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Area Development - Site Selection, Facility Planning and Workforce Development

California Direct Financial Incentives 2012

California's economic development, finance, and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include industrial development bonds, customized training, and enterprise zones.

2012
Business Climate
• California is rising to the challenge of today's difficult economy. A quick review of key initiatives And actions make it clear that California has entered a new era for business investment and job creation:
• The legislature passed comprehensive workers' compensation reforms (SB 899, 2004), reducing employer costs by billions of dollars.
• California voters passed proposition 71, the stem cell research initiative that established $3 billion in obligation bonds to finance up to $350 million a year for research and development of stem cells.
• California's strategic growth plan forecasts an ambitious expansion of California's highways, freeways, railways, aviation, and electrical infrastructure, investments that will create immediate jobs and pave a foundation for long-term economic growth.
• Public-private partnerships (p3) and design-build authority are saving businesses time and money. By tapping into private money for needed transportation projects, California creates more jobs and investment opportunities at greater savings to the taxpayer.
• Sweeping legislation reformed employer litigation and Californians overwhelmingly approved lawsuit limitations.
• AB 32, California's landmark global warming bill, establishes a first-in-the-world comprehensive program to achieve cost-effective reductions in greenhouse gases through energy conservation and renewable energy production, effectively making California a hotbed of renewable energy and energy efficiency innovations. In November 2010, voters overwhelmingly reaffirmed California's commitment to clean energy by rejecting a ballot measure challenging AB 32.
• The California million solar roofs initiative helps residential and commercial utility users install and operate solar panels on their property, aiming to create one million solar roofs in California by 2018.
• Streamlining environmental permits will generate jobs and economic activity related to the construction, architectural, materials, and finance industries. The California Air Resources Board is working with regional planning agencies to simplify the CEQA review process for thousands of new projects that reduce greenhouse gases.
• California provides greater flexibility for businesses to leverage the advantage of tax credits. Effective January 2010, businesses are able to share business tax credits among a related group of affiliate or subsidiary companies (known as unitary utilization). This allowance provides California companies the freedom to allocate tax credits within their family of companies.

California's Advantages
California offers unparalleled value to companies seeking the optimal business location. Our critical mass of business services, intellectual capital, financial acumen, transportation systems and market access enhance the corporate mission and make California the most efficient place to do business in the world. Why invest or create jobs in California? Because the long-term outlook for our economy and business climate is as sunny as the legendary climate.

Innovation and Intellectual Capital
California leads the nation in trends and innovation. New ideas are a way of life here. Californians have a strong need to express themselves and a long history of free thinkers conceiving the inconceivable. California supports creativity with a superior educational system and job training that produces an unrivaled and highly skilled labor force. Over 2.4 million students are enrolled in 416 public and private colleges and universities with over 200,000 college graduates per year. California possesses the nation's highest concentration of engineers, scientists, mathematicians and skilled technicians. Seven of the top 25 engineering schools are in California. Fifty-three California companies are ranked among Fortune Magazine's prestigious FORTUNE 500 list of America's largest corporations. California is a major center for design of automobiles, furniture, apparel, software, electronics, telecommunications services, computers and semiconductors. California boasts nearly 651 members of the National Academy of Sciences and 111 Nobel Laureates.

Nation's Leading High-Tech State
California's culture embraced technology as part of its founding DNA. Technological innovation powers the California economy. We're home to over 930,000 high-tech workers, larger than any other state, and 16% of all U.S. high-tech workers. High-tech exports totaled $48 billion, ranked first nationwide, and high-tech goods represent nearly 44% of the state's annual exports. California leads the nation in several strategic high-tech industry segments, comprising between 20-60% of U.S. market share in electronic components, commercial aerospace, medical instruments, biotechnology and transportation. California has been the #1 manufacturing state since 1977. In many ways, California's technology fortune has driven the nation's economic future. California leads the nation with 4 of "The top ten rankings for the preeminent high-tech metros in North America", a study conducted by the Milken Institute. In addition to leading the country in high-tech, California also leads in `Green Tech' and `Green Collar Jobs.' California is home to many types of renewable energies. Solar, wind and biodiesel are just a few of the technologies that are being researched, developed, and manufactured in the Golden State. California also topped the 2010 and 2011 CNBC's America's Top States for Business Rankings for Technology and Innovation

Research, Capital and Access to Financial Resources
California leads the nation in research and development (R&D) and benefits from receiving half of the nation's venture capital (VC) investment. In 2009, California companies received more than $8.8billion or 50% of all VC dollars invested in the U.S. Top sectors receiving VC funding are software, telecommunications, biotechnology, medical devices and semiconductors. California is home to more than 2,000 companies and more than 100 universities and private nonprofit research organizations that are engaged in biomedical R&D and manufacturing. The biomedical industry is one of the most recession resilient sectors in the state's economy, accounting for 274,000 California jobs. Among the state's high-tech industries, only the information technology sectors (computer and Internet-related services and computer and peripheral equipment industries) employ more people than the biomedical industry. California ranked 1st in "Access to Capital" in CNBC's America's Top States for Business Rankings for 2010 and 2011. California's biotech industry was ranked #1 by Business Facilities Magazine; they call the Golden State, "the birthplace of biotech." In 2009, California's biomedical companies completed 252 deals valued at $2.6 billion, down from 302 deals worth $3.5 billion in 2008 but still attracting more venture capital investment than any other sector in the state. California received the greatest amount of National Institutes of Health (NIH) funding of any state, receiving 7,228 grants totaling $3.15 billion in 2008. California's share of funding was approximately 40% more than the second largest grantee, Massachusetts, which received $2.2 billion. California ranks first in nanotechnology companies, holders of over 200 patents. More research and VC funding for this emerging industry is invested here than anywhere else. The Silicon Valley has established a Blue Ribbon Task Force on Nanotechnology and the National Science Foundation predicts industry revenue will reach $1 trillion by 2015. R&D expenditures at universities and colleges totaled $6.49 billion in 2006, while Industrial R&D exceeded $58.4 billion, ranked first in the nation. California offers a 15% R&D tax credit for inhouse research and 24% for contract research, the highest in the nation.

Eighth-Largest Market in the World
California has the largest, most robust and most resilient economy in the United States. The Golden State produced $1.9 trillion in goods and services in 2010, a 1.8% increase over 2009. Our economy represents 13% of United States gross domestic product. Our population exceeded 37.3 million (2010 census) and is growing dramatically in size and diversity. It represents 12% of U.S. population, one out of every nine persons. California is the number one state for attracting foreign direct investment. The state has the largest consumer markets for high technology, biotechnology, food and agriculture, apparel, entertainment and is a bellwether for the nation's economy. Currently, only three minority markets at the state level exceed $100 billion in buying power annually, and two of them are in California. Hispanic buying power comprises $228 billion in California and California's Asian consumer market totals $150 billion.

Pacific Gateway
California is globally connected with world-class infrastructure. More than 15,000 miles of highways and freeways carry billions of tons of freight per year. Twelve cargo airports carry more than 3 million tons of freight per year and California leads the nation with eleven cargo seaports. The ports of Los Angeles (#1), Long Beach (#2), and Oakland (#5) are among the busiest in the country.

California has 17 Foreign Trade Zones (FTZ) which allow tenants to delay or forgo import and export duties on goods and raw materials until they enter U.S. commerce. If the goods are warehoused in an FTZ, then exported to other countries, no duties are paid at all. In addition, California has 42 Enterprise Zones (EZ) and 8 Local Agency Military Base Recovery Areas (LAMBRA).

Twenty-five freight railroads in California operate over 5,000 miles of track to form an integral part of the global transportation network. Mixed freight, food, glass and stone, chemicals and primary metal products make up the bulk of the originated and terminated tonnage carried by the extensive railroad network.

California is a global export leader with over $134 billion in sales of goods and services. International-related commerce accounts for a large percentage of the state's economy. Exports from California to 228 foreign markets accounted for 11% of total U.S. exports. California's top trading partners are Mexico, Canada, Japan, China and South Korea. California trade and exports translate into high-paying jobs for over one million Californians.

California Lifestyle
Californians lead an enviable life that for the last five years ranks #1 in the Harris Poll asking respondents to name the number one most desirable state in which to live. Residents enjoy one of the highest life expectancies in the country, a median age of 34.7 years and receive the best health care. Californians enjoy natural beauty right in their backyards, featuring towering forests, snow-capped mountains, beautiful beaches and serene deserts. The Golden State is home to over 1,000 golf courses, 45 snow resorts, 21 professional sports teams, 31 national parks, 280 state parks, 134 wilderness areas, 1,100 miles of coastline, and over 900 wineries.

California leads the nation in tourism with over 200 million visitors and $95.1 billion in revenues in 2010.

Innovation Hubs
In an effort to harness and enhance California's innovative spirit, the State of California launched a forward-thinking Innovation Hub (iHub) initiative in early 2010. The Governor's iHub initiative seeks to improve the state's national and global competitiveness by stimulating partnerships, economic development and job creation around specific research clusters throughout the state.

What is an iHub?
• iHubs are operated by local collaboratives comprised of local government entities, universities, businesses, venture capitalist networks, economic development organizations and non-profit organizations.
• Specifically they target young, innovative companies that have been in business for less than eight years in a technology cluster identified by the consortium.
• They are anchored by at least one major university or research center/institution, at least one economic development corporation and typically contain assets such as research parks, technology incubators, universities, community colleges, business accelerators and federal laboratories.
• Certified iHubs are supported by a UC Institute for Science and Innovation.
• iHubs are designated for a period of five years.

Initiative Impact
• The growing statewide network of innovation hubs provides the participants with an unprecedented opportunity to interact and share best practices on a scale which looks beyond regional boundaries.
• By providing a direct link to the Governor's Office of Business and Economic Development and encouraging the development of a stronger relationship with local government entities within various regions, the initiative helps to remove barriers to public-private collaboration needed to commercialize technology.
• The application process forces the formation of strong regional partnerships among all of the players involved in the commercialization of innovation in a given region by insisting that a competitive application includes at least one representative from all of the valued entities.
• The open communication channels created through the initiative allow the iHubs to leverage assets (national laboratories, technology incubators, business accelerators) in and among regions.
• The state-issued designation draws attention to the clusters that exist within a given region as well as the innovation happening within that region, and increases the competitiveness of the hubs both when applying for grant opportunities on an individual basis and as a consortium.
• A mature iHub will be able to match-up players at various stages of the innovation process (e.g. start-up companies and venture capitalists), thereby providing an innovation platform for research clusters, start-up companies, government entities, business groups and venture capitalists.
• The iHub network provides an unprecedented opportunity for experts in the innovation arena to speak as a united force when advocating for policy and legislation on both the state and federal levels.
More information is available at business.ca.gov

Investment Assistance
California Business Investment Services (CalBIS) assists companies and investors interested in employing Californians. Major state-level incentives are described in this section. Note that many incentives are site driven and/or negotiated with local government on a case-by-case basis or under an existing local economic development policy. As needed, "A-Teams" comprised of state and local officials are assembled to bring public and private resources together to assist investors or companies interested in the Golden State.

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