[OPTIONAL] Cover splash screen that can be displayed at the beginning of an event while people are coming in or logging on. This slide is optional and can be removed if desired.

California Competes Tax Credit Program Notes for LPD/Course Developer(s): This is the title slide. It should match the official course title and course number exactly.

Welcome and Introductions Annette Fago, West Region Credits & Incentives Leader Annette.Fago@rsmus.com (415) 510-6141 Pat Carney, West Region. State and Local Tax Practice Leader Pat.Carney@rsmus.com (213) 330-4648

RSM US LLP Our State and Local Tax Practice provides tax compliance and tax consulting services including: Income/Franchise Taxes Sales and Use Tax Unclaimed Property Employment Taxes Credits and Incentives

Credits & Incentives Opportunities All states compete for jobs and investment States send representatives to California to meet with companies considering expanding or relocating Most incentives are offered at the discretion of the state and/or local jurisdiction Incentives are offered in many forms including tax credits, grants, abatements, utility discounts, and property taxes

Incentives Outside California Arizona Quality Jobs Tax Credit Tax credit available to companies creating new jobs and making new capital investments 25 net new jobs and $5m in investment, depending on wages paid the investment requirement can be reduced Up to $9,000 in tax credits/per job over three years Utah EDTIF Tax credit rebate for up to 30 percent of new state tax revenues 50 net new jobs, pay above average wages Benefit period ranges from five to ten years New Mexico High Wage Jobs Tax Credit Tax credit rebate for each new high-wage job created Up to $12,000 per qualified job, per year Credit is available for four years and can be applied against gross receipts tax, compensating tax and withholding tax

California Competes Tax Credit - Overview Credit against the income tax due the Franchise Tax Board Non-refundable 6 tax year carryover Accountability Tied to achieving contractual (hiring/investment) milestones Recapture provisions *The information provided in this presentation may be found on the California Governor’s Office of Business and Economic Development.

California Competes Tax Credit – Evaluation Criteria Credit awards are based on 12 factors Number of jobs created or retained Compensation paid to employees Amount of investment Duration of proposed project and commitment to remain in this state Extent of unemployment or poverty in business area Extent the benefit to the state exceeds the amount of the tax credit Incentives available in other states Opportunity for future growth and expansion Other incentives available in California Overall economic impact Strategic importance to the state, region or locality Training opportunities offered to employees

California Competes Tax Credit – Evaluation Criteria GO-Biz is also required to evaluate the extent to which the credit will influence the applicant’s ability and/or willingness to create new full- time jobs in California that might not otherwise be created by the applicant or another California business How will this credit and – more specifically – the amount of credit being requested factor into the applicant’s ability or willingness to expand in California?

California Competes Tax Credit Availability & Application Periods Amount of Credits Available 180 million per fiscal year 2018/19 through 2022/23 No more than 20% may go to any one applicant per fiscal year Application Periods Fiscal Year 2018-2019 July 30-2018 – August 20, 2019 $70 million available January 2, 2019 – January 21, 2019 $75 million available March 2019 – March 25, 2019 Any unallocated remaining amounts

Credit Application and Award Process Phase I Quantitative analysis Cost-benefit ratio Phase II Comprehensive evaluation based on nine additional factors and the Phase I ratio calculation Agreements Must be approved by the California Competes Tax Credit Committee Post Committee Approval Information Posting Required Reporting Agreement Compliance

Amount of Credit Requested Phase I Evaluation Cost Benefit Ratio: Amount of Credit Requested Aggregate Employee Compensation Aggregate Investment Applications with the most advantageous cost-benefit ratio will be moved to Phase II There will be a review of the top 200% of applicants

Exemptions to the Phase I Calculation GO-Biz may move an application to Phase II, regardless of ratio the applicant certifies that: absent award of the credit, the applicant’s project may/will occur in another state, or the applicant may/will terminate or relocate all or a portion of its employees to another state, or at least 75% of the applicant’s net increase of full time employees work at least 75% of the time in an area of high unemployment or high poverty

Phase II Evaluation Phase I information Extent of unemployment/poverty Economic impact Number of retained employees Opportunity for growth/expansion Other incentives available Wages/benefits Strategic importance Training opportunities offered to employees Other information requested

Terms and conditions of the agreements include: Minimum employee compensation and retention period Credit distribution period Recapture provisions if applicant fails to meet commitments Tax credit agreements must be approved by California Competes Tax Credit Committee Committee Members: State Treasurer, Director of the Department of Finance, two legislative appointees, and the Director of GO-Biz (Chair)

Agreements

Oversight/Accountability Franchise Tax Board (FTB) Access to application and all documentation Must review books/records for agreement compliance* Material Breach FTB informs GO-Biz Committee approves or denies recapture * Discretionary for businesses with base year gross receipts under $2 million

Notes for Course Developer(s): If including a question and answer session, this is the preferred splash screen to denote that. This slide can be removed if desired.

Notes for Course Developer(s): This should be the final slide of the presentation.