In an email to interested parties, the Governor’s Office of Business Development revealed some of the results of the recent California Competes application round:
Thank you for your interest in the California Competes Tax Credit (CCTC) program. On March 19, 2014, we launched this new tax credit as a component of Governor Brown’s Economic Development Initiative. For fiscal year 2013-14, we were authorized to award $30 million in tax credits of which 25% ($7.5 million) was reserved for small businesses. As of the April 14th application deadline, we received 396 applications with a combined tax credit request of over half a billion dollars.
The highest ratio of tax credit to investment that was accepted into the second round was 1.84% (9.25% for small businesses).
The first evaluation phase of the CCTC is an automated quantitative process that looks at the ratio of the applicant’s tax credit request divided by the sum of the applicant’s proposed “aggregate new employee compensation package” and “aggregate investment package.” The ratios were ordered from lowest to highest and applicants with a ratio within 200% of the total tax credit available (200% x $30 million = $60 million) were moved into evaluation Phase II along with all applications that applied as a “retention” project, certifying that they are at-risk of reducing the number of their employees in California or relocating jobs out of California absent consideration for the CCTC.
Applications for so-called “retention” projects represent over 60% of the applications accepted into the second round. Applications totaling $155,097,747 in tax credits were accepted into the second round. At most, $30,000,000 will be awarded, which is just 19% of the second round of the application process and just 5% of the initial applications.
GO-Biz will announce its recommended awardees on June 9th.