BILL NUMBER: AB 2722 CHAPTERED 09/23/04 CHAPTER 715 FILED WITH SECRETARY OF STATE SEPTEMBER 23, 2004 APPROVED BY GOVERNOR SEPTEMBER 23, 2004 PASSED THE ASSEMBLY AUGUST 27, 2004 PASSED THE SENATE AUGUST 26, 2004 AMENDED IN SENATE AUGUST 16, 2004 AMENDED IN SENATE JULY 19, 2004 AMENDED IN SENATE JUNE 17, 2004 AMENDED IN ASSEMBLY MAY 20, 2004 AMENDED IN ASSEMBLY APRIL 1, 2004 INTRODUCED BY Assembly Member Laird FEBRUARY 20, 2004 An act to amend Section 37002 of, and to add Chapter 7 (commencing with Section 37030) to Division 28 of, the Public Resources Code, and to add Section 19560 to the Revenue and Taxation Code, relating to conservation. LEGISLATIVE COUNSEL'S DIGEST AB 2722, Laird. Natural Heritage Preservation Tax Credit Act of 2000: bond funds. Under the existing Natural Heritage Preservation Tax Credit Act of 2000, property may be contributed to departments, as defined, any local government, or any nonprofit organization designated by a local government or department, based on specified criteria, in order to provide for the protection of wildlife habitat, open space, and agricultural lands. The act defines "department" to mean any entity created by statute within the Resources Agency and authorized to hold title to land. The act authorizes a credit against the personal income or bank and corporation tax in an amount equal to 55% of the fair market value of any qualified contribution. This bill would expand the definition of "department" to include the Resources Agency. The bill would also amend the definitions of "designated nonprofit organization" and "local government," with respect to acquisition of property pursuant to the act using specified bond funds. The bill would allow any department or local government authorized to acquire interests in property under specified provisions of particular state bonds approved by the voters, to expend those bond funds to acquire property. The bill would authorize a department or a local government to apply for a designated nonprofit organization to acquire the property, upon expenditure of those particular bond funds, as specified. The bill would provide for the department to which those bond funds have been appropriated or awarded, or which has allocated those bond funds to the local government, to transfer from those bond funds to the Natural Heritage Preservation Tax Credit Reimbursement Account, which the bill would create, funds in the amount of the tax credit necessary for the department, local government, or designated nonprofit organization, as applicable, to acquire the property by donation pursuant to the Natural Heritage Preservation Tax Credit Act of 2000. The bill would require the expenditure to comply with the purpose, as defined, of the applicable bond act and with the Natural Heritage Preservation Tax Credit Act of 2000. The bill would establish the procedures by which the bond funds could be approved and used for these purposes. The bill would require moneys in the Natural Heritage Preservation Tax Credit Reimbursement Account, upon appropriation, to be used to reimburse the General Fund for the amount of tax credits awarded using the bond funds, as specified. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 37002 of the Public Resources Code is amended to read: 37002. As used in this division, the following terms have the following meanings: (a) "Approval" or "approval for acceptance" means the board's approval of the granting of a tax credit for a donation of property pursuant to the program. (b) "Board" means the Wildlife Conservation Board created pursuant to Article 2 (commencing with Section 1320) of Chapter 4 of Division 20 of the Fish and Game Code. (c) "Conservation easement" means a conservation easement, as defined by Section 815.1 of the Civil Code, that is contributed in perpetuity. (d) "Department" means any entity created by statute within the Resources Agency and authorized to hold title to land, or the Resources Agency. (e) (1) "Designated nonprofit organization" means a nonprofit organization qualified under Section 501(c)(3) of Title 26 of the United States Code that has as a principal purpose the conservation of land and water resources and that is designated by a local government or a department to accept property pursuant to this division in lieu of the local government or a department. In order to be eligible to receive a donation of property pursuant to this division, a nonprofit organization shall have experience in land conservation. (2) If bond funds are used pursuant to Chapter 7 (commencing with Section 37030), the designated nonprofit organization shall also meet the eligibility requirements specified in the relevant provision of the applicable bond act, for a nonprofit organization. (f) "Donee" means any of the following: (1) A department to which a donor has applied to donate property. (2) A local government that has filed a joint application with a donor requesting approval of a donation of property to that local government. (3) A designated nonprofit organization. (g) "Donor" means a property owner that donates, or submits an application to donate, property pursuant to the program. (h) (1) "Local government" means any city, county, city and county, or any district, as defined in Section 5902 or in Division 26 (commencing with Section 35100), or any joint powers authority made up of one or more of those entities or those entities and departments. (2) If bond funds are used pursuant to Chapter 7 (commencing with Section 37030), "local government" also includes any other local government entity eligible to receive bond funds pursuant to the relevant provision of the applicable bond act. (i) "Program" means the Natural Heritage Preservation Tax Credit Program authorized by this division. (j) "Property" means any real property, and any perpetual interest therein, including land, conservation easements, and land containing water rights, as well as water rights. (k) "Secretary" means the Secretary of the Resources Agency. SEC. 2. Chapter 7 (commencing with Section 37030) is added to Division 28 of the Public Resources Code, to read: CHAPTER 7. BOND FUNDS 37030. The Legislature finds and declares all of the following: (a) Current justifiable needs for the acquisition of property for environmental purposes substantially exceed state-approved bond funds available for these purposes. (b) The Natural Heritage Preservation Tax Credit Act of 2000 authorizes the acquisition of qualified property through donations eligible for a credit against the personal income or bank and corporation tax in an amount equal to 55 percent of the fair market value of any qualified contribution. (c) Where property owners are able to utilize this tax credit, state acquisition costs are nearly halved. (d) Authorizing the expenditure of bond funds to acquire property using these tax credits will significantly expand the acquisition power of existing bond funds. 37031. (a) For bond provisions listed in paragraphs (1) to (3), inclusive, of subdivision (c) of Section 37032, "purpose" means scheme and design. (b) For bond provisions listed in paragraphs (4) to (11), inclusive, of subdivision (c) of Section 37032, "purpose" means scope and effect. (c) For bond funds eligible to be used under this chapter, pursuant to paragraph (12) of subdivision (c) of Section 37032, if the bond act is passed by initiative, "purpose" shall be defined pursuant to subdivision (b), but if the bond act is not passed by initiative, "purpose" shall be defined pursuant to subdivision (a). (d) For purposes of this chapter, "property" means property as defined in subdivision (j) of Section 37002 that is acquired pursuant to this division using bond funds in accordance with this chapter. 37032. (a) If a department or local government identifies property that may be acquired pursuant to this division and determines that the acquisition would comply with the purpose of a bond provision listed in subdivision (c) and any applicable guidelines developed for that bond provision by the administering agency, and all of the requirements of this division are met and the department or local government acquires the property pursuant to this division, the department or local government may expend funds from the bond provision that have been appropriated, allocated, or awarded to it, to acquire the property using the tax credit provided by this division. (b) The applicable bond provisions from which a department or local government may use bond funds to acquire property using the tax credit provided by this division do not include grants of bond funds distributed through a competitive process. (c) The applicable bond provisions from which a department or local government may expend bond funds pursuant to subdivision (a) are the following: (1) Section 5096.615. (2) Subdivision (a) or (b), or paragraph (1) of subdivision (c), of Section 5096.650. (3) Funds under paragraph (2) of subdivision (c) of Section 5096.650 that are to be expended pursuant to paragraph (6) of subdivision (b) of Section 31220. (4) Section 79541 of the Water Code. (5) Section 79542 of the Water Code. (6) Section 79544 of the Water Code. (7) Subdivision (e) or (f) of Section 79550 of the Water Code. (8) Section 79565 of the Water Code. (9) Section 79568 of the Water Code. (10) Section 79570 of the Water Code. (11) Section 79572 of the Water Code. (12) Other bond funds, if the bond act specifies that its funds may be used for the purposes of this division. 37034. (a) (1) If a department determines that property is available for acquisition by donation, and that the acquisition of the property would comply with the requirements of an applicable bond provision specified in subdivision (c) of Section 37032 and any applicable guidelines developed for that bond provision by the administering agency, and the department believes the acquisition of the property would comply with the requirements of this division, the department may request the prospective donor of the property to submit an application pursuant to Section 37010. If the prospective donor agrees to submit that application, the department may apply for approval of the donation pursuant to the requirements of this division. (2) If a local government determines that property is available for acquisition by donation, and that the acquisition of the property would comply with the requirements of an applicable bond provision specified in subdivision (c) of Section 37032 and any applicable guidelines developed for that bond provision by the administering agency, and the local government believes that the acquisition of the property would comply with the requirements of this division, the local government may request the department that allocated to it the relevant bond funds to determine whether it agrees with the local government's determinations and beliefs made pursuant to this paragraph. If the department agrees with the local government and gives its approval for the acquisition with bond funds that it has allocated to the local government, the local government may request the prospective donor of the property to submit an application pursuant to Section 37010. If the prospective donor agrees to submit the application, the local government may apply for approval of the donation pursuant to the requirements of this division. (3) In addition to the requirements of Section 37011, the application shall include, and shall not be accepted if it does not include, a signed authorization by the donor, in a form and manner mutually agreeable to the board and the Franchise Tax Board, for the disclosure of the information necessary to make the payment as required by subdivision (b). For purposes of subdivision (b) of Section 1798.24 of the Civil Code, the signed authorization shall be the donor's voluntary consent to the disclosure of the information. (b) (1) If the board gives approval, the department or local government may acquire the property pursuant to this division. Through the process outlined in this section, the department shall reimburse the General Fund for the tax credit claimed pursuant to this chapter under Section 17053.30 or 23630 of the Revenue and Taxation Code by transferring bond funds identified under subdivision (c) of Section 37032 to the Natural Heritage Preservation Tax Credit Reimbursement Account, on the basis of information provided to the department under Section 37040 regarding credit claimed for a qualified contribution under Section 17053.30 or 23630 of the Revenue and Taxation Code in that tax year. (2) (A) Upon approval by the board, and prior to the time the department, local government, or designated nonprofit organization receives the property, the department shall encumber bond funds identified under subdivision (c) of Section 37032 in an amount necessary to pay for the tax credit as provided in Section 17053.30 or 23630, as applicable, of the Revenue and Taxation Code. (B) The acquisition agreement or any other document that clearly delineates the commitment pursuant to this division shall be the only documentation required for the department to encumber the bond funds as required by this paragraph. (C) Except as prohibited by the relevant bond act, notwithstanding Section 13340 of the Government Code or any other provision of law, the encumbrance shall be available without regard to fiscal years to allow payments to the Natural Heritage Preservation Tax Credit Reimbursement Account for the tax credit due the donor of the property under Section 17053.30 or 23630, as applicable, of the Revenue and Taxation Code. (3) The Franchise Tax Board shall provide the board information pursuant to subdivision (a) of Section 19560 of the Revenue and Taxation Code on tax credits claimed. The board shall provide the information required by Section 37040 to the relevant department. Upon notification that a qualified tax credit has been claimed, the department, pursuant to paragraph (1), shall transfer bond funds in the amount of the tax credit for that tax year to the Natural Heritage Preservation Tax Credit Reimbursement Account within 60 days of receipt of the notification. 37035. (a) (1) If a department determines that a designated nonprofit organization, in lieu of the department, should accept property that the department applies to acquire pursuant to paragraph (1) of subdivision (a) of Section 37034, and determines that the acceptance by the designated nonprofit organization would comply with the purpose of the applicable bond provision specified in subdivision (c) of Section 37032, the department may, upon that determination and upon making the determinations and having the belief required by paragraph (1) of subdivision (a) of Section 37034, apply to acquire the property for that designated nonprofit organization pursuant to this division. The department shall not make that application until the prospective donor agrees to submit an application pursuant to Section 37010 and paragraph (3) of subdivision (a) of Section 37034 and the designated nonprofit organization agrees to accept the property if it is acquired pursuant to this division. (2) If a local government determines that a designated nonprofit organization, in lieu of the local government, should accept property that the local government applies to acquire pursuant to paragraph (2) of subdivision (a) of Section 37034, and determines that the acceptance by the designated nonprofit organization would comply with the purpose of the applicable bond provision specified in subdivision (c) of Section 37032, the local government may, upon that determination and making the determinations and having the belief required by paragraph (2) of subdivision (a) of Section 37034, request the department that allocated to it the relevant bond funds to determine whether it agrees with the local government's determinations made pursuant to this paragraph. If the department agrees with the local government, gives its approval for the designated nonprofit organization's acceptance of the property, and gives its approval pursuant to paragraph (2) of subdivision (a) of Section 37034, the local government may apply to acquire the property for that designated nonprofit organization pursuant to this division. The local government shall not make that application until the prospective donor agrees to submit an application pursuant to Section 37010 and paragraph (3) of subdivision (a) of Section 37034 and the designated nonprofit organization agrees to accept the property if it is acquired pursuant to this division. (b) If a department or local government applies for a designated nonprofit organization to acquire property, pursuant to subdivision (a), the department and donor, and the local government, if applicable, shall comply with all requirements of this division that apply to the department and donor, and to the local government, if applicable, when the department or local government otherwise applies to acquire property pursuant to this division. 37036. (a) The Natural Heritage Preservation Tax Credit Reimbursement Account is established in the General Fund to receive moneys paid pursuant to this chapter. (b) Upon appropriation by the Legislature, moneys in the Natural Heritage Preservation Tax Credit Reimbursement Account shall be used only to reimburse the General Fund as determined by the departments pursuant to paragraph (1) of subdivision (b) of Section 37034. (c) The moneys in the Natural Heritage Preservation Tax Credit Reimbursement Account may not be loaned to another fund and may not accrue interest. 37038. If the board is the department that receives moneys pursuant to any of the bond provisions listed in subdivision (c) of Section 37032 and the board wishes to use those bond funds to acquire property pursuant to this division using those bond funds, the board shall make separate determinations regarding whether the acquisition of that property would comply with the purpose of the applicable bond provision and any applicable guidelines developed for that bond provision by the administering agency, and whether the acquisition would comply with the requirements of this division. 37040. (a) The board shall notify the Controller, the Treasurer, and the relevant department of the information listed in subdivision (b) after the board receives notification from the Franchise Tax Board pursuant to Section 19560 of the Revenue and Taxation Code that a person is claiming a tax credit under this chapter. (b) The board shall provide all of the following information: (1) The bond fund and specific provision of the bond act under which the credit is being claimed. (2) The project name, appropriation under which the credit was encumbered, and, if applicable, the related local government. (3) The department that will transfer the appropriate bond funds to the Natural Heritage Preservation Tax Credit Reimbursement Account. (4) The amount of the tax credit for that tax year. 37042. The Legislature finds and declares that the expenditure of bond funds pursuant to this chapter does not constitute the use of bond proceeds or other indebtedness to pay a year-end state budget deficit, as prohibited by subdivision (c) of Section 1.3 of Article XVI of the California Constitution. SEC. 3. Section 19560 is added to the Revenue and Taxation Code, to read: 19560. (a) The Franchise Tax Board shall provide the Wildlife Conservation Board, within a reasonable time, information on the amount of the tax credit claimed under Chapter 7 (commencing with Section 37030) of Division 28 of the Public Resources Code, with respect to each qualified contribution, as described in Section 17053.30 or 23630, that is claimed during that year, and any other information the Wildlife Conservation Board requires to correctly allocate the credit to the appropriate bond fund section, appropriation, department, and, if applicable, the related local government. (b) The Franchise Tax Board shall not provide the Wildlife Conservation Board information pursuant to subdivision (a) if providing that information would disclose tax return information of a taxpayer, unless the taxpayer has consented to that disclosure pursuant to paragraph (3) of subdivision (a) of Section 37034 of the Public Resources Code.