The California Governor’s Office of Business and Economic Development (GO-Biz) will begin accepting applications for the 3rd round of the FY 2014-2015 California Competes Tax Credit Program on March 09, 2015. This is the last round of funding for FY 2014/15, and has been allocated $31.1 million, plus approximately $14 million in funds that were not awarded in Round 1 at the January 15th Committee Meeting.
Depending on the final award amount of Round 2 FY 2014/15, there could be additional funds for Round 3. However, as of February 2015, there is approximately $45 million allocated for this current round. Applications for this round will be accepted through 11:59 PM Pacific Time on April 06, 2015.
The California Competes Tax Credit is a discretionary fund capped at $151.1 million for the 2014-2015 fiscal year and $200 million annually for the 2015-2016 fiscal year through the 2018- 2019 fiscal year. No more than 20% of total funding may be allocated to any one taxpayer and 25% of the total funding is allotted for small businesses.
To learn more about the new round, download our brief report on the funding available, program dynamics, and key milestones.
Join H&A experts for a complimentary webinar on how to capture the California Competes Tax Credit for your business. During a brief presentation, participants will learn more about the dynamics of the program, as well as, best practices for submitting a successful application. Following the presentation, the experts will open up the webinar for an interactive Q&A session with attendees. Register for the webinar here: California Competes Tax Credit – New Funding Announcement Webinar Registration
Tuesday, March 3, 2015
2:00 PM EST / 11:00 AM PST
California Competes is a discretionary fund capped at $151.1 million for the 2014-2015 fiscal year and $200 million annually for the 2015-2016 fiscal year through the 2018- 2019 fiscal year. Total funding for this round is $45 million. No more than 20% of total funding may be allocated to any one taxpayer and 25% of the total funding is allotted for small businesses.
California Competes tax credits may be realized in full or phased-in upon reaching negotiated milestones. The credits can be applied to corporate income taxes only and they may be carried forward for up to 6 years. Credits will be allocated to taxpayers as set forth in a written agreement between the company and GO-Biz. The agreement process provides flexibility in the ability to negotiate potential transfers of credits.
Applications for this round of funding for FY 2014-2015 will be evaluated following the April 6th deadline for submission. The evaluation process occurs in multiple phases and culminates in a public committee meeting. The anticipated time from application to award is 45 – 90 days. Evaluation of applications will occur in two phases.
Phase I: Projects are scored on a cost/benefit ratio determined by the project’s investment and total compensation paid to new employees. This economic impact is weighed against the amount of the credit sought. The top applications requesting an aggregate of 200% of the available amount will move to Phase II.
Phase II: In Phase II GO-Biz will examine a broad range of project-specific factors, both qualitative and quantitative, including:
- Job retention
- Other incentives available
- Opportunities for future growth
- Economic impact in California
- Extent of unemployment or poverty in the area
- Strategic importance
- Fringe benefits
Negotiation & Award
After passing Phase II evaluation, applicants negotiate contracts with the state. The state is willing to negotiate certain aspects of the California Competes Tax Credit Agreement, which include the minimum annual and cumulative average annual salary of full-time employees hired, as well as the allocation of tax credits. However, it should be known that the state is reluctant to allocate more than 50% of the tax credits in year 1. Upon arriving at a recommendation, all credit agreements are made public, including the following terms:
- Minimum employee compensation
- Minimum retention period
- Credit distribution period / milestones
- Recapture provision
All award information including company name, location, details of award will be made public prior to committee meeting. The five-person California Competes Committee will accept or reject a project credit application based on the recommendation from GO-Biz.