California Senate Bill SB998 Amended / Bill

 BILL NUMBER: SB 998AMENDED BILL TEXT AMENDED IN SENATE APRIL 9, 2014 INTRODUCED BY Senator Knight FEBRUARY 13, 2014 An act  to add Article 8 (commencing with Section 12099.8) to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code, to amend Section 510 of, and to add Section 511.5 to, the Labor Code, to add Sections 21080.38 and 21168.6.8 to the Public Resources Code, to amend Sections 17059.2 and 23689 of, and to add Sections 17053.35, 17053.36, 23635, and 23636 to, the Revenue and Ta   xation Code, and to add Section 10215.2 to the Unemployment Insurance Code,  relating to aerospace. LEGISLATIVE COUNSEL'S DIGEST SB 998, as amended, Knight. California Aerospace Innovation Hub Act of 2014.  Existing   (1)     Existing  law provides various incentives for industries such as the aerospace industry to locate and invest in this state, such as a program that allows local governments to establish a capital investment incentive program to pay a capital investment incentive amount to the proponents of a qualified manufacturing facility in the aerospace business, and a sales and use tax exemption for the gross receipts from the sale of, and the storage, use, or other consumption of, qualified tangible personal property purchased by a person engaged in aerospace products and parts manufacturing for use primarily in manufacturing, processing, refining, fabricating, or recycling of property.  Existing law also creates the California Innovation Hub Program within the Governor's Office of Business and Economic Development and requires the office to designate innovation hubs and to oversee, coordinate, and provide assistance to each innovation hub.   The bill would require the Governor's Office of Business and Economic Development to design and implement Aerospace Innovation Hubs, as specified, based on existing geographically based clusters of facilities of aerospace manufacturers and related businesses.   (2) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.   The bill, for taxable years beginning on or after January 1, 2015, and before January 1, 2025, would allow a credit against these taxes to an aerospace manufacturer or related business operating within an Aerospace Innovation Hub equal 10% of the qualified cost, as defined, of qualified property, as defined, placed in service during the taxable year, as provided. This credit would be in lieu of a specified sales and use tax exemption.   The bill, for the same taxable years, would allow a credit against these taxes for each taxable year equal to 25% of the charges for electricity paid or incurred by an aerospace manufacturer or related business operating within an Aerospace Innovation Hub during the taxable year.   The Personal Income Tax Law and the Corporation Tax Law, for taxable years beginning before January 1, 2025, allow a credit against the taxes imposed by those laws for each taxable year in an amount as determined by the Governor's Office of Business and Economic Development, pursuant to a contractual agreement with the taxpayer, agreed upon by the California Competes Tax Credit Committee, and based on specified factors.   The bill would include among those factors whether the taxpayer is an aerospace manufacturer or related business operating within an Aerospace Innovation Hub.   (3) Existing law, with certain exceptions, establishes 8 hours as a day's work and a 40-hour workweek, and requires payment of prescribed overtime compensation for additional hours worked. Existing law authorizes the adoption by 2/3 of employees in a work unit of alternative workweek schedules providing for workdays no longer than 10 hours within a 40-hour workweek. Under existing law, any person who violates the provisions regulating work hours is guilty of a misdemeanor.   The bill would allow an individual nonexempt employee of an aerospace manufacturer or related business operating within an Aerospace Innovation Hub to request an employee-selected flexible work schedule providing for workdays up to 10 hours per day within a 40-hour workweek, and would allow the employer to implement this schedule without the obligation to pay overtime compensation for those additional hours in a workday, except as specified. The bill would require the Division of Labor Standards Enforcement in the Department of Industrial Relations to enforce this provision and adopt regulations.   (4) Existing law specifies that moneys in the Employment Training Fund are to be expended only for particular purposes relating to employment training and related administrative costs. Existing law authorizes the Employment Training Panel to allocate money in the fund for particular purposes related to employment training.   The bill would allow the Employment Training Panel to expend moneys in the Employment Training Fund to reimburse an aerospace manufacturer or related business operating within an Aerospace Innovation Hub for its reasonable costs of workforce training upon appropriation by the Legislature.   (5) The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report (EIR) on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment.   CEQA establishes a procedure by which a person may seek judicial review of the decision of the lead agency made pursuant to CEQA.   The bill would require the lead agency to undertake specified steps in the preparation of the EIR for certain aerospace projects, which would be designated by the Governor. The bill would require a public agency, in certifying the EIR and in granting approvals for those designated aerospace projects, to concurrently prepare the record of proceeding and to certify the record of proceeding within 5 days of the filing of a specified notice. The bill would require the Judicial Council, on or before July 1, 2015, to adopt a rule of court to establish procedures applicable to actions or proceedings seeking judicial review of a public agency's action in certifying the EIR and in granting approval of those designated aerospace manufacturing projects that requires the actions or proceedings, including any appeals therefrom, be resolved, to the extent feasible, within 270 days of the certification of the record of proceeding. The bill would, for the calendar years from 2015 to 2020, inclusive, require the Governor to designate 4 aerospace projects each year meeting specified requirements for which the above provisions would apply.   The bill would exempt from the requirements of CEQA a project or an activity related to the retooling or alteration for manufacturing purposes of an existing aerospace manufacturing facility or aerospace-related facility in an Aerospace Innovation Hub within the facility's existing footprint.   Because this bill would impose additional duties on local agencies, it would impose a state-mandated local program.   The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.   The bill would provide that no reimbursement is required by this act for a specified reason.   This bill would state the intent of the Legislature to enact legislation to create the California Aerospace Innovation Hub Act of 2014. This bill would state the intent of the Legislature to enact legislation that would create geographically based aerospace hubs around existing aerospace manufacturing clusters, and that within the aerospace hubs aerospace manufacturers and related businesses would benefit from special tax preferences, streamlined regulations, and work schedule flexibility.  Vote: majority. Appropriation: no. Fiscal committee:  no   yes  . State-mandated local program:  no   yes  . THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:  SECTION 1.   Article 8 (commencing with Section 12099.8) is added to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the   Government Code   , to read:   Article 8. Aerospace Innovation Hubs 12099.8. For the purposes of this article, the following terms have the following meanings: (a) "Aerospace Innovation Hub" means a geographic area that, based on a determination by the Governor's Office of Business and Economic Development, contains a cluster of aerospace manufacturing facilities or related business facilities. (b) "Aerospace manufacturer" means a person that is primarily engaged in those lines of business described in Code 3364 of the North American Industry Classification System (NAICS) published by the United States Office of Management and Budget (OMB), 2012 edition. (c) "Related business" means a person that is primarily engaged in those lines of business described in Codes 222512, 325211, 332710, 332812, 333299, 333514, 333517, 333611, 333612, 333613, 333618, 334419, 334511, 334513, 334515, 334519, 335311, 335314, 335991, and 335999 of the North American Industry Classification System (NAICS) published by the United States Office of Management and Budget (OMB), 2012 edition. 12099.81. The Governor's Office of Business and Economic Development shall designate and implement Aerospace Innovation Hubs based on existing geographically based clusters of facilities of aerospace manufacturers and related businesses. The Governor's Office of Business and Economic Development shall consider several factors when designating an area as an Aerospace Innovation Hub, including the location of facilities, the proximity of facilities to each other, the size of facilities, and the number of employees working in those facilities.   SEC. 2.   Section 510 of the   Labor Code   is amended to read:  510. (a) Eight hours of labor constitutes a day's work. Any work in excess of eight hours in one workday and any work in excess of 40 hours in any one workweek and the first eight hours worked on the seventh day of work in any one workweek shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee. Any work in excess of 12 hours in one day shall be compensated at the rate of no less than twice the regular rate of pay for an employee. In addition, any work in excess of eight hours on any seventh day of a workweek shall be compensated at the rate of no less than twice the regular rate of pay of an employee. Nothing in this section requires an employer to combine more than one rate of overtime compensation in order to calculate the amount to be paid to an employee for any hour of overtime work. The requirements of this section do not apply to the payment of overtime compensation to an employee working pursuant to any of the following: (1) An alternative workweek schedule adopted pursuant to Section 511.  (2) An employee-selected flexible work schedule adopted pursuant to Section 511.5.   (2)   (3)  An alternative workweek schedule adopted pursuant to a collective bargaining agreement pursuant to Section 514.  (3)   (4)  An alternative workweek schedule to which this chapter is inapplicable pursuant to Section 554. (b) Time spent commuting to and from the first place at which an employee's presence is required by the employer shall not be considered to be a part of a day's work, when the employee commutes in a vehicle that is owned, leased, or subsidized by the employer and is used for the purpose of ridesharing, as defined in Section 522 of the Vehicle Code. (c) This section does not affect, change, or limit an employer's liability under the workers' compensation law.  SEC. 3.   Section 511.5 is added to the   Labor Code   , to read:   511.5. (a) Notwithstanding Section 511 or any other law or order of the Industrial Welfare Commission, an individual nonexempt employee of a qualified employer may work up to 10 hours per workday without any obligation on the part of the employer to pay an overtime rate of compensation, except as provided in subdivision (b), if the employee requests this schedule in writing and the employer approves the request. This shall be referred to as an overtime exemption for an employee-selected flexible work schedule. (b) If an employee-selected flexible work schedule is adopted pursuant to subdivision (a), the employer shall pay overtime at one and one-half times the employee's regular rate of pay for all hours worked over 40 hours in a workweek or over 10 hours in a workday, whichever is the greater number of hours. All work performed in excess of 12 hours per workday and in excess of eight hours on a fifth, sixth, or seventh day in the workweek shall be paid at double the employee's regular rate of pay. (c) The employer may inform its employees that it is willing to consider an employee request to work an employee-selected flexible work schedule, but shall not induce a request by promising an employment benefit or threatening an employment detriment. (d) The employee or employer may discontinue the employee-selected flexible work schedule at any time by giving written notice to the other party. The request will be effective the first day of the next pay period or the fifth day after notice is given if there are fewer than five days before the start of the next pay period, unless otherwise agreed to by the employer and the employee. (e) This section does not apply to any employee covered by a valid collective bargaining agreement or employed by the state, a city, county, city and county, district, municipality, or other public, quasi-public, or municipal corporation, or any political subdivision of this state. (f) This section shall be liberally construed to accomplish its purposes. (g) (1) The Division of Labor Standards Enforcement shall enforce this section and shall adopt or revise regulations in a manner necessary to conform and implement this section. (2) This section shall prevail over any inconsistent provisions in any wage order of the Industrial Welfare Commission. (h) (1) For the purposes of this section, "qualified employer" means any employer that is an aerospace manufacturer or related business operating within an Aerospace Innovation Hub. (2) For purposes of this subdivision, "Aerospace Innovation Hub," "aerospace manufacturer," and "related business" have the same meanings as defined in subdivisions (a), (b), and (c), respectively, of Section 12099.8 of the Government Code.   SEC. 4.   Section 21080.38 is added to the   Public Resources Code   , to read:   21080.38. (a) This division does not apply to a project or an activity related to the retooling or alteration for manufacturing purposes of an existing facility of an aerospace manufacturer or a related business in an Aerospace Innovation Hub within the facility's existing footprint. (b) For purposes of this division, "Aerospace Innovation Hub," "aerospace manufacturer," and "related business" have the same meanings as defined in subdivisions (a), (b), and (c), respectively, of Section 12099.8 of the Government Code.   SEC. 5.   Section 21168.6.8 is added to the   Public Resources Code   , to read:   21168.6.8. (a) For the purposes of this section, the following terms have the following meanings: (1) "Aerospace project" means either of the following: (A) A project related to the construction of a new facility of an aerospace manufacturer or a related business. (B) A project related to the expansion of an existing facility of an aerospace manufacturer or a related business outside of the facility's existing footprint. (2) "Designated aerospace project" means an aerospace project designated pursuant to subdivision (b). (b) For each calendar year from 2015 to 2020, inclusive, the Governor shall designate four aerospace projects within Aerospace Innovation Hubs designated pursuant to Section 12099.81 of the Government Code. Each designated project shall have a capital investment of at least 75 million dollars ($75,000,000). (c) (1) On or before July 1, 2015, the Judicial Council shall adopt a rule of court to establish procedures applicable to actions or proceedings brought to attack, review, set aside, void, or annul the certification of the environmental impact report for a designated aerospace project or the granting of any project approvals that require the actions or proceedings, including any potential appeals therefrom, be resolved, to the extent feasible, within 270 days of certification of the record of proceedings pursuant to subdivision (e). (2) Notwithstanding any other law, the procedures established pursuant to paragraph (1) shall apply to an action or proceeding brought to attack, review, set aside, void, or annul the certification of the environmental impact report for a designated aerospace project or the granting of any project approvals. (d) (1) The draft and final environmental impact report for a designated aerospace project shall include a notice in not less than 12-point type stating the following: THIS EIR IS SUBJECT TO SECTION 21168.6.8 OF THE PUBLIC RESOURCES CODE, WHICH PROVIDES, AMONG OTHER THINGS, THAT THE LEAD AGENCY NEED NOT CONSIDER CERTAIN COMMENTS FILED AFTER THE CLOSE OF THE PUBLIC COMMENT PERIOD FOR THE DRAFT EIR. ANY JUDICIAL ACTION CHALLENGING THE CERTIFICATION OF THE EIR OR THE APPROVAL OF THE PROJECT DESCRIBED IN THE EIR IS SUBJECT TO THE PROCEDURES SET FORTH IN SECTION 21168.6.8 OF THE PUBLIC RESOURCES CODE. A COPY OF SECTION 21168.6.8 OF THE PUBLIC RESOURCES CODE IS INCLUDED IN THE APPENDIX TO THIS EIR. (2) The draft environmental impact report and final environmental impact report shall contain, as an appendix, the full text of this section. (3) Within 10 days after the release of the draft environmental impact report, the lead agency shall conduct an informational workshop to inform the public of the key analyses and conclusions of that report. (4) Within 10 days before the close of the public comment period, the lead agency shall hold a public hearing to receive testimony on the draft environmental impact report. A transcript of the hearing shall be included as an appendix to the final environmental impact report. (5) (A) Within five days following the close of the public comment period, a commenter on the draft environmental impact report may submit to the lead agency a written request for nonbinding mediation. The lead agency and the designated aerospace project applicant shall participate in nonbinding mediation with all commenters who submitted timely comments on the draft environmental impact report and who requested the mediation. Mediation conducted pursuant to this paragraph shall end no later than 35 days after the close of the public comment period. (B) A request for mediation shall identify all areas of dispute raised in the comment submitted by the commenter that are to be mediated. (C) The lead agency shall select one or more mediators who shall be retired judges or recognized experts with at least five years experience in land use and environmental law or science, or mediation. The applicant shall bear the costs of mediation. (D) A mediation session shall be conducted on each area of dispute with the parties requesting mediation on that area of dispute. (E) The lead agency shall adopt, as a condition of approval, any measures agreed upon by the lead agency, the applicant, and any other commenter who requested mediation. A commenter who agrees to a measure pursuant to this subparagraph shall not raise the issue addressed by that measure as a basis for an action or proceeding challenging the lead agency's decision to certify the environmental impact report or to grant one or more initial project approvals. (6) The lead agency need not consider written comments submitted after the close of the public comment period, unless those comments address any of the following: (A) New issues raised in the response to comments by the lead agency. (B) New information released by the public agency subsequent to the release of the draft environmental impact report, such as new information set forth or embodied in a staff report, proposed permit, proposed resolution, ordinance, or similar documents. (C) Changes made to the project after the close of the public comment period. (D) Proposed conditions for approval, mitigation measures, or proposed findings required by Section 21081 or a proposed reporting and monitoring program required by paragraph (1) of subdivision (a) of Section 21081.6, where the lead agency releases those documents subsequent to the release of the draft environmental impact report. (E) New information that was not reasonably known and could not have been reasonably known during the public comment period. (7) The lead agency shall file the notice required by subdivision (a) of Section 21152 within five days after the last initial project approval. (e) (1) The lead agency shall prepare and certify the record of the proceedings in accordance with this subdivision and in accordance with Rule 3.1365 of the California Rules of Court. The applicant shall pay the lead agency for all costs of preparing and certifying the record of proceedings. (2) No later than three business days following the date of the release of the draft environmental impact report, the lead agency shall make available to the public in a readily accessible electronic format the draft environmental impact report and all other documents submitted to or relied on by the lead agency in the preparation of the draft environmental impact report. A document prepared by the lead agency or submitted by the applicant after the date of the release of the draft environmental impact report that is a part of the record of the proceedings shall be made available to the public in a readily accessible electronic format within five business days after the document is prepared or received by the lead agency. (3) Notwithstanding paragraph (2), documents submitted to or relied on by the lead agency that were not prepared specifically for the project and are copyright protected are not required to be made readily accessible in an electronic format. For those copyright protected documents, the lead agency shall make an index of these documents available in an electronic format no later than the date of the release of the draft environmental impact report, or within five business days if the document is received or relied on by the lead agency after the release of the draft environmental impact report. The index must specify the libraries or lead agency offices in which hardcopies of the copyrighted materials are available for public review. (4) The lead agency shall encourage written comments on the project to be submitted in a readily accessible electronic format, and shall make any such comment available to the public in a readily accessible electronic format within five days of its receipt. (5) Within seven business days after the receipt of any comment that is not in an electronic format, the lead agency shall convert that comment into a readily accessible electronic format and make it available to the public in that format. (6) The lead agency shall indicate in the record of the proceedings comments received that were not considered by the lead agency pursuant to paragraph (6) of subdivision (d) and need not include the content of the comments as a part of the record. (7) Within five days after the filing of the notice required by subdivision (a) of Section 21152, the lead agency shall certify the record of the proceedings for the approval or determination and shall provide an electronic copy of the record to a party that has submitted a written request for a copy. The lead agency may charge and collect a reasonable fee from a party requesting a copy of the record for the electronic copy, which shall not exceed the reasonable cost of reproducing that copy. (8) Within 10 days after being served with a complaint or a petition for a writ of mandate, the lead agency shall lodge a copy of the certified record of proceedings with the superior court. (9) Any dispute over the content of the record of the proceedings shall be resolved by the superior court. Unless the superior court directs otherwise, a party disputing the content of the record shall file a motion to augment the record at the time it files its initial brief. (10) The contents of the record of proceedings shall be as set forth in subdivision (e) of Section 21167.6.   SEC. 6.   Section 17053.35 is added to the   Revenue and Taxation Code   , to read:  17053.35. (a) For taxable years beginning on or after January 1, 2015, and before January 1, 2025, a qualified taxpayer shall be allowed a credit against the "net tax," as defined in Section 17039, an amount equal to 10 percent of the qualified cost of qualified property that is placed in service in this state during the taxable year. (b) For purposes of this section, "qualified cost" means any cost that satisfies each of the following conditions: (1) Is a cost paid or incurred by the qualified taxpayer for the construction, reconstruction, or acquisition of qualified property during the taxable year. (2) Except as provided in paragraph (2) of subdivision (d) and subparagraph (B) of paragraph (3) of subdivision (d), is an amount upon which the qualified taxpayer has paid, directly or indirectly, as a separately stated contract amount or as determined from the records of the qualified taxpayer, sales tax reimbursement or use tax under Part 1 (commencing with Section 6001). (3) Is an amount properly chargeable to the capital account of the qualified taxpayer. (c) (1) (A) For purposes of this section, "qualified taxpayer" means any taxpayer that is an aerospace manufacturer or related business operating within an Aerospace Innovation Hub. (B) For the purposes of this subdivision, "Aerospace Innovation Hub," "aerospace manufacturer," and "related business" have the same meanings as defined in subdivisions (a), (b), and (c), respectively, of Section 12099.8 of the Government Code. (2) "Qualified taxpayer" does not include a taxpayer whose acquisition of tangible personal property is subject to the exemption provided by Section 6377.1. (3) In the case of any pass thru entity, the determination of whether a taxpayer is a qualified taxpayer under this section shall be made at the entity level and any credit under this section or Section 23649 shall be allowed to the pass thru entity and passed through to the partners or shareholders in accordance with applicable provisions of Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). For purposes of this paragraph, the term "pass thru entity" means any partnership or "S" corporation. (4) The Franchise Tax Board may prescribe regulations to carry out the purposes of this section, including any regulations necessary to prevent the avoidance of the effect of this section through splitups, shell corporations, partnerships, tiered ownership structures, sale-leaseback transactions, or otherwise. (d) For purposes of this section, "qualified property" means property that is described as any of the following: (1) Tangible personal property that is defined in Section 1245(a) of the Internal Revenue Code that is primarily used for any of the following: (A) For the manufacturing, processing, refining, fabricating, or recycling of property, beginning at the point at which any raw materials are received by the qualified taxpayer and introduced into the process and ending at the point at which the manufacturing, processing, refining, fabricating, or recycling has altered tangible personal property to its completed form, including packaging, if required. (B) In research and development. (C) To maintain, repair, measure, or test any property described in this paragraph. (D) For pollution control that meets or exceeds standards established by the state or by any local or regional governmental agency within the state. (E) For recycling. (2) The value of any capitalized labor costs that are directly allocable to the construction or modification of property described in paragraph (1). (3) (A) Special purpose buildings and foundations that are constructed or modified for use by the qualified taxpayer primarily in a manufacturing, processing, refining, fabricating, or recycling process, or as a research or storage facility primarily used in connection with those processes. (B) The value of any capitalized labor costs that are directly allocable to the construction or modification of special purpose buildings and foundations that are used primarily in the manufacturing, processing, refining, fabricating, or recycling process, or as a research or storage facility primarily used in connection with those processes. (C) (i) For purposes of this paragraph, "special purpose building and foundation" means only a building and the foundation immediately underlying the building that is specifically designed and constructed or reconstructed for the installation, operation, and use of specific machinery and equipment with a special purpose, which machinery and equipment, after installation, will become affixed to or a fixture of the real property, and the construction or reconstruction of which is specifically designed and used exclusively for the specified purposes as set forth in subparagraph (A). (ii) A building is specifically designed and constructed or modified for a qualified purpose if it is not economical to design and construct the building for the intended purpose and then use the structure for a different purpose. (iii) For purposes of clause (i) and clause (vi), a building is used exclusively for a qualified purpose only if its use does not include a use for which it was not specifically designed and constructed or modified. Incidental use of a building for nonqualified purposes does not preclude the building from being a special purpose building. "Incidental use" means a use that is both related and subordinate to the qualified purpose. It will be conclusively presumed that a use is not subordinate if more than one-third of the total usable volume of the building is devoted to a use that is not a qualified purpose. (iv) In the event an entire building does not qualify as a special purpose building, a taxpayer may establish that a portion of a building, and the foundation immediately underlying the portion, qualifies for treatment as a special purpose building and foundation if the portion satisfies all of the definitional provisions in this subparagraph. (v) To the extent that a building is not a special purpose building as defined above, but a portion of the building qualifies for treatment as a special purpose building, then all equipment that exclusively supports the qualified purpose occurring within that portion and that would qualify as Internal Revenue Code Section 1245 property if it were not a fixture or affixed to the building shall be treated as a cost of the portion of the building that qualifies for treatment as a special purpose building. (vi) Buildings and foundations that do not meet the definition of a special purpose building and foundation set forth above include, but are not limited to: buildings designed and constructed or reconstructed principally to function as a general purpose manufacturing, industrial, or commercial building; research facilities that are used primarily prior to or after, or prior to and after, the manufacturing process; or storage facilities that are used primarily prior to or after, or prior to and after, completion of the manufacturing process. (4) Subject to the provisions in paragraph (2) of subdivision (b), qualified property also includes computer software that is primarily used for those purposes set forth in paragraph (1) of this subdivision. (5) Qualified property does not include any of the following: (A) Furniture. (B) Facilities used for warehousing purposes after completion of the manufacturing process. (C) Inventory. (D) Equipment used in the extraction process. (E) Equipment used to store finished products that have completed the manufacturing process. (F) Any tangible personal property that is used in administration, general management, or marketing. (e) For purposes of this section: (1) "Fabricating" means to make, build, create, produce, or assemble components or property to work in a new or different manner. (2) "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. (3) "Primarily" means more than 50 percent. (4) "Process" means the period beginning at the point at which any raw materials are received by the qualified taxpayer and introduced into that activity of the qualified taxpayer and ending at the point at which the manufacturing, processing, refining, fabricating, or recycling activity of the qualified taxpayer has altered tangible personal property to its completed form, including packaging, if required. Raw materials are considered to have been introduced into the process when the raw materials are stored on the same premises where the qualified taxpayer's manufacturing, processing, refining, fabricating, or recycling activity is conducted. Raw materials that are stored on premises other than where the qualified taxpayer's manufacturing, processing, refining, fabricating, or recycling activity is conducted, are not considered to have been introduced into the manufacturing, processing, refining, fabricating, or recycling process. (5) "Processing" means the physical application of the materials and labor necessary to modify or change the characteristics of property. (6) "Refining" means the process of converting a natural resource to an intermediate or finished product. (7) "Research and development" means those activities that are described in Section 174 of the Internal Revenue Code or in any regulations thereunder. (f) The credit allowed under subdivision (a) shall apply to qualified property that is acquired by or subject to lease by a qualified taxpayer, subject to the following special rules: (1) A lessor of qualified property, irrespective of whether the lessor is a qualified taxpayer, is not allowed the credit provided under subdivision (a) with respect to any qualified property leased to another qualified taxpayer. (2) (A) For purposes of determining the qualified cost paid or incurred by a lessee in any leasing transaction that is not treated as a sale under Part 1 (commencing with Section 6001), the following rules apply: (i) Except as provided by subparagraph (C) of this paragraph, paragraphs (1) and (3) of subdivision (b) do not apply. (ii) Except as provided in subparagraph (B) and clause (iii), the "qualified cost" upon which the lessee shall compute the credit provided under this section shall be equal to the original cost to the lessor (within the meaning of Section 18031) of the qualified property that is the subject of the lease. (iii) The requirement of paragraph (2) of subdivision (b) shall be treated as satisfied only if the lessor has made a timely election under either Section 6094.1 or subdivision (d) of Section 6244 and has paid sales tax reimbursement or use tax measured by the purchase price of the qualified property (within the meaning of paragraph (5) of subdivision (g) of Section 6006). For purposes of this subdivision, the amount of original cost to the lessor that may be taken into account under clause (ii) may not exceed the purchase price upon which sales tax reimbursement or use tax has been paid under the preceding sentence. (B) For purposes of applying subparagraph (A) only, the following special rules shall apply: (i) The original cost to the lessor of the qualified property shall be reduced by the amount of any original cost of that property that was taken into account by any predecessor lessee in computing the credit allowable under this section. (ii) Clause (i) does not apply in any case where the predecessor lessee was required to recapture the credit provided under this section pursuant to subdivision (g). (iii) For purposes of this section only, in any case where a successor lessor has acquired qualified property from a predecessor lessor in a transaction not treated as a sale under Part 1 (commencing with Section 6001), the original cost to the successor lessor of the qualified property shall be reduced by the amount of the original cost of the qualified property that was taken into account by any lessee of the predecessor lessor in computing the credit allowable under this section. (C) In determining the original cost of any qualified property under this paragraph, only amounts paid or incurred by the lessor on or after January 1, 2015, shall be taken into account. (D) Notwithstanding subparagraph (A), in the case of any leasing transaction for which the lessee is allowed the credit under this section and thereafter the lessee (or any party related to the lessee within the meaning of Section 267 or 318 of the Internal Revenue Code) acquires the qualified property from the lessor (or any successor lessor) within one year from the date the qualified property is first used by the lessee under the terms of the lease, the lessee's (or related party's) acquisition of the qualified property from the lessor (or successor lessor) shall be treated as a disposition by the lessee of the qualified property that was subject to the lease under subdivision (g). (3) For purposes of determining the qualified cost paid or incurred by a lessee in any leasing transaction that is treated as a sale under Part 1 (commencing with Section 6001), the following rules apply: (A) Paragraph (1) of subdivision (b) is applied by substituting the term "purchase" for the term "construction, reconstruction, or acquisition." (B) Paragraph (3) of subdivision (b) applies. (C) The requirement of paragraph (2) of subdivision (b) are treated as satisfied at the time that either the lessor or the qualified taxpayer pays sales tax reimbursement or use tax under Part 1 (commencing with Section 6001). (4) (A) In the case of any leasing transaction described in paragraph (2), the lessor shall provide a statement to the lessee specifying the amount of the lessor's original cost of the qualified property and the amount of that cost upon which a sales or use tax was paid within 45 days after the close of the lessee's taxable year in which the credit is allowable to the lessee under this section. (B) The statement required under subparagraph (A) shall be made available to the Franchise Tax Board upon request. (g) A credit is not allowed if the qualified property is removed from the state, is disposed of to an unrelated party, or is used for any purpose not qualifying for the credit provided in this section in the same taxable year in which the qualified property is first placed in service in this state. If any qualified property for which a credit is allowed pursuant to this section is thereafter removed from this state, disposed of to an unrelated party, or used for any purpose not qualifying for the credit provided in this section within one year from the date the qualified property is first placed in service in this state, the amount of the credit allowed by this section for that qualified property shall be recaptured by adding that credit amount to the net tax of the qualified taxpayer for the taxable year in which the qualified property is disposed of, removed, or put to an ineligible use. (h) In the case where the credit allowed by this section exceeds the "net tax," the excess may be carried over to reduce the "net tax" in the following year, and the seven succeeding years if necessary, until the credit is exhausted. (i) This credit shall be in lieu of any other credit or deduction that the qualified taxpayer may otherwise be allowed pursuant to this part.   SEC. 7.   Section 17053.36 is added to the   Revenue and Taxation Code   , to read:   17053.36. (a) For taxable years beginning January 1, 2015, and before January 1, 2025, there shall be allowed as a credit against the "net tax," as defined in Section 17039, an amount equal to 25 percent of the charges for electricity paid or incurred by a qualified taxpayer during the taxable year. (b) (1) For purposes of this section, "qualified taxpayer" means any taxpayer that is an aerospace manufacturer or related business operating within an Aerospace Innovation Hub. (2) For the purposes of this subdivision, "Aerospace Innovation Hub," "aerospace manufacturer," and "related business" have the same meanings as defined in subdivisions (a), (b), and (c), respectively, of Section 12099.8 of the Government Code. (c) If the credit allowed by this section exceeds the "net tax," the excess may be carried over to reduce the "net tax" in the following year, and the succeeding seven years if necessary, until the credit is exhausted. (d) This credit shall be in lieu of any other credit or deduction that the qualified taxpayer may otherwise be allowed pursuant to this part.   SEC. 8.   Section 17059.2 of the   Revenue and Taxation Code   is amended to read:  17059.2. (a) (1) For each taxable year beginning on and after January 1, 2014, and before January 1, 2025, there shall be allowed as a credit against the "net tax," as defined in Section 17039, an amount as determined by the committee pursuant to paragraph (2) and approved pursuant to Section 18410.2. (2) The credit under this section shall be allocated by GO-Biz with respect to the 2013-14 fiscal year through and including the 2017-18 fiscal year. The amount of credit allocated to a taxpayer with respect to a fiscal year pursuant to this section shall be as set forth in a written agreement between GO-Biz and the taxpayer and shall be based on the following factors: (A) The number of jobs the taxpayer will create or retain in this state. (B) The compensation paid or proposed to be paid by the taxpayer to its employees, including wages and fringe benefits. (C) The amount of investment in this state by the taxpayer. (D) The extent of unemployment or poverty in the area according to the United States Census in which the taxpayer's project or business is proposed or located. (E) The incentives available to the taxpayer in this state, including incentives from the state, local government, and other entities. (F) The incentives available to the taxpayer in other states. (G) The duration of the proposed project and the duration the taxpayer commits to remain in this state. (H) The overall economic impact in this state of the taxpayer's project or business. (I) The strategic importance of the taxpayer's project or business to the state, region, or locality. (J) The opportunity for future growth and expansion in this state by the taxpayer's business. (K) The extent to which the anticipated benefit to the state exceeds the projected benefit to the taxpayer from the tax credit.  (L) (i) Whether the taxpayer is an aerospace manufacturer or related business operating within an Aerospace Innovation Hub.   (ii) For the purposes of this subparagraph, "Aerospace Innovation Hub," "aerospace manufacturer," and "related business" have the same meanings as defined in subdivisions (a), (b), and (c), respectively, of Section 12099.8 of the Government Code.  (3) The written agreement entered into pursuant to paragraph (2) shall include: (A) Terms and conditions that include the taxable year or years for which the credit allocated shall be allowed, a minimum compensation level, and a minimum job retention period. (B) Provisions indicating whether the credit is to be allocated in full upon approval or in increments based on mutually agreed upon milestones when satisfactorily met by the taxpayer. (C) Provisions that allow the committee to recapture the credit, in whole or in part, if the taxpayer fails to fulfill the terms and conditions of the written agreement. (b) For purposes of this section: (1) "Committee" means the California Competes Tax Credit Committee established pursuant to Section 18410.2. (2) "GO-Biz" means the Governor's Office of Business and Economic Development. (c) For purposes of this section, GO-Biz shall do the following: (1) Give priority to a taxpayer whose project or business is located or proposed to be located in an area of high unemployment or poverty. (2) Negotiate with a taxpayer the terms and conditions of proposed written agreements that provide the credit allowed pursuant to this section to a taxpayer. (3) Provide the negotiated written agreement to the committee for its approval pursuant to Section 18410.2. (4) Inform the Franchise Tax Board of the terms and conditions of the written agreement upon approval of the written agreement by the committee. (5) Inform the Franchise Tax Board of any recapture, in whole or in part, of a previously allocated credit upon approval of the recapture by the committee. (6) Post on its Internet Web site all of the following: (A) The name of each taxpayer allocated a credit pursuant to this section. (B) The estimated amount of the investment by each taxpayer. (C) The estimated number of jobs created or retained. (D) The amount of the credit allocated to the taxpayer. (E) The amount of the credit recaptured from the taxpayer, if applicable. (d) For purposes of this section, the Franchise Tax Board shall do all of the following: (1) (A) Except as provided in subparagraph (B), review the books and records of all taxpayers allocated a credit pursuant to this section to ensure compliance with the terms and conditions of the written agreement between the taxpayer and GO-Biz. (B) In the case of a taxpayer that is a "small business," as defined in Section 17053.73, review the books and records of the taxpayer allocated a credit pursuant to this section to ensure compliance with the terms and conditions of the written agreement between the taxpayer and GO-Biz when, in the sole discretion of the Franchise Tax Board, a review of those books and records is appropriate or necessary in the best interests of the state. (2) Notwithstanding Section 19542: (A) Notify GO-Biz of a possible breach of the written agreement by a taxpayer and provide detailed information regarding the basis for that determination. (B) Provide information to GO-Biz with respect to whether a taxpayer is a "small business," as defined in Section 17053.73. (e) In the case where the credit allowed under this section exceeds the "net tax," as defined in Section 17039, for a taxable year, the excess credit may be carried over to reduce the "net tax" in the following taxable year, and succeeding five taxable years, if necessary, until the credit has been exhausted. (f) Any recapture, in whole or in part, of a credit approved by the committee pursuant to Section 18410.2 shall be treated as a mathematical error appearing on the return. Any amount of tax resulting from that recapture shall be assessed by the Franchise Tax Board in the same manner as provided by Section 19051. The amount of tax resulting from the recapture shall be added to the tax otherwise due by the taxpayer for the taxable year in which the committee's recapture determination occurred. (g) (1) The aggregate amount of credit that may be allocated in any fiscal year pursuant to this section and Section 23689 shall be an amount equal to the sum of subparagraphs (A), (B), and (C), less the amount specified in subparagraph (D): (A) Thirty million dollars ($30,000,000) for the 2013-14 fiscal year, one hundred fifty million dollars ($150,000,000) for the 2014-15 fiscal year, and two hundred million dollars ($200,000,000) for each fiscal year from 2015-16 to 2017-18, inclusive. (B) The unallocated credit amount, if any, from the preceding fiscal year. (C) The amount of any previously allocated credits that have been recaptured. (D) The amount estimated by the Director of Finance, in consultation with the Franchise Tax Board and the State Board of Equalization, to be necessary to limit the aggregation of the estimated amount of exemptions claimed pursuant to Section 6377.1 and of the amounts estimated to be claimed pursuant to this section and Sections 17053.73, 23626, and 23689 to no more than seven hundred fifty million dollars ($750,000,000) for either the current fiscal year or the next fiscal year. (i) The Director of Finance shall notify the Chairperson of the Joint Legislative Budget Committee of the estimated annual allocation authorized by this paragraph. Any allocation pursuant to these provisions shall be made no sooner than 30 days after written notification has been provided to the Chairperson of the Joint Legislative Budget Committee and the chairpersons of the committees of each house of the Legislature that consider appropriation, or not sooner than whatever lesser time the Chairperson of the Joint Legislative Budget Committee, or his or her designee, may determine. (ii) In no event shall the amount estimated in this subparagraph be less than zero dollars ($0). (2) Each fiscal year, 25 percent of the aggregate amount of the credit that may be allocated pursuant to this section and Section 23689 shall be reserved for small business, as defined in Section 17053.73 or 23626. (3) Each fiscal year, no more than 20 percent of the aggregate amount of the credit that may be allocated pursuant to this section shall be allocated to any one taxpayer. (h) GO-Biz may prescribe rules and regulations as necessary to carry out the purposes of this section. Any rule or regulation prescribed pursuant to this section may be by adoption of an emergency regulation in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. (i) A written agreement between GO-Biz and a taxpayer with respect to the credit authorized by this section shall comply with existing law on the date the agreement is executed. (j) (1) Upon the effective date of this section, the Department of Finance shall estimate the total dollar amount of credits that will be claimed under this section with respect to each fiscal year from the 2013-14 fiscal year to the 2024-25 fiscal year, inclusive. (2) The Franchise Tax Board shall annually provide to the Joint Legislative Budget Committee, by no later than March 1, a report of the total dollar amount of the credits claimed under this section with respect to the relevant fiscal year. The report shall compare the total dollar amount of credits claimed under this section with respect to that fiscal year with the department's estimate with respect to that same fiscal year. If the total dollar amount of credits claimed for the fiscal year is less than the estimate for that fiscal year, the report shall identify options for increasing annual claims of the credit so as to meet estimated amounts. (k) This section is repealed on December 1, 2025.  SEC. 9.   Section 23635 is added to the   Revenue and Taxation Code   , to read:   23635. (a) For taxable years beginning on or after January 1, 2015, and before January 1, 2025, a qualified taxpayer shall be allowed a credit against the "tax," as defined in Section 23036, an amount equal to 10 percent of the qualified cost of qualified property that is placed in service in this state during the taxable year. (b) For purposes of this section, "qualified cost" means any cost that satisfies each of the following conditions: (1) Is a cost paid or incurred by the qualified taxpayer for the construction, reconstruction, or acquisition of qualified property during the taxable year. (2) Except as provided in paragraph (2) of subdivision (d) and subparagraph (B) of paragraph (3) of subdivision (d), is an amount upon which the qualified taxpayer has paid, directly or indirectly, as a separately stated contract amount or as determined from the records of the qualified taxpayer, sales tax reimbursement or use tax under Part 1 (commencing with Section 6001). (3) Is an amount properly chargeable to the capital account of the qualified taxpayer. (c) (1) (A) For purposes of this section, "qualified taxpayer" means any taxpayer that is an aerospace manufacturer or related business operating within an Aerospace Innovation Hub. (B) For the purposes of this subdivision, "Aerospace Innovation Hub," "aerospace manufacturer," and "related business" have the same meanings as defined in subdivisions (a), (b), and (c), respectively, of Section 12099.8 of the Government Code. (2) "Qualified taxpayer" does not include a taxpayer whose acquisition of tangible personal property is subject to the exemption provided by Section 6377.1. (3) In the case of any pass thru entity, the determination of whether a taxpayer is a qualified taxpayer under this section shall be made at the entity level and any credit under this section or Section 23649 shall be allowed to the pass thru entity and passed through to the partners or shareholders in accordance with applicable provisions of Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). For purposes of this paragraph, the term "pass thru entity" means any partnership or "S" corporation. (4) The Franchise Tax Board may prescribe regulations to carry out the purposes of this section, including any regulations necessary to prevent the avoidance of the effect of this section through splitups, shell corporations, partnerships, tiered ownership structures, sale-leaseback transactions, or otherwise. (d) For purposes of this section, "qualified property" means property that is described as any of the following: (1) Tangible personal property that is defined in Section 1245(a) of the Internal Revenue Code that is primarily used for any of the following: (A) For the manufacturing, processing, refining, fabricating, or recycling of property, beginning at the point at which any raw materials are received by the qualified taxpayer and introduced into the process and ending at the point at which the manufacturing, processing, refining, fabricating, or recycling has altered tangible personal property to its completed form, including packaging, if required. (B) In research and development. (C) To maintain, repair, measure, or test any property described in this paragraph. (D) For pollution control that meets or exceeds standards established by the state or by any local or regional governmental agency within the state. (E) For recycling. (2) The value of any capitalized labor costs that are directly allocable to the construction or modification of property described in paragraph (1). (3) (A) Special purpose buildings and foundations that are constructed or modified for use by the qualified taxpayer primarily in a manufacturing, processing, refining, fabricating, or recycling process, or as a research or storage facility primarily used in connection with those processes. (B) The value of any capitalized labor costs that are directly allocable to the construction or modification of special purpose buildings and foundations that are used primarily in the manufacturing, processing, refining, fabricating, or recycling process, or as a research or storage facility primarily used in connection with those processes. (C) (i) For purposes of this paragraph, "special purpose building and foundation" means only a building and the foundation immediately underlying the building that is specifically designed and constructed or reconstructed for the installation, operation, and use of specific machinery and equipment with a special purpose, which machinery and equipment, after installation, will become affixed to or a fixture of the real property, and the construction or reconstruction of which is specifically designed and used exclusively for the specified purposes as set forth in subparagraph (A). (ii) A building is specifically designed and constructed or modified for a qualified purpose if it is not economical to design and construct the building for the intended purpose and then use the structure for a different purpose. (iii) For purposes of clause (i) and clause (vi), a building is used exclusively for a qualified purpose only if its use does not include a use for which it was not specifically designed and constructed or modified. Incidental use of a building for nonqualified purposes does not preclude the building from being a special purpose building. "Incidental use" means a use that is both related and subordinate to the qualified purpose. It will be conclusively presumed that a use is not subordinate if more than one-third of the total usable volume of the building is devoted to a use that is not a qualified purpose. (iv) In the event an entire building does not qualify as a special purpose building, a taxpayer may establish that a portion of a building, and the foundation immediately underlying the portion, qualifies for treatment as a special purpose building and foundation if the portion satisfies all of the definitional provisions in this subparagraph. (v) To the extent that a building is not a special purpose building as defined above, but a portion of the building qualifies for treatment as a special purpose building, then all equipment that exclusively supports the qualified purpose occurring within that portion and that would qualify as Internal Revenue Code Section 1245 property if it were not a fixture or affixed to the building shall be treated as a cost of the portion of the building that qualifies for treatment as a special purpose building. (vi) Buildings and foundations that do not meet the definition of a special purpose building and foundation set forth above include, but are not limited to: buildings designed and constructed or reconstructed principally to function as a general purpose manufacturing, industrial, or commercial building; research facilities that are used primarily prior to or after, or prior to and after, the manufacturing process; or storage facilities that are used primarily prior to or after, or prior to and after, completion of the manufacturing process. (4) Subject to the provisions in paragraph (2) of subdivision (b), qualified property also includes computer software that is primarily used for those purposes set forth in paragraph (1) of this subdivision. (5) Qualified property does not include any of the following: (A) Furniture. (B) Facilities used for warehousing purposes after completion of the manufacturing process. (C) Inventory. (D) Equipment used in the extraction process. (E) Equipment used to store finished products that have completed the manufacturing process. (F) Any tangible personal property that is used in administration, general management, or marketing. (e) For purposes of this section: (1) "Fabricating" means to make, build, create, produce, or assemble components or property to work in a new or different manner. (2) "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. (3) "Primarily" means more than 50 percent. (4) "Process" means the period beginning at the point at which any raw materials are received by the qualified taxpayer and introduced into that activity of the qualified taxpayer and ending at the point at which the manufacturing, processing, refining, fabricating, or recycling activity of the qualified taxpayer has altered tangible personal property to its completed form, including packaging, if required. Raw materials are considered to have been introduced into the process when the raw materials are stored on the same premises where the qualified taxpayer's manufacturing, processing, refining, fabricating, or recycling activity is conducted. Raw materials that are stored on premises other than where the qualified taxpayer's manufacturing, processing, refining, fabricating, or recycling activity is conducted, are not considered to have been introduced into the manufacturing, processing, refining, fabricating, or recycling process. (5) "Processing" means the physical application of the materials and labor necessary to modify or change the characteristics of property. (6) "Refining" means the process of converting a natural resource to an intermediate or finished product. (7) "Research and development" means those activities that are described in Section 174 of the Internal Revenue Code or in any regulations thereunder. (f) The credit allowed under subdivision (a) shall apply to qualified property that is acquired by or subject to lease by a qualified taxpayer, subject to the following special rules: (1) A lessor of qualified property, irrespective of whether the lessor is a qualified taxpayer, is not allowed the credit provided under subdivision (a) with respect to any qualified property leased to another qualified taxpayer. (2) (A) For purposes of determining the qualified cost paid or incurred by a lessee in any leasing transaction that is not treated as a sale under Part 1 (commencing with Section 6001), the following rules apply: (i) Except as provided by subparagraph (C) of this paragraph, paragraphs (1) and (3) of subdivision (b) do not apply. (ii) Except as provided in subparagraph (B) and clause (iii), the "qualified cost" upon which the lessee shall compute the credit provided under this section shall be equal to the original cost to the lessor (within the meaning of Section 18031) of the qualified property that is the subject of the lease. (iii) The requirement of paragraph (2) of subdivision (b) shall be treated as satisfied only if the lessor has made a timely election under either Section 6094.1 or subdivision (d) of Section 6244 and has paid sales tax reimbursement or use tax measured by the purchase price of the qualified property (within the meaning of paragraph (5) of subdivision (g) of Section 6006). For purposes of this subdivision, the amount of original cost to the lessor that may be taken into account under clause (ii) may not exceed the purchase price upon which sales tax reimbursement or use tax has been paid under the preceding sentence. (B) For purposes of applying subparagraph (A) only, the following special rules shall apply: (i) The original cost to the lessor of the qualified property shall be reduced by the amount of any original cost of that property that was taken into account by any predecessor lessee in computing the credit allowable under this section. (ii) Clause (i) does not apply in any case where the predecessor lessee was required to recapture the credit provided under this section pursuant to subdivision (g). (iii) For purposes of this section only, in any case where a successor lessor has acquired qualified property from a predecessor lessor in a transaction not treated as a sale under Part 1 (commencing with Section 6001), the original cost to the successor lessor of the qualified property shall be reduced by the amount of the original cost of the qualified property that was taken into account by any lessee of the predecessor lessor in computing the credit allowable under this section. (C) In determining the original cost of any qualified property under this paragraph, only amounts paid or incurred by the lessor on or after January 1, 2015, shall be taken into account. (D) Notwithstanding subparagraph (A), in the case of any leasing transaction for which the lessee is allowed the credit under this section and thereafter the lessee (or any party related to the lessee within the meaning of Section 267 or 318 of the Internal Revenue Code) acquires the qualified property from the lessor (or any successor lessor) within one year from the date the qualified property is first used by the lessee under the terms of the lease, the lessee's (or related party's) acquisition of the qualified property from the lessor (or successor lessor) shall be treated as a disposition by the lessee of the qualified property that was subject to the lease under subdivision (g). (3) For purposes of determining the qualified cost paid or incurred by a lessee in any leasing transaction that is treated as a sale under Part 1 (commencing with Section 6001), the following rules apply: (A) Paragraph (1) of subdivision (b) is applied by substituting the term "purchase" for the term "construction, reconstruction, or acquisition." (B) Paragraph (3) of subdivision (b) applies. (C) The requirement of paragraph (2) of subdivision (b) are treated as satisfied at the time that either the lessor or the qualified taxpayer pays sales tax reimbursement or use tax under Part 1 (commencing with Section 6001). (4) (A) In the case of any leasing transaction described in paragraph (2), the lessor shall provide a statement to the lessee specifying the amount of the lessor's original cost of the qualified property and the amount of that cost upon which a sales or use tax was paid within 45 days after the close of the lessee's taxable year in which the credit is allowable to the lessee under this section. (B) The statement required under subparagraph (A) shall be made available to the Franchise Tax Board upon request. (g) A credit is not allowed if the qualified property is removed from the state, is disposed of to an unrelated party, or is used for any purpose not qualifying for the credit provided in this section in the same taxable year in which the qualified property is first placed in service in this state. If any qualified property for which a credit is allowed pursuant to this section is thereafter removed from this state, disposed of to an unrelated party, or used for any purpose not qualifying for the credit provided in this section within one year from the date the qualified property is first placed in service in this state, the amount of the credit allowed by this section for that qualified property shall be recaptured by adding that credit amount to the net tax of the qualified taxpayer for the taxable year in which the qualified property is disposed of, removed, or put to an ineligible use. (h) 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. (i) This credit shall be in lieu of any other credit or deduction that the qualified taxpayer may otherwise be allowed pursuant to this part.   SEC. 10.   Section 23636 is added to the   Revenue and Taxation Code   , to read:   23636. (a) For taxable years beginning January 1, 2015, and before January 1, 2025, there shall be allowed as a credit against the "tax," as defined in Section 23036, an amount equal to 25 percent of the charges for electricity paid or incurred by a qualified taxpayer during the taxable year. (b) (1) For purposes of this section, "qualified taxpayer" means any taxpayer that is an aerospace manufacturer or related business operating within an Aerospace Innovation Hub. (2) For the purposes of this subdivision, "Aerospace Innovation Hub," "aerospace manufacturer," and "related business" have the same meanings as defined in subdivisions (a), (b), and (c), respectively, of Section 12099.8 of the Government Code. (c) If 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 succeeding seven years if necessary, until the credit is exhausted. (d) This credit shall be in lieu of any other credit or deduction that the qualified taxpayer may otherwise be allowed pursuant to this part.   SEC. 11.   Section 23689 of the   Revenue and Taxation Code   is amended to read:  23689. (a) (1) For each taxable year beginning on and after January 1, 2014, and before January 1, 2025, there shall be allowed as a credit against the "tax," as defined in Section 23036, an amount as determined by the committee pursuant to paragraph (2) and approved pursuant to Section 18410.2. (2) The credit under this section shall be allocated by GO-Biz with respect to the 2013-14 fiscal year through and including the 2017-18 fiscal year. The amount of credit allocated to a taxpayer with respect to a fiscal year pursuant to this section shall be as set forth in a written agreement between GO-Biz and the taxpayer and shall be based on the following factors: (A) The number of jobs the taxpayer will create or retain in this state. (B) The compensation paid or proposed to be paid by the taxpayer to its employees, including wages and fringe benefits. (C) The amount of investment in this state by the taxpayer. (D) The extent of unemployment or poverty in the area according to the United States Census in which the taxpayer's project or business is proposed or located. (E) The incentives available to the taxpayer in the state, including incentives from the state, local government and other entities. (F) The incentives available to the taxpayer in other states. (G) The duration of the proposed project and the duration the taxpayer commits to remain in this state. (H) The overall economic impact in this state of the taxpayer's project or business. (I) The strategic importance of the taxpayer's project or business to the state, region, or locality. (J) The opportunity for future growth and expansion in this state by the taxpayer's business. (K) The extent to which the anticipated benefit to the state exceeds the projected benefit to the taxpayer from the tax credit.  (L) (i) Whether the taxpayer is an aerospace manufacturer or related business operating within an Aerospace Innovation Hub.   (ii) For the purposes of this subparagraph, "Aerospace Innovation Hub," "aerospace manufacturer," and "related business" have the same meanings as defined in subdivisions (a), (b), and (c), respectively, of Section 12099.8 of the Government Code.  (3) The written agreement entered into pursuant to paragraph (2) shall include: (A) Terms and conditions that include the taxable year or years for which the credit allocated shall be allowed, a minimum compensation level, and a minimum job retention period. (B) Provisions indicating whether the credit is to be allocated in full upon approval or in increments based on mutually agreed upon milestones when satisfactorily met by the taxpayer. (C) Provisions that allow the committee to recapture the credit, in whole or in part, if the taxpayer fails to fulfill the terms and conditions of the written agreement. (b) For purposes of this section: (1) "Committee" means the California Competes Tax Credit Committee established pursuant to Section 18410.2. (2) "GO-Biz" means the Governor's Office of Business and Economic Development. (c) For purposes of this section, GO-Biz shall do the following: (1) Give priority to a taxpayer whose project or business is located or proposed to be located in an area of high unemployment or poverty. (2) Negotiate with a taxpayer the terms and conditions of proposed written agreements that provide the credit allowed pursuant to this section to a taxpayer. (3) Provide the negotiated written agreement to the committee for its approval pursuant to Section 18410.2. (4) Inform the Franchise Tax Board of the terms and conditions of the written agreement upon approval of the written agreement by the committee. (5) Inform the Franchise Tax Board of any recapture, in whole or in part, of a previously allocated credit upon approval of the recapture by the committee. (6) Post on its Internet Web site all of the following: (A) The name of each taxpayer allocated a credit pursuant to this section. (B) The estimated amount of the investment by each taxpayer. (C) The estimated number of jobs created or retained. (D) The amount of the credit allocated to the taxpayer. (E) The amount of the credit recaptured from the taxpayer, if applicable. (d) For purposes of this section, the Franchise Tax Board shall do all of the following: (1) (A) Except as provided in subparagraph (B), review the books and records of all taxpayers allocated a credit pursuant to this section to ensure compliance with the terms and conditions of the written agreement between the taxpayer and GO-Biz. (B) In the case of a taxpayer that is a "small business," as defined in Section 23626, review the books and records of the taxpayer allocated a credit pursuant to this section to ensure compliance with the terms and conditions of the written agreement between the taxpayers and GO-Biz when, in the sole discretion of the Franchise Tax Board, a review of those books and records is appropriate or necessary in the best interests of the state. (2) Notwithstanding Section 19542: (A) Notify GO-Biz of a possible breach of the written agreement by a taxpayer and provide detailed information regarding the basis for that determination. (B) Provide information to GO-Biz with respect to whether a taxpayer is a "small business," as defined in Section 23626. (e) In the case where the credit allowed under this section exceeds the "tax," as defined in Section 23036, for a taxable year, the excess credit may be carried over to reduce the "tax" in the following taxable year, and succeeding five taxable years, if necessary, until the credit has been exhausted. (f) Any recapture, in whole or in part, of a credit approved by the committee pursuant to Section 18410.2 shall be treated as a mathematical error appearing on the return. Any amount of tax resulting from that recapture shall be assessed by the Franchise Tax Board in the same manner as provided by Section 19051. The amount of tax resulting from the recapture shall be added to the tax otherwise due by the taxpayer for the taxable year in which the committee's recapture determination occurred. (g) (1) The aggregate amount of credit that may be allocated in any fiscal year pursuant to this section and Section 17059.2 shall be an amount equal to the sum of subparagraphs (A), (B), and (C), less the amount specified in subparagraph (D): (A) Thirty million dollars ($30,000,000) for the 2013-14 fiscal year, one hundred fifty million dollars ($150,000,000) for the 2014-15 fiscal year, and two hundred million dollars ($200,000,000) for each fiscal year from 2015-16 to 2017-18, inclusive. (B) The unallocated credit amount, if any, from the preceding fiscal year. (C) The amount of any previously allocated credits that have been recaptured. (D) The amount estimated by the Director of Finance, in consultation with the Franchise Tax Board and the State Board of Equalization, to be necessary to limit the aggregation of the estimated amount of exemptions claimed pursuant to Section 6377.1 and of the amounts estimated to be claimed pursuant to this section and Sections 17053.73, 17059.2, and 23626 to no more than seven hundred fifty million dollars ($750,000,000) for either the current fiscal year or the next fiscal year. (i) The Director of Finance shall notify the Chairperson of the Joint Legislative Budget Committee of the estimated annual allocation authorized by this paragraph. Any allocation pursuant to these provisions shall be made no sooner than 30 days after written notification has been provided to the Chairperson of the Joint Legislative Budget Committee and the chairpersons of the committees of each house of the Legislature that consider appropriation, or not sooner than whatever lesser time the Chairperson of the Joint Legislative Budget Committee, or his or her designee, may determine. (ii) In no event shall the amount estimated in this subparagraph be less than zero dollars ($0). (2) Each fiscal year, 25 percent of the aggregate amount of the credit that may be allocated pursuant to this section and Section 17059.2 shall be reserved for "small business," as defined in Section 17053.73 or 23626. (3) Each fiscal year, no more than 20 percent of the aggregate amount of the credit that shall be allocated pursuant to this section may be allocated to any one taxpayer. (h) GO-Biz may prescribe rules and regulations as necessary to carry out the purposes of this section. Any rule or regulation prescribed pursuant to this section may be by adoption of an emergency regulation in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. (i) (1) A written agreement between GO-Biz and a taxpayer with respect to the credit authorized by this section shall not restrict, broaden, or otherwise alter the ability of the taxpayer to assign that credit or any portion thereof in accordance with Section 23663. (2) A written agreement between GO-Biz and a taxpayer with respect to the credit authorized by this section must comply with existing law on the date the agreement is executed. (j) (1) Upon the effective date of this section, the Department of Finance shall estimate the total dollar amount of credits that will be claimed under this section with respect to each fiscal year from the 2013-14 fiscal year to the 2024-25 fiscal year, inclusive. (2) The Franchise Tax Board shall annually provide to the Joint Legislative Budget Committee, by no later than March 1, a report of the total dollar amount of the credits claimed under this section with respect to the relevant fiscal year. The report shall compare the total dollar amount of credits claimed under this section with respect to that fiscal year with the department's estimate with respect to that same fiscal year. If the total dollar amount of credits claimed for the fiscal year is less than the estimate for that fiscal year, the report shall identify options for increasing annual claims of the credit so as to meet estimated amounts. (k) This section is repealed on December 1, 2025.  SEC. 12.   Section 10215.2 is added to the   Unemployment Insurance Code   , to read:   10215.2. (a) Upon appropriation by the Legislature, the panel shall reimburse an employer that is an aerospace manufacturer or related business operating within an Aerospace Innovation Hub for its reasonable costs of workforce training. (b) The aerospace manufacturer or related business shall apply for reimbursement in such form and providing such information as may be required by the panel. (c) For the purposes of this section, "Aerospace Innovation Hub," "aerospace manufacturer," and "related business" have the same meanings as defined in subdivisions (a), (b), and (c), respectively, of Section 12099.8 of the Government Code.   SEC. 13.   No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.   SECTION 1.   It is the intent of the Legislature to enact legislation to create the California Aerospace Innovation Hub Act of 2014 to improve the ability of the state to retain and attract aerospace businesses and the high-wage, middle-class jobs that these businesses provide. It is the intent of the Legislature to enact legislation that would create geographically based aerospace hubs around existing aerospace manufacturing clusters, and that within the aerospace hubs aerospace manufacturers and related businesses would benefit from special tax preferences, streamlined regulations, and work schedule flexibility.