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AB 904 Expands Eligibility for Renewable Energy in CIIP

AB 904, sponsored by Imperial County, will expand the list of eligible businesses for the CIIP to include those that are engaged in the commercial production of electricity using solar, wind, biomass, hydropower, or geothermal resources on or after July 1, 2010.

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These notes from the Bill Analysis of AB 904 are available online.

The AB 904 summary specifies that a business engaged in the commercial production of electricity using solar, wind, biomass, hydropower, or geothermal resources on or after July 1, 2010, is eligible under the California Investment Incentive Program (CIIP). Specifically, this bill expands the list of eligible businesses to include a business engaged in the commercial production of electricity using solar, wind, biomass, hydropower, or geothermal resources.

The author sites a recent report written by the Center for Energy Efficiency and Renewable Technologies (CEERT) as justification for AB 904. The report, released in August of 2008 and entitled "Harvesting California's Renewable Energy Resources: A Green Jobs Business Plan," notes that Imperial County is "often described as the "crown jewel" of renewable resources, not only for its prime geothermal sites, but also some of the world's best solar resources, as well as significant wind capacity." The report also highlights the fact that renewable energy resources can deliver large numbers of jobs in poverty stricken regions of the state.

In February of 2009, the California Employment Development Department released the latest round of county unemployment statistics. Imperial County has one of the highest unemployment rates in the state, at 24.5%. The author argues that the expansion of CIIP to include production of energy from renewable resources could be a great help to solving their unemployment problems because the county will have the means necessary to attract new businesses that can take advantage of the county's unique attributes specifically aimed at renewable energy.

CIIP - California Investment Incentive Program

CIIP was created in 1997 [SB 566 (Thompson), Chapter 616] to allow local agencies to provide a reduction in property taxes as a means to attract very large, high-tech manufacturing plants. The Legislature originally passed CIIP to help Placer County officials attract an Intel plant, but they never used the law. In 1999, CIIP was expanded to allow mineral-recovery geothermal businesses to the list of eligible businesses [SB 133 (Kelley), Chapter 24], with the intent of including CalEnergy Company's plan to extract minerals from geothermal brine. While Imperial County paid some property tax rebates to that project, CalEnergy was unable to bring the mineral extraction plant into operation and repaid the rebates. With the exception of this one unsuccessful attempt, the tax rebate program has never been used.

CIIP was originally created to attract manufacturing plants, those plants engaged in the manufacturing of some sort of "product" whether it is computer chips or equipment. AB 904 departs from the premise of attracting manufacturing plants, and instead, subsidizes electricity powerplants for the explicit purpose of production of energy from a renewable source. The Committee may wish to consider whether this shifts the character of the program from a property tax subsidy to lure manufacturing to a program that subsidizes electricity production.

The code section AB 904 amends already contains a definition of "manufacturing," defined as "the activity of converting or conditioning property by changing the form composition, quality, or character of the property 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." In this case, the production of energy from a renewable source does not meet the definition of "manufacturing" already contained in the current CIIP law.



Edited by Carolyn Allen, owner/editor of California Green Solutions
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