Bloomberg News

California Won’t Suspend Program Giving Solyndra Tax Break

October 25, 2011

(Updates with Lockyer comment in third paragraph.)

Oct. 25 (Bloomberg) -- California won’t suspend a program that awarded more than $25 million in tax relief to now-bankrupt Solyndra LLC as federal authorities probe the collapse of the solar-panel maker.

The California Alternative Energy and Advanced Transportation Financing Authority voted against halting new applications to and awards from a program at a meeting today. The authority has granted $31.6 million in tax breaks to 33 companies, research institutions and transit districts.

State Treasurer Bill Lockyer, the authority chairman, had urged the panel to suspend the program to consider safeguards “to make sure we don’t give money to companies headed for a fall.” At the meeting, Deputy Treasurer Bettina Redway said five applications already were put on hold as staff conducted an “extensive” review of the tax program.

“We have already effectively paused the program for a month,” Redway said.

Paul Clanon, a deputy to Public Utilities Commission President Michael R. Peevey, said California would risk losing advanced-energy companies to other states if the incentives were taken away.

“This is exactly the wrong time to be pausing a green-jobs program,” Clanon said.

Solar Modules

In November 2010, the authority granted Solyndra a tax break on equipment for its manufacturing facility for cylindrical solar modules in Fremont, California. The break was valued at $34.7 million, according to a report from Lockyer’s office, of which the now-defunct company has used $25.1 million.

Solyndra’s exemption accounts for nearly 80 percent of the tax relief used so far, according to figures from Lockyer’s office. The program, initiated in 2010, has awarded a total of $104 million in tax breaks, most of which haven’t been used.

Solyndra, which received $535 million in U.S. loan guarantees from the Energy Department, filed for bankruptcy protection on Sept. 6. Congressional committees in Washington are investigating the commitments, and the FBI is probing actions taken by company executives.

State senators are weighing Lockyer’s proposed changes to the 2010 law that set up the tax incentives as well as a cap on a company’s exemptions. After an Oct. 19 hearing on the law, its sponsor, Senator Alex Padilla, a Pacoima Democrat, said he envisioned “very minor” changes to the program at most.

--Editors: Pete Young, Jerry Hart

To contact the reporter on this story: James Nash in Sacramento at jnash24@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net


Silicon Valley State of Mind
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus