By Brittney Sherman
Businesses of ALL size, industry and location, wanting to locate in California or stay/grow their existing footprint within the state, are eligible to apply for the CCTC and CCG Programs. In the 2021/2022 fiscal year, a total of $394,707,469 are available for allocation over three separate application periods, one of which is NOW OPEN! January 3rd-January 24th, 2022, approximately $140 million in tax credits and $120 million in grant funding are available. Applications are submitted wholly online and take approximately 90 days to process. Businesses that apply are evaluated on twelve different factors, including number of full-time jobs created, amount of investment and strategic importance to the state/region. GoBiz is the oversight agency, reviewing applications and awarding dollars for both programs. Businesses may only apply for ONE program at a time, however a business CAN be a recipient of both programs during separate application periods as long as they neither apply for nor receive a grant for the same jobs for which they have already been awarded a tax credit. To apply for a California Competes grant, after previously receiving a tax credit, the business must commit to additional full-time jobs and investments. Both the CCTC and CCGP programs have been outlined in detail below. For additional information and to submit your application for consideration, visit the website here: California Competes Tax Credit.
California Competes Tax Credit (CCTC)
The main purpose of the California Competes Tax Credit is to attract and retain high-value employers in California in industries with high economic multipliers and that provide their employees good wages and benefits. GO-Biz is required by statute to consider the extent to which the credit will influence the business’s ability, willingness, or both, to create new, full-time jobs in this state that might not otherwise be created in the state by the taxpayer or any other taxpayer.
This credit applies only to income tax owed to the Franchise Tax Board, is non-refundable and has a 6-tax year carryover. The minimum credit request is $20,000 and NO MORE THAN 20% ($78.9 million) may go to any one applicant per fiscal year.
The application is a two-phase qualification process. Phase I is a quantitative analysis in which the credit amount requested is compared to the hiring and investment commitments of each applicant via a “ratio” based on the applicant’s credit request divided by the sum of its aggregate investment and aggregate employee compensation. Phase II is a variety of quantitative and qualitative factors, including local unemployment and poverty, competing incentives, economic impact, strategic importance, industry outlook, and the extent to which the credit will play a significant role in the company’s decision or ability to create new, quality, full-time jobs in California.
California Competes Grant Program (CCGP)
The primary goal of the CCGP is to make resources available for businesses that do not qualify for the non-refundable income tax credit and continue to incentivize them to choose California and create quality, full-time jobs in the state. The CCGP was specifically created for three types of businesses: (1) businesses that continuously reinvest profits, generating either significant research and development tax credits and/or net operating losses resulting in little to no tax liability; (2) smaller businesses with relatively low tax liabilities; and (3) startups with little to no tax liability.
This program allocates 120 million in one-time (fiscal year 21/22) funding, has a minimum grant request of $5 million, with NO MORE THAN 30% ($36 million) awarded to any one applicant per fiscal year.
Businesses of any size may apply but they MUST meet at least one of the following criteria: create at least 500 new full-time jobs in California, make at least $10 million of capital investments in facility construction and/or renovation or create said jobs or investments in an area of High Unemployment and/or Poverty.
The application is a two-phase process and to progress to Phase II, a business must score in the top 200% of Phase I. Applications may progress regardless of score, if the project will occur outside CA if not funded and/or at least 75% of new jobs work at least 75% of the time in a high poverty/high employment area.
Have questions? Contact City of Morgan Hill Economic Development Director Matt Mahood at Matt.Mahood@morganhill.ca.gov