BILL ANALYSIS �
AB 796
Page 1
GOVERNOR'S VETO
AB 796 (Blumenfield)
As Amended August 24, 2012
2/3 vote
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| |62-14|(June 1, 2011) |SENATE: |31-2 |(August 29, |
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|ASSEMBLY: | | | | | |
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|ASSEMBLY: |65-13|August 30, 2012 | | | |
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Original Committee Reference: NAT. RES.
SUMMARY : 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 specified clean energy
technologies until January 1, 2018.
The Senate amendments delete the Assembly version of the bill,
and instead:
1)Define several terms.
2)Require CAEATFA to establish the Clean Energy Economy and Jobs
Incentive Program to provide financial assistance to eligible
California-based entities for the manufacturing of specified
clean energy technologies.
AB 796
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3)Require CAEATFA to evaluate project applications based upon
the use of a specific net benefits test, which may include the
following criteria:
a) Meets or exceeds the state's energy and environmental
goals;
b) Promotes in-state commercialization and manufacturing
capacity that will establish California as a leader in
clean energy technologies;
c) Supports in-state manufacturing of eligible clean energy
technology on a scale that is capable of meeting a market
demand; and,
d) Maximizes the leveraging of other funding sources.
4)Authorize a project to be eligible for financial assistance if
the applicant demonstrates, to the satisfaction of CAEATFA,
all of the following:
a) The eligible clean energy technology is significantly
more energy efficient or cost effective than current
comparable products commercially available and has been
researched and developed;
b) The project is for the full-scale commercialization or
manufacture of a product to be used as a part of an
eligible clean energy technology within three years of the
date of the submission of the application;
c) The financial assistance would accelerate the
construction or expansion of the project;
d) The eligible clean technology is manufactured by a
California-based entity that is transitioning from product
development to commercialization; and,
e) Any other criteria established by the authority.
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5)Limit the financial assistance provided to an applicant to no
more than $5 million and to no more than 25% of the project
total as provided by the applicant. CAEATFA may provide
financial assistance of up to $10 million if it provides
notice to the chair of the Joint Legislative Budget Committee
and the chair concurs with the provision of the financial
assistance within 30 days of the notice.
6)Require the financial assistance provided in this bill to only
be provided in partnership with a financial institution.
7)Allow CAEATFA not to implement this bill until the Legislature
appropriates funds to CAEATFA for the purposes of this bill
and private or federal funds are made available to CAEATFA for
the purpose of developing clean energy technology.
8)Require on or before January 1, 2015, the Legislative
Analyst's Office to report to the Joint Legislative Budget
Committee on the effectiveness of the program by evaluating
various specified factors.
9)Require CAEATFA to make every effort to expedite the operation
of this bill and to adopt emergency regulations.
10)Create the Clean Energy Economy and Jobs Incentive Program
Fund (Fund) in the State Treasury.
11)Authorize the Fund to pay for the implementation of the bill
as specified.
12)Authorize CAEATFA to fix fees and other charges to reimburse
the costs of CAEATFA in its administration of this bill.
13)Sunset the bill on January 1, 2018.
EXISTING LAW :
1)Creates 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
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prepayment bonds to fund projects.
2)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.
AS PASSED BY THE ASSEMBLY , this bill:
1)Increased, under the Capital Access Loan Program for Small
Businesses, the combined amount that a participating financial
institution may deposit into any individual loan loss reserve
account over a three-year period to $200,000 if the matching
contribution made by the California Pollution Control
Financing Authority is funded exclusively from funds made
available pursuant to the federal Small Business Jobs Act of
2010 (Public Law 111-240).
2)Created the Clean Energy and Jobs Incentive Program
administered by CAEATFA for the development and expansion of
manufacturing facilities and the installation of specified
energy technologies. The Clean Energy and Jobs Incentive
Program shall provide a loan loss reserve account to a
participating loan institution that would be responsible for
the overall financial structure of the financial assistance
for clean technology manufacturing development and expansion.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)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.
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2)Unknown, significant cost pressures of at least several
million dollars to capitalize a financial assistance program
(unspecified state, federal, and private funds). Actual costs
would depend upon the type and structure of financial
assistance program established by CAEATFA.
COMMENTS : CAEATFA was established in 1980 in the State
Treasurer's Office as a means to encourage the development and
use of equipment using alternative or renewable energy sources.
CAEATFA's authority has since been expanded several times,
including the financing of advanced transportation technologies.
Financial assistance can occur through the issuance of revenue
bonds, loan guarantees, loan loss reserves, and insurance.
As a result of the passage of SB 71 (Padilla), Chapter 10,
Statutes of 2010, CAEATFA is authorized to provide financial
assistance to eligible manufacturers in the form of a sales and
use tax exemption on tangible personal property (such as
manufacturing equipment) used for the design, manufacture,
production, or assembly of advanced transportation technologies
or alternative energy products, components, or systems. CAEATFA
must evaluate project applications for eligibility based upon
certain criteria that encourages manufacturing facilities and
jobs located in California and the reduction of greenhouse gases
beyond the reduction required by federal or state law or
regulation. Projects must meet the "net benefits test" by
showing that the new project will create jobs in the state. If
CAEATFA approves more than $100 million in tax exemptions in one
year, it must provide specified notice to the Legislature before
approving further exemptions. The authority provided under SB 71
will sunset on January 1, 2021.
According to the Senate Appropriations Committee:
In many cases, a financial institution may not be
willing to provide a direct loan to a company that
wishes to manufacture a technology that could be
perceived as untested and a financial risk. This
bill is intended to provide a mechanism to
mitigate the risk associated with financing
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projects involving the manufacture of emerging
clean energy technologies, and retain or attract
clean energy manufacturing jobs in California.
The authority provided in this bill is contingent
upon the availability of funding for the purpose
of developing clean energy technology, and CAEATFA
would not be required to promulgate regulations to
implement the program until funds are appropriated
that would cover initial administrative costs.
The 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.
GOVERNOR'S VETO MESSAGE :
"This bill would create the Clean Energy Economy and Jobs
Incentive Program in order to provide financial assistance for
the manufacturing of clean energy technology projects. Though
well intended, there is no funding source currently available
for this program. It jumps the gun by establishing a program
before we are ready."
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092
FN:
0005938