Sales and Use Tax Exclusion Program
- Incentive Website
- Incentive Status: Active
- Application Due Date: Ongoing
- Program Duration: Through December 31, 2020.
- Available Funds: Individual projects are limited to $20 million of STE in a given calendar year. Projects may receive more than the $20 million individual cap, at the discretion of the Authority and subject to STE allocation availability at the end of the calendar year.
- Total Allocation: $100,000,000 in sales and use tax exclusion, which equates to approximately $1.2 billion in qualified property purchases.
Eligible manufacturers planning to construct a new manufacturing facility or expand or upgrade a currently existing manufacturing facility may apply to the California Alternative Energy and Advanced Transportation Financing Authority ("CAEATFA") Sales and Use Tax Exclusion ("STE") Program (the “Program”), and if approved, the purchases of Qualified Property for the project are not subject to state and local sales and use tax.
Qualified Property is eligible for an STE if:
- if it's used to either process Recycled feedstock or using Recycled feedstock in the production of another product or soil amendment,
- it is used in an Advanced Manufacturing process, or
- it is used to manufacture Alternative Source products or Advanced Transportation Technologies.
- Agriculture and Forestry
- Air Quality and Climate
- Business and Commerce
- Financial Services
- Green Business
- Green House Gas Emission Reduction
- Health Care
- Research and Development
- Waste Management
- Applicable Regions:
Do I Qualify?
Four types of manufacturers are eligible to apply to the Sales and Use Tax Exclusion Program. Definitions and examples for each type of manufacturer are listed below:
Alternative Sources are defined in Public Resources Code Section 26003(a)(3) as:
- devices or technologies used for a renewable electrical generation facility,
- a combined heat and power system,
- distributed generation and energy storage technologies eligible under the self-generation incentive program pursuant to Section 379.6 of the Public Utilities Code, as determined by the Public Utilities Commission,
- a facility designed for the production of renewable fuels, the efficient use of which reduce the use of fossil or nuclear fuels, or
- energy efficiency devices or technologies that reduce the need for new electric generation and reduce emissions of toxic and criteria pollutants and greenhouse gases
Examples of past Alternative Source manufacturing projects approved include: solar photovoltaic, biogas, biomass, landfill gas, and renewable fuels. Equipment used to manufacture these products is eligible under the STE award.
Advanced Transportation Technologies are defined in Public Resources Code Section 26003(a)(2) as emerging commercially competitive transportation-related technologies capable of creating long-term, high value-added jobs for Californians while enhancing the state’s commitment to energy conservation, pollution and greenhouse gas emissions reduction, and transportation efficiency.
Advanced Manufacturers must utilize a process that meets all of the following requirements:
- Improve existing, or create entirely new materials, products, and processes through:
- the use of science, engineering, or information technologies,
- high-precision tools and methods,
- a high-performance workforce, and
- innovative business or organizational models.
- Use any of the following technology areas:
- Micro- and nanoelectronics, including semiconductors.
- Advanced materials.
- Integrated computational materials engineering.
- Additive manufacturing.
- Industrial biotechnology.
- Result in a substantive advancement, whether incremental or breakthrough, beyond the current industry standard, in the production of materials and products.
- Be a sustainable manufacturing system that minimizes the use of resources while maintaining or improving cost and performance (not including systems or technologies required to be undertaken pursuant to state or federal law or regulations).
Recycled feedstock is defined as stated in Public Resources Code Section 26011.8(b)(2) as materials that would otherwise be destined for disposal, having completed their intended end use and product lifecycle.
To qualify as Recycled feedstock, the tangible personal property purchased for the project must be used at least 50% of the time to process Recycled feedstock that is intended to be reused in the production of another product or using recycled feedstock in the production of another product or soil amendment.
- Soil amendments may include "compost," as defined in Section 14525 of the Food and Agricultural Code, "fertilizing material," as defined in Section 14533 of the Food and Agricultural Code, "gypsum" or "phosphatic sulfate gypsum," as those terms are defined in Section 14537 of the Food and Agricultural Code, or a substance distributed for the purpose of promoting plant growth or improving the quality of crops by conditioning soils through physical means.
How to Apply
Applications are accepted on a rolling basis, and may be considered at the first board meeting at least 60 days after the completed application is submitted. The CAEATFA Board meets at regularly scheduled monthly meetings. Potential applicants seeking to be considered in a particular month should consult the Board meeting schedule and associated deadlines.
The application consists of two parts:
- Part A includes a project narrative, legal questionnaire, and applicant certification. The project narrative includes information about the applicant and the proposed project, including timeline and status of required permits.
- Part B consists of a self-scoring Excel spreadsheet designed to measure and quantify the net fiscal and environmental benefits of the proposed project. Based on the inputs provided by the applicant, the spreadsheet calculates the number of points received by the project. The formulas for determining the points awarded may be found in CAEATFA Regulation Section 10033(c).
Applications shall be considered in the order in which they were received, determined by the time and date stamp of the electronic submission of the application via e-mail.
To the extent that total STEs awarded during the calendar year reach $100 million (the funding statutory cap), no additional applications will be reviewed during that calendar year. Applications that are received but not awarded due to the funding statutory cap will be placed on a waiting list. Applications that are on the waiting list but are not evaluated by staff due to the statutory cap may be considered in the subsequent calendar year.
In the event that applications received by CAEATFA represent STEs in excess of the statutory cap for that calendar year, the order in which the Applications shall be considered by the Authority will be based on a ranking of competitive criteria of all projects moving forward before the Board within the same month. The competitive criteria are a series of objective criteria that can be verified at the time of application. The competitive process will be handled as follows:
- Each criterion that the Application meets shall be worth between one and five points. The projects with the greatest point score will be reviewed and presented to the CAEATFA Board.
- In the event of a tie, the application representing the smaller STE award will move forward to consideration before the Authority.
- If the STE amounts are identical, the completed application that was received by CAEATFA first shall be heard first.
- When the amount requested in the Application exceeds the STE available in the calendar year, the Authority may award the remaining STE request using STE from the following calendar year.
- Any remaining Applications shall be placed on the waiting list.