2005 California Government Code Sections 51298 CHAPTER 8. CAPITAL INVESTMENT INCENTIVE PROGRAM

51298.  It is the intent of the Legislature in enacting this chapter
to provide local governments 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 Trade and Commerce Agency upon the agency'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 agency in writing in the time and
manner as specified by the agency.
   (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  either of the following:
   (i) A business described in Codes 3500 to 3899, inclusive, of the
Standard Industrial Classification (SIC) Manual published by the
United States Office of Management and Budget, 1987 edition, except
that "January 1, 1997," shall be substituted for "January 1, 1994,"
in each place in which it appears.
   (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.
   (D) The proponent is either currently engaged in commercial
production or engaged in the perfection of the manufacturing process,
or 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, special district, or school 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,
special district, or school 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 subject to the agreement, 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.
   (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.
   (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
Trade and Commerce Agency 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 Trade and Commerce Agency 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 Trade and Commerce Agency 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.