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  SEPTEMBER 6, 2013
	AMENDED IN SENATE  AUGUST 22, 2013

INTRODUCED BY    Committee on Jobs, Economic Development, and
the Economy   (   Medina (Chair),
Campos, Daly, Fong, Fox, Linder, Mansoor, Melendez, and V. Manuel
Pérez   )   Assembly   Members
  Medina   and V. Manuel  Pérez 

                        MARCH 11, 2013

   An act to  amend and renumber Sections 13997.2 and 13997.7
of, and to add the heading of Article 6 (commencing with Section
12100) to Chapter 1.6 of Part 2 of Division 3 of Title 2 of, the
Government Code, and to amend Section 44559.1 of the Health and
Safety Code, relating to economic development.   add
Section 26011.9 to the Public Resources Code, and to add and repeal
Sections 17053.9 and 23622.9 of the Revenue and Taxation Code,
relating to taxation, and making an appropriation therefor, to take
effect immediately, tax levy. 



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1399, as amended,  Committee on Jobs, Economic
Development, and the Economy   Medina  . 
Economic development.   Income ta   xation:
credits: New Market Tax Credit.  
   The Personal Income Tax Law and the Corporation Tax Law allow
various credits against the taxes imposed by those laws. Existing law
also creates the California Tax Credit Allocation Committee, which
has specified duties in regard to low-income housing credits. 

   This bill would allow a credit under both laws, in modified
conformity with a federal New Market Tax Credit, for taxable years
beginning on or after January 1, 2015, and before January 1, 2021, 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. This bill
would impose specified duties on the California Tax Credit Allocation
Committee with regard to the application for, and allocation of, the
credit. The bill would require the committee to establish and impose
reasonable fees upon entities that apply for the allocation of the
credit and use the revenue to defray the cost of administering the
program, as specified, thereby making an appropriation.  
   This bill would take effect immediately as a tax levy. 

   Existing law defines specified terms relating to economic
development and authorizes the Business, Transportation and Housing
Agency, and its secretary, to expend specified funds. 

   This bill would renumber these provisions, instead authorize the
Governor's Office of Business and Economic Development and its
director to expend these funds. This bill would authorize the
Executive Director of the California Infrastructure and Economic
Development Bank to expend these funds, but only if AB 1247, relating
to the Small Business Assistance Act of 2013, is enacted and takes
effect on or before January 1, 2014. This bill would also make
conforming changes. 
   Vote: majority. Appropriation:  no   yes
 . Fiscal committee: yes. State-mandated local program: no.


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

   SECTION 1.    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 New Market Tax Credit Program pursuant to
Sections 17053.9 and 23622.9 of the Revenue and Taxation Code. This
section shall not prevent a taxpayer granted an extension 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. 2.    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 and Section 23622.9.
The purpose of this program is to stimulate economic development, and
hasten California's economic recovery, by authorizing tax credits
for investment in California, including, but not limited to, retail
businesses, real property, financial institutions, and schools. The
California Tax Credit Allocation Committee shall have responsibility
for the administration of this program as provided in this section
and Section 23622.9.
   (b) (1) For taxable years beginning on or after January 1, 2015,
and before January 1, 2021, 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 modified as set forth in this section.
   (2) This credit shall be allowed only if the taxpayer holds the
qualified equity investment on the credit allowance date and each of
the six following anniversary dates of that date.
   (c) Section 45D of the Internal Revenue Code is modified as
follows:
   (1) (A) The references to "the Secretary" in Section 45D of the
Internal Revenue Code are modified to read "the committee."
   (B) For purposes of this section, "committee" means the California
Tax Credit Allocation Committee as described in subdivision (a) of
Section 50199.7 of the Health and Safety Code, or any successor
thereto.
   (2) Section 45D(a)(2) of the Internal Revenue Code 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) The provisions of Section 45D(b) of the Internal Revenue Code
is modified as follows:
   (A) Section 45D(b)(1) of the Internal Revenue Code is modified by
substituting "3 years" for "5 years" and "3-year period" for "5-year
period."
   (B) Section 45D(b)(3) of the Internal Revenue Code is modified by
substituting "qualified low-income community investments in
California" for "qualified low-income community investments."
   (4) Section 45D(d)(1)(A) of the Internal Revenue Code, relating to
qualified low-income community investments, is modified to include
any capital or equity investment in, or loan to, any real estate
project located in a low-income community or any operating business
that, at the time the initial investment is made, has 250 or less
employees and is located in a low-income community. The real estate
project or operating business shall meet all other conditions of a
qualified active low-income community business, except as modified by
paragraphs (5) and (6).
   (5) 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 substituting "any low-income community in California" for
"any low-income community."
   (B) Section 45D(d)(2)(A)(ii) of the Internal Revenue Code is
modified by substituting "any low-income community in California" for
"qualified low-income community investments."
   (C) Section 45D(d)(2)(A)(iii) of the Internal Revenue Code shall
not apply.
   (D) The following shall apply in lieu of the provisions of Section
45D(d)(2)(C) of the Internal Revenue Code, relating to qualified
active low-income community business: "A 'qualified active low-income
community business' shall include an operating business that, at the
time the initial investment is made, has 250 or less employees and
is located in a low-income community. The operating business shall
meet all other conditions of a qualified active low-income business,
except as modified by this paragraph and paragraph (6)."
   (6) 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."
   (7) The following shall apply in lieu of the provisions of Section
45(D)(f)(1) 45D(f)(1) of the Internal Revenue Code, relating to
national limitation on amount of investments designated: "The
aggregate amount of credit that may be allocated in any calendar year
pursuant to this section and Section 23622.9 shall be an amount
equal to 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 forty million dollars ($40,000,000). The committee shall
limit the allocation of credits permitted under this section and
Section 23622.9 to a cumulative total of no more than two hundred
million dollars ($200,000,000). Any unused credits shall be returned
to the committee at the end of the third year following allocation
and the value of the unused credit shall be available for allocation
in the following calendar years. Reallocation 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."
   (8) Section 45D(g)(3) of the Internal Revenue Code, relating to
recapture event, is modified by adding the following:
"Notwithstanding the provisions of this paragraph, a recapture event
shall not have occurred and an investment shall be considered held by
a community development entity upon its sale or repayment, provided
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 that capital. A
qualified community development entity shall not be required to
reinvest capital returned from a qualified low-income community
investment after the sixth anniversary of the issuance of the
qualified equity investment, the proceeds of which were used to make
the qualified low-income community investment. The qualified
low-income community investment shall be considered held by the
qualified community development entity through the seventh
anniversary of the issuance of the qualified equity investment."
   (9) Section 45D(i) of the Internal Revenue Code, relating to
regulations, shall not apply.
   (d) (1) The committee shall adopt guidelines necessary or
appropriate to carry out the purposes of 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. 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) The committee shall establish and impose reasonable fees upon
entities that apply for the allocation pursuant to subdivision (d)
and use the revenue to defray the cost of administering the program.
The committee shall establish the fees in a manner that ensures that
(A) the total amount collected equals the amount reasonably necessary
to defray the committee's costs in performing its administrative
duties under this section, and (B) the amount paid by each entity
reasonably corresponds with the value of the services provided to the
entity.
   (3) In developing guidelines the committee shall adopt an
allocation process that does all of the following:
   (A) Creates an equitable distribution process that ensures that
low-income communities across the state 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.
   (C) Requires annual reporting by each community development entity
that receives an allocation. The report shall include, but is not
limited to, the impact the credit had on the low-income community,
the amount of moneys used, and the types of activities funded through
the equity investment. The reporting period shall be for a period of
eight years following the allocation of credits.
   (D) Provides for the annual return of unused credits following the
third year after being awarded so that they may be reallocated to
other community development entities.
   (e) 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 seven succeeding years if necessary,
until the credit is exhausted.
   (f) The committee shall annually report on its Internet Web site
the information provided by low-income community development entities
and on the geographic distribution of the credits.
   (g) This section shall remain in effect only until December 1,
2028, and as of that date is repealed. 
   SEC. 3.    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 and Section 17053.9.
The purpose of this program is to stimulate economic development, and
hasten California's economic recovery, by authorizing tax credits
for investment in California, including, but not limited to, retail
businesses, real property, financial institutions, and schools. The
California Tax Credit Allocation Committee shall have responsibility
for the administration of this program as provided in this section
and Section 17053.9.
   (b) (1) For taxable years beginning on or after January 1, 2015,
and before January 1, 2021, 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
modified as set forth in this section.
   (2) This credit shall be allowed only if the taxpayer holds the
qualified equity investment on the credit allowance date and each of
the six following anniversary dates of that date.
   (c) Section 45D of the Internal Revenue Code is modified as
follows:
   (1) (A) The references to "the Secretary" in Section 45D of the
Internal Revenue Code are modified to read "the committee."
   (B) For purposes of this section, "committee" means the California
Tax Credit Allocation Committee as described in subdivision (a) of
Section 50199.7 of the Health and Safety Code, or any successor
thereto.
   (2) Section 45D(a)(2) of the Internal Revenue Code 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) The provisions of Section 45D(b) of the Internal Revenue Code
is modified as follows:
   (A) Section 45D(b)(1) of the Internal Revenue Code is modified by
substituting "3 years" for "5 years" and "3-year period" for "5-year
period."
   (B) Section 45D(b)(3) of the Internal Revenue Code is modified by
substituting "qualified low-income community investments in
California" for "qualified low-income community investments."
   (4) Section 45D(d)(1)(A) of the Internal Revenue Code, relating to
qualified low-income community investments, is modified to include
any capital or equity investment in, or loan to, any real estate
project located in a low-income community or any operating business
that, at the time the initial investment is made, has 250 or less
employees and is located in a low-income community. The real estate
project or operating business shall meet all other conditions of a
qualified active low-income community business, except as modified by
paragraphs (5) and (6).
   (5) 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 substituting "any low-income community in California" for
"any low-income community."
   (B) Section 45D(d)(2)(A)(ii) of the Internal Revenue Code is
modified by substituting "any low-income community in California" for
"qualified low-income community investments."
   (C) Section 45D(d)(2)(A)(iii) of the Internal Revenue Code shall
not apply.
   (D) The following shall apply in lieu of the provisions of Section
45D(d)(2)(C) of the Internal Revenue Code, relating to qualified
active low-income community business: "A 'qualified active low-income
community business' shall include an operating business that, at the
time the initial investment is made, has 250 or less employees and
is located in a low-income community. The operating business shall
meet all other conditions of a qualified active low-income business,
except as modified by this paragraph and paragraph (6)."
   (6) 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."
   (7) The following shall apply in lieu of the provisions of Section
45(D)(f)(1) of the Internal Revenue Code, relating to national
limitation on amount of investments designated: "The aggregate amount
of credit that may be allocated in any calendar year pursuant to
this section and Section 17053.9 shall be an amount equal to 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
forty million dollars ($40,000,000). The committee shall limit the
allocation of credits permitted under this section and Section
23622.9 to a cumulative total of no more than two hundred million
dollars ($200,000,000). Any unused credits shall be returned to the
committee at the end of the third year following allocation and the
value of the unused credit shall be available for allocation in the
following calendar years. Reallocation 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."
   (8) Section 45D(g)(3) of the Internal Revenue Code, relating to
recapture event, is modified by adding the following:
"Notwithstanding the provisions of this paragraph, a recapture event
shall not have occurred and an investment shall be considered held by
a community development entity upon its sale or repayment, provided
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 that capital. A
qualified community development entity shall not be required to
reinvest capital returned from a qualified low-income community
investment after the sixth anniversary of the issuance of the
qualified equity investment, the proceeds of which were used to make
the qualified low-income community investment. The qualified
low-income community investment shall be considered held by the
qualified community development entity through the seventh
anniversary of the issuance of the qualified equity investment."
   (9) Section 45D(i) of the Internal Revenue Code, relating to
regulations, shall not apply.
   (d) (1) The committee shall adopt guidelines necessary or
appropriate to carry out the purposes of 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. 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) The committee shall establish and impose reasonable fees upon
entities that apply for the allocation pursuant to subdivision (d)
and use the revenue to defray the cost of administering the program.
The committee shall establish the fees in a manner that ensures that
(A) the total amount collected equals the amount reasonably necessary
to defray the committee's costs in performing its administrative
duties under this section, and (B) the amount paid by each entity
reasonably corresponds with the value of the services provided to the
entity.
   (3) In developing guidelines the committee shall adopt an
allocation process that does all of the following:
   (A) Creates an equitable distribution process that ensures that
low-income communities across the state 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.
   (C) Requires annual reporting by each community development entity
that receives an allocation. The report shall include, but is not
limited to, the impact the credit had on the low-income community,
the amount of moneys used, and the types of activities funded through
the equity investment. The reporting period shall be for a period of
eight years following the allocation of credits.
   (D) Provides for the annual return of unused credits following the
third year after being awarded so that they may be reallocated to
other community development entities.
   (e) 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 seven succeeding years if necessary, until
the credit is exhausted.
   (f) The committee shall annually report on its Internet Web site
the information provided by low-income community development entities
and on the geographic distribution of the credits.
   (g) This section shall remain in effect only until December 1,
2028, and as of that date is repealed. 
   SEC. 4.    This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.  All matter omitted in this version of the
bill appears in the bill as amended in the Senate August 22, 2013.
(JR11)