California Legislature—2015–16 Regular Session

Assembly BillNo. 1269


Introduced by Assembly Member Dababneh

February 27, 2015


An act to amend Section 26003 of, and to amend and repeal Section 26011.8 of, the Public Resources Code, and to amend Section 6010.8 of the Revenue and Taxation Code, relating to alternative energy.

LEGISLATIVE COUNSEL’S DIGEST

AB 1269, as introduced, Dababneh. Alternative energy.

The California Alternative Energy and Advanced Transportation Financing Authority Act establishes the California Alternative Energy and Advanced Transportation Financing Authority. The act authorizes, until January 1, 2021, the authority to provide financial assistance in the form of a sales and use tax exclusion for projects, including those that promote California-based manufacturing, California-based jobs, the reduction of greenhouse gases, or the reduction in air and water pollution or energy consumption. The act prohibits the sales and use tax exclusions from exceeding $100,000,000 for each calendar year. The act authorizes the authority, until July 1, 2016, to grant financial assistance in the form of a sales and use tax exclusion for projects that promote the use of advanced manufacturing.

This bill would extend the authorization to grant the above financial assistance to projects that promote the use of advanced manufacturing to January 1, 2021. By extending the eligibility of projects that promote the use of advanced manufacturing for the sales and use tax exclusion, which is limited at $100,000,000 annually, this bill would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution.

Vote: 23. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

P2    1

SECTION 1.  

Section 26003 of the Public Resources Code, as
2amended by Section 1 of Chapter 540 of the Statutes of 2013, is
3amended to read:

4

26003.  

(a) As used in this division, unless the context
5otherwise requires:

6(1) (A) “Advanced manufacturing” means manufacturing
7processes that improve existing or create entirely new materials,
8products, and processes through the use of science, engineering,
9or information technologies, high-precision tools and methods, a
10high-performance workforce, and innovative business or
11organizational models utilizing any of the following technology
12areas:

13(i) Microelectronics and nanoelectronics, including
14semiconductors.

15(ii) Advanced materials.

16(iii) Integrated computational materials engineering.

17(iv) Nanotechnology.

18(v) Additive manufacturing.

19(vi) Industrial biotechnology.

20(B) “Advanced manufacturing” includes any of the following:

21(i) Systems that result from substantive advancement, whether
22incremental or breakthrough, beyond the current industry standard,
23in the production of materials and products. These advancements
24include improvements in manufacturing processes and systems
25that are often referred to as “smart” or “intelligent” manufacturing
26systems, which integrate computational predictability and
27operational efficiency.

28(ii) (I) Sustainable manufacturing systems and manufacturing
29technologies that minimize the use of resources while maintaining
30or improving cost and performance.

31(II) Sustainable manufacturing systems and manufacturing
32technologies do not include those required to be undertaken
33pursuant to state or federal law or regulations, air district rules or
34regulations, memoranda of understanding with a governmental
35entity, or legally binding agreements or documents. The State Air
P3    1Resources Board shall advise the authority to ensure that the
2requirements of this clause are met.

3(2) (A) “Advanced transportation technologies” means
4emerging commercially competitive transportation-related
5technologies identified by the authority as capable of creating
6long-term, high value-added jobs for Californians while enhancing
7the state’s commitment to energy conservation, pollution and
8greenhouse gas emissions reduction, and transportation efficiency.

9(B) “Advanced transportation technologies” does not include
10those projects required to be undertaken pursuant to state or federal
11law or regulations, air district rules or regulations, memoranda of
12understanding with a governmental entity, or legally binding
13agreements or documents. The State Air Resources Board shall
14advise the authority regarding projects that are excluded pursuant
15to this subparagraph.

16(3) (A) “Alternative sources” means devices or technologies
17used for a renewable electrical generation facility, as defined in
18paragraph (1) of subdivision (a) of Section 25741, a combined
19heat and power system, as defined in Section 2840.2 of the Public
20Utilities Code, distributed generation and energy storage
21technologies eligible under the self-generation incentive program
22pursuant to Section 379.6 of the Public Utilities Code, as
23determined by the Public Utilities Commission, or a facility
24designed for the production of renewable fuels, the efficient use
25of which reduce the use of fossil or nuclear fuels, and energy
26efficiency devices or technologies that reduce the need for new
27electric generation and reduce emissions of toxic and criteria
28pollutants and greenhouse gases.

29(B) “Alternative sources” does not include a hydroelectric
30facility that does not meet state laws pertaining to the control,
31appropriation, use, and distribution of water, including, but not
32limited to, the obtaining of applicable licenses and permits.

33(4) “Authority” means the California Alternative Energy and
34Advanced Transportation Financing Authority established pursuant
35to Section 26004, and any board, commission, department, or
36officer succeeding to the functions of the authority, or to which
37the powers conferred upon the authority by this division shall be
38given.

39(5) “Cost” as applied to a project or portion of the project
40financed under this division means all or part of the cost of
P4    1construction and acquisition of all lands, structures, real or personal
2property or an interest in the real or personal property, rights,
3rights-of-way, franchises, easements, and interests acquired or
4used for a project; the cost of demolishing or removing any
5buildings or structures on land so acquired, including the cost of
6acquiring any lands to which those buildings or structures may be
7moved; the cost of all machinery, equipment, and furnishings,
8financing charges, interest prior to, during, and for a period after,
9completion of construction as determined by the authority;
10provisions for working capital; reserves for principal and interest
11and for extensions, enlargements, additions, replacements,
12renovations, and improvements; the cost of architectural,
13engineering, financial, accounting, auditing and legal services,
14plans, specifications, estimates, administrative expenses, and other
15expenses necessary or incident to determining the feasibility of
16constructing any project or incident to the construction, acquisition,
17or financing of a project.

18(6) “Financial assistance” includes, but is not limited to, loans,
19loan loss reserves, interest rate reductions, proceeds of bonds issued
20by the authority, bond insurance, loan guarantees or other credit
21enhancements or liquidity facilities, contributions of money, or a
22combination thereof, as determined by, and approved by the
23resolution of, the board.

24(7) (A) “Participating party” means a person, federal or state
25agency, department, board, authority, or commission, state or
26community college, or university, or a city or county, regional
27agency, public district, school district, or other political entity
28engaged in the business or operations in the state, whether
29organized for profit or not for profit, that applies for financial
30assistance from the authority for the purpose of implementing a
31project.

32(B) (i) For purposes of Section 6010.8 of the Revenue and
33Taxation Code, “participating party” means an entity specified in
34subparagraph (A) that seeks financial assistance pursuant to Section
3526011.8.

36(ii) For purposes of Section 6010.8 of the Revenue and Taxation
37Code, an entity located outside of the state, including an entity
38located overseas, is considered to be a participating party and is
39eligible to apply for financial assistance pursuant to Section
P5    126011.8 if the participating party commits to, and demonstrates
2that, the party will be opening a manufacturing facility in the state.

3(iii) It is the intent of the Legislature by adding clause (ii) to
4clarify existing law and ensure that an out-of-state entity or
5overseas entity is eligible to apply for financial assistance pursuant
6to Section 26011.8.

7(8) (A) “Project” means a land, building, improvement to the
8land or building, rehabilitation, work, property, or structure, real
9or personal, stationary or mobile, including, but not limited to,
10machinery and equipment utilized in the state, whether or not in
11existence or under construction, that utilizes, or is designed to
12utilize, an alternative source, or that is utilized for the design,
13technology transfer, manufacture, production, assembly,
14distribution, or service of advanced transportation technologies or
15alternative source components.

16(B) “Project,” for purposes of Section 26011.8 and Section
176010.8 of the Revenue and Taxation Code, means tangible personal
18property that is utilized in the state for the design, manufacture,
19production, or assembly of advanced manufacturing, advanced
20transportation technologies, or alternative source products,
21components, or systems.

22(9) “Revenue” means all rents, receipts, purchase payments,
23loan repayments, and all other income or receipts derived by the
24authority from a project, or the sale, lease, or other disposition of
25alternative source or advanced transportation technology facilities,
26or the making of loans to finance alternative source or advanced
27transportation technology facilities, and any income or revenue
28derived from the investment of money in any fund or account of
29the authority.

begin delete

30(b) This section shall become inoperative on July 1, 2016, and,
31as of January 1, 2017, is repealed, unless a later enacted statute,
32that becomes operative on or before January 1, 2017, deletes or
33extends the dates on which it becomes inoperative and is repealed.

end delete
begin insert

34(b) This section shall remain in effect only until January 1, 2021,
35and as of that date is repealed, unless a later enacted statute, that
36is enacted before January 1, 2021, deletes or extends that date.

end insert
37

SEC. 2.  

Section 26003 of the Public Resources Code, as
38amended by Section 2 of Chapter 540 of the Statutes of 2013, is
39amended to read:

P6    1

26003.  

(a) As used in this division, unless the context
2otherwise requires:

3(1) (A) “Advanced transportation technologies” means
4emerging commercially competitive transportation-related
5technologies identified by the authority as capable of creating
6long-term, high value-added jobs for Californians while enhancing
7the state’s commitment to energy conservation, pollution and
8greenhouse gas emissions reduction, and transportation efficiency.

9(B) “Advanced transportation technologies” does not include
10those projects required to be undertaken pursuant to state or federal
11law or regulations, air district rules or regulations, memoranda of
12understanding with a governmental entity, or legally binding
13agreements or documents. The State Air Resources Board shall
14advise the authority regarding projects that are excluded pursuant
15to this subparagraph.

16(2) (A) “Alternative sources” means devices or technologies
17used for a renewable electrical generation facility, as defined in
18paragraph (1) of subdivision (a) of Section 25741, a combined
19heat and power system, as defined in Section 2840.2 of the Public
20Utilities Code, distributed generation and energy storage
21technologies eligible under the self-generation incentive program
22pursuant to Section 379.6 of the Public Utilities Code, as
23determined by the Public Utilities Commission, or a facility
24designed for the production of renewable fuels, the efficient use
25of which reduce the use of fossil or nuclear fuels, and energy
26efficiency devices or technologies that reduce the need for new
27electric generation and reduce emissions of toxic and criteria
28pollutants and greenhouse gases.

29(B) “Alternative sources” does not include a hydroelectric
30facility that does not meet state laws pertaining to the control,
31appropriation, use, and distribution of water, including, but not
32limited to, the obtaining of applicable licenses and permits.

33(3) “Authority” means the California Alternative Energy and
34Advanced Transportation Financing Authority established pursuant
35to Section 26004, and any board, commission, department, or
36officer succeeding to the functions of the authority, or to which
37the powers conferred upon the authority by this division shall be
38given.

39(4) “Cost” as applied to a project or portion of the project
40financed under this division means all or part of the cost of
P7    1construction and acquisition of all lands, structures, real or personal
2property or an interest in the real or personal property, rights,
3rights-of-way, franchises, easements, and interests acquired or
4used for a project; the cost of demolishing or removing any
5buildings or structures on land so acquired, including the cost of
6acquiring any lands to which those buildings or structures may be
7moved; the cost of all machinery, equipment, and furnishings,
8financing charges, interest prior to, during, and for a period after,
9completion of construction as determined by the authority;
10provisions for working capital; reserves for principal and interest
11and for extensions, enlargements, additions, replacements,
12renovations, and improvements; the cost of architectural,
13engineering, financial, accounting, auditing and legal services,
14plans, specifications, estimates, administrative expenses, and other
15expenses necessary or incident to determining the feasibility of
16constructing any project or incident to the construction, acquisition,
17or financing of a project.

18(5) “Financial assistance” includes, but is not limited to, loans,
19loan loss reserves, interest rate reductions, proceeds of bonds issued
20by the authority, bond insurance, loan guarantees or other credit
21enhancements or liquidity facilities, contributions of money, or a
22combination thereof, as determined by, and approved by the
23resolution of, the board.

24(6) (A) “Participating party” means a person, federal or state
25agency, department, board, authority, or commission, state or
26community college, or university, or a city or county, regional
27agency, public district, school district, or other political entity
28engaged in the business or operations in the state, whether
29organized for profit or not for profit, that applies for financial
30assistance from the authority for the purpose of implementing a
31project.

32(B) (i) For purposes of Section 6010.8 of the Revenue and
33Taxation Code, “participating party” means an entity specified in
34subparagraph (A) that seeks financial assistance pursuant to Section
3526011.8.

36(ii) For purposes of Section 6010.8 of the Revenue and Taxation
37Code, an entity located outside of the state, including an entity
38located overseas, is considered to be a participating party and is
39eligible to apply for financial assistance pursuant to Section
P8    126011.8 if the participating party commits to, and demonstrates
2that, the party will be opening a manufacturing facility in the state.

3(iii) It is the intent of the Legislature by adding clause (ii) to
4clarify existing law and ensure that an out-of-state entity or
5overseas entity is eligible to apply for financial assistance pursuant
6to Section 26011.8.

7(7) (A) “Project” means a land, building, improvement to the
8land or building, rehabilitation, work, property, or structure, real
9or personal, stationary or mobile, including, but not limited to,
10machinery and equipment utilized in the state, whether or not in
11existence or under construction, that utilizes, or is designed to
12utilize, an alternative source, or that is utilized for the design,
13technology transfer, manufacture, production, assembly,
14distribution, or service of advanced transportation technologies or
15alternative source components.

16(B) “Project,” for purposes of Section 26011.8 and Section
176010.8 of the Revenue and Taxation Code, means tangible personal
18property that is utilized in the state for the design, manufacture,
19production, or assembly of advanced transportation technologies
20or alternative source products, components, or systems.

21(8) “Revenue” means all rents, receipts, purchase payments,
22loan repayments, and all other income or receipts derived by the
23authority from a project, or the sale, lease, or other disposition of
24alternative source or advanced transportation technology facilities,
25or the making of loans to finance alternative source or advanced
26transportation technology facilities, and any income or revenue
27derived from the investment of money in any fund or account of
28the authority.

29(b) This section shall become operative onbegin delete July 1, 2016.end deletebegin insert January
301, 2021.end insert

31

SEC. 3.  

Section 26011.8 of the Public Resources Code, as
32amended by Section 3 of Chapter 540 of the Statutes of 2013, is
33amended to read:

34

26011.8.  

(a) The purpose of this section is to promote the
35creation of California-based manufacturing, California-based jobs,
36advanced manufacturing, the reduction of greenhouse gases, or
37reductions in air and water pollution or energy consumption. In
38furtherance of this purpose, the authority may approve a project
39for financial assistance in the form of the sales and use tax
P9    1exclusion established in Section 6010.8 of the Revenue and
2Taxation Code.

3(b) For purposes of this section, “project” means a project as
4defined in subparagraph (B) of paragraph (8) of subdivision (a) of
5Section 26003.

6(c) The authority shall publish notice of the availability of
7project applications and deadlines for submission of project
8applications to the authority.

9(d) The authority shall evaluate project applications based upon
10all of the following criteria:

11(1) The extent to which the project develops manufacturing
12facilities, or purchases equipment for manufacturing facilities,
13located in California.

14(2) The extent to which the anticipated benefit to the state from
15the project equals or exceeds the projected benefit to the
16participating party from the sales and use tax exclusion.

17(3) The extent to which the project will create new, permanent
18jobs in California.

19(4) To the extent feasible, the extent to which the project, or the
20product produced by the project, results in a reduction of
21greenhouse gases, a reduction in air or water pollution, an increase
22in energy efficiency, or a reduction in energy consumption, beyond
23what is required by federal or state law or regulation.

24(5) The extent of unemployment in the area in which the project
25is proposed to be located.

26(6) Any other factors the authority deems appropriate in
27accordance with this section.

28(e) At a duly noticed public hearing, the authority shall approve,
29by resolution, project applications for financial assistance.

30(f) Notwithstanding subdivision (j), and without regard to the
31actual date of any transaction between a participating party and
32the authority, any project approved by the authority by resolution
33for the sales and use tax exclusion pursuant to Section 6010.8 of
34the Revenue and Taxation Code before March 24, 2010, shall not
35be subject to this section.

36(g) The Legislative Analyst’s Office shall report to the Joint
37Legislative Budget Committee on the effectiveness of this program,
38on or before January 1, 2019, by evaluating factors, including, but
39not limited to, the following:

40(1) The number of jobs created by the program in California.

P10   1(2) The number of businesses that have remained in California
2or relocated to California as a result of this program.

3(3) The amount of state and local revenue and economic activity
4generated by the program.

5(4) The types of advanced manufacturing, as defined in
6paragraph (1) of subdivision (a) of Section 26003, utilized.

7(5) The amount of reduction in greenhouse gases, air pollution,
8water pollution, or energy consumption.

9(h) The exclusions granted pursuant to Section 6010.8 of the
10Revenue and Taxation Code for projects approved by the authority
11pursuant to this section shall not exceed one hundred million dollars
12($100,000,000) for each calendar year.

13(i) (1) The authority shall study the efficacy and cost benefit
14of the sales and use tax exemption as it relates to advanced
15manufacturing projects. The study shall include the number of jobs
16created, the costs of each job, and the annual salary of each job.
17The study shall also consider a dynamic analysis of the economic
18output to the state that would occur without the sales and use tax
19exemption. Before January 1, 2017, the authority shall submit to
20the Legislature, consistent with Section 9795 of the Government
21Code, the result of the study.

22(2) Before January 1, 2015, the authority shall, consistent with
23Section 9795 of the Government Code, submit to the Legislature
24an interim report on the efficacy of the program conducted pursuant
25to this section. The study shall include recommendations on
26program changes that would increase the program’s efficacy in
27creating permanent and temporary jobs, and whether eligibility
28for the program should be extended or narrowed to other
29manufacturing types. The authority may work with the Legislative
30Analyst’s Office in preparing the report and its recommendations.

31(j) begin delete(1)end deletebegin deleteend deletebegin deleteExcept as provided in paragraph (2), this end deletebegin insertThis end insertsection
32shallbegin delete become inoperative on July 1, 2016, and, as ofend deletebegin insert remain in
33effect only untilend insert
January 1,begin delete 2017,end deletebegin insert 2021, and as of that dateend insert is
34repealed, unless a later enacted statute, that becomes operative on
35or before January 1,begin delete 2017,end deletebegin insert 2021,end insert deletes or extendsbegin delete the dates on
36which it becomes inoperative and is repealed.end delete
begin insert that date.end insert The sale
37or purchase of tangible personal property of a project approved
38beforebegin delete June 30, 2016,end deletebegin insert January 1, 2021,end insert shall continue to be
39excluded from sales and use taxes pursuant to Section 6010.8 of
40the Revenue and Taxation Code for the period of time set forth in
P11   1the authority’s resolution approving the project pursuant to this
2section.

begin delete

3(2) Notwithstanding paragraph (1), the authority’s obligation
4to submit to the Legislature a report pursuant to paragraph (2) of
5subdivision (i) shall remain operative until the submission of the
6report.

end delete
7

SEC. 4.  

Section 26011.8 of the Public Resources Code, as
8amended by Section 4 of Chapter 540 of the Statutes of 2013, is
9repealed.

begin delete
10

26011.8.  

(a) The purpose of this section is to promote the
11creation of California-based manufacturing, California-based jobs,
12the reduction of greenhouse gases, or reductions in air and water
13pollution or energy consumption. In furtherance of this purpose,
14the authority may approve a project for financial assistance in the
15form of the sales and use tax exclusion established in Section
166010.8 of the Revenue and Taxation Code.

17(b) For purposes of this section, “project” means a project as
18defined in subparagraph (B) of paragraph (7) of subdivision (a) of
19Section 26003.

20(c) The authority shall publish notice of the availability of
21project applications and deadlines for submission of project
22applications to the authority.

23(d) The authority shall evaluate project applications based upon
24a net benefits test that includes all of the following criteria:

25(1) The extent to which the project develops manufacturing
26facilities, or purchases equipment for manufacturing facilities,
27located in California.

28(2) The extent to which the anticipated benefit to the state from
29the project equals or exceeds the projected benefit to the
30participating party from the sales and use tax exclusion.

31(3) The extent to which the project will create new, permanent
32jobs in California.

33(4) To the extent feasible, the extent to which the project, or the
34product produced by the project, results in a reduction of
35greenhouse gases, a reduction in air or water pollution, an increase
36in energy efficiency, or a reduction in energy consumption, beyond
37what is required by federal or state law or regulation.

38(5) The extent of unemployment in the area in which the project
39is proposed to be located.

P12   1(6) Any other factors the authority deems appropriate in
2accordance with this section.

3(e) At a duly noticed public hearing, the authority shall approve,
4by resolution, project applications for financial assistance.

5(f) Notwithstanding subdivision (j), and without regard to the
6actual date of any transaction between a participating party and
7the authority, any project as defined in paragraph (7) of subdivision
8(a) of Section 26003 approved by the authority by resolution for
9the sales and use tax exclusion pursuant to Section 6010.8 of the
10Revenue and Taxation Code before March 24, 2010, shall not be
11subject to this section.

12(g) The Legislative Analyst’s Office shall report to the Joint
13Legislative Budget Committee on the effectiveness of this program,
14on or before January 1, 2019, by evaluating factors, including, but
15not limited to, the following:

16(1) The number of jobs created by the program in California.

17(2) The number of businesses that have remained in California
18or relocated to California as a result of this program.

19(3) The amount of state and local revenue and economic activity
20generated by the program.

21(4) The amount of reduction in greenhouse gases, air pollution,
22water pollution, or energy consumption.

23(h) The exclusions granted pursuant to Section 6010.8 of the
24Revenue and Taxation Code for projects approved by the authority
25pursuant to this section shall not exceed one hundred million dollars
26($100,000,000) for each calendar year.

27(i) The authority shall make every effort to expedite the
28operation of this section, and shall adopt regulations for purposes
29of implementing the section as emergency regulations in
30accordance with Chapter 3.5 (commencing with Section 11340)
31of Part 1 of Division 3 of Title 2 of the Government Code. For
32purposes of that Chapter 3.5, including Section 11349.6 of the
33Government Code, the adoption of the regulations shall be
34considered by the Office of Administrative Law to be necessary
35for the immediate preservation of the public peace, health and
36safety, and general welfare.

37(j) This section shall become operative on July 1, 2016, and
38shall remain in effect only until January 1, 2021, and as of that
39date is repealed. The sale or purchase of tangible personal property
40of a project approved before January 1, 2021, shall continue to be
P13   1excluded from sales and use taxes pursuant to Section 6010.8 of
2the Revenue and Taxation Code for the period of time set forth in
3the authority’s resolution approving the project pursuant to this
4section.

end delete
5

SEC. 5.  

Section 6010.8 of the Revenue and Taxation Code, as
6amended by Section 35 of Chapter 677 of the Statutes of 2012, is
7amended to read:

8

6010.8.  

(a) “Sale” and “purchase” do not include any lease or
9transfer of title of tangible personal property constituting any
10project to any participating party. As used in this section, “project”
11has the meaning specified in subparagraph (B) of paragraph (8)
12of subdivision (a) of Section 26003 of the Public Resources Code
13and “participating party” has the meaning specified in subparagraph
14(B) of paragraph (7) of subdivision (a) of Section 26003 of the
15Public Resources Code.

begin delete

16(b) This section shall become inoperative on July 1, 2016, and,
17as of January 1, 2017, is repealed, unless a later enacted statute,
18that becomes operative on or before January 1, 2017, deletes or
19extends the dates on which it becomes inoperative and is repealed.

end delete
begin insert

20(b) This section shall remain in effect only until January 1, 2021,
21and as of that date is repealed, unless a later enacted statute, that
22is enacted before January 1, 2021, deletes or extends that date.

end insert
23

SEC. 6.  

Section 6010.8 of the Revenue and Taxation Code, as
24added by Section 36 of Chapter 677 of the Statutes of 2012, is
25amended to read:

26

6010.8.  

(a) “Sale” and “purchase” do not include any lease or
27transfer of title of tangible personal property constituting any
28project to any participating party. As used in this section, “project”
29has the meaning specified in subparagraph (B) of paragraph (7)
30of subdivision (a) of Section 26003 of the Public Resources Code
31and “participating party” has the meaning specified in subparagraph
32(B) of paragraph (6) of subdivision (a) of Section 26003 of the
33Public Resources Code.

34(b) This section shall become operative onbegin delete July 1, 2016end deletebegin insert January
351, 2021end insert
.



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