Legal Alerts Oct 21, 2019

New Economic Development Subsidy Requirements

AB 485 to Promote Greater Oversight and Transparency

New Economic Development Subsidy Requirements

Local agencies must now provide specific information to the public before approving economic development subsidies for warehouse distribution centers in its jurisdiction under Assembly Bill 485, signed last week by Gov. Gavin Newsom.
An “economic development subsidy” occurs when, to stimulate economic development, a local agency spends public funds or loses revenue greater than $100,000. Some of the information to be made available to the public includes:

  • the name and address of all corporations and business entities benefiting from the subsidy,
  • the name and address of all warehouse distribution centers that are the beneficiary of the subsidy,
  • the start and end dates and schedule of the subsidy,
  • a description of the subsidy,
  • a public purpose statement and
  • the projected tax revenue, among others.

AB 485 requires that local agencies hold hearings to report on the subsidies provided to warehouse distribution centers. It also requires local agencies to submit the information to the Governor’s Office of Business and Economic Development. These reports will be available to the public through the GO-Biz website. AB 485 takes effect Jan. 1  and applies to all cities, charter cities or counties.
Currently, the law requires local agencies to provide the public with specific information prior to approving an economic development subsidy in its jurisdiction. AB 485 is similar to existing law but focuses on continuous reporting on economic development subsidies for warehouse distribution centers. It ensures that the public has access to information for any economic development subsides granted to warehouse distribution centers by local agencies.
In signing AB 485, Newsom stated his support for greater oversight and transparency for tax agreements between local agencies and businesses. AB 485’s requirements promote greater understanding as to the nature of these tax subsidy agreements.
Alternatively, Newsom did not sign Senate Bill 531, which would have prohibited local agencies from entering into agreements that offered retailers, within its jurisdiction, a rebate of the Bradley-Burns Uniform Local Sales and Use Tax revenues. Newsom acknowledged that tax agreements between local agencies and businesses are an “important local tool that captures additional economic activity.” Therefore, he declined completely eliminating such tax agreements at the local level. The focus instead shifted to promoting transparency and oversight of tax agreements, as exemplified by AB 485.
For more information about this new law and how it impacts your agency, please contact the authors of this Legal Alert listed at the right in the firm’s Municipal Law practice group, or your BB&K attorney.
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Disclaimer: BB&K Legal Alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.

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