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Capital Investment and Incentive Program Extension Spurs Economic Hopes in California

-Editorial

Imperial County Board of Supervisors unanimously threw their support behind an important legislation, as they endorsed Assembly Bill 2922. The proposed legislation focuses on Economic Development through the Capital Investment Incentive Program. 

Initially enacted in 1997 and later extended in 2018, the program set its sights on attracting substantial manufacturing facilities to invest in communities across California. Notably, it targeted diverse industries, including high technology, aerospace, automotive, biotechnology, software, and environmental sources.

Recognizing its significance, cities and counties were keen on extending the program, viewing it as a crucial avenue to garner local community support. The extension promised to create or retain businesses committed to generating well-paying jobs, fostering additional community benefits, and contributing to increased corporate and personal income tax collections.

Procedurally, once a local government agency codifies a CIIP by resolution or local ordinance, the program authorizes a local government agency to rebate a capital investment incentive amount (as defined by statute) to a manufacturer Proponent that is equal to the local government agency’s ad valorem property taxes owed on the manufacturing property in excess of the first $150 million assessment for up to 15 years. 

The incentive may only be offered after the proponent and the local government agency enter into a community services agreement. The community services agreement requires the proponent to commit to certain obligations, including a job creation plan specifying the number of jobs to be created by the facility with compensation ranges greater than the state average weekly wage; payment of an annual community services fee equal to 25 percent of the capital investment incentive amount, not to exceed $2 million per year; and other provisions.

Responding to the urgent plea from the County of Imperial and the Imperial Valley Economic Development Corporation, several agencies rallied behind the bill, lending support to the legislation. This paved the way for the reauthorization of the Capital Investment Incentive Program (CIIP) through Assembly Bill 2922.

The Board of Supervisors deemed the legislation a vital tool for encouraging much-needed investments. Supervisors underscored its alignment with the Lithium Valley Economic Opportunity Investment Plan (LVIP), emphasizing the interconnectedness of the programs.

The CIP extension, offering partial property tax abatements as a compelling incentive, empowered cities and counties to form lasting partnerships with manufacturing facilities. As California grappled with a substantial loss of company headquarters, particularly between January 1, 2018, and December 31, 2021, the importance of reversing this trend became unmistakable.

Citing a comprehensive study by the Hoover Institution, it was unveiled that California had experienced the departure of 352 company headquarters during the specified period, with the trend accelerating. The reauthorization of the CIP emerged as a crucial tool, especially within the context of the Lithium Valley Investment Plan. This larger initiative aimed to attract private economic investment into the Imperial Valley Region.

The overarching goal of the Lithium Valley Investment Plan focused on securing investments in lithium and rare mineral extraction, processing, and manufacturing for end-user applications. Additionally, it sought to champion renewable energy generation and storage through geothermal, solar, wind, and energy storage initiatives. The reauthorization of the CIP, therefore, stood as a significant step toward realizing these economic and developmental objectives.

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