Bill Text: CA AB1999 | 2013-2014 | Regular Session | Amended

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

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Bill Title: Personal income and corporation taxes: credits: rehabilitation.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Vetoed) 2014-09-29 - Vetoed by Governor. [AB1999 Detail]

Download: California-2013-AB1999-Amended.html

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BILL NUMBER: AB 1999	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 15, 2014
	AMENDED IN ASSEMBLY  APRIL 30, 2014
	AMENDED IN ASSEMBLY  APRIL 1, 2014

INTRODUCED BY   Assembly Member Atkins

                        FEBRUARY 20, 2014

   An act to add and repeal Sections  38.9,17053.86,
  38.9, 17053.86,  and 23686 of the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1999, as amended, Atkins. Personal income and corporation
taxes: credits: rehabilitation.
   The Personal Income Tax Law and the Corporation Tax Law allow
various credits against the taxes imposed by those laws.
   This bill would allow a credit against those taxes for each
taxable year beginning on or after January 1, 2015, and before
January 1, 2021, in an amount, determined pursuant to a specified
section of the Internal Revenue Code, that is paid or incurred during
the taxable year for rehabilitation of certified historic
structures. This bill would provide for a 25% credit, or 30% credit
if the structure meets specified criteria, for rehabilitation of a
certified historic structure within the state to be allocated by the
Governor's Office of Business and Economic Development in an
aggregate amount of $100,000,000 per calendar year, as specified.
This bill would require the Legislative Analyst to, on an annual
basis, collaborate with the Governor's Office of Business and
Economic Development to review the tax credit, as provided.
   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.  (a) The Legislature finds and declares that California'
s historic buildings are an important asset to communities throughout
the state, and that the preservation and restoration of these
buildings is important to enhancing civic pride, increasing tourism,
and maintaining vibrant neighborhoods.
   (b) The Legislature further finds and declares all of the
following:
   (1) The federal Historic Preservation Tax Incentives program,
currently available to California's income producing historic
properties, has generated nearly $1.5 billion in investment during
the last 10 years.
   (2) While 35 states have similar state tax credits or incentives
for historic preservation, no such incentive exists in California.
   (3) States that have partnered a state incentive with the federal
Historic Preservation Tax Incentive have reaped significant economic
development benefits, including construction and building industry
job creation, increased state tax revenues through increased
employment and wages, increased local property tax revenues through
increased property values, and increased local tax revenues through
sales taxes and heritage tourism.
   (4) Over the last 10 years, California has had 129 projects
qualify for the federal Historic Preservation Tax Incentives program.
These projects have been located in 20 different counties.
   (5) As California communities continue to adjust and adapt to the
dissolution of redevelopment agencies, proven tools are still needed
to incentivize economic development and revitalize economically
distressed areas.
  SEC. 2.  Section 38.9 is added to the Revenue and Taxation Code, to
read:
   38.9.  (a) The Legislative Analyst shall, on an annual basis
beginning January 1, 2016, collaborate with the Governor's Office of
Business and Economic Development to review the effectiveness of the
tax credits allowed by Sections 17053.86 and 23686. The review shall
include, but is not limited to, an analysis of the demand for the tax
credit, the types and uses of projects receiving the tax credit, the
jobs created by the use of the tax credits, and the economic impact
of the tax credits.
   (b) This section shall remain in effect only until January 1,
2022, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2022, deletes or extends
that date.
  SEC. 3.  Section 17053.86 is added to the Revenue and Taxation
Code, to read:
   17053.86.  For each taxable year 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 47 of the Internal Revenue
Code, except as follows:
   (a) (1) In lieu of the percentages specified in Section 47(a) of
the Internal Revenue Code, except as provided in paragraph (2), the
applicable percentage shall be 25 percent of the qualified
rehabilitation expenditures with respect to a certified historic
structure.
   (2) The applicable percentage shall be 30 percent of the qualified
rehabilitation expenditures with respect to a certified historic
structure if that certified historic structure meets one of the
following criteria: 
   (A) The structure is located on federal, state, or local surplus
property.  
   (A) The rehabilitated structure is located on either federal
surplus property, if obtained by a local agency under Section 54142
of the Government Code, on surplus state real property, as defined by
Section 11011.1 of the Government Code, or on surplus land, as
defined by subdivision (b) of Section 54221 of the Government Code.

   (B) The rehabilitated structure includes affordable housing for
lower-income households, as defined by Section 50079.5 of the Health
and Safety Code.
   (C) The structure is located in a designated census tract, as
defined in paragraph (7) of subdivision (b) of Section 17053.73.
   (D) The structure is a part of a military base reuse authority
established pursuant to Title 7.86 (commencing with Section 67800) of
the Government Code.
   (E) The structure is a transit-oriented development that is a
higher-density, mixed-use development within a walking distance of
one-half mile of a transit station.
   (b) For purposes of this section, a certified historic structure
means a structure in this state that appears on either the National
Register of Historic Places or the California Register of Historical
Resources.
   (c) A deduction shall not be allowed under this part for any
expense for which a credit is allowed by this section.
   (d) If a credit is allowed under this section with respect to any
property, the basis of that property shall be reduced by the amount
of the credit allowed.
   (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) For purposes of this section, the Governor's Office of
Business and Economic Development shall do the following:
   (1) (A) On and after January 1, 2015, and before January 1, 2021,
allocate tax credits to applicants.
   (B)  (i)    The credit shall be allocated to the
partners of a partnership owning the project in accordance with the
partnership agreement, regardless of how the federal historic
rehabilitation tax credit with respect to the project is allocated to
the partners, or whether the allocation of the credit under the
terms of the agreement has substantial economic effect, within the
meaning of Section 704(b) of the Internal Revenue Code. 
   (ii) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or
deduction otherwise allowable under this part that is attributable to
the sale or other disposition of that partner's partnership interest
made prior to the expiration of the federal credit shall not be
allowed in the taxable year in which the sale or other disposition
occurs, but shall instead be deferred until, and treated as if, it
occurred in the first taxable year immediately following the taxable
year in which the federal credit period expires for the project
described in clause (i). 
   (2) Establish a procedure for applicants to file with the Governor'
s Office of Business and Economic Development a written application,
on a form jointly prescribed by that office and the Office of
Historic Preservation for the allocation of the tax credit.
   (3)  Establish criteria consistent with the requirements of this
section, for allocating tax credits. Criteria shall include, but are
not limited to, the following:
   (A) The number of jobs created by the rehabilitation project, both
during and after the rehabilitation of the structure.
   (B) The expected increase in state and local tax revenues derived
from the rehabilitation project, including those from increased wages
and property taxes.
   (C) Any additional incentives or contributions included in the
rehabilitation project from federal, state, or local governments.
   (4) Determine and designate, in consultation with the Office of
Historic Preservation, applicants that meet the requirements of this
section to ensure that the rehabilitation project upholds historical
values in terms of architectural and aesthetic standards.
   (5)  Process and approve, or reject, all applications.
   (6) Subject to the annual cap established as provided in
subdivision (g), allocate an aggregate amount of credits under this
section and Section  17053.86   23686  ,
and allocate any carryover of unallocated credits from prior years.
   (7) Certify tax credits allocated to taxpayers. 
   (8) Provide the Franchise Tax Board an annual list of the
taxpayers that were allocated a credit pursuant to this section and
Section 23686, including each taxpayer's taxpayer identification
number, and the amount allocated to each taxpayer. 
   (g) The aggregate amount of credits that may be allocated in any
calendar year pursuant to this section and Section  17053.86
  23686  shall be an amount equal to the sum of all
of the following:
   (1) One hundred million dollars ($100,000,000) in tax credits for
the 2015 calendar year and each calendar year thereafter, through and
including the 2020 calendar year.
   (2) The unused allocation tax credit amount, if any, for the
preceding calendar year.
   (h) This section shall remain in effect only until December 1,
2021, and as of that date is repealed.
  SEC. 4.  Section 23686 is added to the Revenue and Taxation Code,
to read:
   23686.  For each taxable year 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 47 of the Internal Revenue Code, except as
follows:
   (a) (1) In lieu of the percentages specified in Section 47(a) of
the Internal Revenue Code, except as provided in paragraph (2), the
applicable percentage shall be 25 percent of the qualified
rehabilitation expenditures with respect to a certified historic
structure.
   (2) The applicable percentage shall be 30 percent of the qualified
rehabilitation expenditures with respect to a certified historic
structure if that historic structure meets one of the following
criteria: 
   (A) The structure is located on federal, state, or local surplus
property.  
   (A) The rehabilitated structure is located on either federal
surplus property, if obtained by a local agency under Section 54142
of the Government Code, on surplus state real property, as defined by
Section 11011.1 of the Government Code, or on surplus land, as
defined by subdivision (b) of Section 54221 of the Government Code.

   (B) The rehabilitated structure includes affordable housing for
lower-income households, as defined by Section 50079.5 of the Health
and Safety Code.
   (C) The structure is located in a designated census tract, as
defined in paragraph (7) of subdivision (b) of Section 17053.73.
   (D) The structure is a part of a military base reuse authority
established pursuant to Title 7.86 (commencing with Section 67800) of
the Government Code.
   (E) The structure is a transit-oriented development that is a
higher-density, mixed-use development within a walking distance of
one-half mile of a transit station.
   (b) For purposes of this section, a certified historic structure
means a structure in this state that appears on either the National
Register of Historic Places or the California Register of Historical
Resources.
   (c) A deduction shall not be allowed under this part for any cost
for which a credit is allowed by this section.
   (d) If a credit is allowed under this section with respect to any
property, the basis of that property shall be reduced by the amount
of the credit allowed.
   (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) For purposes of this section, the Governor's Office of
Business and Economic Development shall do the following:
   (1) (A) On and after January 1, 2015, and before January 1, 2021,
allocate tax credits to applicants.
   (B)  (i)    The credit shall be allocated to the
partners of a partnership owning the project in accordance with the
partnership agreement, regardless of how the federal historic
rehabilitation tax credit with respect to the project is allocated to
the partners, or whether the allocation of the credit under the
terms of the agreement has substantial economic effect, within the
meaning of Section 704(b) of the Internal Revenue Code. 
   (ii) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or
deduction otherwise allowable under this part that is attributable to
the sale or other disposition of that partner's partnership interest
made prior to the expiration of the federal credit shall not be
allowed in the taxable year in which the sale or other disposition
occurs, but shall instead be deferred until, and treated as if, it
occurred in the first taxable year immediately following the taxable
year in which the federal credit period expires for the project
described in clause (i). 
   (2) Establish a procedure for applicants to file with the Governor'
s Office of Business and Economic Development a written application,
on a form jointly prescribed by that office and the Office of
Historic Preservation for the allocation of the tax credit.
   (3)  Establish criteria consistent with the requirements of this
section, for allocating tax credits. Criteria shall include, but are
not limited to, the following:
   (A) The number of jobs created by the rehabilitation project, both
during and after the rehabilitation of the structure.
   (B) The expected increase in state and local tax revenues derived
from the rehabilitation project, including those from increased wages
and property taxes.
   (C) Any additional incentives or contributions included in the
rehabilitation project from federal, state, or local governments.
   (4) Determine and designate, in consultation with the Office of
Historic Preservation, applicants that meet the requirements of this
section to ensure that the rehabilitation project upholds historical
values in terms of architectural and aesthetic standards.
   (5)  Process and approve, or reject, all applications.
   (6) Subject to the annual cap established as provided in
subdivision (g), allocate an aggregate amount of credits under this
section and Section 17053.86, and allocate any carryover of
unallocated credits from prior years.
   (7) Certify tax credits allocated to taxpayers. 
   (8) Provide the Franchise Tax Board an annual list of the
taxpayers that were allocated a credit pursuant to this section and
Section 17053.86, including each taxpayer's taxpayer identification
number, and the amount allocated to each taxpayer. 
   (g) The aggregate amount of credits that may be allocated in any
calendar year pursuant to this section and Section 17053.86 shall be
an amount equal to the sum of all of the following:
   (1) One hundred million dollars ($100,000,000) in tax credits for
the 2015 calendar year and each calendar year thereafter, through and
including the 2020 calendar year.
   (2) The unused allocation tax credit amount, if any, for the
preceding calendar year.
   (h) This section shall remain in effect only until December 1,
2021, and as of that date is repealed.
  SEC. 5.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.