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Imperial County Approves Lithium Incentive Program

-Editorial

Continuing with the mission to bring more economic development to lithium development, the Imperial County Board of Supervisors approved a resolution that will offer incentive programs for those that want to create jobs locally. 

Imperial County has long been a producer of geothermal energy helping power California’s economy. The region also produces over $2 billion a year of agricultural products (livestock and crops). 

In recent years, it has been determined that the region holds significant lithium/rare-mineral resources, which are in high demand as consumer demand for electric-powered vehicles and portable electronics expands.

To increase economic opportunity for its residents, the Imperial County Board of Supervisors adopted the Lithium Valley Economic Opportunity Investment Plan (LVIP) on February 14, 2022. This Plan included several steps the County of Imperial would take along with requests from both the State and Federal Governments to assist the region in making lithium production economically viable within the region. Further, the LVIP was designed to increase overall economic investment and job creation within the region.

As a direct result of the LVIP, the State of California adopted SB 125, which created a lithium production tax to benefit both the State of California and the Imperial County region. In short, the Lithium Tax is as follows (aggregate):

<20,000 Metric Tons = $400 / Metric Ton 20,001-30,000 Metric Tons = $600 / Metric Ton

>30,000 Metric Tons = $800 / Metric Ton

The law provides that 20 percent of the tax generated will go to the State of California and come back to the region in the form of environmental mitigation at the Salton Sea while 30 percent of the County of Imperial share shall be utilized within the local (host) communities where lithium facilities are located.

The LVIP also memorialized a Lithium/Renewable Energy Subcommittee, currently comprised of two (2) members of the Board of Supervisors (Chair Ryan Kelley and Supervisor Jesus Escobar). The subcommittee directed staff to work on local tax incentives that would benefit the geothermal/lithium production industry to begin making investments. The attached County of Imperial Lithium Incentives Program is a result of this work. 

In short, there are three incentives that geothermal/lithium producers would be eligible for through individually negotiated Development Agreements) including:

For example, participation in the Capital Improvement Incentive Program (CIIP), which through State Law essentially allows for a 75% reduction in property taxes paid for investments within certain NAICS Codes for investments of $150 million or more.

Lithium Tax Rebate to Lithium producers that both produce lithium and sell said lithium to business entities located in Imperial County that manufacture a finished product (such as a battery).

The lithium tax rebate is $50 per metric ton.

Lithium Tax Rebate to Lithium users who purchase lithium from an Imperial County-based

producer and utilize said lithium to create a finished product (such as a battery).

Each of the three (3) incentives has permanent job production requirements that are outlined in the enclosed incentive program.

Finally, the incentives program is contingent upon the lithium tax contained in SB 125 being in place, active, and applicable at the levels identified in SB 125.

The State of California enacted the CIIP in 1997 and extended it in 2018. In short, this program exempts property tax assessment on manufacturing property over the first $150 million for up to 15 years. The exemption is predicated upon payment of an annual Community Service Fee in an amount equal to 25% of the savings (not to exceed $2 million per year) to the County enacting the CIIP.

Those accepted into the Imperial County Capital Investment Incentive Program (CIIP) must generate one (1) full-time permanent job located in Imperial County per $5 million of capital investment. The applicant shall provide payroll records each year as part of a certification process. If a company fails to provide said records or if said records show that less than one (1) full-time job located in Imperial County has been generated per $5 million of capital investment, the County of Imperial shall automatically revoke the CIIP from the applicant.

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