BILL ANALYSIS �
AB 1661
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Date of Hearing: May 14, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1661 (Bonta) - As Amended: May 7, 2014
Policy Committee: Local
GovernmentVote:9-0
Revenue & Taxation 8-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill establishes the Healthy Options for Everyone (HOPE)
Act of 2014 to authorize the creation of HOPE Incentive Zones
designed to increase the availability of fresh fruits and
vegetables, and other grown foods. In summary, this bill:
1)Authorizes a city or county to establish by ordinance a HOPE
Incentive Zone for purposes of increasing the availability of
fresh fruits and vegetables, and other grown foods, and
requires the city or county to waive business license fees for
qualified businesses in the zone.
2)Specifies that a HOPE Incentive Zone may only be established
in a geographic area within the boundaries of the city or
county that qualifies as a "food desert" under the US
Department of Agriculture standard, which is defined as a
low-income census tract where at least 33% of the tract's
population or a minimum of 500 people in the tract have low
access to a supermarket or large grocery store, also as
defined.
3)Requires the local government to consider transportation,
population density, population income, accessibility to fresh
foods, population rate of participation in food assistance
programs, population rate of dietary illness, and neglected
real property when establishing a HOPE Incentive Zone.
4)Authorizes the city or county establishing a HOPE Incentive
Zone to enact an ordinance to create incentives for businesses
with at least 80% of their activity consisting of retail sales
AB 1661
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of canned food, dry goods, fresh fruits and vegetables, and
fresh meats, fish, and poultry to conduct business within the
zone.
5)For taxable years beginning on or after January 1, 2015, and
before January 1, 2022, allows a credit under the personal
income tax law and the corporation tax law equal to 20% of the
gross sales within the HOPE Incentive Zones to qualified
businesses that conduct their business primarily within the
zone.
6)For taxable years beginning on or after January 1, 2015, and
before January 1, 2022, increases the net operating loss (NOL)
carryforward period for those qualified businesses from 20 to
25 years.
FISCAL EFFECT
1)Potentially significant GF costs to FTB to administer the
changes to forms and systems.
2)Substantial GF revenue decreases, in the tens of millions of
dollars annually, over the duration of the program.
COMMENTS
1) Purpose. According to the author, this bill would allow
cities and counties to opt into incentives for grocery vendors
to increase the availability of healthy food options in areas
that have been classified as low food access areas or "food
deserts." The author contends many of the most vulnerable
communities are underserved by full-service grocers and
otherwise lack access to fresh foods.
The author argues the lack of access to affordable and
nutritious food contributes to higher rates of diabetes, heart
disease, obesity, and other diet-related problems and
illnesses in those communities. Existing law does not provide
incentives for healthy and fresh food vendors to move into
food deserts. Without a change, residents of food deserts
will continue to suffer in isolation from nutritious food
resources.
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2) Comparison with Enterprise Zones. While the objectives and
the scope of incentives created by this bill are more limited
than those offered in the now-defunct Enterprise Zone program,
the HOPE Incentive Zone program is similar in certain ways.
The bill provides state tax incentives to businesses operating
within a zone, and relieves them of local licensing fees.
These incentives are available to qualified businesses already
established within a zone as well as those that relocate or
open in the zone. As a result, this bill will reward
businesses already operating in HOPE Incentive Zones without
any further investment by those businesses in their food
offering. The ongoing reward to existing businesses was one
of the primary critiques of Enterprise Zones as it did little
or nothing to further the broader goals of the program.
3) California's Food Deserts. According to data from the US
Department of Agriculture, there are likely more than 350
census tracts in California that would qualify as food deserts
under the federal standard, with some of the larger geographic
counties, such as San Bernardino and Riverside, having more
than 40 each. By contrast, California had only 42 Enterprise
Zones at the time it repealed that program.
Given the large number of potential HOPE Incentive Zones made
possible by this bill, and the limited success of Enterprise
Zones previously, the Committee may wish to consider whether a
more targeted program would be preferable. A smaller program
would allow the Legislature to better understand the overall
impact and likelihood of success before allowing all
California food deserts to qualify.
Analysis Prepared by : Joel Tashjian / APPR. / (916) 319-2081