Bill Text: CA AB1399 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Income taxation: insurance taxation: credits: California

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Vetoed) 2014-09-29 - Vetoed by Governor. [AB1399 Detail]

Download: California-2013-AB1399-Amended.html

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BILL NUMBER: AB 1399	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 22, 2014
	AMENDED IN SENATE  AUGUST 19, 2014
	AMENDED IN SENATE  AUGUST 4, 2014
	AMENDED IN SENATE  JULY 3, 2014
	AMENDED IN SENATE  JUNE 18, 2014
	AMENDED IN SENATE  JUNE 9, 2014
	AMENDED IN SENATE  SEPTEMBER 6, 2013
	AMENDED IN SENATE  AUGUST 22, 2013

INTRODUCED BY   Assembly Members Medina and V. Manuel Pérez

                        MARCH 11, 2013

   An act to add Section 26011.9 to the Public Resources Code, and to
add Section 18410.3 to, and to add and repeal Sections 12283,
17053.9, and 23622.9 of, the Revenue and Taxation Code, relating to
taxation, to take effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1399, as amended, Medina. Income taxation: insurance taxation:
credits: California New Markets Tax Credit.
   The Personal Income Tax Law and the Corporation Tax Law allow
various credits against the taxes imposed by those laws. Existing law
creates the California Competes Tax Credit Committee, which has
specified duties in regard to tax credits for economic development.
Existing law establishes the Governor's Office of Business and
Economic Development, also known as "GO-Biz," to, among other duties,
serve the Governor as the lead entity for economic strategy and the
marketing of California on issues relating to business development,
private sector investment, and economic growth.
   Existing law imposes an annual tax on the gross premiums of an
insurer, as defined, doing business in this state at specified rates.

   This bill would allow a credit under the Personal Income Tax Law
and the Corporation Tax Law, and a credit against the tax imposed on
an insurer, in modified conformity with a federal New Markets Tax
Credit, for taxable years beginning on or after January 1, 2015, and
before January 1, 2027, in a specified amount for investments in
low-income communities. The bill would limit the total annual amount
of credit allowed pursuant to these provisions to an amount equal to
any portion not granted under a specified sales and use tax
exclusion, not to exceed $40,000,000 per calendar year, and would
limit the allocation of the credit to a cumulative total of no more
than $200,000,000, as provided. The bill would impose specified
duties on the California Competes Tax Credit Committee and GO-Biz
with regard to the application for, and allocation of, the credit.
The bill would require GO-Biz to establish and impose reasonable fees
upon entities that apply for the allocation of the credit, to be
deposited in the California New Markets Tax Credit Fund established
by the bill, and use the revenue, upon appropriation by the
Legislature, to defray the cost of applying to, and 
administering the program, as specified. The bill would specify that
the credit would not be allowed unless the Legislature makes an
appropriation from the fund. 
   The bill would provide that its provisions are severable. 
   This bill would take effect immediately as a tax levy.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares the following:
   (a) While many areas of California have recovered from the
economic and community development impacts of the 2006 Financial
Crisis and the 2010 global recession, Californians in a number of
communities and neighborhoods are still experiencing their lingering
effects. In some cases this has resulted in small and medium
businesses in low-income areas lacking sufficient access to capital
and technical assistance. Given that the state has many needs and
limited resources, moneys from the private sector are necessary to
fill this capital and investment gap.
   (b) Initially enacted in 2000, the federal government established
the New Markets Tax Credit (NMTC) Program, which uses a market-based
approach for expanding capital and technical assistance to businesses
in lower income communities. The federal program is jointly
administered by the Community Development Financial Institutions Fund
(CDFI Fund) and the Internal Revenue Service. The NMTC Program
allocates federal tax incentives to community development entities
(CDE), which they then use to attract private investors who
contribute funds that can be used to finance and invest in businesses
and develop real estate in low-income communities. Through the
2013-14 funding round, the CDFI Fund had awarded approximately
$40,000,000,000 in NMTC in 836 awards including $3,000,000,000 in
American Recovery and Investment Act of 2009 awards and
$1,000,000,000 of special allocation authority to be used for the
recovery and redevelopment of the Gulf Opportunity Zone.
   (c) The federal NMTC totals 39 percent of the original investment
amount in the CDE and is claimed over a period of seven years (5
percent for each of the first three years, and 6 percent for each of
the remaining four years).  The   Any 
investment by  the   any  taxpayer in the
CDE redeemed before the end of the seven-year period will be
recaptured.
   (d) Fourteen states in the United States have adopted state
programs using the NMTC model including Alabama, Florida, Illinois,
Nevada, and Oregon. While some of the programs substantially mirror
the federal program, others vary in both the percentage of the credit
and some of the policies that form the foundation of the credit. One
of the reasons cited for establishing state-level programs is to
make  their   a  state more attractive to
CDEs, which results in increasing the amount of federal NMTCs being
utilized in  their   a  state. Further,
several studies, including a January 1, 2011, case study by Pacific
Community Ventures, showed that for every dollar of forgone tax
revenue, the federal NMTC leverages $12 to $14 of private investment.

  SEC. 2.  Section 26011.9 is added to the Public Resources Code, to
read:
   26011.9.  The authority shall make a determination of the amount
of the one hundred million dollars ($100,000,000) in exclusions not
granted in the assigned calendar year pursuant to Section 26011.8. An
amount equal to that amount shall be granted in the subsequent
calendar year through the California New Markets Tax Credit Program
pursuant to Sections 12283, 17053.9, and 23622.9 of the Revenue and
Taxation Code. This section shall not prevent a taxpayer granted an
exclusion pursuant to Section 6010.8 of the Revenue and Taxation Code
from applying for, and receiving a refund for, taxes paid under Part
1 (commencing with Section 6001) of Division 2 of the Revenue and
Taxation Code.
  SEC. 3.  Section 12283 is added to the Revenue and Taxation Code,
to read:
   12283.  (a) There is hereby created the California New Markets Tax
Credit Program as provided in this section, Section 17053.9, and
Section 23622.9. The purpose of this program is to stimulate private
sector investment in lower income communities by providing a tax
incentive to community and economic development entities that can be
leveraged by the entity to attract private sector investment that in
turn will be deployed by providing financing and technical assistance
to small- and medium-size businesses and the development of
commercial, industrial, and community development projects,
including, but not limited to, facilities for nonprofit service
organizations, light manufacturing, and mixed-use and
transit-oriented development. The committee and GO-Biz shall
administer this program as provided in this section, Section 17053.9,
and Section 23622.9.  The Director of GO-Biz may delegate the
administration of all or portions of the program within GO-Biz.
   (b) (1) For taxable years beginning on or after January 1, 2015,
and before January 1, 2027, and subject to subdivision (h), there
shall be allowed as a credit against the tax described in Sections
12201, 12204, 12206, and 12209, an amount determined in accordance
with Section 45D of the Internal Revenue Code,  as amended by
Public Law 111-5, Public Law 111-312, and Public Law 112-240,
 as modified as set forth in this section. 
   (2) This credit shall be allowed only if the taxpayer holds the
qualified equity investment, or has been allocated a credit pursuant
to paragraph (3), on the credit allowance date and each of the six
following anniversary dates of that date.  
   (3) A tax credit allowed under this section shall not be sold and
is not a refundable credit. Tax credits allowed or allocated to a
partnership, limited liability company, or "S" corporation may be
allocated to the partners, members, managers, or shareholders of such
entity for their use in accordance with the provisions of any
agreement among such partners, members, managers, or shareholders.
Such allocations shall not be considered a sale for the purposes of
this section.  
   (4) 
    (2)  (A) For purposes of this section, "committee" means
the California Competes Tax Credit Committee established under
Section 18410.2.
   (B) For purposes of this section, "GO-Biz" means the Governor's
Office of Business and Economic Development.
   (c) Section 45D of the Internal Revenue Code is modified as
follows: 
   (1) The references to "the Secretary" in Section 45D of the
Internal Revenue Code, other than in Sections 45D(c)(1)(C) and 45D(d)
(1)(C), are modified to read "GO-Biz."  
   (2) 
    (1)  Section 45D(a)(2) of the Internal Revenue Code,
relating to applicable percentage, is modified by substituting for "
(A) 5 percent with respect to the first 3 credit allowance dates, and
(B) 6 percent with respect to the remainder of the credit allowance
dates" with the following:
   (A) Zero percent with respect to the first two credit allowance
dates.
   (B) Seven percent with respect to the third credit allowance date.

   (C) Eight percent with respect to the remainder of the credit
allowance dates. 
   (3) Section 45D(b)(3) of the Internal Revenue Code, relating to
safe harbor for determining use of cash, is modified by substituting
"qualified low-income community investments in California" for
"qualified low-income community investments."  
   (4) (A) Section 45D(c)(1) of the Internal Revenue Code is modified
to additionally include:  
   (i) A subsidiary community development entity of any such
qualified community development entity.  
   (ii) A nonprofit organization, pursuant to Section 23701,
certified by the committee as having a primary mission of serving or
providing investment capital in low-income communities and the entity
maintains accountability to residents of low-income communities
through their representation on any governing board of the entity or
on an advisory board of the entity. GO-Biz shall establish guidelines
for certifying nonprofit organizations pursuant to this
subparagraph. GO-Biz may include reasonable conditions on the
certification to effectuate the intent of this section and may
suspend or revoke a certification, after affording the nonprofit
organization notice and the opportunity to appeal and be heard by the
committee, if GO-Biz finds that the nonprofit organization no longer
meets the requirements for certification. Such nonprofit
organization is not subject to the requirement of subparagraph (B).
 
   (B) 
    (2)   (A)    Section 45D(c)(1) of the
Internal Revenue Code is modified to only include a qualified
community development  entity   entity, that is
certified by the Secretary of the Treasury,  and its subsidiary
qualified community development entities that have entered into an
allocation agreement with the Community Development Financial
Institutions Fund of the United States Treasury Department, with
respect to credits authorized by Section 45D of the Internal Revenue
Code, that includes California within the service area and is dated
on or after January 1, 2012. 
   (5) 
    (B)  Section  45D(d)(1)(A)   45D(c)
(2)  of the Internal Revenue Code is modified to only include
 any capital or equity investment in, or loan to, a qualified
active low-income community business.   a specialized
small business investment company or community development financial
institution that entered into an allocation agreement with the Co
  mmunity Development Financial Institutions Fund of the
United States Treasury Department, with respect to credits authorized
by Section 45D of the Internal Revenue Code, that includes
California within the service area and is dated on or after January
1, 2012.  
   (6) 
    (3)  The term "qualified active low-income community
business," as defined in Section 45D(d)(2) of the Internal Revenue
Code, is modified as follows:
   (A)  Section 45D(d)(2)(A)(i) of the Internal Revenue Code
is modified by   By  substituting "any low-income
community in California" for "any low-income  community."
  community" every place it appears in Section 45D of
the Internal Revenue Code.  
   (B) Section 45D(d)(2)(A)(ii) of the Internal Revenue Code is
modified as follows:  
   (i)  Substituting "any low-income community in California" for
"any low-income community."  
   (ii) In determining whether the qualified active low-income
community business uses a substantial portion of its tangible
personal property within any low-income community, the term
"substantial portion" shall mean "at least 40 percent" as calculated
by the average value of the tangible property owned or leased and
used within a California low-income community by the entity divided
by the average value of the total tangible property owned or leased
and used by the entity in California during the taxable year. The
value assigned to the leased property by the entity must be
reasonable.  
   (iii) Adding the provision that if the business meets the
requirements of a qualified low-income community business at the time
the investment is made, the business shall be treated as satisfying
the requirements of Section 45D(d)(2)(A)(ii) for the duration of the
investment.  
   (C) An entity complies with Section 45D(d)(2)(A)(i) of the
Internal Revenue Code if, as calculated in subparagraph (B), it uses
50 percent of its tangible property, whether owned or leased, within
any low-income community for any taxable year.  
   (D) 
    (B)  Section 45D(d)(2)(A)(iii) of the Internal Revenue
Code is modified to allow the services of employees of a
service-based qualified  active low-income community 
business to be performed outside the low-income community. A
service-based qualified  active low-income community 
business is a business that primarily earns revenue through providing
intangible products and services  and leases or owns real
property in the low-income community that is used for the operation
of the business  . 
   (E) (i) 
    (C)    A qualified active low-income community
business shall not include any business that derives, or projects to
derive, 15 percent or more of its annual revenue from the rental or
sale of real estate. This exclusion does not apply to a business that
is controlled by, or under common control with, another business if
the second business: (I) does not derive or project to derive 15
percent or more of its annual revenue from the rental or sale of real
estate; and (II) is the primary tenant of the real estate leased
from the first business. 
   (ii) 
    (D)  A qualified active low-income community business
shall only include a business that, at the time the initial
investment is made, has 250 or fewer employees and is located in
 a   one or more  California low-income
 community   communities  . The operating
business shall meet all other conditions of a qualified active
low-income community business, except as modified by this paragraph
 and paragraph (7)  . 
   (iii) 
    (E)    A qualified active low-income community
business shall only include a business located in census tracts with
a poverty rate greater than 30 percent, or census tracts, if located
within a non-metropolitan area, with a median family income that does
not exceed 60 percent of median family income for the State of
California, or census tracts, if located within a metropolitan area,
with a median family income that does not exceed 60 percent of the
greater of the California median family income or the metropolitan
area median family income, or census tracts with unemployment rates
at least 1.5 times the national average. 
   (iv) 
    (F)  A qualified active low-income community business
shall not include any business that operates or derives revenues from
the operation of a country club, gaming establishment, massage
parlor, liquor store, or golf course. 
   (v) 
    (G)  A qualified active low-income community business
shall not include a sexually oriented business. A "sexually oriented
business" means a nightclub, bar, restaurant, or similar commercial
enterprise that provides for an audience of two or more individuals
live nude entertainment or live nude performances where the nudity is
a function of everyday business operations and where nudity is a
planned and intentional part of the entertainment or performance.
"Nude" means clothed in a manner that leaves uncovered or visible,
through less than fully opaque clothing, any portion of the genitals
or, in the case of a female, any portion of the breasts below the top
of the areola of the breasts. 
   (vi) 
    (H)  A qualified active low-income community business
shall not include a charter school. 
   (7) Section 45D(e)(1) of the Internal Revenue Code is modified to
add the following: "When the United States Census Bureau discontinues
using the decennial census to report median family income on a
census tract basis, census block group data shall be used based on
the American Community Survey."  
   (8) The following shall apply in lieu of the provisions of Section

    (4)     Section  45D(f) of the
Internal Revenue Code, relating to national limitation on amount of
investments  designated: "The   designated, is
modified as follows: 
    (A)     The following shall apply in lieu
of the provisions of Section 45D(f)(1) of the Internal Revenue Code:
"The  aggregate amount of  credit  
qualified equity investments  that may be allocated in any
calendar year  pursuant to   for purposes of
 this section, Section 17053.9, and Section 23622.9 shall be an
amount  equal to   as determined by GO-Biz in
consultation with the Department of Finance based upon  any
unused portion of the one hundred million dollars ($100,000,000) in
exclusions, authorized pursuant to Section 6010.8, as determined by
the California Alternative Energy and Advanced Transportation
Financing Authority and reported to the committee, not to exceed 
an amount based upon a credit of  forty million dollars
($40,000,000). The committee shall limit the allocation of 
credits permitted   investments that may be designated
 under this section, Section 17053.9, and Section 23622.9 to a
cumulative total  amount based on credits  of no more than
two hundred million dollars ($200,000,000).  Any unused
credits   The allocation of any undesignated qualified
equity investments  shall be returned to the committee by March
1 of the year following allocation and the value of the 
unused credit   undesignated qualified equity investment
 shall be available for allocation in the following calendar
years in accordance with the application process. Any  qualified
equity investment attributable to  recaptured credits shall be
 returned   available  to the committee
 by   on  March 1 of the year following
recapture and  the value of the recaptured credit 
shall be available for allocation in the following calendar years in
accordance with subparagraph (B) of paragraph  (9) 
 (5)  .  Reallocation credits and  
Reallocated qualified equity investments attributable to 
recapture credits shall not count against the  forty million
dollars ($40,000,000)  annual  limit  or
the  two hundred million dollars ($200,000,000) 
cumulative limit." 
   (B) The references to "the Secretary" in Section 45D(f)(2) of the
Internal Revenue Code, relating to allocation of limitation, is
modified to read "GO-Biz."  
   (C) The last sentence of Section 45D(f)(3) of the Internal Revenue
Code, relating to carryover of unused limitation, shall not apply.
 
   (9) 
    (5) Section 45D(g)(3) of the Internal Revenue Code,
relating to recapture event,  does not apply and is replaced
with the following:   is modified to add the following:
 
   (A) (i) The qualified community development entity fails to comply
with subparagraph (D) of paragraph (5) of subdivision (d). In this
case, recapture shall be 100 percent of the credit. The qualified
community development entity shall send notice to GO-Biz within 30
calendar days of the close of any calendar year in which the
qualified community development entity has failed to invest at least
15 percent of the purchase price of the qualified equity investment
in satisfaction of the requirements of subparagraph (D) of paragraph
(5) of subdivision (d).  
   (ii) The qualified community development entity made an investment
without performing a revenue impact assessment that satisfies
subparagraph (J) of paragraph (5) of subdivision (d). In this case,
recapture shall be 100 percent of the credit, unless GO-Biz has
approved a waiver pursuant to clause (ii) of subparagraph (J) of
paragraph (5) of subdivision (d). The qualified community development
entity shall send notice to GO-Biz within 30 calendar days of the
close of any calendar year in which the qualified community
development entity has made an investment that fails to meet the
requirements set forth in subparagraph (J) of paragraph (5) of
subdivision (d).  
   (A) 
    (B)  GO-Biz shall establish a process, in consultation
with the Department of Insurance, for the recapture of credits
allowed under this section from the entity that claimed the credit on
a return.  The recapture process shall be applied if any of
the following conditions set forth occur.  
   (i) Any amount of a federal tax credit available with respect to a
qualified equity investment that is eligible for a credit under this
section is recaptured under Section 45D of the Internal Revenue
Code. The qualified community development entity shall send notice to
GO-Biz within 30 calendar days of being notified by the United
States Treasury that any amount of a federal tax credit available
with respect to a qualified equity investment that is eligible for a
credit under this section is recaptured. The committee shall send
written acknowledgment within five calendar days of receipt of the
qualified community development entity's notice of potential
noncompliance. In such case the recapture shall be proportionate to
the federal recapture with respect to such qualified equity
investment.  
   (ii) The qualified community development entity redeems a
qualified equity investment prior to the seventh anniversary of the
issuance of such qualified equity investment. The qualified community
development entity shall send notice to GO-Biz within 30 calendar
days of redeeming a qualified equity investment prior to the seventh
anniversary of the issuance of such qualified equity investment.
GO-Biz shall send written acknowledgment within five calendar days of
receipt of the qualified community development entity's notice of
potential noncompliance. In such case GO-Biz's recapture shall be
proportionate to the amount of the redemption of such qualified
equity investment.  
   (iii) The qualified community development entity fails to invest
an amount equal to at least 85 percent of the purchase price of the
qualified equity investment in qualified low-income community
investments in California within 12 months of the issuance of the
qualified equity investment and maintain at least 85 percent of such
level of investment in qualified low-income community investments in
California until the last credit allowance date for the qualified
equity investment. For purposes of this section, an investment shall
be considered held by a qualified community development entity even
if the investment has been sold or repaid if the qualified community
development entity reinvests an amount equal to the capital returned
to, or recovered by, the qualified community development entity from
the original investment, exclusive of any profits realized, in
another qualified low-income community investment within 12 months of
the receipt of such capital. The qualified community development
entity shall send notice to GO-Biz within 30 calendar days of the
12-month deadline for the reinvestment if the entity fails to meet
any of the reinvestment requirements. GO-Biz shall send written
acknowledgment within five calendar days of receipt of the qualified
community development entity's notice of potential noncompliance. A
qualified community development entity shall not be required to
reinvest capital returned from qualified low-income community
investments after the sixth anniversary of the issuance of the
qualified equity investment, and the qualified low-income community
investment shall be considered held by the qualified community
development entity through the seventh anniversary of the qualified
equity investment's issuance.  
   (B) 
    (C)  Recaptured  tax credits and the related
 qualified equity  investment authority 
 investments  revert back to GO-Biz and shall be reissued.
The reissue shall not count toward the annual  allocation
limitation of forty million dollars ($40,000,000) or overall credit
allocation limitation of two hundred million dollars ($200,000,000)
in paragraph (8) of subdivision (c)   or cumulative
allocation limitation  . The reissue shall be done in the
following order:
   (i) First, pro rata to applicants whose qualified equity
investment allocations were reduced pursuant to subparagraph 
(B)   (F)  of paragraph (5) of subdivision (d) by
the  annual  allocation  limitation of forty million
dollars ($40,000,000) in paragraph (8) of subdivision (c). 
 limitation. 
   (ii) Thereafter, in accordance with the application process.

   (C) 
    (D)  (i) Enforcement of each of the recapture provisions
shall be subject to a six-month cure period. Recapture shall not
occur until the qualified community development entity gives notice
of potential noncompliance to GO-Biz and is afforded six months from
the date of such notice to cure the noncompliance. The six-month cure
period shall begin on the day GO-Biz sends written acknowledgment of
the qualified community development entity's notice of the potential
noncompliance. The qualified community development entity is
responsible for addressing the circumstances of the potential
noncompliance and providing all documentation to GO-Biz necessary to
demonstrate, to GO-Biz's satisfaction, that those conditions no
longer exist. 
   (ii) In an instance where a qualified community development entity
fails to send the required notice of potential noncompliance or
GO-Biz has information from the annual report or other sources that
indicates that the entity is in potential noncompliance, GO-Biz shall
send the notice. The date GO-Biz sends the notice of potential
noncompliance shall begin the six-month cure period.  
   (ii) 
    (iii)  Not more than 45 calendar days following the
close of the cure period, GO-Biz shall make a final determination as
to whether the  credit is to be recaptured  
noncompliance has been cured  . This determination shall be
based on the review of the notice, information submitted by the
qualified community development entity, and any other information
GO-Biz deems relevant to this determination.  Within 30 calendar
days of making the final determination, GO-Biz shall notify the
Department of Insurance and the Franchise Tax Board of the
determination and other related information including, but not
limited to, the tax identification number of the qualified community
development entity.  
   (iii) GO-Biz 
    (iv)     GO-Biz  shall post, and
update monthly, a tally of  returned credits  
undesignated qualified equity investments  , pursuant to
paragraph  (8)   (4)  , and recaptured
credits pursuant to this paragraph.  Within 30 calendar days
of making the final determination that the credit is to be
recaptured, GO-Biz shall notify
      the Department of Insurance of the determination including, but
not limited to, the tax identification number of the taxpayer.
 
   (10) 
    (6)  Section 45D(h) of the Internal Revenue Code,
relating to basis reduction, shall not apply. 
   (11) Section 45D(i) of the Internal Revenue Code, relating to
regulations, shall not apply.  
   (12) 
    (7)  If a qualified community development entity makes a
capital or equity investment or a loan with respect to a qualified
low-income building under the state Low-Income Housing Tax Credit
Program, the investment or loan is not a qualified low-income
community investment under this section.
   (d) (1) GO-Biz shall adopt guidelines necessary or appropriate to
carry out  the purposes of this section and meet the
requirements of Section 45D of the Internal Revenue Code, as modified
by this section. In promulgating guidelines GO-Biz shall look for
guidance in the rules and regulations adopted under Section 45D of
the Internal Revenue Code to the extent that those rules and
regulations are consistent with this section. The guidelines shall
not disqualify a low-income community investment for the single
reason that public or private incentives, loans, equity investments,
technical assistance, or other forms of support have been or continue
to be provided.   its responsibilities with respect to
the allocation of the qualified equity investments and recapture of
credit allowed by this section.  The adoption of the guidelines
shall not be subject to the rulemaking provisions of the
Administrative Procedure Act of Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code.
   (2) (A) GO-Biz shall establish and impose reasonable fees upon
entities that apply for the allocation pursuant to this subdivision
that in the aggregate defray the cost of  administering
  reviewing applications for  the program. 
GO-Biz may impose other reasonable fees upon entities that receive
the allocation pursuant to this subdivision that in the aggregate
defray the cost of administering the program. 
   (B) The fees collected shall be deposited in the California New
Markets Tax Credit Fund established in Section 18410.3.
   (3) In developing guidelines GO-Biz shall adopt an allocation
process that does all of the following:
   (A) Creates an equitable distribution process that ensures that
low-income  communities   community populations
 across the state  are engaged and  have an opportunity
to benefit from the program.
   (B) Sets minimum organizational capacity standards that applicants
must meet in order to receive an allocation of  credits
  authority to designate qualified equity investments
 including, but not limited to, its business strategy, targeted
community outcomes, capitalization strategy, and management capacity.

   (C) Considers the qualified community development entity's prior
qualified low-income community investments under Section 45D of the
Internal Revenue Code.
   (D) Considers the qualified community development entity's prior
qualified low-income community investments under this section,
including subparagraph (D) of paragraph (5).
   (E) Does not require the qualified community development entity to
identify the qualified active low-income community businesses in
which the qualified community development entity will invest in an
application for qualified equity investment allocation. 
   (F) Does not disqualify a low-income community investment for the
single reason that public or private incentives, loans, equity
investments, technical assistance, or other forms of support have
been or continue to be provided. 
   (4) (A) GO-Biz shall begin accepting applications on or before May
15, 2015, and shall award  credits   authority
to designate qualified equity investments  annually through
2019, to the extent that allocations are available pursuant to
Section 26011.9 of the Public Resources Code. To the extent
reasonable and consistent in carrying out the purposes of this
section, GO-Biz shall consider how the timing of the state allocation
rounds correspond with the allocation schedule of the federal New
Markets Tax Credit Program.
   (B) Within 20 calendar days after receipt of an application GO-Biz
shall determine whether the application is complete or whether
additional information is necessary in order to fully evaluate the
application. If additional information is requested and the qualified
community development entity provides that information within five
business days, the application shall be considered completed as of
the original date of receipt. If the qualified community development
entity fails to provide the information within the five-business-day
period, the application shall be denied and must be resubmitted in
full with a new receipt date.
   (C) Within 20 calendar days after receipt of an application
determined to be complete by GO-Biz, the committee shall grant or
deny the application in full or in part. If the committee denies any
part of the application, it shall inform the qualified community
development entity of the grounds for the denial.
   (5) (A)  The   In the 2015 awards cycle, the
 committee shall award  tax credits  
authority to designate qualified equity investments  to
qualified community development entities described in 
subparagraph (B) of paragraph (4)   paragraph (3) 
of subdivision (c) in the order applications are received by the
 committee, subject to clause (i) or on a competitive basis,
pursuant to clause (ii).   committee. Applications
received on the same day shall be deemed to have been received
simultaneously.  
   (i)  (I) In 2015, the committee shall only award tax credits to a
qualified community development entity in the order applications are
received by the committee. In 
    (B)     In  the 2016 to 2019 award
cycles, inclusive, at least 60 percent of the  credit
allocation   authority to designate qualified equity
investments  shall be awarded  in the order applications
are received by the committee to a qualified community development
entity   pursuant to subparagraph (A) . 
Applications received on the same day shall be deemed to have been
received simultaneously.  At the committee's discretion, a
higher percentage of  credits   authority to
designate qualified equity investments  may be awarded pursuant
to  the first sentence in this subparagraph  
subparagraph (A)  .  Qualified community development
entities that receive tax credit awards pursuant to this clause shall
commit to making investments in a manner that engages
community-based partnerships and local grassroots stakeholders.
 
    (II) An entity described in clause (ii) of subparagraph (A) of
paragraph (4) of subdivision (c) shall not receive a tax credit award
pursuant to this clause.  
   (ii) 
    (C)  The committee shall award up to 40 percent of the
 credit allocation   authority to designate
qualified equity investments  in the 2016 to 2019, inclusive,
award cycles, to  a  qualified community development
 entity, as described in clause (ii) of subparagraph (A) of
paragraph (4) of subdivision (c) and subparagraph (B) of paragraph
(4) of subdivision (c),   entities on a competitive
basis using blind scoring and a review committee that is comprised
of community development finance practitioners  and members 
having demonstrated experience in assessing organizational business
strategy, community outcomes, capitalization strategy, and management
capacity. A member of the review committee shall not have a
financial interest, which includes, but is not limited to, asking,
consenting, or agreeing to receive any commission, emolument,
gratuity, money, property, or thing of value for his or her own use,
benefit, or personal advantage for procuring or endeavoring to
procure for any person, partnership, joint venture, association, or
corporation any  tax credit   qualified equity
investment  or other assistance from any applicant. 
   (D) (i) For qualified equity investments derived from the 2015 to
2019, inclusive, awards cycles, pursuant to subparagraphs (A), (B)
and (C), a qualified community development entity shall invest at
least 15 percent of the qualified equity investment in a qualified
low-income community business in consultation or in partnership with
either of the following:  
   (I) A qualified community development entity certified under
Section 45D of the Internal Revenue Code that has not received a
federal New Markets Tax Credit allocation on or after January 1,
2012, and has either a local service area that includes one or more
California communities or a California statewide service area, but
excluding qualified community development entities with a national
service area.  
   (II) A nonprofit organization certified by GO-Biz, pursuant to
clause (iii).  
   (ii) The 15-percent investment shall be calculated by multiplying
the total purchase price of the qualified equity investments issued
by the qualified community development entity by 15 percent. Each
community development entity application shall indicate how the
qualified community development entity will meet this requirement.
 
   (iii) GO-Biz shall establish guidelines for certifying a nonprofit
organization pursuant to this subparagraph. A nonprofit organization
shall meet the requirements of Section 23701 and be certified by
GO-Biz as having a primary mission of serving or providing investment
capital in low-income communities in California. The nonprofit
organization shall maintain accountability to residents of low-income
communities through their representation on any governing board or
on an advisory board of the nonprofit organization. GO-Biz may
include reasonable conditions on the certification to effectuate the
intent of this section and may suspend or revoke a certification,
after affording the nonprofit organization notice and the opportunity
to appeal and be heard by the committee, if GO-Biz finds that the
nonprofit organization no longer meets the requirements for
certification.  
   (iii) In awarding credits on a 
    (E)     In making  competitive
 basis,   awards of authority to designate
qualified equity investments,  priority shall be given to
applications that can demonstrate that the  credits 
 qualified equity investment authority  will allow the 
qualified community development  entity to undertake qualified
low-income community investments in rural, suburban, or urban areas
that have been historically underserved and result in the greatest
benefit to the hardest to serve and undercapitalized lower income
populations, or in newly established businesses, or in activities
that support neighborhood revitalization strategies driven by local
grassroots stakeholders in multiple low-income communities across one
or more regions or the state for the purpose of scaling economic
development activities that compliment regional industry clusters
that result in the greatest benefit to the largest number of lower
income individuals.  All competitive applications shall
demonstrate strong linkages with communities and neighborhoods in
California low-income neighborhoods.  
   (B) 
    (F)   (i)    For applications
described in  clause (i) of  subparagraph (A), in
the event  tax credit  requests  for authority
to designate qualified equity investments  exceed the applicable
annual allocation  limitation of up to forty million dollars
($40,000,000) in paragraph (8) of subdivision (c), the committee
  limitation, GO-Biz  shall certify, consistent
with remaining qualified equity investment capacity, qualified equity
investments of applicants in proportionate percentages based upon
the ratio of the amount of qualified equity investments requested in
such applications to the total amount of qualified equity investments
requested in all such applications received on the same day.

   (C) 
    (ii)  If a pending request cannot be fully certified due
to this limit,  the committee   GO-Biz 
shall certify the portion that may be certified unless the qualified
community development entity elects to withdraw its request rather
than receive partial certification. 
   (D) 
    (G)  An approved applicant may transfer all or a portion
of its certified qualified equity investment authority to its
controlling entity or any subsidiary qualified community development
entity of the controlling entity, provided that the applicant and the
transferee notify the committee within 30 calendar days of such
transfer and include the information required in the application with
respect to such transferee with such notice.  The transferee
shall be subject to the same   rules, requirements, and
limitations applicable to the transferor.  
   (E) 
    (H)  Within 60 calendar days of GO-Biz sending notice of
certification, the qualified community development entity or any
transferee, under subparagraph  (D)   (G) 
, shall issue the qualified equity investment and receive cash in
the amount of the certified amount. The qualified community
development entity or transferee, under subparagraph  (D)
  (G)  , must provide GO-Biz with evidence of the
receipt of the cash investment within 65 calendar days of the
applicant receiving notice of certification. If the qualified
community development entity or any transferee, under subparagraph
 (D)   (G)  , does not receive the cash
investment and issue the qualified equity investment within 60
calendar days of GO-Biz sending the certification notice, the
certification shall lapse and the entity may not issue the qualified
equity investment without reapplying to GO-Biz for certification.
Lapsed certifications revert back to GO-Biz and shall be reissued in
the following order:
   (i) First, pro rata to applicants whose qualified equity
investment allocations were reduced pursuant to subparagraph 
(B)   (F)  under the annual allocation limitation
of forty million dollars ($40,000,000) in paragraph  (8)
  (5)  of subdivision (c).
   (ii) Thereafter, in accordance with the application process.

   (F) 
    (I)  A qualified community development entity that
issues qualified equity investments must notify GO-Biz of the names
of  the entities   taxpayers  that are
eligible to utilize tax credits  under paragraph (3) of
subdivision (b) pursuant to an allocation of tax credits or change in
allocation of tax credits or due to a   pursuant to
this section and any  transfer of a qualified equity investment.

   (J) (i) A qualified community development entity shall only make a
qualified low-income community investment that demonstrates a
positive revenue impact on the state over a 10-year period against
the aggregate tax credit utilization over the same 10-year period.
GO-Biz shall approve one or more nationally recognized revenue impact
assessment models that shall be used by the qualified community
development entity to demonstrate positive revenue impact. If it is
demonstrated that the qualified low-income community investment has a
positive revenue impact on the state at the time the investment is
made, it shall be treated as if the investment continues to meet the
requirement of this subparagraph for the duration of the seven-year
program period.  
   (ii) Upon application and approval by GO-Biz, the requirement of
this subparagraph may be waived. 
   (6) (A) A qualified community development entity that issues
qualified equity investments shall submit a report to GO-Biz within
the first five business days after the first anniversary of the
initial credit allowance date that provides documentation as to the
investment of at least 85 percent of the purchase price in qualified
low-income community investments in qualified active low-income
community businesses located in California. Such report shall include
all of the following:
   (i) A bank statement of such qualified community development
entity evidencing each qualified low-income community investment.
   (ii) Evidence that such business was a qualified active low-income
community business at the time of such qualified low-income
community investment. 
   (iii) Evidence that the community development entity complied with
subparagraph (D) of paragraph (5).  
   (iv) Evidence that each qualified low-income community investment
was determined to have a positive revenue impact on the state. This
requirement does not apply for any qualified low-income community
investment for which GO-Biz approved a waiver, pursuant to clause
(ii) of subparagraph (J) of paragraph (5) or to reinvestments of
redeemed qualified low-income investments.  
   (iii) Any 
    (v)     Any  other information
required by GO-Biz as being necessary to meet the requirements of
this section.
   (B) Thereafter, the qualified community development entity shall
submit an annual report to GO-Biz within 60 calendar days of the
beginning of the calendar year during the seven years following
submittal of the report, pursuant to subparagraph (A). No annual
report shall be due prior to the first anniversary of the initial
credit allowance date. The report shall include, but is not limited
to, the following:
   (i) The  social, environmental, and economic  impact the
credit had on the low-income community  during the report period
and cumulatively  .
   (ii) The amount of moneys used for qualified low-income
investments in qualified low-income community businesses.
   (iii) The number of employment positions created and retained as a
result of qualified low-income community investments and the average
annual salary of such positions.
   (iv) The number of operating businesses assisted as a result of
qualified low-income community investments, by industry and number of
employees.
   (v) Number of owner-occupied real estate projects 
described in subparagraph (E) of paragraph (6) of subdivision (c)
 .
   (vi) Location of  the   each  qualified
low-income community  businesses   business
assisted by a qualified low-income community investment  . 
   (vii) Summary of the outcomes of each of the revenue impact
assessments undertaken by the qualified community development entity
during the year. 
   (e)  (1)    In the case where the credit allowed
by this section exceeds the tax described in Sections 12201, 12204,
12206, and 12209, the excess may be carried over to reduce that tax
in the following year, and the six succeeding years if necessary,
until the credit is exhausted. 
   (2) A taxpayer allowed a credit under this section for a qualified
equity investment shall not be eligible for any other credit under
this part with respect to that investment. 
   (f) GO-Biz shall annually report on its Internet Web site the
information provided by low-income community development entities and
on the geographic distribution of the qualified active low-income
community businesses assisted.
   (g) (1) The Insurance Commissioner  and the Franchise Tax
Board  may prescribe any rules or regulations that may be
necessary or appropriate to implement this section. The Insurance
Commissioner  and the Franchise Tax Board  shall have access
to any documentation held by the committee relative to the
application and reporting of a qualified community development
entity.
   (2) A qualifying community development entity shall provide GO-Biz
with the name, address, and tax identification number of each
investor and entity for which a  credit  
qualified equity investment  was  allocated 
 designated  by the qualifying community development entity,
pursuant to  paragraph (3) of subdivision (b)  
this section . GO-Biz shall provide this information to the
Insurance Commissioner  and the Franchise Tax Board  in a
manner determined by the Insurance Commissioner  and the
Franchise Tax Board  .
   (h)  The credit allowed under this section shall only be
allowed for taxable years   GO-Biz and the committee
shall only make awards pursuant to paragraph (4) of subdivision (d)
in a calendar year  in which the Legislature appropriates funds
in the California New Markets Tax Credit Fund pursuant to subdivision
(b) of Section 18410.3.
   (i) This section shall remain in effect only until December 1,
2028, and as of that date is repealed.
  SEC. 4.  Section 17053.9 is added to the Revenue and Taxation Code,
to read:
   17053.9.  (a) There is hereby created the California New Markets
Tax Credit Program as provided in this section, Section 12283, and
Section 23622.9. The purpose of this program is to stimulate private
sector investment in lower income communities by providing a tax
incentive to community and economic development entities that can be
leveraged by the entity to attract private sector investment that in
turn will be deployed by providing financing and technical assistance
to small- and medium-size businesses and the development of
commercial, industrial, and community development projects,
including, but not limited to, facilities for nonprofit service
organizations, light manufacturing, and mixed-use and
transit-oriented development. The committee and GO-Biz shall
administer this program as provided in this section, Section 12283,
and Section 23622.9.  The Director of GO-Biz may delegate the
administration of all or portions of the program within GO-Biz. 

   (b) (1) For taxable years beginning on or after January 1, 2015,
and before January 1, 2027, and subject to subdivision (h), there
shall be allowed as a credit against the "net tax," as defined in
Section 17039, an amount determined in accordance with Section 45D of
the Internal Revenue Code,  as amended by Public Law 111-5,
Public Law 111-312, and Public Law 112-240,  as modified as
set forth in this section. 
   (2) This credit shall be allowed only if the taxpayer holds the
qualified equity investment, or has been allocated a credit pursuant
to paragraph (3), on the credit allowance date and each of the six
following anniversary dates of that date.  
   (3) A tax credit allowed under this section shall not be sold and
is not a refundable credit. Tax credits allowed or allocated to a
partnership, limited liability company, or "S" corporation may be
allocated to the partners, members, managers, or shareholders of such
entity for their use in accordance with the provisions of any
agreement among such partners, members, managers, or shareholders.
Such allocations shall not be considered a sale for the purposes of
this section.  
   (2) (A) For purposes of this section, "committee" means the
California Competes Tax Credit Committee established under Section
18410.2.  
   (B) For purposes of this section, "GO-Biz" means the Governor's
Office of Business and Economic Development. 
   (c) Section 45D of the Internal Revenue Code is modified as
follows: 
   (1) The references to "the Secretary" in Section 45D of the
Internal Revenue Code, other than in Sections 45D(c)(1)(C) and 45D(d)
(1)(C), are modified to read "GO-Biz."  
   (2) 
    (1)  Section 45D(a)(2) of the Internal Revenue Code,
relating to applicable percentage, is modified by substituting for "
(A) 5 percent with respect to the first 3 credit allowance dates, and
(B) 6 percent with respect to the remainder of the credit allowance
dates" with the following:
   (A) Zero percent with respect to the first two credit allowance
dates.
   (B) Seven percent with respect to the third credit allowance date.

   (C) Eight percent with respect to the remainder of the credit
allowance dates. 
   (3) Section 45D(b)(3) of the Internal Revenue Code, relating to
safe harbor for determining use of cash, is modified by substituting
"qualified low-income community investments in California" for
"qualified low-income community investments."  
   (4) (A) Section 45D(c)(1) of the Internal Revenue Code is modified
to additionally include:  
   (i) A subsidiary community development entity of any such
qualified community development entity.  
   (ii) A nonprofit organization, pursuant to Section 23701,
certified by GO-Biz as having a primary mission of serving or
providing investment capital in low-income communities and the entity
maintains accountability to residents of low-income communities
through their representation on any governing board of the entity or
on an advisory board of the entity. GO-Biz shall establish guidelines
for certifying nonprofit organizations pursuant to this
subparagraph. GO-Biz may include reasonable conditions on the
certification to effectuate the intent of this section and may
suspend or revoke a certification, after affording the nonprofit
organization notice and the opportunity to appeal and be heard by the
committee, if GO-Biz finds that the nonprofit organization no longer
meets the requirements for certification. Such nonprofit
organization is not subject to the requirement of subparagraph (B).
 
   (B) 
    (2)   (A)    Section 45D(c)(1) of the
Internal Revenue Code is modified to only include a qualified
community development  entity   entity, that is
certified by the Secretary of the Treasury,  and its subsidiary
qualified community development entities that have entered into an
allocation agreement with the Community Development Financial
Institutions Fund of the United States Treasury Department, with
respect to credits authorized by Section 45D of the Internal Revenue
Code, that includes
California within the service area and is dated on or after January
1, 2012. 
   (5) 
    (B)  Section  45D(d)(1)(A)   45D(c)
(2)  of the Internal Revenue Code is modified to only include
 any capital or equity investment in, or loan to, a qualified
active low-income community business.     a
specialized small business investment company or community
development financial institution that entered into an allocation
agreement with the Community Development   Financial
Institutions Fund of the United States Treasury Department, with
respect to credits authorized by Section 45D of the Internal Revenue
Code, that includes California within the service area and is dated
on or after January 1, 2012.  
   (6) 
    (3)  The term "qualified active low-income community
business," as defined in Section 45D(d)(2) of the Internal Revenue
Code, is modified as follows:
   (A)  Section 45D(d)(2)(A)(i) of the Internal Revenue Code
is modified by   By    substituting "any
low-income community in California" for "any low-income 
community."   community" every place it appears in
Section 45D of the Internal Revenue Code.  
   (B) Section 45D(d)(2)(A)(ii) of the Internal Revenue Code is
modified as follows:  
   (i) Substituting "any low-income community in California" for "any
low-income community."  
   (ii) In determining whether the qualified active low-income
community business uses a substantial portion of its tangible
personal property within any low-income community, the term
"substantial portion" shall mean "at least 40 percent" as calculated
by the average value of the tangible property owned or leased and
used within a California low-income community by the entity divided
by the average value of the total tangible property owned or leased
and used by the entity in California during the taxable year. The
value assigned to the leased property by the entity must be
reasonable.  
   (iii) Adding the provision that if the business meets the
requirements of a qualified low-income community business at the time
the investment is made, the business shall be treated as satisfying
the requirements of Section 45D(d)(2)(A)(ii) for the duration of the
investment.  
   (C) An entity complies with Section 45D(d)(2)(A)(i) of the
Internal Revenue Code if, as calculated in subparagraph (B), it uses
50 percent of its tangible property, whether owned or leased, within
any low-income community for any taxable year.  
   (D) 
    (B)  Section 45D(d)(2)(A)(iii) of the Internal Revenue
Code is modified to allow the services of employees of a
service-based qualified  active low-income community 
business to be performed outside the low-income community. A
service-based qualified  active low-income community 
business is a business that primarily earns revenue through providing
intangible products and services  and leases or owns real
property in the low-income community that is used for the operation
of the business  . 
   (E) (i) 
    (C)    A qualified active low-income community
business shall not include any business that derives, or projects to
derive, 15 percent or more of its annual revenue from the rental or
sale of real estate. This exclusion does not apply to a business that
is controlled by, or under common control with, another business if
the second business: (I) does not derive or project to derive 15
percent or more of its annual revenue from the rental or sale of real
estate; and (II) is the primary tenant of the real estate leased
from the first business. 
   (ii) 
    (D)  A qualified active low-income community business
shall only include a business that, at the time the initial
investment is made, has 250 or fewer employees and is located in
 a   one or more  California low-income
 community   communities  . The operating
business shall meet all other conditions of a qualified active
low-income community business, except as modified by this paragraph
 and paragraph (7)  . 
   (iii) A 
    (   E)     A  qualified
active low-income community business shall only include a business
located in census tracts with a poverty rate greater than 30 percent,
or census tracts, if located within a non-metropolitan area, with a
median family income that does not exceed 60 percent of median family
income for the State of California, or census tracts, if located
within a metropolitan area, with a median family income that does not
exceed 60 percent of the greater of the California median family
income or the metropolitan area median family income, or census
tracts with unemployment rates at least 1.5 times the national
average. 
   (iv) 
    (F)  A qualified active low-income community business
shall not include any business that operates or derives revenues from
the operation of a country club, gaming establishment, massage
parlor, liquor store, or golf course. 
   (v) 
    (G)  A qualified active low-income community business
shall not include a sexually oriented business. A "sexually oriented
business" means a nightclub, bar, restaurant, or similar commercial
enterprise that provides for an audience of two or more individuals
live nude entertainment or live nude performances where the nudity is
a function of everyday business operations and where nudity is a
planned and intentional part of the entertainment or performance.
"Nude" means clothed in a manner that leaves uncovered or visible,
through less than fully opaque clothing, any portion of the genitals
or, in the case of a female, any portion of the breasts below the top
of the areola of the breasts. 
   (vi) 
    (H)  A qualified active low-income community business
shall not include a charter school. 
   (7) Section 45D(e)(1) of the Internal Revenue Code is modified to
add the following: "When the United States Census Bureau discontinues
using the decennial census to report median family income on a
census tract basis, census block group data shall be used based on
the American Community Survey."  
   (8) The following shall apply in lieu of the provisions of Section

    (4)     Section  45D(f) of the
Internal Revenue Code, relating to national limitation on amount of
investments  designated: "The   designated, is
modified as follows: 
    (A)     The following shall apply in lieu
of the provisions of Section 45D(f)(1) of the Internal Revenue Code:
"The  aggregate amount of  credit  
qualified equity investments  that may be allocated in any
calendar year  pursuant to   for purposes of
 this section, Section 12283, and Section 23622.9 shall be an
amount  equal to   as determined by GO-Biz in
consultation with the Department of Finance based upon  any
unused portion of the one hundred million dollars ($100,000,000) in
exclusions, authorized pursuant to Section 6010.8, as determined by
the California Alternative Energy and Advanced Transportation
Financing Authority and reported to the committee, not to exceed 
an amount based upon a credit of  forty million dollars
($40,000,000). The committee shall limit the allocation of 
credits permitted   investments that may be designated
 under this section, Section 12283, and Section 23622.9 to a
cumulative total  amount based on credits  of no more than
two hundred million dollars ($200,000,000).  Any unused
credits   The allocation of any undesignated qualified
equity investments  shall be returned to the committee by March
1 of the year following allocation and the value of the 
unused credit   undesignated qualified equity investment
 shall be available for allocation in the following calendar
years in accordance with the application process. Any  qualified
equity investment attributable to  recaptured credits shall be
 returned   available  to the committee
 by   on  March 1 of the year following
recapture and  the value of the recaptured credit 
shall be available for allocation in the following calendar years in
accordance with clause (ii) of subparagraph (B) of paragraph 
(9)   (5)  .  Reallocation credits and
  Reallocated qualified equity investments attributable
to  recapture credits shall not count against the  forty
million dollars ($40,000,000)  annual  limit
 or the  two hundred million dollars ($200,000,000)
 cumulative limit." 
   (B) The references to "the Secretary" in Section 45D(f)(2) of the
Internal Revenue Code, relating to allocation of limitation, is
modified to read "GO-Biz."  
   (C) The last sentence of Section 45D(f)(3) of the Internal Revenue
Code, relating to carryover of unused limitation, shall not apply.
 
   (9) 
    (5)  (A) Section 45D(g)(2)(B) of the Internal Revenue
Code, relating to credit recapture amount, is modified to substitute
"Section 19101 of this code" for "section 6621".
   (B) Section 45D(g)(3) of the Internal Revenue Code, relating to
recapture event,  does not apply and is replaced with the
following:   is modified to add the following: 

   (i) (I) The qualified community development entity fails to comply
with subparagraph (D) of paragraph (5) of subdivision (d). In this
case, recapture shall be 100 percent of the credit. The qualified
community development entity shall send notice to GO-Biz within 30
calendar days of the close of any calendar year in which the
qualified community development entity has failed to invest at least
15 percent of the purchase price of the qualified equity investment
in satisfaction of the requirements of subparagraph (D) of paragraph
(5) of subdivision (d).  
   (II) The qualified community development entity made an investment
without performing a revenue impact assessment that satisfies
subparagraph (J) of paragraph (5) of subdivision (d). In this case,
recapture shall be 100 percent of the credit, unless GO-Biz has
approved a waiver pursuant to clause (ii) of subparagraph (J) of
paragraph (5) of subdivision (d). The qualified community development
entity shall send notice to GO-Biz within 30 calendar days of the
close of any calendar year in which the qualified community
development entity has made an investment that fails to meet the
requirements set forth in subparagraph (J) of paragraph (5) of
subdivision (d).  
   (i) 
    (ii)  GO-Biz shall establish a process, in consultation
with the Franchise Tax Board, for the recapture of credits allowed
under this section from the entity that claimed the credit on a
return.  The recapture process shall be applied if any of the
following conditions set forth occur.  
   (I)  Any amount of a federal tax credit available with respect to
a qualified equity investment that is eligible for a credit under
this section is recaptured under Section 45D of the Internal Revenue
Code. The qualified community development entity shall send notice to
GO-Biz within 30 calendar days of being notified by the United
States Treasury that any amount of a federal tax credit available
with respect to a qualified equity investment that is eligible for a
credit under this section is recaptured. GO-Biz shall send written
acknowledgment within five calendar days of receipt of the qualified
community development entity's notice of potential noncompliance. In
such case the recapture shall be proportionate to the federal
recapture with respect to such qualified equity investment. 

   (II)  The qualified community development entity redeems a
qualified equity investment prior to the seventh anniversary of the
issuance of such qualified equity investment. The qualified community
development entity shall send notice to GO-Biz within 30 calendar
days of redeeming a qualified equity investment prior to the seventh
anniversary of the issuance of such qualified equity investment.
GO-Biz shall send written acknowledgment within five calendar days of
receipt of the qualified community development entity's notice of
potential noncompliance. In such case GO-Biz's recapture shall be
proportionate to the amount of the redemption of such qualified
equity investment.  
   (III)  The qualified community development entity fails to invest
an amount equal to at least 85 percent of the purchase price of the
qualified equity investment in qualified low-income community
investments in California within 12 months of the issuance of the
qualified equity investment and maintain at least 85 percent of such
level of investment in qualified low-income community investments in
California until the last credit allowance date for the qualified
equity investment. For purposes of this section, an investment shall
be considered held by a qualified community development entity even
if the investment has been sold or repaid if the qualified community
development entity reinvests an amount equal to the capital returned
to, or recovered by, the qualified community development entity from
the original investment, exclusive of any profits realized, in
another qualified low-income community investment within 12 months of
the receipt of such capital. The qualified community development
entity shall send notice to GO-Biz within 30 calendar days of the
12-month deadline for the reinvestment if the entity fails to meet
any of the reinvestment requirements. GO-Biz shall send written
acknowledgment within five calendar days of receipt of the qualified
community development entity's notice of potential noncompliance. A
qualified community development entity shall not be required to
reinvest capital returned from qualified low-income community
investments after the sixth anniversary of the issuance of the
qualified equity investment, and the qualified low-income community
investment shall be considered held by the qualified community
development entity through the seventh anniversary of the qualified
equity investment's issuance.  
   (ii) 
    (iii)  Recaptured  tax credits and the related
 qualified equity investment  authority 
 investments  revert back to GO-Biz and shall be reissued.
The reissue shall not count toward the annual  allocation
limitation of forty million dollars ($40,000,000) or overall credit
allocation limitation of two hundred million dollars ($200,000,000)
in paragraph (8) of subdivision (c)   or cumulative
allocation limitation  . The reissue shall be done in the
following order:
   (I)  First, pro rata to applicants whose qualified equity
investment allocations were reduced pursuant to subparagraph 
(B)   (F)  of paragraph (5) of subdivision (d) by
the  annual  allocation  limitation of forty million
dollars ($40,000,000) in paragraph (8) of subdivision (c). 
 limitation. 
   (II)  Thereafter, in accordance with the application process.

   (iii) (I)  Enforcement 
    (iv)     (I)    
Enforcement  of each of the recapture provisions shall be
subject to a six-month cure period. Recapture shall not occur until
the qualified community development entity gives notice of potential
noncompliance to GO-Biz and is afforded six months from the date of
such notice to cure the noncompliance. The six-month cure period
shall begin on the day GO-Biz sends written acknowledgment of the
qualified community development entity's notice of the potential
noncompliance. The qualified community development entity is
responsible for addressing the circumstances of the potential
noncompliance and providing all documentation to GO-Biz necessary to
demonstrate, to GO-Biz's satisfaction, that those conditions no
longer exist. 
   (II) In an instance where a qualified community development entity
fails to send the required notice of potential noncompliance or
GO-Biz has information from the annual report or other sources that
indicates that the entity is in potential noncompliance, GO-Biz shall
send the notice. The date GO-Biz sends the notice of potential
noncompliance shall begin the six-month cure period.  
   (II) 
    (III)  Not more than 45 calendar days following the
close of the cure period, GO-Biz shall make a final determination as
to whether the  credit is to be recaptured  
noncompliance has been cured  . This determination shall be
based on the review of the notice, information submitted by the
qualified community development entity, and any other information
GO-Biz deems relevant to this determination.  Within 30 calendar
da   ys of making the final determination, GO-Biz shall
notify the Franchise Tax Board of the determination and other related
information including, but not limited to, the tax identification
number of the qualified community development entity.  
   (III) GO-Biz 
    (IV)     GO-Biz  shall post, and
update monthly, a tally of  returned credits  
undesignated qualified equity investments  , pursuant to
paragraph  (8)   (4)  , and recaptured
credits pursuant to this paragraph.  Within 30 calendar days
of making the final determination that the credit is to be
recaptured, GO-Biz shall notify the Department of Insurance of the
determination including, but not limited to, the tax identification
number of the taxpayer.  
   (10) Section 45D(i) of the Internal Revenue Code, relating to
regulations, shall not apply.  
   (11) 
    (6)  If a qualified community development entity makes a
capital or equity investment or a loan with respect to a qualified
low-income building under the state Low-Income Housing Tax Credit
Program, the investment or loan is not a qualified low-income
community investment under this section.
   (d) (1) GO-Biz shall adopt guidelines necessary or appropriate to
carry out  the purposes of this section and meet the
requirements of Section 45D of the Internal Revenue Code, as modified
by this section. In promulgating guidelines GO-Biz shall look for
guidance in the rules and regulations adopted under Section 45D of
the Internal Revenue Code to the extent that those rules and
regulations are consistent with this section. The guidelines shall
not disqualify a low-income community investment for the single
reason that public or private incentives, loans, equity investments,
technical assistance, or other forms of support have been or continue
to be provided.   its responsibilities with respect to
the allocation of the qualified equity investments and recapture of
credit allowed by this section.  The adoption of the guidelines
shall not be subject to the rulemaking provisions of the
Administrative Procedure Act of Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code.
   (2) (A) GO-Biz shall establish and impose reasonable fees upon
entities that apply for the allocation pursuant to this subdivision
that in the aggregate defray the cost of  administering
  reviewing applications for  the program. 
GO-Biz may impose other reasonable fees upon entities that receive
the allocation pursuant to this subdivision that in the aggregate
defray the cost of administering the program. 
   (B) The fees collected shall be deposited in the California New
Markets Tax Credit Fund established in Section 18410.3.
   (3) In developing guidelines GO-Biz shall adopt an allocation
process that does all of the following:
   (A) Creates an equitable distribution process that ensures that
low-income  communities   community populations
 across the state  are engaged and  have an opportunity
to benefit from the program.
   (B) Sets minimum organizational capacity standards that applicants
must meet in order to receive an allocation of  credits
  authority to designate qualified equity investments
 including, but not limited to, its business strategy, targeted
community outcomes, capitalization strategy, and management capacity.

   (C) Considers the qualified community development entity's prior
qualified low-income community investments under Section 45D of the
Internal Revenue Code.
   (D) Considers the qualified community development entity's prior
qualified low-income community investments under this section,
including subparagraph (D) of paragraph (5).
   (E) Does not require the qualified community development entity to
identify the qualified active low-income community businesses in
which the qualified community development entity will invest in an
application for qualified equity investment allocation. 
   (F) Does not disqualify a low-income community investment for the
single reason that public or private incentives, loans, equity
investments, technical assistance, or other forms of support have
been or continue to be provided. 
   (4) (A) GO-Biz shall begin accepting applications on or before May
15, 2015, and shall award  credits   authority
to designate qualified equity investments  annually through
2019, to the extent that allocations are available pursuant to
Section 26011.9 of the Public Resources Code. To the extent
reasonable and consistent in carrying out the purposes of this
section, GO-Biz shall consider how the timing of the state allocation
rounds correspond with the allocation schedule of the federal New
Markets Tax Credit Program.
   (B) Within 20 calendar days after receipt of an application GO-Biz
shall determine whether the application is complete or whether
additional information is necessary in order to fully evaluate the
application. If additional information is requested and the qualified
community development entity provides that information within five
business days, the application shall be considered completed as of
the original date of receipt. If the qualified community development
entity fails to provide the information within the five-business-day
period, the application shall be denied and must be resubmitted in
full with a new receipt date.
   (C) Within 20 calendar days after receipt of an application
determined to be complete by GO-Biz, the committee shall grant or
deny the application in full or in part. If the committee denies any
part of the application, it shall inform the qualified community
development entity of the grounds for the denial.
   (5) (A)  The   In the 2015 awards cycle, the
 committee shall award  tax credits  
authority to designate qualified equity investments to qualified
community development entities described in  subparagraph
(B) of paragraph (4)   paragraph (3)  of
subdivision (c) in the order applications are received by the
 committee, subject to clause (i) or on a competitive basis,
pursuant to clause (ii).   committee. Applications
received on the same day shall be deemed to have been received
simultaneously.  
   (i) (I) In 2015, the committee shall only award tax credits to a
qualified community development entity in the order applications are
received by the committee. In 
    (B)     In  the 2016 to 2019 award
cycles, inclusive, at least 60 percent of the  credit
allocation   authority to designate qualified equity
investments  shall be awarded  in the order applications
are received by the committee to a qualified community development
entity. Applications received on the same day shall be deemed to have
been received simultaneously.   pursuant to
subparagraph (A).  At the committee's discretion, a higher
percentage of  credits   authority to designate
qualified equity investments  may be awarded pursuant to
the first sentence in this subparagraph. Qualified community
development entities that receive tax credit awards pursuant to this
clause shall commit to making investments in a manner that engages
community-based partnerships and local grassroots stakeholders.
  subparagraph (A).  
   (II) An entity described in clause (ii) of subparagraph (A) of
paragraph (4) of subdivision (c) shall not receive a tax credit award
pursuant to this clause.  
   (ii) 
    (C)  The committee shall award up to 40 percent of the
 credit allocation   authority to  
designate qualified equity investments  in the 2016 to 2019,
inclusive, award cycles, to  a qualified community
development  entity, as described in clause (ii) of
subparagraph (A) of paragraph (4) of subdivision (c) and subparagraph
(B) of paragraph (4) of subdivision (c),   entities
 on a competitive basis using blind scoring and a review
committee that is comprised of community development finance
practitioners  and members  having demonstrated experience
in assessing organizational business strategy, community outcomes,
capitalization strategy, and management capacity. A member of the
review committee shall not have a financial interest, which includes,
but is not limited to, asking, consenting, or agreeing to receive
any commission, emolument, gratuity, money, property, or thing of
value for his or her own use, benefit, or personal advantage for
procuring or endeavoring to procure for any person, partnership,
joint venture, association, or corporation any  tax credit
  qualified equity investment  or other assistance
from any applicant. 
   (D) (i) For qualified equity investments derived from the 2015 to
2019, inclusive, awards cycles, pursuant to subparagraphs (A), (B)
and (C), a qualified community development entity shall invest at
least 15 percent of the qualified equity investment in a qualified
low-income community business in consultation or in partnership with
either of the following:  
                     (I) A qualified community development entity
certified under Section 45D of the Internal Revenue Code that has not
received a federal New Markets Tax Credit allocation on or after
January 1, 2012, and has either a local service area that includes
one or more California communities or a California statewide service
area, but excluding qualified community development entities with a
national service area.  
   (II) A nonprofit organization certified by GO-Biz, pursuant to
clause (iii).  
   (ii) The 15-percent investment shall be calculated by multiplying
the total purchase price of the qualified equity investments issued
by the qualified community development entity by 15 percent. Each
community development entity application shall indicate how the
qualified community development entity will meet this requirement.
 
   (iii) GO-Biz shall establish guidelines for certifying a nonprofit
organization pursuant to this subparagraph. A nonprofit organization
shall meet the requirements of Section 23701 and be certified by
GO-Biz as having a primary mission of serving or providing investment
capital in low-income communities in California. The nonprofit
organization shall maintain accountability to residents of low-income
communities through their representation on any governing board or
on an advisory board of the nonprofit organization. GO-Biz may
include reasonable conditions on the certification to effectuate the
intent of this section and may suspend or revoke a certification,
after affording the nonprofit organization notice and the opportunity
to appeal and be heard by the committee, if GO-Biz finds that the
nonprofit organization no longer meets the requirements for
certification.  
   (iii) In awarding credits on a 
    (E)     In making  competitive
 basis,   awards of authority to designate
qualified equity investments,  priority shall be given to
applications that can demonstrate that the  credits 
 qualified equity investment authority  will allow the 
qualified community development  entity to undertake qualified
low-income community investments in rural, suburban, or urban areas
that have been historically underserved and result in the greatest
benefit to the hardest to serve and undercapitalized lower income
populations, or in newly established businesses, or in activities
that support neighborhood revitalization strategies driven by local
grassroots stakeholders in multiple low-income communities across one
or more regions or the state for the purpose of scaling economic
development activities that compliment regional industry clusters
that result in the greatest benefit to the largest number of lower
income individuals.  All competitive applications shall
demonstrate strong linkages with communities and neighborhoods in
California low-income neighborhoods.  
   (B) 
    (F)   (i)    For applications
described in  clause (i)  of subparagraph (A), in
the event  tax credit  requests  for authority
to designate qualified equity investments  exceed the applicable
annual allocation  limitation of up to forty million dollars
($40,000,000) in paragraph (8) of subdivision (c), the committee
  limitation, GO-Biz  shall certify, consistent
with remaining qualified equity investment capacity, qualified equity
investments of applicants in proportionate percentages based upon
the ratio of the amount of qualified equity investments requested in
such applications to the total amount of qualified equity investments
requested in all such applications received on the same day.

   (C) 
    (ii)  If a pending request cannot be fully certified due
to this limit,  the committee   GO-Biz 
shall certify the portion that may be certified unless the qualified
community development entity elects to withdraw its request rather
than receive partial certification. 
   (D) 
    (G)  An approved applicant may transfer all or a portion
of its certified qualified equity investment authority to its
controlling entity or any subsidiary qualified community development
entity of the controlling entity, provided that the applicant and the
transferee notify the committee within 30 calendar days of such
transfer and include the information required in the application with
respect to such transferee with such notice.  The transferee
shall be subject to the same   rules, requirements, and
limitations applicable to the transferor.  
   (E) 
    (H)  Within 60 calendar days of GO-Biz sending notice of
certification, the qualified community development entity or any
transferee, under subparagraph  (D)   (G) 
, shall issue the qualified equity investment and receive cash in
the amount of the certified amount. The qualified community
development entity or transferee, under subparagraph  (D)
  (G)  , must provide GO-Biz with evidence of the
receipt of the cash investment within 65 calendar days of the
applicant receiving notice of certification. If the qualified
community development entity or any transferee, under subparagraph
 (D)   (G)  , does not receive the cash
investment and issue the qualified equity investment within 60
calendar days of GO-Biz sending the certification notice, the
certification shall lapse and the entity may not issue the qualified
equity investment without reapplying to GO-Biz for certification.
Lapsed certifications revert back to GO-Biz and shall be reissued in
the following order:
   (i) First, pro rata to applicants whose qualified equity
investment allocations were reduced pursuant to subparagraph 
(B)   (F)  under the annual allocation limitation
of forty million dollars ($40,000,000) in paragraph  (8)
  (5)  of subdivision (c).
   (ii) Thereafter, in accordance with the application process.

   (F) 
    (I)  A qualified community development entity that
issues qualified equity investments must notify GO-Biz of the names
of  the entities   taxpayers  that are
eligible to utilize tax credits  under paragraph (3) of
subdivision (b) pursuant to an allocation of tax credits or change in
allocation of tax credits or due to a   pursuant to
this section and any  transfer of a qualified equity investment.

   (J) (i) A qualified community development entity shall only make a
qualified low-income community investment that demonstrates a
positive revenue impact on the state over a 10-year period against
the aggregate tax credit utilization over the same 10-year period.
GO-Biz shall approve one or more nationally recognized revenue impact
assessment models that shall be used by the qualified community
development entity to demonstrate positive revenue impact. If it is
demonstrated that the qualified low-income community investment has a
positive revenue impact on the state at the time the investment is
made, it shall be treated as if the investment continues to meet the
requirement of this subparagraph for the duration of the seven-year
program period.  
   (ii) Upon application and approval by GO-Biz, the requirement of
this subparagraph may be waived. 
   (6) (A) A qualified community development entity that issues
qualified equity investments shall submit a report to GO-Biz within
the first five business days after the first anniversary of the
initial credit allowance date that provides documentation as to the
investment of at least 85 percent of the purchase price in qualified
low-income community investments in qualified active low-income
community businesses located in California. Such report shall include
all of the following:
   (i) A bank statement of such qualified community development
entity evidencing each qualified low-income community investment.
   (ii) Evidence that such business was a qualified active low-income
community business at the time of such qualified low-income
community investment. 
   (iii) Evidence that the community development entity complied with
subparagraph (D) of paragraph (5).  
   (iv) Evidence that each qualified low-income community investment
was determined to have a positive revenue impact on the state. This
requirement does not apply for any qualified low-income community
investment for which GO-Biz approved a waiver, pursuant to clause
(ii) of subparagraph (J) of paragraph (5) or to reinvestments of
redeemed qualified low-income investments.  
   (iii) Any 
    (v)     Any  other information
required by GO-Biz as being necessary to meet the requirements of
this section.
   (B) Thereafter, the qualified community development entity shall
submit an annual report to GO-Biz within 60 calendar days of the
beginning of the calendar year during the seven years following
submittal of the report, pursuant to subparagraph (A). No annual
report shall be due prior to the first anniversary of the initial
credit allowance date. The report shall include, but is not limited
to, the following:
   (i) The  social, environmental, and economic  impact the
credit had on the low-income community  during the report period
and cumulatively  .
   (ii) The amount of moneys used for qualified low-income
investments in qualified low-income community businesses.
   (iii) The number of employment positions created and retained as a
result of qualified low-income community investments and the average
annual salary of such positions.
   (iv) The number of operating businesses assisted as a result of
qualified low-income community investments, by industry and number of
employees.
   (v) Number of owner-occupied real estate projects 
described in subparagraph (E) of paragraph (6) of subdivision (c)
 .
   (vi) Location of  the   each  qualified
low-income community  businesses   business
assisted by a qualified low-income community investment  . 
   (vii) Summary of the outcomes of each of the revenue impact
assessments undertaken by the qualified community development entity
during the year. 
   (e)  (1)    In the case where the credit allowed
by this section exceeds the "net tax," the excess may be carried
over to reduce the "net tax" in the following year, and the six
succeeding years if necessary, until the credit is exhausted. 
   (2) A taxpayer allowed a credit under this section for a qualified
equity investment shall not be eligible for any other credit under
this part with respect to that investment. 
   (f) GO-Biz shall annually report on its Internet Web site the
information provided by low-income community development entities and
on the geographic distribution of the qualified active low-income
community businesses assisted.
   (g) (1) The Franchise Tax Board may prescribe any rules or
regulations that may be necessary or appropriate to implement this
section. The Franchise Tax Board shall have access to any
documentation held by the committee relative to the application and
reporting of a qualified community development entity.
   (2) A qualifying community development entity shall provide GO-Biz
with the name, address, and tax identification number of each
investor and entity for which a  credit  
qualified equity investment  was  allocated 
 designated  by the qualifying community development entity,
pursuant to  paragraph (3) of subdivision (b)  
this section  . GO-Biz shall provide this information to the
Franchise Tax Board in a manner determined by the Franchise Tax
Board.
   (h)  The credit allowed under this section shall only be
allowed for taxable years   GO-Biz and the committee
shall only make awards pursuant to paragraph (4) of subdivision (d)
in a calendar year  in which the Legislature appropriates funds
in the California New Markets Tax Credit Fund pursuant to subdivision
(b) of Section 18410.3.
   (i) This section shall remain in effect only until December 1,
2028, and as of that date is repealed.
  SEC. 5.  Section 18410.3 is added to the Revenue and Taxation Code,
to read:
   18410.3.  (a) The California New Markets Tax Credit Fund is hereby
established in the State Treasury.
   (b) Upon appropriation, moneys in the fund shall be used for the
purposes described in subdivision (d) of Section 12283, subdivision
(d) of Section 17053.9, and subdivision (d) of Section 23622.9.
  SEC. 6.  Section 23622.9 is added to the Revenue and Taxation Code,
to read:
   23622.9.  (a) There is hereby created the California New Markets
Tax Credit Program as provided in this section, Section 12283, and
Section 17053.9. The purpose of this program is to stimulate private
sector investment in lower income communities by providing a tax
incentive to community and economic development entities that can be
leveraged by the entity to attract private sector investment that in
turn will be deployed by providing financing and technical assistance
to small- and medium-size businesses and the development of
commercial, industrial, and community development projects,
including, but not limited to, facilities for nonprofit service
organizations, light manufacturing, and mixed-use and
transit-oriented development. The committee and GO-Biz shall
administer this program as provided in this section, Section 12283,
and Section 17053.9.  The Director of GO-Biz may delegate the
administration of all or portions of the program within GO-Biz. 

   (b) (1) For taxable years beginning on or after January 1, 2015,
and before January 1, 2027, and subject to subdivision (h), there
shall be allowed as a credit against the "tax," as defined in Section
23036, an amount determined in accordance with Section 45D of the
Internal Revenue Code,  as amended by Public Law 111-5,
Public Law 111-312, and Public Law 112-240,  as modified as
set forth in this section. 
   (2) This credit shall be allowed only if the taxpayer holds the
qualified equity investment, or has been allocated a credit pursuant
to paragraph (3), on the credit allowance date and each of the six
following anniversary dates of that date.  
   (3) A tax credit allowed under this section shall not be sold and
is not a refundable credit. Tax credits allowed or allocated to a
partnership, limited liability company, or "S" corporation may be
allocated to the partners, members, managers, or shareholders of such
entity for their use in accordance with the provisions of any
agreement among such partners, members, managers, or shareholders.
Such allocations shall not be considered a sale for the purposes of
this section.  
   (2) (A) For purposes of this section, "committee" means the
California Competes Tax Credit Committee established under Section
18410.2.  
   (B) For purposes of this section, "GO-Biz" means the Governor's
Office of Business and Economic Development. 
   (c) Section 45D of the Internal Revenue Code is modified as
follows: 
   (1) The references to "the Secretary" in Section 45D of the
Internal Revenue Code, other than in Sections 45D(c)(1)(C) and 45D(d)
(1)(C), are modified to read "GO-Biz."  
   (2) 
    (1)  Section 45D(a)(2) of the Internal Revenue Code,
relating to applicable percentage, is modified by substituting for "
(A) 5 percent with respect to the first 3 credit allowance dates, and
(B) 6 percent with respect to the remainder of the credit allowance
dates" with the following:
   (A) Zero percent with respect to the first two credit allowance
dates.
   (B) Seven percent with respect to the third credit allowance date.

   (C) Eight percent with respect to the remainder of the credit
allowance dates. 
   (3) Section 45D(b)(3) of the Internal Revenue Code, relating to
safe harbor for determining use of cash, is modified by substituting
"qualified low-income community investments in California" for
"qualified low-income community investments."  
   (4) (A) Section 45D(c)(1) of the Internal Revenue Code is modified
to additionally include:  
   (i) A subsidiary community development entity of any such
qualified community development entity.  
   (ii) A nonprofit organization, pursuant to Section 23701,
certified by GO-Biz as having a primary mission of serving or
providing investment capital in low-income communities and the entity
maintains accountability to residents of low-income communities
through their representation on any governing board of the entity or
on an advisory board of the entity. GO-Biz shall establish guidelines
for certifying nonprofit organizations pursuant to this
subparagraph. GO-Biz may include reasonable conditions on the
certification to effectuate the intent of this section and may
suspend or revoke a certification, after affording the nonprofit
organization notice and the opportunity to appeal and be heard by the
committee, if GO-Biz finds that the nonprofit organization no longer
meets the requirements for certification. Such nonprofit
organization is not subject to the requirement of subparagraph (B).
 
   (B) 
    (2)   (A)    Section 45D(c)(1) of the
Internal Revenue Code is modified to only include a qualified
community development  entity   entity, that is
certified by the Secretary of the Treasury,  and its subsidiary
qualified community development entities that have entered into an
allocation agreement with the Community Development Financial
Institutions Fund of the United States Treasury Department, with
respect to credits authorized by Section 45D of the Internal Revenue
Code, that includes California within the service area and is dated
on or after January 1, 2012. 
   (5) 
    (B)  Section 45D(d)(1)(A)   45D(c)
(2)  of the Internal Revenue Code is modified to only include
 any capital or equity investment in, or loan to, a qualified
active low-income community business.   a specialized
small business investment company or a community development
financial institution that have entered into an allocation agreement
with the Community Development Financial Institutions Fund of the
United States Treasury Department, with respect to credits authorized
  by Section 45D of the Internal Revenue Code, that
includes California within the service area and is dated on or after
January 1, 2012.  
   (6) 
    (3)  The term "qualified active low-income community
business," as defined in Section 45D(d)(2) of the Internal Revenue
Code, is modified as follows:
   (A)  Section 45D(d)(2)(A)(i) of the Internal Revenue Code
is modified by   By  substituting "any low-income
community in California" for "any low-income  community."
  community" every place it appears in Section 45D of
the Internal Revenue Code.  
   (B) Section 45D(d)(2)(A)(ii) of the Internal Revenue Code is
modified as follows:  
   (i) Substituting "any low-income community in California" for "any
low-income community."  
   (ii) In determining whether the qualified active low-income
community business uses a substantial portion of its tangible
personal property within any low-income community, the term
"substantial portion" shall mean "at least 40 percent" as calculated
by the average value of the tangible property owned or leased and
used within a California low-income community by the entity divided
by the average value of the total tangible property owned or leased
and used by the entity in California during the taxable year. The
value assigned to the leased property by the entity must be
reasonable.  
   (iii) Adding the provision that if the business meets the
requirements of a qualified low-income community business at the time
the investment is made, the business shall be treated as satisfying
the requirements of Section 45D(d)(2)(A)(ii) for the duration of the
investment.  
   (C) An entity complies with Section 45D(d)(2)(A)(i) of the
Internal Revenue Code if, as calculated in subparagraph (B), it uses
50 percent of its tangible property, whether owned or leased, within
any low-income community for any taxable year.  
   (D) 
    (B)  Section 45D(d)(2)(A)(iii) of the Internal Revenue
Code is modified to allow the services of employees of a
service-based qualified  active low-income community 
business to be performed outside the low-income community. A
service-based qualified  active low-income community 
business is a business that primarily earns revenue through providing
intangible products and services  and leases or owns real
property in the low-income community that is used for the operation
of the business  . 
   (E) (i) 
    (C)    A qualified active low-income community
business shall not include any business that derives, or projects to
derive, 15 percent or more of its annual revenue from the rental or
sale of real estate. This exclusion does not apply to a business that
is controlled by, or under common control with, another business if
the second business: (I) does not derive or project to derive 15
percent or more of its annual revenue from the rental or sale of real
estate; and (II) is the primary tenant of the real estate leased
from the first business. 
   (ii) 
    (D)  A qualified active low-income community business
shall only include a business that, at the time the initial
investment is made, has 250 or fewer employees and is located in
 a   one or more  California low-income
 community   communities  . The operating
business shall meet all other conditions of a qualified active
low-income community business, except as modified by this paragraph
 and paragraph (7)  . 
   (iii) A 
    (E)     A  qualified active low-income
community business shall only include a business located in census
tracts with a poverty rate greater than 30 percent, or census tracts,
if located within a non-metropolitan area, with a median family
income that does not exceed 60 percent of median family income for
the State of California, or census tracts, if located within a
metropolitan area, with a median family income that does not exceed
60 percent of the greater of the California median family income or
the metropolitan area median family income, or census tracts with
unemployment rates at least 1.5 times the national average. 
   (iv) 
    (F)  A qualified active low-income community business
shall not include any business that operates or derives revenues from
the operation of a country club, gaming establishment, massage
parlor, liquor store, or golf course. 
   (v) 
    (G)  A qualified active low-income community business
shall not include a sexually oriented business. A "sexually oriented
business" means a nightclub, bar, restaurant, or similar commercial
enterprise that provides for an audience of two or more individuals
live nude entertainment or live nude performances where the nudity is
a function of everyday business operations and where nudity is a
planned and intentional part of the entertainment or performance.
"Nude" means clothed in a manner that leaves uncovered or visible,
through less than fully opaque clothing, any portion of the genitals
or, in the case of a female, any portion of the breasts below the top
of the areola of the breasts. 
   (vi) 
    (H)  A qualified active low-income community business
shall not include a charter school. 
   (7) Section 45D(e)(1) of the Internal Revenue Code is modified to
add the following: "When the United States Census Bureau discontinues
using the decennial census to report median family income on a
census tract basis, census block group data shall be used based on
the American Community Survey."  
   (8) The following shall apply in lieu of the provisions of Section

    (4)     Section  45D(f) of the
Internal Revenue Code, relating to national limitation on amount of
investments  designated: "The   designated, is
modified as follows: 
    (A)     The following shall apply in lieu
of the provisions of Section 45D(f)(1) of the Internal Revenue Code:
"The  aggregate amount of  credit  
qualified equity investments  that may be allocated in any
calendar year  pursuant to   for purposes of
 this section, Section 12283, and Section 17053.9 shall be an
amount  equal to   as determined by GO-Biz in
consultation with the Department of Finance based upon  any
unused portion of the one hundred million dollars ($100,000,000) in
exclusions, authorized pursuant to Section 6010.8, as determined by
the California Alternative Energy and Advanced Transportation
Financing Authority and reported to the committee, not to exceed 
an amount based upon a credit of  forty million dollars
($40,000,000). The committee shall limit the allocation of 
credits permitted   investments that may be designated
 under this section, Section 12283, and Section 17053.9 to a
cumulative total  am   ount based on credits  of no
more than two hundred million dollars ($200,000,000).  Any
unused credits   The allocation of any undesignated
qualified equity investments  shall be returned to the committee
by March 1 of the year following allocation and the value of the
 unused credit   undesignated qualified equity
investment  shall be available for allocation in the following
calendar years in accordance with the application process. Any 
qualified equity investment   attributable to 
recaptured credits shall be  returned  
available  to the committee  by   on 
March 1 of the year following recapture and  the value of the
recaptured credit  shall be available for allocation in the
following calendar years in accordance with clause (ii) of
subparagraph (B) of paragraph  (9)   (5)  .
 Reallocation credits and   Reallocated
qualified equity investments attributable to  recapture credits
shall not count against  the forty million dollars
($40,000,000)  annual  limit  or the
 two hundred million dollars ($200,
                   000,000)  cumulative limit." 
   (B) The references to "the Secretary" in Section 45D(f)(2) of the
Internal Revenue Code, relating to allocation of limitation, is
modified to read "GO-Biz."  
   (C) The last sentence of Section 45D(f)(3) of the Internal Revenue
Code, relating to carryover of unused limitation, shall not apply.
 
   (9) 
    (5)  (A) Section 45D(g)(2)(B) of the Internal Revenue
Code, relating to credit recapture amount, is modified to substitute
"Section 19101 of this code" for "section 6621".
   (B) Section 45D(g)(3) of the Internal Revenue Code, relating to
recapture event,  does not apply and is replaced with the
following:   is modified to add the following: 

   (i) (I) The qualified community development entity fails to comply
with subparagraph (D) of paragraph (5) of subdivision (d). In this
case, recapture shall be 100 percent of the credit. The qualified
community development entity shall send notice to GO-Biz within 30
calendar days of the close of any calendar year in which the
qualified community development entity has failed to invest at least
15 percent of the purchase price of the qualified equity investment
in satisfaction of the requirements of subparagraph (D) of paragraph
(5) of subdivision (d).  
   (II) The qualified community development entity made an investment
without performing a revenue impact assessment that satisfies
subparagraph (J) of paragraph (5) of subdivision (d). In this case,
recapture shall be 100 percent of the credit, unless GO-Biz has
approved a waiver pursuant to clause (ii) of subparagraph (J) of
paragraph (5) of subdivision (d). The qualified community development
entity shall send notice to GO-Biz within 30 calendar days of the
close of any calendar year in which the qualified community
development entity has made an investment that fails to meet the
requirements set forth in subparagraph (J) of paragraph (5) of
subdivision (d).  
   (i) 
    (ii)  GO-Biz shall establish a process, in consultation
with the Franchise Tax Board, for the recapture of credits allowed
under this section from the entity that claimed the credit on a
return.  The recapture process shall be applied if any of the
following conditions set forth occur.  
   (I) Any amount of a federal tax credit available with respect to a
qualified equity investment that is eligible for a credit under this
section is recaptured under Section 45D of the Internal Revenue
Code. The qualified community development entity shall send notice to
GO-Biz within 30 calendar days of being notified by the United
States Treasury that any amount of a federal tax credit available
with respect to a qualified equity investment that is eligible for a
credit under this section is recaptured. GO-Biz shall send written
acknowledgment within five calendar days of receipt of the qualified
community development entity's notice of potential noncompliance. In
such case the recapture shall be proportionate to the federal
recapture with respect to such qualified equity investment. 

   (II) The qualified community development entity redeems a
qualified equity investment prior to the seventh anniversary of the
issuance of such qualified equity investment. The qualified community
development entity shall send notice to GO-Biz within 30 calendar
days of redeeming a qualified equity investment prior to the seventh
anniversary of the issuance of such qualified equity investment.
GO-Biz shall send written acknowledgment within five calendar days of
receipt of the qualified community development entity's notice of
potential noncompliance. In such case GO-Biz's recapture shall be
proportionate to the amount of the redemption of such qualified
equity investment.  
   (III) The qualified community development entity fails to invest
an amount equal to at least 85 percent of the purchase price of the
qualified equity investment in qualified low-income community
investments in California within 12 months of the issuance of the
qualified equity investment and maintain at least 85 percent of such
level of investment in qualified low-income community investments in
California until the last credit allowance date for the qualified
equity investment. For purposes of this section, an investment shall
be considered held by a qualified community development entity even
if the investment has been sold or repaid if the qualified community
development entity reinvests an amount equal to the capital returned
to, or recovered by, the qualified community development entity from
the original investment, exclusive of any profits realized, in
another qualified low-income community investment within 12 months of
the receipt of such capital. The qualified community development
entity shall send notice to GO-Biz within 30 calendar days of the
12-month deadline for the reinvestment if the entity fails to meet
any of the reinvestment requirements. GO-Biz shall send written
acknowledgment within five calendar days of receipt of the qualified
community development entity's notice of potential noncompliance. A
qualified community development entity shall not be required to
reinvest capital returned from qualified low-income community
investments after the sixth anniversary of the issuance of the
qualified equity investment, and the qualified low-income community
investment shall be considered held by the qualified community
development entity through the seventh anniversary of the qualified
equity investment's issuance.  
   (ii) 
    (iii)    Recaptured  tax credits and
the related qualified equity investment authority  
investments  revert back to GO-Biz and shall be reissued. The
reissue shall not count toward the annual  allocation
limitation of forty million dollars ($40,000,000) or overall credit
allocation limitation of two hundred million dollars ($200,000,000)
in paragraph (8) of subdivision (c)   or cumulative
allocation limitation  . The reissue shall be done in the
following order:
   (I) First, pro rata to applicants whose qualified equity
investment allocations were reduced pursuant to subparagraph 
(B)   (F)  of paragraph (5) of subdivision (d) by
the  annual  allocation  limitation of forty million
dollars ($40,000,000) in paragraph (8) of subdivision (c). 
 limitation. 
   (II) Thereafter, in accordance with the application process.

   (iii) (I) Enforcement 
    (iv)     (I)    
Enforcement  of each of the recapture provisions shall be
subject to a six month cure period. Recapture shall not occur until
the qualified community development entity gives notice of potential
noncompliance to GO-Biz and is afforded six months from the date of
such notice to cure the noncompliance. The six-month cure period
shall begin on the day GO-Biz sends written acknowledgment of the
qualified community development entity's notice of the potential
noncompliance. The qualified community development entity is
responsible for addressing the circumstances of the potential
noncompliance and providing all documentation to GO-Biz necessary to
demonstrate, to  the  GO-Biz's satisfaction, that
those conditions no longer exist. 
   (II) In an instance where a qualified community development entity
fails to send the required notice of potential noncompliance or
GO-Biz has information from the annual report or other sources that
indicates that the entity is in potential noncompliance, GO-Biz shall
send the notice. The date GO-Biz sends the notice of potential
noncompliance shall begin the six-month cure period.  
   (II) 
    (III)  Not more than 45 calendar days following the
close of the cure period, GO-Biz shall make a final determination as
to whether the  credit is to be recaptured  
noncompliance has been cured  . This determination shall be
based on the review of the notice, information submitted by the
qualified community development entity, and any other information
GO-Biz deems relevant to this determination.  Within 30 calendar
days of making the final determination, GO-Biz shall notify 
 the Franchise Tax Board of the determination and other related
information including, but not limited to, the tax  
identification number of the taxpayer.  
   (III) GO-Biz 
    (I   V)     GO-Biz shall
post, and update monthly, a tally of  returned credits
  undesignated qualified equity investments  ,
pursuant to paragraph  (8)   (4)  , and
recaptured credits pursuant to this paragraph.  Within 30
calendar days of making the final determination that the credit is to
be recaptured, GO-Biz shall notify the Department of Insurance of
the determination including, but not limited to, the tax
identification number of the taxpayer.  
   (10) Section 45D(i) of the Internal Revenue Code, relating to
regulations, shall not apply.  
   (11) 
    (6)  If a qualified community development entity makes a
capital or equity investment or a loan with respect to a qualified
low-income building under the state Low-Income Housing Tax Credit
Program, the investment or loan is not a qualified low-income
community investment under this section.
   (d) (1)  GO-Biz shall adopt guidelines necessary or appropriate to
carry out  the purposes of this section and meet the
requirements of Section 45D of the Internal Revenue Code, as modified
by this section. In promulgating guidelines GO-Biz shall look for
guidance in the rules and regulations adopted under Section 45D of
the Internal Revenue Code to the extent that those rules and
regulations are consistent with this section. The guidelines shall
not disqualify a low-income community investment for the single
reason that public or private incentives, loans, equity investments,
technical assistance, or other forms of support have been or continue
to be provided.   its responsibilities with respect to
the allocation of the qualified equity investments and recapture of
credit allowed by this section.  The adoption of the guidelines
shall not be subject to the rulemaking provisions of the
Administrative Procedure Act of Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code.
   (2) (A) GO-Biz shall establish and impose reasonable fees upon
entities that apply for the allocation pursuant to this subdivision
that in the aggregate defray the cost of  administering
  reviewing applications for  the program. 
GO-Biz may impose other reasonable fees upon entities that receive
the allocation pursuant to this subdivision that in the aggregate
defray the cost of administering the program. 
   (B) The fees collected shall be deposited in the California New
Markets Tax Credit Fund established in Section 18410.3.
   (3) In developing guidelines GO-Biz shall adopt an allocation
process that does all of the following:
   (A) Creates an equitable distribution process that ensures that
low-income  communities   community populations
 across the state  are engaged and  have an opportunity
to benefit from the program.
   (B) Sets minimum organizational capacity standards that applicants
must meet in order to receive an allocation of  credits
  authority to designate qualified equity investments
 including, but not limited to, its business strategy, targeted
community outcomes, capitalization strategy, and management capacity.

   (C) Considers the qualified community development entity's prior
qualified low-income community investments under Section 45D of the
Internal Revenue Code.
   (D) Considers the qualified community development entity's prior
qualified low-income community investments under this section,
including subparagraph (D) of paragraph (5).
   (E) Does not require the qualified community development entity to
identify the qualified active low-income community businesses in
which the qualified community development entity will invest in an
application for qualified equity investment allocation. 
   (F) Does not disqualify a low-income community investment for the
single reason that public or private incentives, loans, equity
investments, technical assistance, or other forms of support have
been or continue to be provided. 
   (4) (A) GO-Biz shall begin accepting applications on or before May
15, 2015, and shall award  credits   authority
to designate qualified equity investments  annually through
2019, to the extent that allocations are available pursuant to
Section 26011.9 of the Public Resources Code. To the extent
reasonable and consistent in carrying out the purposes of this
section, GO-Biz shall consider how the timing of the state allocation
rounds correspond with the allocation schedule of the federal New
Markets Tax Credit Program.
   (B) Within 20 calendar days after receipt of an application GO-Biz
shall determine whether the application is complete or whether
additional information is necessary in order to fully evaluate the
application. If additional information is requested and the qualified
community development entity provides that information within five
business days, the application shall be considered completed as of
the original date of receipt. If the qualified community development
entity fails to provide the information within the five-business-day
period, the application shall be denied and must be resubmitted in
full with a new receipt date.
   (C) Within 20 calendar days after receipt of an application
determined to be complete by GO-Biz, the committee shall grant or
deny the application in full or in part. If the committee denies any
part of the application, it shall inform the qualified community
development entity of the grounds for the denial.
   (5) (A)  The   In the 2015 awards cycle, the
 committee shall award  tax credits  
authority to designate qualified equity investments  to
qualified community development entities described in 
subparagraph (B) of paragraph (4)   paragraph (3) 
of subdivision (c) in the order applications are received by the
 committee, subject to clause (i) or on a competitive basis,
pursuant to clause (ii)   committee. Applications
received on the same day shall be deemed to have been received
simultaneously  . 
   (i) (I) In 2015, the committee shall only award tax credits to a
qualified community development entity in the order applications are
received by the committee. In 
    (B)     In  the 2016 to 2019 award
cycles, inclusive, at least 60 percent of the  credit
allocation   authority to designate qualified equity
investments  shall be awarded  in the order applications
are received by the committee to a qualified community development
entity. Applications received on the same day shall be deemed to have
been received simultaneously.   pursuant to
subparagraph (A).  At the committee's discretion, a higher
percentage of  credits   authority to designate
qualified equity investments  may be awarded pursuant to
 the first sentence in this subparagraph. Qualified community
development entities that receive tax credit awards pursuant to this
clause shall commit to making investments in a manner that engages
community-based partnerships and local grassroots stakeholders.
  subparagraph (A).  
   (II) An entity described in clause (ii) of subparagraph (A) of
paragraph (4) of subdivision (c) shall not receive a tax credit award
pursuant to this clause.  
   (ii) 
    (C)  The committee shall award up to 40 percent of the
 credit allocation   authority to designate
  qualified equity investments  in the 2016 to 2019,
inclusive, award cycles, to  a  qualified community
development  entity, as described in clause (ii) of
subparagraph (A) of paragraph (4) of subdivision (c) and subparagraph
(B) of paragraph (4) of subdivision (c),   entities
 on a competitive basis using blind scoring and a review
committee that is comprised of community development finance
practitioners  and members  having demonstrated experience
in assessing organizational business strategy, community outcomes,
capitalization strategy, and management capacity. A member of the
review committee shall not have a financial interest, which includes,
but is not limited to, asking, consenting, or agreeing to receive
any commission, emolument, gratuity, money, property, or thing of
value for his or her own use, benefit, or personal advantage for
procuring or endeavoring to procure for any person, partnership,
joint venture, association, or corporation any  tax credit
  qualified equity investment  or other assistance
from any applicant. 
   (D) (i) For qualified equity investments derived from the 2015 to
2019, inclusive, awards cycles, pursuant to subparagraphs (A), (B)
and (C), a qualified community development entity shall invest at
least 15 percent of the qualified equity investment in a qualified
low-income community business in consultation or in partnership with
either of the following:  
   (I) A qualified community development entity certified under
Section 45D of the Internal Revenue Code that has not received a
federal New Markets Tax Credit allocation on or after January 1,
2012, and has either a local service area that includes one or more
California communities or a California statewide service area, but
excluding qualified community development entities with a national
service area.  
   (II) A nonprofit organization certified by GO-Biz, pursuant to
clause (iii).  
   (ii) The 15-percent investment shall be calculated by multiplying
the total purchase price of the qualified equity investments issued
by the qualified community development entity by 15 percent. Each
community development entity application shall indicate how the
qualified community development entity will meet this requirement.
 
   (iii) GO-Biz shall establish guidelines for certifying a nonprofit
organization pursuant to this subparagraph. A nonprofit organization
shall meet the requirements of Section 23701 and be certified by
GO-Biz as having a primary mission of serving or providing investment
capital in low-income communities in California. The nonprofit
organization shall maintain accountability to residents of low-income
communities through their representation on any governing board or
on an advisory board of the nonprofit organization. GO-Biz may
include reasonable conditions on the certification to effectuate the
intent of this section and may suspend or revoke a certification,
after affording the nonprofit organization notice and the opportunity
to appeal and be heard by the committee, if GO-Biz finds that the
nonprofit organization no longer meets the requirements for
certification.  
   (iii) In awarding credits on a 
    (E)    In making  competitive 
basis,   awards of authority to designate qualified
equity investments,  priority shall be given to applications
that can demonstrate that the  credits  
qualified equity investment authority  will allow the 
qualified community development  entity to undertake qualified
low-income community investments in rural, suburban, or urban areas
that have been historically underserved and result in the greatest
benefit to the hardest to serve and undercapitalized lower income
populations, or in newly established businesses, or in activities
that support neighborhood revitalization strategies driven by local
grassroots stakeholders in multiple low-income communities across one
or more regions or the state for the purpose of scaling economic
development activities that compliment regional industry clusters
that result in the greatest benefit to the largest number of lower
income individuals.  All competitive applications shall
demonstrate strong linkages with communities and neighborhoods in
California low-income neighborhoods.  
   (B) 
    (F)   (i)    For applications
described in  clause (i) of  subparagraph (A), in
the event  tax credit  requests  for authority
to designate qualified equity investments  exceed the applicable
annual allocation  limitation of up to forty million dollars
($40,000,000) in paragraph (8) of subdivision (c), the committee
  limitation, GO-Biz  shall certify, consistent
with remaining qualified equity investment capacity, qualified equity
investments of applicants in proportionate percentages based upon
the ratio of the amount of qualified equity investments requested in
such applications to the total amount of qualified equity investments
requested in all such applications received on the same day.

   (C) 
    (ii)  If a pending request cannot be fully certified due
to this limit,  the committee   GO-Biz 
shall certify the portion that may be certified unless the qualified
community development entity elects to withdraw its request rather
than receive partial certification. 
   (D) 
    (G)  An approved applicant may transfer all or a portion
of its certified qualified equity investment authority to its
controlling entity or any subsidiary qualified community development
entity of the controlling entity, provided that the applicant and the
transferee notify the committee within 30 calendar days of such
transfer and include the information required in the application with
respect to such transferee with such notice.  The transferee
shall be subject to the same rules, requirements, and limitations
applicable to the transferor.  
   (E) 
    (H)  Within 60 calendar days of GO-Biz sending notice of
certification, the qualified community development entity or any
transferee, under subparagraph  (D)   (G) 
, shall issue the qualified equity investment and receive cash in
the amount of the certified amount. The qualified community
development entity or transferee, under subparagraph  (D)
  (G)  , must provide GO-Biz with evidence of the
receipt of the cash investment within 65 calendar days of the
applicant receiving notice of certification. If the qualified
community development entity or any transferee, under subparagraph
 (D)   (G)  , does not receive the cash
investment and issue the qualified equity investment within 60
calendar days of GO-Biz sending the certification notice, the
certification shall lapse and the entity may not issue the qualified
equity investment without reapplying to GO-Biz for certification.
Lapsed certifications revert back to GO-Biz and shall be reissued in
the following order:
   (i) First, pro rata to applicants whose qualified equity
investment allocations were reduced pursuant to subparagraph 
(B) of paragraph (5)   (F)  under the annual
allocation limitation of forty million dollars ($40,000,000) in
paragraph  (8)   (5)  of subdivision (c).
   (ii) Thereafter, in accordance with the application process.

   (F) 
    (I)  A qualified community development entity that
issues qualified equity investments must notify GO-Biz of the names
of the  entities   taxpayers  that are
eligible to utilize tax credits  under paragraph (3) of
subdivision (b) pursuant to an allocation of tax credits or change in
allocation of tax credits or due to a   pursuant to
this section and any  transfer of a qualified equity investment.

   (J) (i) A qualified community development entity shall only make a
qualified low-income community investment that demonstrates a
positive revenue impact on the state over a 10-year period against
the aggregate tax credit utilization over the same 10-year period.
GO-Biz shall approve one or more nationally recognized revenue impact
assessment models that shall be used by the qualified community
development entity to demonstrate positive revenue impact. If it is
demonstrated that the qualified low-income community investment has a
positive revenue impact on the state at the time the investment is
made, it shall be treated as if the investment continues to meet the
requirement of this subparagraph for the duration of the seven-year
program period.  
   (ii) Upon application and approval by GO-Biz, the requirement of
this subparagraph may be waived. 
   (6) (A) A qualified community development entity that issues
qualified equity investments shall submit a report to GO-Biz within
the first five business days after the first anniversary of the
initial credit allowance date that provides documentation as to the
investment of at least 85 percent of the purchase price in qualified
low-income community investments in qualified active low-income
community businesses located in California. Such report shall include
all of the following:
   (i) A bank statement of such qualified community development
entity evidencing each qualified low-income community investment.
   (ii) Evidence that such business was a qualified active low-income
community business at the time of such qualified low-income
community investment. 
   (iii) Evidence that the community development entity complied with
subparagraph (D) of paragraph (5). 
   (iv) Evidence that each qualified low-income community investment
was determined to have a positive revenue impact on the state. This
requirement does not apply for any qualified low-income community
investment for which GO-Biz approved a waiver, pursuant to clause
(ii) of subparagraph (J) of paragraph
              (5) or to reinvestments of redeemed qualified
low-income investments.  
   (iii) Any 
    (v)     Any  other information
required by GO-Biz as being necessary to meet the requirements of
this section.
   (B) Thereafter, the qualified community development entity shall
submit an annual report to GO-Biz within 60 calendar days of the
beginning of the calendar year during the seven years following
submittal of the report, pursuant to subparagraph (A). No annual
report shall be due prior to the first anniversary of the initial
credit allowance date. The report shall include, but is not limited
to, the following:
   (i) The  social, environmental, and economic  impact the
credit had on the low-income community  during the report period
and cumulatively  .
   (ii) The amount of moneys used for qualified low-income
investments in qualified low-income community businesses.
   (iii) The number of employment positions created and retained as a
result of qualified low-income community investments and the average
annual salary of such positions.
   (iv) The number of operating businesses assisted as a result of
qualified low-income community investments, by industry and number of
employees.
   (v) Number of owner-occupied real estate projects 
described in subparagraph (E) of paragraph (6) of subdivision (c)
 .
   (vi) Location of  the   each  qualified
low-income community  businesses  business
assisted by a qualified low-income community investment  . 
   (vii) Summary of the outcomes of each of the revenue impact
assessments undertaken by the qualified community development entity
during the year. 
   (e)  (1)    In the case where the credit allowed
by this section exceeds the "tax," the excess may be carried over to
reduce the "tax" in the following year, and the six succeeding years
if necessary, until the credit is exhausted. 
   (2) A taxpayer allowed a credit under this section for a qualified
equity investment shall not be eligible for any other credit under
this part with respect to that investment. 
   (f) GO-Biz shall annually report on its Internet Web site the
information provided by low-income community development entities and
on the geographic distribution of the qualified active low-income
community businesses assisted.
   (g) (1) The Franchise Tax Board may prescribe any rules or
regulations that may be necessary or appropriate to implement this
section. The Franchise Tax Board shall have access to any
documentation held by the committee relative to the application and
reporting of a qualified community development entity.
   (2) A qualifying community development entity shall provide GO-Biz
with the name, address, and tax identification number of each
investor and entity for which a  credit  
qualified equity investment  was  allocated 
 designated  by the qualifying community development entity,
pursuant to  paragraph (3) of subdivision (b)  
this section  . GO-Biz shall provide this information to the
Franchise Tax Board in a manner determined by the Franchise Tax
Board.
   (h)  The credit allowed under this section shall only be
allowed for taxable years   GO-Biz and the committee
shall only make awards pursuant to paragraph (4) of subdivision (d)
in a calendar year  in which the Legislature appropriates funds
in the California New Markets Tax Credit Fund pursuant to subdivision
(b) of Section 18410.3.
   (i) This section shall remain in effect only until December 1,
2028, and as of that date is repealed.
   SEC. 7.    The provisions of this act are severable.
If any provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that
can be given effect without the invalid provision or application.

   SEC. 7.   SEC. 8.   This act provides
for a tax levy within the meaning of Article IV of the Constitution
and shall go into immediate effect.