As we had foretold in May, California Governor Gavin Newsom’s FY ’22 budget has passed the Democratic-dominated legislature and significantly enhances the state’s signature business incentive – the California Competes Tax Credit Program (“CalCompetes Tax Credit Program”). The budget also creates a new grant program called the California Competes Grant Program (“CalCompetes Grant Program”).
CalCompetes Tax Credit Program
The newly adopted budget provides for almost $285 million of state income tax credits to the CalCompetes Tax Credit Program in FY ‘22; a noteworthy $105 million increase above the FY ‘21 level. As has been the practice of the Governor’s Office of Business and Economic Development (GO-Biz), the credits will be awarded in three tranches over the next twelve months. The first $100 million allotment will be conferred on November 4, 2021. Go-Biz will begin accepting applications for this initial allocation between July 26, 2021, and August 16, 2021. Subsequent opportunities to submit application for the CalCompetes Tax Credit Program will occur in January and March of 2022.
CalCompetes Grant Program
As part of the Governor’s California Comeback Plan, the budget created the new CalCompetes Grant Program and appropriated $120 million to the same for FY 2021-2022. By law, the program is eligible to applicants that meet at least one of the following criteria:
1. The applicant will create at least 500 new full time equivalent jobs;
2. The applicant will make a ‘significant infrastructure investment’; Significant infrastructure investment is defined as investing in new construction or building renovations of at least $10M over a 5-year period; or
3. The applicant will create jobs or make an investment in eligible census tracts designated as areas of high poverty or high unemployment.
While the statute prohibits any one award to exceed 30% of the appropriation a fiscal year (for example, the ceiling would be $36M for FY 2021-22), the statute otherwise provides discretion to GO-Biz in determining the amount, disbursement conditions and other related conditions of the grant based on a variety of factors including, but not limited to, job creation, overall investment in the state, level of wages and benefits, economic impact to the state and competitiveness of the project. The statute authorizes the program until January 1, 2030; however, funding appropriations have only been made for this current fiscal year.
BLS will continue to monitor and provide timely updates on all developments related to the new CalCompetes Grant Program as additional guidance on application requirements and procedures are anticipated soon. BLS expects the new program to receive applications no later than the end of the current calendar year.
If your business is considering investing in new, full-time jobs in California or contemplating relocating some or all of your operations, you may benefit from a consultation with the incentives and site selection professionals at BLS & Co. For more information contact Andy Shapiro at 609-651-7765 (ashapiro@BLSstrategies.com); or Stephanie Mercado at 609-454-0783 (smercado@BLSstrategies.com).