAEATFA to utilize a
sale/lease-back mechanism with manufacturers which results
in a sales and use tax exemption on tangible personal
property utilized for the design, manufacture, production,
or assembly of advanced transportation technologies or
alternative energy source products, components or systems.
The sales and use tax exemption sunsets on January 1, 2021.
This bill requires CAEATFA to establish the Clean Energy
Economy and Jobs Incentive Program to provide financial
assistance for California-based manufacturers of specified
clean energy technologies. Financial assistance, which
must be provided in partnership with a financial
institution, is defined as loans, loan loss reserves,
interest rate reductions, insurance, guarantees, credit
enhancements, and contributions of money, property, and
labor.
This bill defines Advanced Transportation Technologies, and
states specifically that these technologies must include
emerging commercially competitive transportation-related
technologies but must not include those projects that are
required to be undertaken pursuant to the state or federal
law.
This bill prescribes project eligibility requirements and
requires CAEATFA to evaluate projects using a specified net
benefits test. An applicant may receive up to $5 million
in financial assistance, representing a maximum of 25% of a
project's total capital costs, but CAEATFA may authorize up
to $10 million to an applicant with concurrence from the
Joint Legislative Budget Committee. The bill also requires
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the Legislative Analyst's Office to report to the
Legislature on the effectiveness of the program, measured
by job creation, retention or attraction of businesses to
California, generation of revenue and economic activity,
and specified environmental benefits.
The implementation of this is contingent upon the
availability of unspecified state, federal, and private
funds, and CAEATFA may only initiate the program when the
Legislature appropriates money for this purpose into the
Clean Energy Economy and Jobs Incentive Program Fund,
established by this bill. Up to $300,000 of this amount
may be expended by CAEATFA for initial costs to implement
the program. Ongoing administrative costs may be funded by
fees and charges on program participants. The bill would
sunset on January 1, 2018.
Background
California Alternative Energy Source Financing Authority .
CAEATFA was created in 1980 with an authorization of $200
million in revenue bonds to finance projects utilizing
alternative sources of energy, such as cogeneration, wind
and geothermal power. It was renamed in 1994 as the
CAEATFA and its charge expanded to include the financing of
"advanced transportation" technologies.
During the energy crisis of 2001, its authority was again
expanded, this time to provide financial assistance to
public power entities, independent generators, and others
for new and renewable energy sources, and to develop clean
distributed generation. CAEATFA's board, composed of the
Treasurer, Controller, Director of Finance, Chairperson of
the Energy Commission and President of the PUC, decides
which projects to assist.
SB 71 (Padilla), Chapter 10,Statutes of 2010, allows
expands the authority of CAEATFA to grant a sales and use
tax exemption to an eligible firm that purchases property
necessary to design, produce, manufacture, or assemble
advanced transportation technologies or alternative energy
source products, components, or systems. Selected firms
purchase equipment without paying the sales and use tax
that would normally apply, lowering their cost of capital.
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Neither CAEATFA nor the state is a creditor to the selected
firm in any way under the SB 71 program. Instead, CAEATFA
calculates whether the exemption will yield a net
environmental and economic benefit for the state. Thus
far, CAEATFA has approved $104 million to 33 firms that
applied for the SB 71 benefit, of which 33 firms have
monetized $31.6 million in exemptions. Some of the firms
have purchased the property and deployed it in the
manufacturing process, while others have won the award, but
not yet purchased the equipment.
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.
Related Legislation
SB 1128 (Padilla), authorizes CAEATFA, until July 1, 2016,
to grant financial assistance to eligible projects that
promote the utilization of "advanced manufacturing," as
defined, thereby expanding the sales and use tax exemption
provided under the existing CAEATFA program.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Initial administrative costs to CAEATFA of up to
$300,000 to implement the new program (unspecified
state, federal, and private funds). Ongoing costs are
expected to be covered by fees and charges on applicants
for financial assistance. Potential ongoing cost
pressures if fees and other charges on applicants are
insufficient to fully offset CAEATFA administrative
costs.
Unknown, significant cost pressures of at least several
million dollars to capitalize a financial assistance
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program (unspecified state, federal, and private funds).
Actual costs would depend upon the type and structure
of financial assistance program established by CAEATFA.
The authority provided in this bill is contingent upon the
availability of funding for the purpose of developing clean
energy technology, and CAEATFA will not be required to
promulgate regulations to implement the program until funds
are appropriated that would cover initial administrative
costs. The States Treasurer's Office estimates that the
one-time administrative startup costs necessitated by this
bill would be approximately $300,000. Once fully
implemented, the administration of this program is intended
to be self-funded through a fee imposed on applicants. The
ability of the program to be self-sustaining is dependent
on participation in the program (i.e. there must be
applicants on which a fee may be assessed) and the amount
of the fee.
SUPPORT : (Verified 8/24/12)
CALSTART
Clean Tech San Diego
Environmental Defense Fund
Mohr-Davidow Ventures
Nanosolar
Simbol Materials
Solaria
AGB:d 8/27/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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