BILL NUMBER: AB 1399 AMENDED
BILL TEXT
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 and repeal Sections 12283, 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, Medina. Income taxation: insurance
taxation: credits: California 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
Competes Tax Credit Committee, which has specified duties
in regard to low-income housing credits. tax
credits for economic development.
The California Constitution imposes on insurers doing business in
California, an annual tax in lieu of all other taxes and licenses,
state, county, and municipal, upon those insurers and their property
except, among others, a retaliatory tax, as specified.
This bill would allow a credit under both laws,
the Personal Income Tax Law and the Corporation Tax
Law, and a credit against the retaliatory tax imposed on an insurer,
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, 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
. This bill would impose specified duties on the California
Tax Credit Allocation Competes Tax Credit
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.
Vote: majority. Appropriation: yes. 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
affects. 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 May 2013,
the CDFI Fund had awarded approximately $36,500,000,000 in NMTC in
749 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 investment by the 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 state more attractive to CDEs, which results in increasing
the amount of federal NMTCs being utilized in their 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.
SECTION 1. 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 Market
Markets Tax Credit Program pursuant to Sections
17053.9 12283, 17053.9, and 23622.9 of
the Revenue and Taxation Code. This section shall not prevent a
taxpayer granted an extension 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 qualified 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 California Competes Tax Credit
Committee shall administer this program as provided in this section,
Section 17053.9, and Section 23622.9.
(b) (1) For taxable years beginning on or after January 1, 2015,
and before January 1, 2027, there shall be allowed as a credit
against the tax described in paragraph (1) of subdivision (a) of
Section 12204, 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 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 to a partnership,
limited liability company, or "S" corporation may be allocated to
the partners, members, managers, or shareholders of such entity 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.
(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
Competes Tax Credit Committee established under Section 18410.2.
(2) 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 three 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) of the Internal Revenue Code, relating to
qualified equity investment, is modified as follows:
(A) Section 45D(b)(6) of the Internal Revenue Code, relating to
equity investments, is modified to also include long-term debt
securities issued by any qualified active low-income community
business that substantially supports projects within a low-income
community.
(B) 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) Section 45D(c)(1) of the Internal Revenue Code, relating to
qualified community development entities, is modified to additionally
include:
(A) A subsidiary community development entity of any such
qualified community development entity.
(B) A nonprofit organization 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. The committee shall establish guidelines for certifying
nonprofit organizations pursuant to this subparagraph.
(5) 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 fewer
employees and is located in a low-income community. The real estate
project or operating business shall meet all other requirements of a
qualified active low-income community business, except as modified by
paragraphs (6) and (7).
(6) 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, relating
to qualified active low-income community businesses, 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,
relating to qualified active low-income community businesses, 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 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 continue to satisfy the
requirements of Section 45D(d)(2)(A)(ii) for the duration of the
investment.
(C) Section 45D(d)(2)(A)(iii) of the Internal Revenue Code,
relating to qualified active low-income community businesses which
limits the services of employees to substantially those performed
within the low-income community, 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 fewer employees and
is located in a California 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 (7)."
(7) Section 45D(e)(1) of the Internal Revenue Code, relating to
determining the eligible low-income community, 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
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, Section 17053.9, 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, Section
170533.9, and Section 23622.9 to a cumulative total of no more than
two hundred million dollars ($200,000,000). Any unused or recaptured
credits shall be returned to the committee on March 1 of the year
following allocation and the value of the unused or recaptured credit
shall be available for reallocation 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."
(9) Section 45D(g)(3) of the Internal Revenue Code, relating to
recapture event, does not apply and is replaced with the following:
(A) (i) The committee shall recapture, from the entity that
claimed the credit on a return, the tax credit allowed under this
section if any of the following:
(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. In such case the committee's recapture shall be proportionate
to the federal recapture with respect to such qualified equity
investment.
(II) The qualified community development entity redeems or makes
principal repayment with respect to a qualified equity investment
prior to the seventh anniversary of the issuance of such qualified
equity investment. In such case the committee's recapture shall be
proportionate to the amount of the redemption or repayment with
respect to such qualified equity investment.
(III) The qualified community development entity fails to invest
an amount equal to 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. Periodic amounts received as repayment
of principal pursuant to regularly scheduled amortization payments on
a loan that is a qualified low-income community investment shall be
treated as continuously invested in a qualified low-income community
investment if the amounts are reinvested in one or more qualified
low-income community investments by the end of the following calendar
year. 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) Recaptured tax credits and the related qualified equity
investment authority revert back to the committee and shall be
reissued in the following order:
(I) First, pro rata to applicants whose qualified equity
investment allocations were reduced by the allocation limitation of
forty million dollars ($40,000,000) in paragraph (8) of subdivision
(c).
(II) Thereafter, in accordance with the application process.
(iii) Enforcement of each of the recapture provisions shall be
subject to a six-month cure period. No recapture shall occur until
the qualified community development entity shall have been given
notice of noncompliance and afforded six months from the date of such
notice to cure the noncompliance.
(10) Section 45D(i) of the Internal Revenue Code, relating to
regulations, shall not apply.
(11) 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 Tax Credit Program, the
investment or loan is not a qualified low income community investment
under this section.
(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 this subdivision
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) Provides for the annual return of unused credits on March 1 of
year following the year the credits are awarded so that they may be
reallocated to other community development entities.
(4) (A) The committee shall begin accepting applications on March
15, 2015, and shall award credits at least two times a year at dates
set annually by the committee through 2019, to the extent that
allocations are available pursuant to Section 26011.9 of the Public
Resources Code.
(B) Within 20 calendar days after receipt of an application the
committee 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 working days, the application shall be considered
completed as of the original date of submission. If the qualified
community development entity fails to provide the information within
the five-working-day period, the application shall be denied and must
be resubmitted in full with a new submission date.
(C) Within 20 days after receipt of an application determined to
be complete by the committee, 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 committee shall award tax credits in the order
applications are received by the committee. Applications received on
the same day shall be deemed to have been received simultaneously.
(B) For applications that are complete and received on the same
day, and in the event tax credit requests exceed the allocation
limitation of forty million dollars ($40,000,000) in paragraph (8) of
subdivision (c), the committee 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) If a pending request cannot be fully certified due to this
limit, the committee 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) 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 of such transfer and include the
information required in the application with respect to such
transferee with such notice.
(E) Within 60 days of the applicant receiving notice of
certification, the qualified community development entity or any
transferee, under paragraph (3) of subdivision (b), shall issue the
qualified equity investment, receive cash in the amount of the
certified amount, and, if applicable, designate the required amount
of qualified equity investment authority as federal qualified equity
investments. The qualified community development entity or
transferee, under paragraph (3) of subdivision (b), must provide the
committee with evidence of the receipt of the cash investment and
designation of the qualified equity investment as a federal qualified
equity investment within 65 days of the applicant receiving notice
of certification. If the qualified community development entity or
any transferee, under paragraph (3) of subdivision (b), does not
receive the cash investment, issue the qualified equity investment
and, if applicable, designate the required amount of qualified equity
investment authority as federal qualified equity investments within
60 days following receipt of the certification notice, the
certification shall lapse and the entity may not issue the qualified
equity investment without reapplying to the committee for
certification. Lapsed certifications revert back to the committee and
shall be reissued in the following order:
(i) First, pro rata to applicants whose qualified equity
investment allocations were reduced under the allocation limitation
of forty million dollars ($40,000,000) in paragraph (8) of
subdivision (c).
(ii) Thereafter, in accordance with the application process.
(F) A qualified community development entity that issues qualified
equity investments must notify the committee of the names of the
entities 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 transfer of a
qualified equity investment.
(6) (A) A qualified community development entity that issues
qualified equity investments shall submit a report to the committee
within the first five business days after the first anniversary of
the initial credit allowance date that provides documentation as to
the investment of 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) Any other information required by the committee.
(B) Thereafter, the qualified community development entity shall
submit an annual report to the committee within 60 days of the
beginning of the calendar year during the compliance period. 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 impact the credit had on the low-income community.
(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.
(iv) Average annual salary of positions in the projects described
in subdivision (a).
(e) In the case where the credit allowed by this section exceeds
the tax described in paragraph (1) of subdivision (a) of Section
12204, 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.
(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. 2. 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, Section 12283, 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 private sector investment in
lower income communities by providing a tax incentive to qualified
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 California
Competes Tax Credit Committee shall administer this
program as provided in this section section,
Section 12283, and Section 23622.9.
(b) (1) For taxable years beginning on or after January 1, 2015,
and before January 1, 2021, 2027, 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 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 to a partnership,
limited liability company, or "S" corporation may be allocated to the
partners, members, managers, or shareholders of such entity
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.
(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. Competes Tax Credit Committee
established under Section 18410.2.
(2) Section 45D(a)(2) of the Internal Revenue Code
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."
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 , relating to qualified equity investment,
is modified as follows:
(A) Section 45D(b)(1) 45D(b)(6) of
the Internal Revenue Code , relating to equity investments,
is modified by substituting "3 years" for "5 years"
and "3-year period" for "5-year period." to also
include long-term debt securities issued by any qualified low-income
community business that substantially supports projects within a
low-income community.
(B) 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) Section 45D(c)(1) of the Internal Revenue Code, relating to
qualified community development entities, is modified to additionally
include:
(A) A subsidiary community development entity of any such
qualified community development entity.
(B) A nonprofit organization 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. The committee shall establish guidelines for certifying
nonprofit organizations pursuant to this subparagraph.
(4)
(5) 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 fewer employees and is located in
a low-income community. The real estate project or operating
business shall meet all other conditions
requirements of a qualified active low-income community
business, except as modified by paragraphs (5)
(6) and (6) (7) .
(5)
(6) 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 ,
relating to qualified active low-income community
businesses, 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
Code, relating to qualified active low-income
community businesses, is modified by substituting
as follows:
(i) Substituting "any low-income
community in California" for "qualified "any
low-income community investments."
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 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 continue to satisfy the
requirements of Section 45D(d)(2)(A)(ii) for the duration of the
investment.
(C) Section 45D(d)(2)(A)(iii) of the Internal Revenue
Code Code, relating to qualified active low-income
community businesses which limits the services of employees to
substantially those performed within the low-income community,
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
fewer employees and is located in a
California 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)
(7) ."
(6)
(7) Section 45D(e)(1) of the Internal Revenue Code
, relating to determining the eligible low-income community,
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)
(8) 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 ,
Section 12283, 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 , Section
12283, and Section 23622.9 to a cumulative total of no more
than two hundred million dollars ($200,000,000). Any unused or
recaptured credits shall be returned to the committee
at the end of the third on March 1 of the year
following allocation and the value of the unused or recaptured
credit shall be available for allocation
reallocation 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)
(9) Section 45D(g)(3) of the Internal Revenue Code,
relating to recapture event, is modified by adding
does not apply and is replaced with 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."
(A) (i) The committee shall recapture, from the entity that
claimed the credit on a return, the tax credit allowed under this
section if any of the following:
(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. In such case the committee's recapture shall be proportionate
to the federal recapture with respect to such qualified equity
investment.
(II) The qualified community development entity redeems or makes
principal repayment with respect to a qualified equity investment
prior to the seventh anniversary of the issuance of such qualified
equity investment. In such case the committee's recapture shall be
proportionate to the amount of the redemption or repayment with
respect to such qualified equity investment.
(III) The qualified community development entity fails to invest
an amount equal to 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. Periodic amounts received as repayment
of principal pursuant to regularly scheduled amortization payments on
a loan that is a qualified low-income community investment shall be
treated as continuously invested in a qualified low-income community
investment if the amounts are reinvested in one or more qualified
low-income community investments by the end of the following calendar
year. 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) Recaptured tax credits and the related qualified equity
investment authority revert back to the committee and shall be
reissued in the following order:
(I) First, pro rata to applicants whose qualified equity
investment allocations were reduced by the allocation limitation of
forty million dollars ($40,000,000) in paragraph (8) of subdivision
(c).
(II) Thereafter, in accordance with the application process.
(iii) Enforcement of each of the recapture provisions shall be
subject to a six-month cure period. No recapture shall occur until
the qualified community development entity shall have been given
notice of noncompliance and afforded six months from the date of such
notice to cure the noncompliance.
(9)
(10) Section 45D(i) of the Internal Revenue Code,
relating to regulations, shall not apply.
(11) 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 Tax Credit Program, the
investment or loan is not a qualified low-income community investment
under this section.
(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 this
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)
(C) Provides for the annual return of unused credits
on March 1 of the year following the third
year after being the credits are
awarded so that they may be reallocated to other community
development entities.
(4) (A) The committee shall begin accepting applications on March
15, 2015, and shall award credits at least two times a year at dates
set annually by the committee through 2015, to the extent that
allocations are available pursuant to Section 26011.9 of the Public
Resources Code.
(B) Within 20 calendar days after receipt of an application the
committee 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 working days, the application shall be considered
completed as of the original date of submission. If the qualified
community development entity fails to provide the information within
the five-working-day period, the application shall be denied and must
be resubmitted in full with a new submission date.
(C) Within 20 days after receipt of an application determined to
be complete by the committee, 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 committee shall award tax credits in the order
applications are received by the committee. Applications received on
the same day shall be deemed to have been received simultaneously.
(B) For applications that are complete and received on the same
day, and in the event tax credit requests exceed the allocation
limitation of forty million dollars ($40,000,000) in paragraph (8) of
subdivision (c), the committee 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) If a pending request cannot be fully certified due to this
limit, the committee 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) 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 of such transfer and include the
information required in the application with respect to such
transferee with such notice.
(E) Within 60 days of the applicant receiving notice of
certification, the qualified community development entity or any
transferee, under paragraph (3) of subdivision (b), shall issue the
qualified equity investment, receive cash in the amount of the
certified amount, and, if applicable, designate the required amount
of qualified equity investment authority as federal qualified equity
investments. The qualified community development entity or
transferee, under paragraph (3) of subdivision (b), must provide the
committee with evidence of the receipt of the cash investment and
designation of the qualified equity investment as a federal qualified
equity investment within 65 days of the applicant receiving notice
of certification. If the qualified community development entity or
any transferee, under paragraph (3) of subdivision (b), does not
receive the cash investment, issue the qualified equity investment
and, if applicable, designate the required amount of qualified equity
investment authority as federal qualified equity investments within
60 days following receipt of the certification notice, the
certification shall lapse and the entity may not issue the qualified
equity investment without reapplying to the committee for
certification. Lapsed certifications revert back to the committee and
shall be reissued in the following order:
(i) First, pro rata to applicants whose qualified equity
investment allocations were reduced under the allocation limitation
of forty million dollars ($40,000,000) in paragraph (8) of
subdivision (c).
(ii) Thereafter, in accordance with the application process.
(F) A qualified community development entity that issues qualified
equity investments must notify the committee of the names of the
entities 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 transfer of a
qualified equity investment.
(6) (A) A qualified community development entity that issues
qualified equity investments shall submit a report to the committee
within the first five business days after the first anniversary of
the initial credit allowance date that provides documentation as to
the investment of 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) Any other information required by the committee.
(B) Thereafter, the qualified community development entity shall
submit an annual report to the committee within 60 days of the
beginning of the calendar year during the compliance period. 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 impact the credit had on the low-income community.
(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.
(iv) Average annual salary of positions in the projects described
in subdivision (a).
(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 six
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. SEC. 5. 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 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 . private
sector investment in lower income communities by providing a tax
incentive to qualified 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 California Tax Credit Allocation Competes
Tax Credit Committee shall have responsibility for
the administration of administer this program as
provided in this section section, Section
12283, and Section 17053.9.
(b) (1) For taxable years beginning on or after January 1, 2015,
and before January 1, 2021, 2027, 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 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 to a partnership,
limited liability company, or "S" corporation may be allocated to the
partners, members, managers, or shareholders of such entity 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.
(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. Competes Tax Credit Committee
established under Section 18410.2.
(2) 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." 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 , relating to qualified equity investment,
is modified as follows:
(A) Section 45D(b)(1) 45D(b)(6) of
the Internal Revenue Code , relating to equity investments,
is modified by substituting "3 years" for "5 years"
and "3-year period" for "5-year period." to also
include long-term debt securities issued by any qualified low-income
community business that substantially supports projects within a
low-income community.
(B) 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) Section 45D(c)(1) of the Internal Revenue Code, relating to
qualified community development entities, is modified to additionally
include:
(A) A subsidiary community development entity of any such
qualified community development entity.
(B) A nonprofit organization 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. The committee shall establish guidelines for certifying
nonprofit organizations pursuant to this subparagraph.
(4)
(5) 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 fewer employees and is located in
a low-income community. The real estate project or operating
business shall meet all other conditions
requirements of a qualified active low-income community
business, except as modified by paragraphs (5)
(6) and (6) (7) .
(5)
(6) 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 ,
relating to qualified active low-income community businesses,
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 ,
relating to qualified active low-income community businesses,
is modified by substituting as follows:
(i) Substituting "any low-income
community in California" for "qualified "any
low-income community investments."
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 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 continue to satisfy the
requirements of Section 45D(d)(2)(A)(ii) for the duration of the
investment.
(C) Section 45D(d)(2)(A)(iii) of the Internal Revenue Code ,
relating to qualified active low-income community businesses that
limits the services of employees to substantially those performed
within the low-income community, 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
fewer employees and is located in a Ca
lifornia 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) (7) ."
(6)
(7) Section 45D(e)(1) of the Internal Revenue Code
, relating to determining the eligible low-income community 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)
(8) 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 12283,
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 12283,
and Section 23622.9 to a cumulative total of no more than two hundred
million dollars ($200,000,000). Any unused or recaptured
credits shall be returned to the committee at the end of the
third on March 1 of the year following
allocation and the value of the unused or recaptured
credit shall be available for allocation
reallocation 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)
(9) Section 45D(g)(3) of the Internal Revenue Code,
relating to recapture event, is modified by adding
does not apply and is replaced with 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."
(A) (i) The committee shall recapture, from the entity that
claimed the credit on a return, the tax credit allowed under this
section if any of the following:
(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. In such case the committee's recapture shall be proportionate
to the federal recapture with respect to such qualified equity
investment.
(II) The qualified community development entity redeems or makes
principal repayment with respect to a qualified equity investment
prior to the seventh anniversary of the issuance of such qualified
equity investment. In such case the committee's recapture shall be
proportionate to the amount of the redemption or repayment with
respect to such qualified equity investment.
(III) The qualified community development entity fails to invest
an amount equal to 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. Periodic amounts received as repayment
of principal pursuant to regularly scheduled amortization payments on
a loan that is a qualified low-income community investment shall be
treated as continuously invested in a qualified low-income community
investment if the amounts are reinvested in one or more qualified
low-income community investments by the end of the following calendar
year. 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) Recaptured tax credits and the related qualified equity
investment authority revert back to the committee and shall be
reissued in the following order:
(I) First, pro rata to applicants whose qualified equity
investment allocations were reduced by the allocation limitation of
forty million dollars ($40,000,000) in paragraph (8) of subdivision
(c).
(II) Thereafter, in accordance with the application process.
(iii) Enforcement of each of the recapture provisions shall be
subject to a six month cure period. No recapture shall occur until
the qualified community development entity shall have been given
notice of noncompliance and afforded six months from the date of such
notice to cure the noncompliance.
(9)
(10) Section 45D(i) of the Internal Revenue Code,
relating to regulations, shall not apply.
(11) 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 Tax Credit Program, the
investment or loan is not a qualified low-income community investment
under this section.
(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 this
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)
(C) Provides for the annual return of unused credits
on March 1 of the year following the third year
after being year the credits are awarded so that
they may be reallocated to other community development entities.
(4) (A) The committee shall begin accepting applications on March
15, 2019, and shall award credits at least two times a year at dates
set annually by the committee through 2025, to the extent that
allocations are available pursuant to Section 26011.9 of the Public
Resources Code.
(B) Within 20 calendar days after receipt of an application the
committee 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 working days, the application shall be considered
completed as of the original date of submission. If the qualified
community development entity fails to provide the information within
the five-working-day period, the application shall be denied and must
be resubmitted in full with a new submission date.
(C) Within 20 days after receipt of an application determined to
be complete by the committee, 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 committee shall award tax credits in the order
applications are received by the committee. Applications received on
the same day shall be deemed to have been received simultaneously.
(B) For applications that are complete and received on the same
day, and in the event tax credit requests exceed the allocation
limitation of forty million dollars ($40,000,000) in paragraph (8) of
subdivision (c), the committee 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) If a pending request cannot be fully certified due to this
limit, the committee 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) 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 of such transfer and include the
information required in the application with respect to such
transferee with such notice.
(E) Within 60 days of the applicant receiving notice of
certification, the qualified community development entity or any
transferee, under paragraph (3) of subdivision (b), shall issue the
qualified equity investment, receive cash in the amount of the
certified amount, and, if applicable, designate the required amount
of qualified equity investment authority as federal qualified equity
investments. The qualified community development entity or
transferee, under paragraph (3) of subdivision (b), must provide the
committee with evidence of the receipt of the cash investment and
designation of the qualified equity investment as a federal qualified
equity investment within 65 days of the applicant receiving notice
of certification. If the qualified community development entity or
any transferee, under paragraph (3) of subdivision (b), does not
receive the cash investment, issue the qualified equity investment
and, if applicable, designate the required amount of qualified equity
investment authority as federal qualified equity investments within
60 days following receipt of the certification notice, the
certification shall lapse and the entity may not issue the qualified
equity investment without reapplying to the committee for
certification. Lapsed certifications revert back to the committee and
shall be reissued in the following order:
(i) First, pro rata to applicants whose qualified equity
investment allocations were reduced under the allocation limitation
of forty million dollars ($40,000,000) in paragraph (8) of
subdivision (c).
(ii) Thereafter, in accordance with the application process.
(F) A qualified community development entity that issues qualified
equity investments must notify the committee of the names of the
entities 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 transfer of a
qualified equity investment.
(6) (A) A qualified community development entity that issues
qualified equity investments shall submit a report to the committee
within the first five business days after the first anniversary of
the initial credit allowance date that provides documentation as to
the investment of 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) Any other information required by the committee.
(B) Thereafter, the qualified community development entity shall
submit an annual report to the committee within 60 days of the
beginning of the calendar year during the compliance period. 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 impact the credit had on the low-income community.
(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.
(iv) Average annual salary of positions in the projects described
in subdivision (a).
(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 six
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. SEC. 6. This act provides
for a tax levy within the meaning of Article IV of the Constitution
and shall go into immediate effect.