1 GOVERNOR’S OFFICE OF BUSINESS AND ECONOMIC DEVELOPMENTSTATE OF CALIFORNIA s OFFICE OF GOVERNOR EDMUND G. BROWN JR. California Competes Tax Credit Application Workshop Fiscal Year
2 GO-Biz Services California Business Investment Services (CalBIS)Small Business Assistance California Business Portal Innovation and Entrepreneurship Permitting Assistance International Affairs and Trade Development
3 Small Business AssistanceProvides assistance through informational workshops, interagency projects, and direct advocacy Maintains a comprehensive list of small business resources for state procurement, loan programs, and business planning
4 Permitting AssistanceProvides permit identification and regulatory compliance assistance Offers pre-application meetings between businesses and the appropriate regulatory agencies Maintains online permit assistance website:
5 California Business PortalBusiness Navigator Not sure where to start? Use the California Business Navigator to find custom information for your business Business Service Desk Get answers to commonly asked questions relating to taxes, permits, incentive programs, regulations, and workforce information Quick Start Guides Quick Start Guides contain essential information for starting, growing, and expanding specific types of businesses
6 The California Competes Tax CreditCredit against the income tax due the Franchise Tax Board Non-refundable 6 tax year carryover Accountability: Tied to achieving contractual (hiring/investment) milestones Recapture provisions 6
7 California Competes Tax Credit (Continued)Credit awards are based on 11 factors: Number of jobs created or retained Compensation paid to employees Amount of investment Duration of proposed project and commitment to remain in this state Extent of unemployment or poverty in business area Extent the benefit to the state exceeds the amount of the tax credit Incentives available in other states Opportunity for future growth and expansion Other incentives available in California Overall economic impact Strategic importance to the state, region, or locality 7
8 California Competes Tax Credit AvailabilityTentative Amount of Credits Available $230 million in fiscal year 2017/18 No more than 20% may go to any one applicant per fiscal year 25% of total amount each fiscal year reserved for small businesses
9 The Director of GO-Biz sets the application periods each fiscal year:July 24, 2017 – August 21, 2017 $75 million available January 2, 2018 – January 22, 2018 $100 million available March 5, 2018 – March 26, 2018 $55.4 million available 9
10 Application Process Online application submission: https://www.calcompetes.ca.gov Notices and technical assistance: Unsuccessful applicants may resubmit applications in the next application period in the same fiscal year after updating the Employees and Investment sections and Current Tax Year
11 Credit Application and Award ProcessPhase I Quantitative analysis Cost-benefit ratio Phase II Comprehensive evaluation based on eight additional factors and the Phase I ratio calculation Post Committee Approval Information Posting Required Reporting Agreement Compliance Agreements Must be approved by the California Competes Tax Credit Committee 11
12 Phase I Evaluation Cost-Benefit Ratio: Amount of Credit RequestedAggregate Employee Compensation Aggregate Investment Applications with the most advantageous cost-benefit ratio will be moved to Phase II There will be a review of the top 200% of applicants 12
13 Exemptions to the Phase I CalculationGO-Biz may move an application to Phase II, regardless of ratio the applicant certifies that: absent award of the credit, the applicant’s project may/will occur in another state, or the applicant may/will terminate or relocate all or a portion of its employees to another state, or at least 75% of the applicant’s net increase of full time employees work at least 75% of the time in an area of high unemployment or high poverty 13
14 High Poverty and Unemployment AreasHigh Poverty Area A city and/or county within California with a poverty rate of at least 150% of the California statewide poverty rate per the most recently updated data available from the U.S. Census Bureau’s American Community Survey thirty days prior to the first day of the applicable application period. High Unemployment Area A city and/or county within California with an unemployment rate of at least 150% of the California statewide unemployment rate per the most recently updated data available from the California Employment Development Department thirty days prior to the first day of the applicable application period. A list of qualifying high unemployment and high poverty areas will be posted on the California Competes website approximately 30 days prior to the close of an upcoming application period. 14
15 Phase II Evaluation Phase I information Extent of unemployment/povertyEconomic impact Number of retained employees Opportunity for growth/expansion Other incentives available Wages/benefits Strategic importance Other information requested Note: Evaluated factors are in no particular order 15
16 Agreements Terms and conditions of the agreements include:Minimum employee compensation and retention period Credit distribution period Recapture provisions if applicant fails to meet commitments Tax credit agreements must be approved by California Competes Tax Credit Committee Committee Members: State Treasurer, Director of the Department of Finance, two legislative appointees, and the Director of GO-Biz (Chair) 16
17 Agreements 17
18 Post Committee ApprovalGO-Biz is required to post information on its website for all awardees For a list of all awardees, visit the awardee list. 18
19 Oversight/AccountabilityFranchise Tax Board (FTB) Access to application and all documentation Must review books/records for agreement compliance for non-small businesses May review books/records for agreement compliance if the recipient is a small business Material Breach FTB informs GO-Biz Committee approves or denies recapture 19
20 California Competes Tax CreditQuestions? Apply: Phone: (916) Governor’s Office of Business & Economic Development 1325 J Street, Suite 1800 Sacramento, CA 20