Amended in Assembly June 25, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2389

Introduced by Assembly Member begin delete Campos end delete begin insert Fox end insert

begin insert

(Principal Coauthors: Assembly Members Campos, Muratsuchi, Quirk-Silva, and Salas)

end insert begin insert

(Principal Coauthors: Senators Knight and Lieu)

end insert begin insert

(Coauthors: Assembly Members Achadjian, Alejo, Atkins, Bloom, Bocanegra, Bradford, Ian Calderon, Chau, Conway, Cooley, Dababneh, Dickinson, Gorell, Gray, Hall, Harkey, Linder, Maienschein, Medina, Nazarian, Olsen, Pan, Perea, John A. Pérez, V. Manuel Pérez, and Wilk)

end insert begin insert

(Coauthors: Senators Anderson, Berryhill, Cannella, Correa, Fuller, Gaines, Huff, Lara, Nielsen, Padilla, Roth, Vidak, and Walters)

end insert

February 21, 2014

begin delete An act to amend Section 2333.5 of the Streets and Highways Code, relating to transportation, and declaring the urgency thereof, to take effect immediately. end delete begin insert An act to amend Section 51298.5 of, and to amend, repeal, and add Section 51298 of, the Government Code, and to add Section 23636 to the Revenue and Taxation Code, relating to economic development, and declaring the urgency thereof, to take effect immediately. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 2389, as amended, begin delete Campos end delete   begin insert Fox end insert . begin delete Safe routes to school. end delete begin insert Local government: capital investment incentive programs: corporation tax credits: qualified wages: new advanced strategic aircraft program. end insert

begin insert

Existing law authorizes a county, city and county, or city to establish a capital investment incentive program, pursuant to which the county, city and county, or city is authorized to pay a capital investment incentive amount, as defined, that does not exceed the amount of property tax derived from the assessed value of that portion of a qualified manufacturing facility that exceeds $150,000,000, to a proponent of a qualified manufacturing facility. A “qualified manufacturing facility” is defined to include a facility operated by a business described in specified provisions of the Standard Industrial Classification Manual. Existing law requires the Business, Transportation and Housing Agency, or its successor, to certify qualified manufacturing facilities for purposes of these provisions and to carry out various oversight duties. Existing law repeals these provisions on January 1, 2017.

end insert begin insert

This bill would, until July 1, 2015, reduce the assessed value threshold for calculating the capital investment incentive amount from $150,000,000 to $25,000,000 and would define “qualified manufacturing facility” to include, among others, facilities operated by certain businesses described in specified provisions of the North American Industry Classification System Manual. The bill would transfer the duties of the Business, Transportation and Housing Agency to the Governor’s Office of Business and Economic Development (GO-Biz). The bill would, on July 1, 2015, restore the existing provisions relating to the capital investment threshold amount and the definition of “qualified manufacturing facility,” but would maintain the transfer of duties to Go-Biz. The bill would instead repeal these provisions on January 1, 2018. The bill would also replace obsolete references in those restored provisions to the Standard Industrial Classification Manual with corresponding references to the North American Industry Classification System Manual.

end insert begin insert

The Corporation Tax Law allows various credits against the taxes imposed by that law.

end insert begin insert

This bill would, for taxable years beginning on or after January 1, 2015, and before January 1, 2030, allow, with regard to the manufacture of a new advanced strategic aircraft for the United States Air Force, a credit against the taxes imposed under that law for 171⁄2% of qualified wages, as defined, paid or incurred by the qualified taxpayer, as defined, to qualified full-time employees, award the credit on a first-come-first-served basis, and provide that the credit have a phased aggregate cap ranging from $25,000,000 to $31,000,000 per calendar year, as specified.

end insert begin insert

This bill would declare that it is to take effect immediately as an urgency statute.

end insert begin delete

Existing law requires the Department of Transportation, in consultation with the Department of the California Highway Patrol, to establish and administer a safe routes to school program for construction of bicycle and pedestrian safety and traffic calming projects. These provisions become inoperative on July 1, 2014, and are repealed on January 1, 2015.

end delete begin delete

Existing law also creates the Active Transportation Program in the Department of Transportation to fund various transportation projects and programs relating to biking, walking, and other nonmotorized activities, with funds allocated by the California Transportation Commission, as specified. Existing law provides that safe routes to school projects are to be included among the types of projects eligible for funding under the Active Transportation Program.

end delete begin delete

This bill would extend the date that the specific provisions governing the safe routes to school program become inoperative, to July 1, 2015, and the date that these provisions are repealed, to January 1, 2016.

end delete begin delete

This bill would declare that it is to take effect immediately as an urgency statute.

end delete

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 51298 of the end insert begin insert Government Code end insert begin insert is
amended to read: end insert

51298.  

It is the intent of the Legislature in enacting this chapter
to provide local governments with opportunities to attract large
manufacturing facilities to invest in their communities and to
encourage industries, such as high technology, aerospace,
automotive, biotechnology, software, environmental sources, and
others, to locate and invest in those facilities in California.

(a) Commencing in the 1998-99 fiscal year, the governing body
of a county, city and county, or city, may, by means of an ordinance
or resolution approved by a majority of its entire membership,
elect to establish a capital investment incentive program. In any
county, city and county, or city in which the governing body has
so elected, the county, city and county, or city shall, upon the
approval by a majority of the entire membership of its governing
body of a written request therefor, pay a capital investment
incentive amount to the proponent of a qualified manufacturing
facility for up to 15 consecutive fiscal years. A request for the
payment of capital investment incentive amounts shall be filed by
a proponent in writing with the governing body of an electing
county, city and county, or city in the time and manner specified
in procedures adopted by that governing body. In the case in which
the governing body of an electing county, city and county, or city
approves a request for the payment of capital investment incentive
amounts, both of the following conditions shall apply:

(1) The consecutive fiscal years during which a capital
investment incentive amount is to be paid shall commence with
the first fiscal year commencing after the date upon which the
qualified manufacturing facility is certified for occupancy or, if
no certification is issued, the first fiscal year commencing after
the date upon which the qualified manufacturing facility
commences operation.

(2) In accordance with paragraph (4) of subdivision (d), the
annual payment to a proponent of each capital investment incentive
amount shall be contingent upon the proponent’s payment of a
community services fee.

(b) For purposes of this section:

(1) “Qualified manufacturing facility” means a proposed
manufacturing facility that meets all of the following criteria:

(A) The proponent’s initial investment in that facility, in real
and personal property, necessary for the full and normal operation
of that facility, made pursuant to the capital investment incentive
program, that comprises any portion of that facility or has its situs
at that facility, exceeds one hundred fifty million dollars
($150,000,000). Compliance with this subparagraph shall be
certified by the begin delete Business, Transportation end delete begin insert Governor’s Office of
Business end insert and begin delete Housing Agency end delete begin insert Economic Development end insert upon the
begin delete agency’s end delete begin insert director’s end insert approval of a proponent’s application for
certification of a qualified manufacturing facility. An application
for certification shall be submitted by a proponent to the begin delete agency end delete
begin insert Governor’s Office of Business and Economic Development end insert in
writing in the time and manner as specified by the begin delete agency. end delete begin insert director. end insert

(B) The facility is to be located within the jurisdiction of the
electing county, city and county, or city to which the request is
made for payment of capital investment incentive amounts.

(C) The facility is operated by any of the following:

(i) A business described begin delete in Codes 3500 to 3899, inclusive, end delete begin insert within
Code 3359 or 3364 end insert of the begin delete Standard Industrial end delete begin insert 2012 North American
Industry end insert Classification begin delete (SIC) end delete begin insert System (NAICS) end insert Manual published
by the United States Office of Management and begin delete Budget, 1987
edition, except that “January 1, 1997,” shall be substituted for
“January 1, 1994,” in each place in which it appears. end delete begin insert Budget. end insert

(ii) A business engaged in the recovery of minerals from
geothermal resources, including the proportional amount of a
geothermal electric generating plant that is integral to the recovery
process by providing electricity for it.

(iii) 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.

(D) The proponent is begin delete either end delete currently engaged in begin delete commercial
production or engaged in the perfection end delete begin insert any end insert of the begin delete manufacturing
process, or the perfection of a product intended to be manufactured. end delete
begin insert following: end insert

begin insert

(i) Commercial production.

end insert begin insert

(ii) The perfection of the manufacturing process.

end insert begin insert

(iii) The perfection of a product intended to be manufactured.

end insert

(2) “Proponent” means a party or parties that meet all of the
following criteria:

(A) The party is named in the application to the county, city
and county, or city within which the qualified manufacturing
facility would be located for a permit to construct a qualified
manufacturing facility.

(B) The party will be the fee owner of the qualified
manufacturing facility upon the completion of that facility.
Notwithstanding the previous sentence, the party may enter into
a sale-leaseback transaction and nevertheless be considered the
proponent.

(C) If a proponent that is receiving capital investment incentive
amounts subsequently leases the subject qualified manufacturing
facility to another party, the lease may provide for the payment to
that lessee of any portion of a capital investment incentive amount.
Any lessee receiving any portion of a capital investment incentive
amount shall also be considered a proponent for the purposes of
subdivision (d).

(3) “Capital investment incentive amount” means, with respect
to a qualified manufacturing facility for a relevant fiscal year, an
amount up to or equal to the amount of ad valorem property tax
revenue derived by the participating local agency from the taxation
of that portion of the total assessed value of that real and personal
property described in subparagraph (A) of paragraph (1) that is in
excess of begin delete one hundred fifty end delete begin insert twenty-five end insert million dollars
begin delete ($150,000,000). end delete begin insert ($25,000,000). end insert

(4) “Manufacturing” means the activity of converting or
conditioning property by changing the form, composition, quality,
or character of the property for ultimate sale at retail or use in the
manufacturing of a product to be ultimately sold at retail.
Manufacturing includes any improvements to tangible personal
property that result in a greater service life or greater functionality
than that of the original property.

(c) A city or special district may, upon the approval by a
majority of the entire membership of its governing body, pay to
the county, city and county, or city an amount equal to the amount
of ad valorem property tax revenue allocated to that city or special
district, but not the actual allocation, derived from the taxation of
that portion of the total assessed value of that real and personal
property described in subparagraph (A) of paragraph (1) of
subdivision (b) that is in excess of begin delete one hundred fifty end delete begin insert twenty-five end insert
million dollars begin delete ($150,000,000). end delete begin insert ($25,000,000). end insert

(d) A proponent whose request for the payment of capital
investment incentive amounts is approved by an electing county,
city and county, or city shall enter into a community services
agreement with that county, city and county, or city that includes,
but is not limited to, all of the following provisions:

(1) A provision requiring that a community services fee be
remitted by the proponent to the county, city and county, or city,
in each fiscal begin delete year subject to the agreement, end delete begin insert year, end insert in an amount
that is equal to 25 percent of the capital investment incentive
amount calculated for that proponent for that fiscal year, except
that in no fiscal year shall the amount of the community services
fee exceed two million dollars ($2,000,000).

(2) A provision specifying the dates in each relevant fiscal year
upon which payment of the community services fee is due and
delinquent, and the rate of interest to be charged to a proponent
for any delinquent portion of the community services fee amount.

(3) A provision specifying the procedures and rules for the
determination of underpayments or overpayments of a community
services fee, for the appeal of determinations of any underpayment,
and for the refunding or crediting of any overpayment.

(4) A provision specifying that a proponent is ineligible to
receive a capital investment incentive amount if that proponent is
currently delinquent in the payment of any portion of a community
services fee amount, if the qualified manufacturing facility is
constructed in a manner materially different from the facility as
described in building permit application materials, or if the facility
is no longer operated as a qualified manufacturing facility meeting
the requirements of paragraph (1) of subdivision (b). If a proponent
becomes ineligible to receive a capital investment incentive amount
as a result of an agreement provision included pursuant to this
subparagraph, the running of the number of consecutive fiscal
years specified in an agreement made pursuant to subdivision (a)
is not tolled during the period in which the proponent is ineligible.

(5) A provision that sets forth a job creation plan with respect
to the relevant qualified manufacturing facility. The plan shall
specify the number of jobs to be created by that facility, and the
types of jobs and compensation ranges to be created thereby. The
plan shall also specify that for the entire term of the community
services agreement, both of the following shall apply:

(A) All of the employees working at the qualified manufacturing
facility shall be covered by an employer-sponsored health benefits
begin delete plan. end delete begin insert plan, with the exception of any employee who was offered
but declined coverage due to other available group coverage. end insert

(B) The average weekly wage, exclusive of overtime, paid to
all of the employees working at the qualified manufacturing
facility, who are not management or supervisory employees, shall
be not less than the state average weekly wage.

For the purpose of this subdivision, “state average weekly wage”
means the average weekly wage paid by employers to employees
covered by unemployment insurance, as reported to the
Employment Development Department for the four calendar
quarters ending June 30 of the preceding calendar year.

(6) (A)   In the case in which the proponent fails to operate the
qualified manufacturing facility as required by the community
services agreement, a provision that requires the recapture of any
portion of any capital investment incentive amounts previously
paid to the proponent equal to the lesser of the following:

(i) All of the capital investment incentive amounts paid to the
proponent, less all of the community services fees received from
the proponent, and less any capital investment incentive amounts
previously recaptured.

(ii) The last capital investment incentive amount paid to the
proponent, less the last community services fee received from the
proponent, multiplied by 40 percent of the number of years
remaining in the community services agreement, but not to exceed
10 years, and less any capital investment incentive amounts
previously recaptured.

(B) If the proponent fails to operate the qualified manufacturing
facility as required by the community services agreement, the
county, city and county, or city may, upon a finding that good
cause exists, waive any portion of the recapture of any capital
investment incentive amount due under this subdivision. For the
purpose of this subdivision, good cause includes, but is not limited
to, the following:

(i) The proponent has sold or leased the property to a person
who has entered into an agreement with the county, city and
county, or city to assume all of the responsibilities of the proponent
under the community services agreement.

(ii) The qualified manufacturing facility has been rendered
inoperable and beyond repair as a result of an act of begin delete God. end delete begin insert God,
civil disorder, failure of power, riots, insurrections, war, acts of
terrorism, or any other causes, whether the kind herein enumerated
or otherwise, not within the control of the qualified manufacturing
facility claiming good cause, which restrict or interfere with a
qualified manufacturing facility’s ability to timely perform, and
which by the exercise of reasonable due diligence, such party is
or would have been unable to prevent or overcome. end insert

(C) For purposes of this subdivision, failure to operate a
qualified manufacturing facility as required by the community
services agreement includes, but is not limited to, failure to
establish the number of jobs specified in the jobs creation plan
created pursuant to paragraph (5).

(e) (1)   Each county, city and county, or city that elects to
establish a capital investment incentive program shall notify the
begin delete Business, Transportation end delete begin insert Governor’s Office of Business end insert and
begin delete Housing Agency end delete begin insert Economic Development end insert of its election to do so
no later than June 30th of the fiscal year in which the election was
made.

(2) In addition to the information required to be reported
pursuant to paragraph (1), each county, city and county, or city
that has elected to establish a capital investment incentive program
shall notify the begin delete Business, Transportation end delete begin insert Governor’s Office of
Business end insert and begin delete Housing Agency end delete begin insert Economic Development end insert each fiscal
year no later than June 30th of the amount of any capital investment
incentive payments made and the proponent of the qualified
manufacturing facility to whom the payments were made during
that fiscal year.

(3) The begin delete Business, Transportation end delete begin insert Governor’s Office of Business end insert
and begin delete Housing Agency end delete begin insert Economic Development end insert shall compile the
information submitted by each county, city and county, and city
pursuant to paragraphs (1) and (2) and submit a report to the
Legislature containing this information no later than October 1,
every two years commencing October 1, 2000.

(f) This section shall become begin delete operative end delete begin insert inoperative end insert on July 1,
begin delete 2013. end delete begin insert 2015. end insert

begin insert

(g) A capital investment incentive program established pursuant
to this section before the effective date of the act adding this
subdivision may remain in effect for the full term of that program.

end insert begin insert

(h) This section is repealed on January 1, 2016.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 51298 is added to the end insert begin insert Government Code end insert begin insert , to
read: end insert

begin insert

begin insert 51298. end insert   

It is the intent of the Legislature in enacting this chapter
to provide local governments with opportunities to attract large
manufacturing facilities to invest in their communities and to
encourage industries, such as high technology, aerospace,
automotive, biotechnology, software, environmental sources, and
others, to locate and invest in those facilities in California.

(a) Commencing in the 1998-99 fiscal year, the governing body
of a county, city and county, or city, may, by means of an ordinance
or resolution approved by a majority of its entire membership,
elect to establish a capital investment incentive program. In any
county, city and county, or city in which the governing body has
so elected, the county, city and county, or city shall, upon the
approval by a majority of the entire membership of its governing
body of a written request therefor, pay a capital investment
incentive amount to the proponent of a qualified manufacturing
facility for up to 15 consecutive fiscal years. A request for the
payment of capital investment incentive amounts shall be filed by
a proponent in writing with the governing body of an electing
county, city and county, or city in the time and manner specified
in procedures adopted by that governing body. In the case in which
the governing body of an electing county, city and county, or city
approves a request for the payment of capital investment incentive
amounts, both of the following conditions shall apply:

(1) The consecutive fiscal years during which a capital
investment incentive amount is to be paid shall commence with
the first fiscal year commencing after the date upon which the
qualified manufacturing facility is certified for occupancy or, if
no certification is issued, the first fiscal year commencing after
the date upon which the qualified manufacturing facility
commences operation.

(2) In accordance with paragraph (4) of subdivision (d), the
annual payment to a proponent of each capital investment incentive
amount shall be contingent upon the proponent’s payment of a
community services fee.

(b) For purposes of this section:

(1) “Qualified manufacturing facility” means a proposed
manufacturing facility that meets all of the following criteria:

(A) The proponent’s initial investment in that facility, in real
and personal property, necessary for the full and normal operation
of that facility, made pursuant to the capital investment incentive
program, that comprises any portion of that facility or has its situs
at that facility, exceeds one hundred fifty million dollars
($150,000,000). Compliance with this subparagraph shall be
certified by the Governor’s Office of Business and Economic
Development upon the director’s approval of a proponent’s
application for certification of a qualified manufacturing facility.
An application for certification shall be submitted by a proponent
to the Governor’s Office of Business and Economic Development
in writing in the time and manner as specified by the director.

(B) The facility is to be located within the jurisdiction of the
electing county, city and county, or city to which the request is
made for payment of capital investment incentive amounts.

(C) The facility is operated by any of the following:

(i) A business described in Codes 3321 to 3399, inclusive, or
Codes 541711 or 541712 of the 2012 North American Industry
Classification System (NAICS) Manual published by the United
States Office of Management and Budget.

(ii) A business engaged in the recovery of minerals from
geothermal resources, including the proportional amount of a
geothermal electric generating plant that is integral to the recovery
process by providing electricity for it.

(iii) 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.

(D) The proponent is currently engaged in any of the following:

(i) Commercial production.

(ii) The perfection of the manufacturing process.

(iii) The perfection of a product intended to be manufactured.

(2) “Proponent” means a party or parties that meet all of the
following criteria:

(A) The party is named in the application to the county, city and
county, or city within which the qualified manufacturing facility
would be located for a permit to construct a qualified
manufacturing facility.

(B) The party will be the fee owner of the qualified
manufacturing facility upon the completion of that facility.
Notwithstanding the previous sentence, the party may enter into
a sale-leaseback transaction and nevertheless be considered the
proponent.

(C) If a proponent that is receiving capital investment incentive
amounts subsequently leases the subject qualified manufacturing
facility to another party, the lease may provide for the payment to
that lessee of any portion of a capital investment incentive amount.
Any lessee receiving any portion of a capital investment incentive
amount shall also be considered a proponent for the purposes of
subdivision (d).

(3) “Capital investment incentive amount” means, with respect
to a qualified manufacturing facility for a relevant fiscal year, an
amount up to or equal to the amount of ad valorem property tax
revenue derived by the participating local agency from the taxation
of that portion of the total assessed value of that real and personal
property described in subparagraph (A) of paragraph (1) that is
in excess of one hundred fifty million dollars ($150,000,000).

(4) “Manufacturing” means the activity of converting or
conditioning property by changing the form, composition, quality,
or character of the property for ultimate sale at retail or use in
the manufacturing of a product to be ultimately sold at retail.
Manufacturing includes any improvements to tangible personal
property that result in a greater service life or greater functionality
than that of the original property.

(c) A city or special district may, upon the approval by a
majority of the entire membership of its governing body, pay to
the county, city and county, or city an amount equal to the amount
of ad valorem property tax revenue allocated to that city or special
district, but not the actual allocation, derived from the taxation of
that portion of the total assessed value of that real and personal
property described in subparagraph (A) of paragraph (1) of
subdivision (b) that is in excess of one hundred fifty million dollars
($150,000,000).

(d) A proponent whose request for the payment of capital
investment incentive amounts is approved by an electing county,
city and county, or city shall enter into a community services
agreement with that county, city and county, or city that includes,
but is not limited to, all of the following provisions:

(1) A provision requiring that a community services fee be
remitted by the proponent to the county, city and county, or city,
in each fiscal year, in an amount that is equal to 25 percent of the
capital investment incentive amount calculated for that proponent
for that fiscal year, except that in no fiscal year shall the amount
of the community services fee exceed two million dollars
($2,000,000).

(2) A provision specifying the dates in each relevant fiscal year
upon which payment of the community services fee is due and
delinquent, and the rate of interest to be charged to a proponent
for any delinquent portion of the community services fee amount.

(3) A provision specifying the procedures and rules for the
determination of underpayments or overpayments of a community
services fee, for the appeal of determinations of any underpayment,
and for the refunding or crediting of any overpayment.

(4) A provision specifying that a proponent is ineligible to
receive a capital investment incentive amount if that proponent is
currently delinquent in the payment of any portion of a community
services fee amount, if the qualified manufacturing facility is
constructed in a manner materially different from the facility as
described in building permit application materials, or if the facility
is no longer operated as a qualified manufacturing facility meeting
the requirements of paragraph (1) of subdivision (b). If a proponent
becomes ineligible to receive a capital investment incentive amount
as a result of an agreement provision included pursuant to this
subparagraph, the running of the number of consecutive fiscal
years specified in an agreement made pursuant to subdivision (a)
is not tolled during the period in which the proponent is ineligible.

(5) A provision that sets forth a job creation plan with respect
to the relevant qualified manufacturing facility. The plan shall
specify the number of jobs to be created by that facility, and the
types of jobs and compensation ranges to be created thereby. The
plan shall also specify that for the entire term of the community
services agreement, both of the following shall apply:

(A) All of the employees working at the qualified manufacturing
facility shall be covered by an employer-sponsored health benefits
plan, with the exception of any employee who was offered but
declined coverage due to other available group coverage.

(B) The average weekly wage, exclusive of overtime, paid to all
of the employees working at the qualified manufacturing facility,
who are not management or supervisory employees, shall be not
less than the state average weekly wage. For the purpose of this
subdivision, “state average weekly wage” means the average
weekly wage paid by employers to employees covered by
unemployment insurance, as reported to the Employment
Development Department for the four calendar quarters ending
June 30 of the preceding calendar year.

(6) (A) In the case in which the proponent fails to operate the
qualified manufacturing facility as required by the community
services agreement, a provision that requires the recapture of any
portion of any capital investment incentive amounts previously
paid to the proponent equal to the lesser of the following:

(i) All of the capital investment incentive amounts paid to the
proponent, less all of the community services fees received from
the proponent, and less any capital investment incentive amounts
previously recaptured.

(ii) The last capital investment incentive amount paid to the
proponent, less the last community services fee received from the
proponent, multiplied by 40 percent of the number of years
remaining in the community services agreement, but not to exceed
10 years, and less any capital investment incentive amounts
previously recaptured.

(B) If the proponent fails to operate the qualified manufacturing
facility as required by the community services agreement, the
county, city and county, or city may, upon a finding that good
cause exists, waive any portion of the recapture of any capital
investment incentive amount due under this subdivision. For the
purpose of this subdivision, good cause includes, but is not limited
to, the following:

(i) The proponent has sold or leased the property to a person
who has entered into an agreement with the county, city and
county, or city to assume all of the responsibilities of the proponent
under the community services agreement.

(ii) The qualified manufacturing facility has been rendered
inoperable and beyond repair as a result of an act of God, civil
disorder, failure of power, riots, insurrections, war, acts of
terrorism, or any other causes, whether the kind herein enumerated
or otherwise, not within the control of the qualified manufacturing
facility claiming good cause, which restrict or interfere with a
qualified manufacturing facility’s ability to timely perform, and
which by the exercise of reasonable due diligence, such party is
or would have been unable to prevent or overcome.

(C) For purposes of this subdivision, failure to operate a
qualified manufacturing facility as required by the community
services agreement includes, but is not limited to, failure to
establish the number of jobs specified in the jobs creation plan
created pursuant to paragraph (5).

(e) (1) Each county, city and county, or city that elects to
establish a capital investment incentive program shall notify the
Governor’s Office of Business and Economic Development of its
election to do so no later than June 30th of the fiscal year in which
the election was made.

(2) In addition to the information required to be reported
pursuant to paragraph (1), each county, city and county, or city
that has elected to establish a capital investment incentive program
shall notify the Governor’s Office of Business and Economic
Development each fiscal year no later than June 30th of the amount
of any capital investment incentive payments made and the
proponent of the qualified manufacturing facility to whom the
payments were made during that fiscal year.

(3) The Governor’s Office of Business and Economic
Development shall compile the information submitted by each
county, city and county, and city pursuant to paragraphs (1) and
(2) and submit a report to the Legislature containing this
information no later than October 1, every two years commencing
October 1, 2016.

(f) This section shall become operative on July 1, 2015.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 51298.5 of the end insert begin insert Government Code end insert begin insert is amended
to read: end insert

51298.5.  

(a) This chapter shall remain in effect only until
January 1, begin delete 2017, and as of that date is repealed, unless a later
enacted statute, that is enacted before January 1, 2017, deletes or
extends that date. end delete begin insert 2018. end insert

(b) A capital investment incentive program established pursuant
to this chapter before January 1, begin delete 2017, end delete begin insert 2018, end insert may remain in effect
for the full term of that program, regardless of the repeal of this
chapter.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 23636 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

begin insert

begin insert 23636. end insert   

(a) For each taxable year beginning on or after
January 1, 2015, and before January 1, 2030, a qualified taxpayer
shall be allowed a credit against the “tax,” as defined in Section
23036, in an amount equal to 171⁄2 percent of qualified wages paid
or incurred by the qualified taxpayer during the taxable year to
qualified full-time employees multiplied by the annual full-time
equivalent ratio.

(b) For purposes of this section:

(1) “Annual full-time equivalent” means either of the following:

(A) In the case of a qualified full-time employee paid hourly
qualified wages, “annual full-time equivalent” means the total
number of hours worked for the qualified taxpayer by the qualified
full-time employee, not to exceed 2,000 hours per employee, divided
by 2,000.

(B) In the case of a salaried qualified full-time employee,
“annual full-time equivalent” means the total number of weeks
worked for the qualified taxpayer by the qualified employee divided
by 52.

(2) “Annual full-time equivalent ratio” means a ratio, the
numerator of which is 1,100 and the denominator of which is the
number of a qualified taxpayer’s qualified full-time employees
computed on an annual full-time equivalent basis for the taxable
year. The annual full-time equivalent ratio may not be greater
than one.

(3) “Qualified full-time employee” means an individual that is
employed in this state by the qualified taxpayer and satisfies both
of the following:

(A) The individual’s services for the qualified taxpayer are at
least 80 percent directly related to the qualified taxpayer’s
subcontract to design, test, manufacture property, or otherwise
support production of property for ultimate use in or as a
component of a new advanced strategic aircraft for the United
States Air Force.

(B) The individual is paid compensation from the qualified
taxpayer that satisfies either of the following conditions:

(i) Is qualified wages paid by the qualified taxpayer for services
not less than an average of 35 hours per week.

(ii) Is a salary paid by the qualified taxpayer as compensation
during the taxable year for full-time employment, within the
meaning of Section 515 of the Labor Code.

(4) “Qualified taxpayer” means any taxpayer that is a major
first-tier subcontractor awarded a subcontract to manufacture
property for ultimate use in or as a component of a new advanced
strategic aircraft for the United States Air Force. For purposes of
this paragraph, the term “major first-tier subcontractor” means
a subcontractor that was awarded a subcontract in an amount of
at least 35 percent of the amount of the initial prime contract
awarded for the manufacturing of a new advanced strategic
aircraft for the United States Air Force.

(5) “Qualified wages” means wages paid or incurred by the
qualified taxpayer during the taxable year with respect to qualified
full-time employees that are direct labor costs, within the meaning
of Section 263A of the Internal Revenue Code, relating to
capitalization and inclusion in inventory costs of certain expenses,
allocable to property manufactured in this state by the qualified
taxpayer for ultimate use in or as a component of a new advanced
strategic aircraft for the United States Air Force.

(6) “New advanced strategic aircraft for the United States Air
Force” means a new advanced strategic aircraft developed and
produced for the United States Air Force under the New Advanced
Strategic Aircraft Program.

(7) “New Advanced Strategic Aircraft Program” means the
project designed to design, test, manufacture, or otherwise support
production of a new advanced strategic aircraft for the United
States Air Force under a contract that is expected to be awarded
in the first or second calendar quarter of 2015.

(c) (1) The total aggregate amount of the credit that may be
allowed to all qualified taxpayers pursuant to this section shall be
as follows:

(A) In years one through five of the credit, the total aggregate
amount of the credit that may be allowed to all qualified taxpayers
pursuant to this section shall not exceed twenty- five million dollars
($25,000,000) per calendar year.

(B) In years six through 10 of the credit, the total aggregate
amount of the credit that may be allowed to all qualified taxpayers
pursuant to this section shall not exceed twenty-eight million
dollars ($28,000,000) per calendar year.

(C) In years 11 through 15 of the credit, the total aggregate
amount of the credit that may be allowed to all qualified taxpayers
pursuant to this section shall not exceed thirty-one million dollars
($31,000,000) per calendar year.

(2) The Franchise Tax Board shall allocate the credit to the
taxpayers on a first-come-first-served basis.

(3) The credit allowed under this section must be claimed on a
timely filed original return.

(d) In the case where the credit allowed by this section exceeds
the “tax,” the excess may be carried over to reduce the “tax” in
the following year, and the seven succeeding years if necessary,
until the credit is exhausted.

(e) A credit shall not be allowed unless the credit was reflected
within the bid upon which the qualified taxpayer’s subcontract to
manufacture property for ultimate use in or as a component of a
New Advanced Strategic Aircraft Program is based by reducing
the amount of the bid by a good faith estimate of the amount of
the credit allowable under this section.

(f) All references to the credit and ultimate cost reductions
incorporated into any successful bid that was awarded a
subcontract and for which a qualified taxpayer is making a claim
shall be made available to the Franchise Tax Board upon request.

(g) If the qualified taxpayer is allowed a credit pursuant to this
section for qualified wages paid or incurred, only one credit shall
be allowed to the taxpayer under this part with respect to any wage
consisting in whole or in part of those qualified wages.

(h) (1) The Franchise Tax Board may prescribe regulations
necessary or appropriate to carry out the purposes of this section.

(2) The Franchise Tax Board may also prescribe rules,
guidelines, or procedures necessary or appropriate to carry out
the purposes of this section. Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code
shall not apply to any rule, guideline, or procedure prescribed by
the Franchise Tax Board pursuant to this section.

(i) This section shall remain in effect only until December 1,
2030, and as of that date is repealed.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert begin insert

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

end insert begin insert

In order to promote economic development in California related
to the manufacture of property to be used for new advanced
strategic aircraft for the United States Air Force and to authorize
a local government to pay a related capital investment amount
pursuant to a reduced threshold amount as soon as possible, it is
necessary that this act take effect immediately.

end insert

begin delete

SECTION 1.  

Section 2333.5 of the Streets and Highways Code
is amended to read:

2333.5.  

(a) The department, in consultation with the
Department of the California Highway Patrol, shall establish and
administer a “Safe Routes to School” construction program for
construction of bicycle and pedestrian safety and traffic calming
projects.

(b) The department shall award grants to local governmental
agencies under the program based on the results of a statewide
competition that requires submission of proposals for funding and
rates those proposals on all of the following factors:

(1) Demonstrated needs of the applicant.

(2) Potential of the proposal for reducing child injuries and
fatalities.

(3) Potential of the proposal for encouraging increased walking
and bicycling among students.

(4) Identification of safety hazards.

(5) Identification of current and potential walking and bicycling
routes to school.

(6) Use of a public participation process, including, but not
limited to, a public meeting that satisfies all of the following:

(A) Involves the public, schools, parents, teachers, local
agencies, the business community, key professionals, and others.

(B) Identifies community priorities and gathers community
input to guide the development of projects included in the proposal.

(C) Ensures that community priorities are reflected in the
proposal.

(D) Secures support for the proposal by relevant stakeholders.

(7) Benefit to a low-income school, defined for purposes of this
section to mean a school where at least 75 percent of students are
eligible to receive free or reduced-price meals under the National
School Lunch Program.

(c) Any annual budget allocation to fund grants described in
subdivision (b) shall be in addition to any federal funding received
by the state that is designated for “Safe Routes to School” projects
pursuant to Section 1404 of SAFETEA-LU or any similar program
funded through a subsequent transportation act.

(d) Any federal funding received by the state that is designated
for “Safe Routes to School” projects shall be distributed by the
department under the competitive grant process, consistent with
all applicable federal requirements.

(e) Prior to the award of any construction grant or the
department’s use of those funds for a “Safe Routes to School”
construction project encompassing a freeway, state highway, or
county road, the department shall consult with, and obtain approval
from, the Department of the California Highway Patrol, ensuring
that the “Safe Routes to School” proposal complements the
California Highway Patrol’s Pedestrian Corridor Safety Program
and is consistent with its statewide pedestrian safety statistical
analysis.

(f) The department is encouraged to coordinate with law
enforcement agencies’ community policing efforts in establishing
and maintaining the “Safe Routes to School” construction program.

(g) In the development of guidelines and procedures governing
this program, the department shall fully consider the needs of
low-income schools.

(h) Up to 10 percent of program funds may be used to assist
eligible recipients in making infrastructure improvements, other
than schoolbus shelters, that create safe routes to schoolbus stops
that are located outside the vicinity of schools.

(i) This section shall become inoperative on July 1, 2015, and,
as of January 1, 2016, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2016, deletes or
extends the dates on which it becomes inoperative and is repealed.

SEC. 2.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to extend the operation of the “Safe Routes to School”
Program as quickly as possible, it is necessary that this act take
effect immediately.

end delete