BILL NUMBER: AB 1011 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 24, 2010
AMENDED IN SENATE JULY 15, 2010
AMENDED IN SENATE SEPTEMBER 3, 2009
AMENDED IN SENATE JUNE 29, 2009
AMENDED IN ASSEMBLY JUNE 1, 2009
AMENDED IN ASSEMBLY APRIL 15, 2009
INTRODUCED BY Assembly Member Jones
FEBRUARY 27, 2009
An act to amend Sections 926.1, 926.2, and 12939 of , and
to add Division 4.1 (commencing with Section 13925) to,
the Insurance Code, relating to insurer investment.
LEGISLATIVE COUNSEL'S DIGEST
AB 1011, as amended, Jones. Insurance: green investments.
Existing law requires each admitted insurer to provide information
biennially to the Insurance Commissioner on all of its community
development investments and community development infrastructure
investments, as defined, in California. The commissioner and the
Department of Insurance are required to provide certain information
on these investments to the public, as specified. These provisions
are to remain in effect only until January 1, 2011, and are repealed
as of that date.
This bill would make findings and declarations relating to
California's role in greenhouse gas reduction, and would include
green investments, as defined, as community development investments.
The bill would require the commissioner, on the department's Internet
Web site, to biennially identify those insurers that make
investments that qualify as green investments and the aggregate
amount of identified insurer investments in green investments. The
bill would extend the date for repealing those provisions to January
1, 2015.
The bill would make changes to findings and declarations relating
to specialized financial institutions and tax incentives for their
capitalization.
This bill would authorize insurers to claim a 20% credit for green
investments against the amount of gross premiums tax owed by the
insurer, as specified.
The bill would incorporate additional changes to Section 926.2 of
the Insurance Code, proposed by AB 41 of the 2009-10 Regular Session,
to be operative only if both bills are chaptered and become
effective on or before January 1, 2011, and this bill is chaptered
last.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Climate change will have detrimental effects on some of
California's largest industries, including the insurance industry. It
will also increase the strain on energy and natural resources
necessary to rebuild and restore property after losses.
(b) National and international actions are necessary to fully
address the issue of climate change. However, actions taken in
California to reduce emissions of greenhouse gases will have
far-reaching effects by encouraging other states, the federal
government, and other countries to act.
(c) By exercising a global leadership role, California and its
state-based businesses will also position California's economy,
technology centers, financial institutions, and businesses to benefit
from national and international efforts to reduce emissions of
greenhouse gases. More importantly, investing in and fostering the
development of innovative and pioneering technologies will assist
California businesses and communities in achieving reductions in the
emissions of greenhouse gases and will provide an opportunity for the
state, including the state's businesses, to take a global economic
and technological leadership role in reducing emissions of greenhouse
gases.
(d) By increasing incentives for reduced driving, the building of
"green buildings," investments in energy efficiency improvements and
renewable energy projects, and the conservation of natural resources,
the insurance industry can help reduce greenhouse gas emissions.
(e) By making investments that support community development
financial institutions in low- and moderate-income communities,
including needed financial services, economic development, and
housing, the insurance community can help those communities better
accommodate new growth in compact forms, so as to deemphasize
automobile dependency, integrate new growth into existing
communities, support a diversity of affordable housing near
employment centers, and create jobs.
(f) Making this new capital available furthers important green
objectives by enabling communities to focus on the use and reuse of
existing urbanized lands supplied with infrastructure as the situs
for new growth, and by helping those communities grow through new
capital investment in the maintenance and rehabilitation of existing
infrastructure so that the reuse and reinvention of city centers and
existing transportation corridors and community spaces through
mixed-use development, affordable housing opportunities, safe,
reliable, and efficient multimodal transportation systems, and
transit-oriented development are encouraged.
SEC. 2. Section 926.1 of the Insurance Code is amended to read:
926.1. As used in this article, the following terms shall have
the following meanings:
(a) "Area median income" (AMI) means either of the following:
(1) The median family income for the Metropolitan Statistical Area
(MSA), if a person or geography is located in an MSA, or for the
metropolitan division, if a person or geography is located in an MSA
that has been subdivided into metropolitan divisions.
(2) The statewide nonmetropolitan median family income, if a
person or geography is located outside an MSA.
(b) "Community development investment" means an investment where
all or a portion of the investment has as its primary purpose
community development for, or that directly benefits, California
low-income low- or moderate-income
individuals, families, or communities. "Community development
investment" includes, but is not limited to, investments in
California in the following:
(1) Affordable housing, including multifamily rental and ownership
housing, for low-income low- or
moderate-income individuals or families.
(2) Community facilities or community services providers
(including providers of education, health, or social services)
directly benefiting low-income low- or
moderate-income individuals, families , or communities.
(3) Economic development that demonstrates benefits, including,
but not limited to, job creation, retention , or
improvement, or provision of needed capital, to low-income,
low- or moderate-income, individuals, families,
or communities, including urban or rural communities, or businesses
or nonprofit community service organizations that serve these
communities.
(4) Activities that revitalize or stabilize low-income
low- or moderate-income communities.
(5) Investments in or through California Organized Investment
Network (COIN)-certified community development financial institutions
(CDFIs) and investments made pursuant to the requirements of
federal, state, or local community development investment programs or
community development investment tax incentive programs, including
green investments, if these investments directly benefit
low-income, low- or moderate-income ,
individuals, families, and communities and are consistent
with this article.
(6) Community development infrastructure investments.
(7) Investments in a commercial property or properties located in
low-income low- or moderate-income
geographical areas and are consistent with this article.
(c) "Community development infrastructure" means California public
debt (including all debt issued by the State of California or a
California state or local government agency) where all or a portion
of the debt has as its primary purpose community development for, or
that directly benefits, low-income low-
or moderate-income communities and is consistent with subdivision
(b).
(d) "Geography" means a census tract delineated by the United
States Bureau of the Census in the most recent decennial census.
(e) "Green investments" means investments that emphasize renewable
energy projects, economic development, and affordable housing
focused on infill sites so as to reduce the degree of automobile
dependency and promote the use and reuse of existing urbanized lands
supplied with infrastructure for the purpose of accommodating new
growth and jobs. "Green investments" also means investments that can
help communities grow through new capital investment in the
maintenance and rehabilitation of existing infrastructure so that the
reuse and reinvention of city centers and existing transportation
corridors and community space, including projects offering energy
efficiency improvements and renewable energy generation, including,
but not limited to, solar and wind power, mixed-use development,
affordable housing opportunities, multimodal transportation systems,
and transit-oriented development, can advance economic development,
jobs, and housing.
(f) "Insurer" means an admitted insurer as defined in Section 24,
including the State Compensation Insurance Fund, or a domestic
fraternal benefit society as defined in Section 10990.
(g) "Investment" means a lawful equity or debt investment, or
loan, or deposit obligation, or other investment or investment
transaction allowed by the Insurance Code.
(h) "Low-income" means an individual income that is less than 50
percent of the AMI, or a median family income that is less than 50
percent of the AMI in the case of a geographical area.
(i) "MSA" means a metropolitan statistical area as defined by the
Director of the Office of Management and Budget.
(j) "Moderate income" "Moderate-income"
means an individual income that is at least 50 percent but less
than 80 percent of the AMI, or a median family income that is at
least 50 percent but less than 80 percent of the AMI in the case of a
geographical area.
(k) "Nonmetropolitan area" means any area that is not located in
an MSA.
SEC. 3. Section 926.2 of the Insurance Code is amended to read:
926.2. (a) Each insurer admitted in California shall provide
information biennially to the commissioner on all its community
development investments and community development infrastructure
investments in California. This information shall be provided as part
of the required filing pursuant to Section 900 or Section 11131, or
through a data call, or by other means as determined by the
commissioner. COIN shall provide insurers with information on why
investments, if any, were found not to be qualified by the
commissioner.
(b) The commissioner shall biennially provide information on the
department's Internet Web site on the aggregate insurer community
development investments and community development infrastructure
investments. Insurers that make investments that are innovative,
responsive to community needs, not routinely provided by insurers,
qualify as green investments, or have a high degree of positive
impact on the economic welfare of low-income
low- or moderate-income individuals, families, or communities
in urban or rural California shall be identified.
(c) The department shall also biennially provide information on
the department's Internet Web site regarding the aggregate amount of
California public debt (including all debt issued by the State of
California or a California State state
or local government agency) purchased by insurers as reported to the
department in their National Association of Insurance Commissioners
(NAIC) annual statement filing pursuant to Section 900 or Section
11131.
(d) The department shall also biennially provide on its Internet
Web site the aggregate amount of identified California investments,
as reported to the NAIC in the annual statement filed pursuant to
Section 900 or Section 11131.
(e) The department shall also biennially provide information on
its Internet Web site regarding the aggregate amount of identified
California insurer investments in green investments.
(f) The first report under this article shall be filed with the
commissioner by May 31, 2007.
(g) Insurers that did not comply with the voluntary community
investment data call issued by the commissioner in May 2005 shall
provide the information requested therein to the commissioner on or
before February 28, 2007.
(h) This article shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date.
(i) Nothing in this article shall limit the authority of the
commissioner to ask for data concerning community development
investments on a voluntary basis on or after January 1, 2014, if this
article is not extended.
SEC. 3.5. Section 926.2 of the
Insurance Code is amended to read:
926.2. (a) (1) Each insurer admitted in
California shall provide information biennially
information, by January 1, 2014, to the commissioner on
all its Community Development Investments and Community
Development Infrastructure Investments of its
community development investments and community development
infrastructure investments in California. This information
shall be provided as part of the required filing pursuant to Section
900 or Section 11131, or through a data call, or by other means as
determined by the commissioner. COIN shall provide insurers with
information on why investments, if any, were found not to be
qualified by the commissioner.
(2) Nothing in this subdivision shall preclude an insurer that is
a member of an insurance holding company system, as defined in
Article 4.7 (commencing with Section 1215) of Chapter 2, from
complying with paragraph (1) through a single filing on behalf of the
entire group of affiliated companies, provided that the data so
filed accurately reflects the investments made by each of the
affiliates, and accurately attributes, by National Association of
Insurance Commissioners (NAIC) number or other identifier required by
the commissioner, which of the investments were made by each
affiliated company.
(3) Nothing in this subdivision shall preclude an insurer from
satisfying the requirements of paragraph (1) through a filing made by
a community development financial institution, provided all of the
following conditions are met:
(A) The insurer has no less than a 10 percent ownership interest
in a COIN-certified community development financial institution.
(B) The insurer makes community development investments and
community development infrastructure investments in and through the
community development financial institution.
(C) The community development financial institution accurately
files the information required by paragraph (1) with the commissioner
on behalf of the insurer and accurately attributes, by NAIC number
or other identifier required by the commissioner, which investments,
including the dollar amounts of the investments, were made by each
insurer on whose behalf the community development financial
institution is reporting.
(b) The commissioner shall biennially
shall, by May 31, 2014, provide information on the department's
Internet Web site on the aggregate insurer Community
Development Investments and Community Development Infrastructure
Investments community development investments and
community development infrastructure investments . Insurers
that make investments that are innovative, responsive to community
needs, not routinely provided by insurers, qualify as green
investments, or have a high degree of positive impact on the
economic welfare of low-income low- or
moderate-income individuals, families, or communities in urban or
rural California shall be identified.
(c) The department shall also biennially
also, by May 31, 2014, provide information on the department's
Internet Web site regarding the aggregate amount of California public
debt (including all debt issued by the State of California or a
California State state or local
government agency) purchased by insurers as reported to the
department in their National Association of Insurance
Commissioners (NAIC) NAIC annual statement
filing pursuant to Section 900 or Section 11131.
(d) The department shall also biennially
also, by May 31, 2014, provide on its Internet Web site the
aggregate amount of identified California investments, as reported to
the NAIC in the annual statement filed pursuant to Section 900 or
Section 11131.
(e) The first report under this article shall be filed with the
commissioner by May 31, 2007.
(f) Insurers that did not comply with the voluntary community
investment data call issued by the commissioner in May 2005 shall
provide the information requested therein to the commissioner on or
before February 28, 2007.
(e) The department shall also biennially provide information on
its Internet Web site regarding the aggregate amount of identified
California insurer investments in green investments.
(g)
(f) This article shall remain in effect only until
January 1, 2011, 2015, and as of that
date is repealed, unless a later enacted statute, that is enacted
before January 1, 2011, 2015, deletes
or extends that date.
(h) Nothing in this article shall limit the authority of the
commissioner to ask for data concerning community development
investments on a voluntary basis on or after January 1, 2010, if this
article is not extended.
SEC. 4. Section 12939 of the Insurance Code is amended to read:
12939. The Legislature finds and declares all of the following:
(a) There are specialized financial institutions in California
that are specifically dedicated to, and whose core purpose is to,
provide financial products and services to people and communities
underserved by traditional financial markets and to support renewable
energy projects, energy efficiency improvements, economic
development, and affordable housing in these communities. These
community development financial institutions or CDFIs seek to bridge
the growing gap that exists between the financial products and
services, renewable energy generation, energy efficiency
improvements, economic development, and affordable housing available
to the economic mainstream and those offered to low-income people and
communities, as well as the nonprofit institutions that serve them.
In addition, they serve a critical role in addressing issues of
poverty and access to credit in economically disadvantaged
communities by providing services, including, but not limited to,
credit counseling to consumers, financial literacy training,
homeownership counseling, entrepreneurial education, and technical
assistance to small business owners.
(b) These mission-driven financial institutions require additional
capital in order to expand their ability to provide financial
products and services, and to promote needed renewable energy
generation projects, energy efficiency improvements, economic
development, and affordable housing for low-income individuals and
communities, and the businesses and nonprofit agencies that serve
them. For example, some offer responsible alternatives to high-cost
check-cashing services and payday lenders that have moved into
low-income communities. Others help finance small businesses,
affordable housing, and community services and facilities that, in
turn, help stabilize low-income neighborhoods and alleviate poverty.
(c) In carrying out their mission, funding community development
is given priority over providing high returns to investors.
(d) It is the intent of the Legislature to provide an incentive in
the form of California tax credits to attract much needed additional
private capital investments that would not otherwise be available to
CDFIs without the benefit of such incentive. It is the expectation
of the Legislature that CDFIs will leverage these new investment
dollars for the direct benefit of economically disadvantaged
communities and low-income people in California.
SEC. 5. Division 4.1 (commencing with Section
13925) is added to the Insurance Code, to read:
DIVISION 4.1. Green Insurance Tax Credit and Investment
13925. (a) For each taxable year beginning on or after January 1,
2011, there shall be allowed, as a credit against the tax, as
defined in Section 28 of Article XIII of the California Constitution,
an amount equal to 20 percent of the amount of each qualified
investment made by a taxpayer during the taxable year into green
investments certified by the department.
(b) For purposes of determining any tax that may be imposed under
Section 685 on a taxpayer not organized under the laws of this state,
the credit allowed by subdivision (a) shall be treated as a tax paid
under Section 12201 or Section 28 of Article XIII of the California
Constitution.
(c) Notwithstanding any other provision of this section, no credit
shall be allowed under this section unless the department certifies
that the investment qualifies for the credit under this section and
certifies the total amount of the credit allocated to the taxpayer
pursuant to this section.
(d) No credit shall be allowed by this section unless there is an
application for certification as a green investment and the taxpayer
provides satisfactory substantiation to, and in the form and manner
requested by, the department.
(e) For purposes of this section, a "green investment" means an
investment that emphasizes clean energy projects, energy efficiency
improvements, green technology projects, and other investments that
conserve natural resources or reduce greenhouse gas emissions.
(f) The commissioner shall establish a task force to investigate
innovative insurance products that could bolster the development of
California's clean energy and green technology industries, and
encourage investments in clean energy and green technology by
insurance companies. The members of the task force shall include, but
not be limited to, entrepreneurs, business leaders, and insurance
experts who specialize in emerging companies.
(g) A person or entity seeking certification of a green investment
shall do all of the following:
(1) Apply to the department for certification of a green
investment.
(2) Apply to the department, on behalf of the taxpayer, for
certification of the amount of the investment and the credit amount
allocated to the taxpayer, obtain the certification, and retain a
copy of the certification.
(3) Obtain the taxpayer's California company identification number
for tax administration purposes and provide that information to the
department, with the application required in paragraph (2).
(4) Provide an annual listing to the State Board of Equalization,
in the form and manner agreed upon by the State Board of Equalization
and the department, of the names and taxpayer's California company
identification numbers of any taxpayer who makes any withdrawal or
partial withdrawal of a qualified investment before the expiration of
60 months from the date of the qualified investment.
(h) The commissioner may develop instructions, procedures, and
standards for applications, and for administering the criteria for
the evaluation of applications, under this section. The commissioner
may, from time to time, issue regulations to implement the provisions
of this section.
(i) The aggregate amount of qualified investments made by all
taxpayers pursuant to this section shall not exceed five million
dollars ($5,000,000) for each calendar year. However, if the
aggregate amount of qualified investments made in any calendar year
is less than five million dollars ($5,000,000), the difference may be
carried over to the next year, and any succeeding year during which
this section remains in effect, and added to the aggregate amount
authorized for those years.
(j) In the case where the credit allowed by this section exceeds
the "tax," the excess may be carried over to reduce the "tax" for the
next four years, or until the credit has been exhausted, whichever
occurs first.
(k) The State Board of Equalization shall, as requested by the
department and the California Organized Investment Network or its
successor, advise and assist in the administration of this section.
(l) The department shall biennially provide information on the
department's Internet Web site regarding the aggregate amount of
identified California investments in green investments.
SEC. 5 . Nothing in Article 10.1
(commencing with Section 926.1) of Chapter 1 of Part 2 of Division 1
of the Insurance Code shall limit the authority of the Insurance
Commissioner to ask for data concerning community development
investments and community development infrastructure investments on a
voluntary basis on or after January 1, 2015, if that article is not
extended beyond that date.
SEC. 6. Section 3.5 of this bill incorporates
amendments to Section 926.2 of the Insurance Code proposed by both
this bill and AB 41. It shall only become operative if (1) both bills
are enacted and become effective on or before January 1, 2011, (2)
each bill amends Section 926.2 of the Insurance Code, and (3) this
bill is enacted after AB 41, in which case Section 3 of this bill
shall not become operative.