BILL NUMBER: AB 624 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 6, 2011
AMENDED IN SENATE JUNE 21, 2011
AMENDED IN ASSEMBLY MARCH 31, 2011
INTRODUCED BY Assembly Members John A. Pérez and Blumenfield
(Principal coauthor: Assembly Member Solorio)
(Coauthors: Assembly Members Alejo, Carter, Chesbro, Dickinson,
Gordon, Bonnie Lowenthal, and Ma)
FEBRUARY 16, 2011
An act to add Section 12939.2 to the Insurance Code, and to amend
Sections 12209, 17053.57, and 23657 of the Revenue and Taxation Code,
relating to insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 624, as amended, John A. Pérez. California Organized Investment
Network.
Existing laws governing the taxation of insurers, the Personal
Income Tax Law, and the Corporation Tax Law, authorize, until January
1, 2012, a credit in an amount equal to 20% of a qualified
investment, as defined, made into a community development financial
institution, as defined, but not to exceed, in the aggregate amount
under all those laws, $10,000,000 per year.
The bill would extend the operation of the credits until January
1, 2017, and increase the $10,000,000 limitation on the
aggregate amount of qualified investments to $20,000,000
would eliminate specified limitations on the aggregate certified
investments, and would eliminate certain requirements regarding
certificates issued to taxpayers . The bill would
require authorize the Insurance Commissioner to
establish a California Organized Investment Network Advisory Board,
as specified, to advise the California Organized Investment Network
on the best methods of increasing insurance investments while
providing fair returns to investors and social benefits to
underserved communities, increase the level and number of contacts
among executives in the insurance industry, and recommend
programmatic guidelines to the California Organized Investment
Network program. The bill would also authorize the California
Organized Investment Network, in allocating qualified investment
credits, when certain conditions are met, to prioritize applications
for those credits, as specified.
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. Section 12939.2 is added to the Insurance Code, to
read:
12939.2. (a) The commissioner shall may
establish and appoint a California Organized Investment Network
Advisory Board.
(b) For purposes of this section, all of the following shall
apply:
(1) "Commissioner" means the Insurance Commissioner of this state.
(2) "Board" means the California Organized Investment Network
Advisory Board.
(3) "Licensed attorney" means an attorney who resides in this
state who has successfully passed the California bar examination and
has been admitted to practice in this state or has otherwise been
licensed to practice law in this state by the State Bar of
California.
(c) The board shall include the commissioner, or his or her
designee, and at least one voluntary member from each of the
following:
(1) An executive in the insurance investment industry.
(2) A licensed attorney practicing insurance law.
(3) The public, appointed by the Speaker of the Assembly.
(4) The public, appointed by the Senate Committee on Rules.
(5) A consumer advocacy group.
(6) An affordable housing practitioner.
(7) A local economic development practitioner.
(8) A financial institution or a community development financial
institution.
(d) The board shall elect, from among its members, a chair.
(e) The term of each member shall be for two years. Staggered
terms shall be established by drawing lots at the first meeting of
the advisory board so that a simple majority of the members shall
initially serve a two-year term, and the remainder initially a
one-year term.
(f) The board shall have all of the following powers and duties:
(1) To advise the California Organized Investment Network, or any
successor thereof, on the best methods to increase the level of
insurance industry capital in safe and sound investments while
providing fair returns to investors and social benefits to
underserved communities.
(2) To meet quarterly, or as deemed necessary by the commissioner.
(3) To increase the level and number of contacts among executives
at insurance companies, community-based organizations, and community
development financial institutions.
(4) To recommend programmatic guidelines, but not specific
allocations of the tax credit amount, to the California Organized
Investment Network program.
(g) The members of the board shall not receive compensation from
the state for their services under this section but, when called to
attend a meeting of the board, may be reimbursed for their actual and
necessary expenses incurred in connection with the meeting.
SEC. 2. Section 12209 of the Revenue and Taxation Code is amended
to read:
12209. (a) For each year beginning on or after January 1, 1999,
and before January 1, 2017, there shall be allowed as a credit
against the amount of 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 a community development financial institution that
is certified by the Department of Insurance, California Organized
Investment Network, or any successor thereof.
(b) For purposes of determining any tax that may be imposed under
Section 685 of the Insurance Code on a taxpayer not organized under
the laws of this state, the amount of 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) (1) Notwithstanding any other provision of this part, no
credit shall be allowed under this section unless the California
Organized Investment Network, or its successor within the Department
of Insurance, certifies that the investment described in subdivision
(a) qualifies for the credit under this section and certifies the
total amount of the credit allocated to the taxpayer pursuant to this
section.
(2) A credit shall not be allowed by this section unless the
applicant and the taxpayer provide satisfactory substantiation to,
and in the form and manner requested by, the Department of Insurance,
California Organized Investment Network, or any successor thereof,
that the investment is a qualified investment as defined in paragraph
(1) of subdivision (g). In addition, on or after January 1,
2007, the aggregate certified investments shall meet all of the
following:
(A) Each year, until October 1, the total qualified investments
certified in any calendar year from any one community development
financial institution together with its affiliates, as defined in
Section 1215 of the Insurance Code, does not exceed the lesser of
either twenty million dollars ($20,000,000) or 40 percent of the
annual aggregate amount of qualified investments authorized in the
first sentence of paragraph (3), or until a date or an amount
determined in regulations promulgated by the Insurance Commissioner.
(B) Each year, until July 1, the annual aggregate amount of
qualified investments specified in the first sentence of paragraph
(3) that is reserved for investments by admitted insurers is 25
percent, or until a date or an amount determined in regulations
promulgated by the Insurance Commissioner.
(C) Each year, until July 1, the annual aggregate amount of
qualified investments authorized in the first sentence of paragraph
(3) that is reserved for individual investment amounts of less than
or equal to three hundred thousand dollars ($300,000) is three
million dollars ($3,000,000), or until a date or amounts determined
in regulations promulgated by the Insurance Commissioner.
(3) The aggregate amount of qualified investments made by all
taxpayers pursuant to this section, Section 17053.57, and Section
23657 shall not exceed twenty million dollars ($20,000,000)
ten million dollars ($10,000,000) for each
calendar year. However, if the aggregate amount of qualified
investments made in any calendar year is less than twenty
million dollars ($20,000,000) ten million dollars
($10,000,000) , 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.
(4) If the California Organized Investment Network determines that
total qualified investments will exceed the aggregate amount of
qualified investments made by all taxpayers specified in paragraph
(3), priority shall be granted to those applications that meet any or
all of the following:
(A) Directly benefit low-income persons.
(B) Prioritize rental housing, mortgages for community-based
residential programs, and self-help housing ahead of single-family
owned housing.
(C) Represent investments from insurance companies subject to tax
under Section 12201 of this code or under Section 28 of Article XIII
of the California Constitution.
(d) The community development financial institution shall do all
of the following:
(1) Apply to the Department of Insurance, California Organized
Investment Network, or its successor, for certification of its status
as a community development financial institution.
(2) Apply to the Department of Insurance, California Organized
Investment Network, or its successor, 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 this information to the
Department of Insurance, California Organized Investment Network, or
its successor, 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 Insurance, California Organized Investment
Network, or its successor, 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.
(5) Submit reports to the department, California Organized
Investment Network, or any successor thereof, as required pursuant to
subdivision (a) of Section 12939.1 of the Insurance Code.
(e) The California Organized Investment Network may certify
investments for the credit allowed by this section on or before
January 1, 2015, but not after that date.
(e)
(f) The Insurance Commissioner may develop
instructions, procedures, and standards for applications, and for
administering the criteria for the evaluation of applications under
this section. The Insurance Commissioner may, from time to time,
issue regulations to implement the provisions of this section.
(f)
(g) The Department of Insurance, California Organized
Investment Network, or any successor thereof, shall do all of the
following:
(1) Accept and evaluate applications for certification from
financial institutions and issue certificates that the applicant is a
community development financial institution qualified to receive
qualified investments. To receive a certificate, an applicant shall
satisfy the Department of Insurance, California Organized Investment
Network, or any successor thereof, that it meets the specific
requirements to be a community development financial institution for
this state program as defined in paragraph (2) of subdivision
(g) (h) . The certificate may be issued
for a specified period of time, and may include reasonable
conditions to effectuate the intent of this section. The Insurance
Commissioner may suspend or revoke a certification, after affording
the institution notice and the opportunity to be heard, if the
commissioner finds that an institution no longer meets the
requirement for certification.
(2) Accept and evaluate applications for certification from any
community development financial institution on behalf of the taxpayer
and issue certificates to taxpayers in an aggregate amount that
shall not exceed the limit specified in subdivision (c). The
certificate shall include the amount eligible to be made as an
investment that qualifies for the credit and the total amount of the
credit to which the taxpayer is entitled for the year. Applications
for tax credits shall be accepted and evaluated throughout the year.
Certificates shall be issued in the order that complete
applications are received. If the aggregate amount of tax credit
applications exceeds the amount of tax credits available, tax credits
shall be approved for qualifying investments on a
first-come-first-served basis as determined by the order in which
complete applications are received. All applications received on the
same business day are deemed to be received at the same time. If the
aggregate amount of tax credit applications received on a single
business day exceeds the amount of tax credits available, tax credits
shall be approved for qualifying investments received on that day on
a pro rata basis.
(3) Provide an annual listing to the State Board of Equalization,
in the form or manner agreed upon by the State Board of Equalization
and the Department of Insurance, California Organized Investment
Network, or its successor, of the taxpayers who were issued
certificates, their respective National Association of Insurance
Commissioners company number and employer's tax identification
number, the amount of the qualified investment made by each taxpayer,
and the total amount of qualified investments.
(4) Include information specified pursuant to subdivision (b) of
Section 12939.1 of the Insurance Code in the report required by
Section 12922 of the Insurance Code.
(g)
(h) For purposes of this section:
(1) "Qualified investment" means an investment that is a deposit
or loan that does not earn interest, or an equity investment, or an
equity-like debt instrument that conforms to the specifications for
these instruments as prescribed by the United States Department of
the Treasury, Community Development Financial Institutions Fund, or
its successor, or, in the absence of that prescription, as defined by
the Insurance Commissioner. The investment must be equal to or
greater than fifty thousand dollars ($50,000) and made for a minimum
duration of 60 months. During that 60-month period, the community
development financial institution shall have full use and control of
the proceeds of the entire amount of the investment as well as any
earnings on the investment for its community development purposes.
The entire amount of the investment shall be received by the
community development financial institution before the application
for the tax credit is submitted. The community development financial
institution shall use the proceeds of the investment for a purpose
that is consistent with its community development mission and for the
benefit of economically disadvantaged communities and low-income
people in California.
(2) "Community development financial institution" means a private
financial institution located in this state that is certified by the
Department of Insurance, California Organized Investment Network, or
its successor, that, consistent with the findings, declarations, and
intent set forth in Section 12939 of the Insurance Code, has
community development as its primary mission, and that lends in
urban, rural, or reservation-based communities in this state. A
community development financial institution may include a community
development bank, a community development loan fund, a community
development credit union, a microenterprise fund, a community
development corporation-based lender, or a community development
venture fund.
(h)
(i) (1) If a qualified investment is withdrawn before
the end of the 60th month and not reinvested in another community
development financial institution within 60 days, there shall be
added to the "tax," as defined in Section 28 of Article XIII of the
California Constitution, for the year in which the withdrawal occurs,
the entire amount of any credit previously allowed under this
section.
(2) If a qualified investment is reduced before the end of the
60th month, but not below fifty thousand dollars ($50,000), there
shall be added to the "tax," as defined in Section 28 of Article XIII
of the California Constitution, for the taxable year in which the
reduction occurs, an amount equal to 20 percent of the total
reduction for the year.
(i)
(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.
(j)
(k) The State Board of Equalization shall, as requested
by the Department of Insurance, California Organized Investment
Network, or its successor, advise and assist in the administration of
this section.
(k)
(l) This section shall remain in effect only until
December 1, 2017, and as of that date is repealed.
SEC. 3. Section 17053.57 of the Revenue and Taxation Code is
amended to read:
17053.57. (a) For each taxable year beginning on or after January
1, 1997, and before January 1, 2017, there shall be allowed as a
credit against the amount of "net tax," as defined in Section 17039,
an amount equal to 20 percent of the amount of each qualified
investment made by a taxpayer during the taxable year into a
community development financial institution that is certified by the
Department of Insurance, California Organized Investment Network, or
any successor thereof.
(b) (1) Notwithstanding any other provision of this part, a credit
shall not be allowed under this section unless the California
Organized Investment Network, or its successor within the Department
of Insurance, certifies that the investment described in subdivision
(a) qualifies for the credit under this section and certifies the
total amount of the credit allocated to the taxpayer pursuant to this
section.
(2) A credit shall not be allowed by this section unless the
applicant and the taxpayer provide satisfactory substantiation to,
and in the form and manner requested by, the Department of Insurance,
California Organized Investment Network, or any successor thereof,
that the investment is a qualified investment, as defined in
paragraph (1) of subdivision (f) (g) .
In addition, on or after January 1, 2007, the aggregate
certified investments shall meet all of the following:
(A) Each year, until October 1, the total qualified investments
certified in any calendar year from any one community development
financial institution together with its affiliates, as defined in
Section 1215 of the Insurance Code, does not exceed the lesser of
either twenty million dollars ($20,000,000) or 40 percent of the
annual aggregate amount of qualified investments authorized in the
first sentence of paragraph (3), or until a date or an amount
determined in regulations promulgated by the Insurance Commissioner.
(B) Each year, until July 1, the annual aggregate amount of
qualified investments specified in the first sentence of paragraph
(3) that is reserved for investments by admitted insurers is 25
percent, or until a date or an amount determined in regulations
promulgated by the Insurance Commissioner.
(C) Each year, until July 1, the annual aggregate amount of
qualified investments authorized in the first sentence of paragraph
(3) that is reserved for individual investment amounts of less than
or equal to three hundred thousand dollars ($300,000) is three
million dollars ($3,000,000), or until a date or amounts determined
in regulations promulgated by the Insurance Commissioner.
(3) The aggregate amount of qualified investments made by all
taxpayers pursuant to this section, Section 12209, and Section 23657
shall not exceed twenty million dollars ($20,000,000)
ten million dollars ($10,000,000) for each
calendar year. However, if the aggregate amount of qualified
investments made in any calendar year is less than twenty
million dollars ($20,000,000) ten million dollars
($10,000,000) , 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.
(4) If the California Organized Investment Network determines that
total qualified investments will exceed the aggregate amount of
qualified investments made by all taxpayers specified in paragraph
(3), priority shall be granted to those applications that meet any or
all of the following:
(A) Directly benefit low-income persons.
(B) Prioritize rental housing, mortgages for community-based
residential programs, and self-help housing ahead of single-family
owned housing.
(C) Represent investments from insurance companies subject to tax
under Section 12201 of this code or under Section 28 of Article XIII
of the California Constitution.
(c) The Community Development Financial Institution shall do all
of the following:
(1) Apply to the Department of Insurance, California Organized
Investment Network, or its successor, for certification of its status
as a Community Development Financial Institution.
(2) Apply to the Department of Insurance, California Organized
Investment Network, or its successor, 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 identification number, or in the case of
a partnership, the taxpayer identification numbers of all the
partners for tax administration purposes and provide this information
to the Department of Insurance, California Organized Investment
Network, or its successor, with the application required in paragraph
(2).
(4) Provide an annual listing to the Franchise Tax Board, in the
form and manner agreed upon by the Franchise Tax Board and the
Department of Insurance, California Organized Investment Network, or
its successor, of the names and taxpayer 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.
(5) Submit reports to the department, California Organized
Investment Network, or any successor thereof, as required pursuant to
subdivision (a) of Section 12939.1 of the Insurance Code.
(d) The Insurance Commissioner may develop instructions,
procedures, and standards for applications, and for administering the
criteria for the evaluation of applications under this section. The
Insurance Commissioner may, from time to time, issue regulations to
implement the provisions of this section.
(e) The California Organized Investment Network may certify
investments for the credit allowed by this section on or before
January 1, 2015, but not after that date.
(e)
(f) The Department of Insurance, California Organized
Investment Network, or any successor thereof, shall do all of the
following:
(1) Accept and evaluate applications for certification from
financial institutions and issue certificates that the applicant is a
Community Development Financial Institution qualified to receive
qualified investments. To receive a certificate, an applicant shall
satisfy the Department of Insurance, California Organized Investment
Network, or any successor thereof, that it meets the specific
requirements to be a community development financial institution for
this state program as defined in paragraph (2) of subdivision
(f) (g) . The certificate may be issued
for a specified period of time, and may include reasonable
conditions to effectuate the intent of this section. The Insurance
Commissioner may suspend or revoke a certification, after affording
the institution notice and the opportunity to be heard, if the
commissioner finds that an institution no longer meets the
requirement for certification.
(2) Accept and evaluate applications for certification from any
Community Development Financial Institution on behalf of the taxpayer
and issue certificates to taxpayers in an aggregate amount that
shall not exceed the limit specified in subdivision (b). The
certificate shall include the amount eligible to be made as an
investment that qualifies for the credit and the total amount of the
credit to which the taxpayer is entitled for the taxable year.
Applications for tax credits shall be accepted and evaluated
throughout the year. Certificates shall be issued in the
order that complete applications are received. If the aggregate
amount of tax credit applications exceeds the amount of tax credits
available, tax credits shall be approved for qualifying investments
on a first-come-first-served basis as determined by the order in
which complete applications are received. All applications received
on the same business day are deemed to be received at the same time.
If the aggregate amount of tax credit applications received on a
single business day exceeds the amount of tax credits available, tax
credits shall be approved for qualifying investments received on that
day on a pro rata basis.
(3) Provide an annual listing to the Franchise Tax Board, in the
form or manner agreed upon by the Franchise Tax Board and the
Department of Insurance, California Organized Investment Network, or
its successor, of the taxpayers who were issued certificates, their
respective tax identification numbers, the amount of the qualified
investment made by each taxpayer, and the total amount of all
qualified investments.
(4) Include information specified pursuant to subdivision (b) of
Section 12939.1 of the Insurance Code in the report required by
Section 12922 of the Insurance Code.
(f)
(g) For purposes of this section:
(1) "Qualified investment" means an investment that is a deposit
or loan that does not earn interest, or an equity investment, or an
equity-like debt instrument that conforms to the specifications for
these instruments as prescribed by the United States Department of
the Treasury, Community Development Financial Institutions Fund, or
its successor, or, in the absence of that prescription, as defined by
the Insurance Commissioner. The investment must be equal to or
greater than fifty thousand dollars ($50,000) and made for a minimum
duration of 60 months. During that 60-month period, the community
development financial institution shall have full use and control of
the proceeds of the entire amount of the investment as well as any
earnings on the investment for its community development purposes.
The entire amount of the investment shall be received by the
community development financial institution before the application
for the tax credit is submitted. The community development financial
institution shall use the proceeds of the investment for a purpose
that is consistent with its community development mission and for the
benefit of economically disadvantaged communities and low-income
people in California.
(2) "Community development financial institution" means a private
financial institution located in this state that is certified by the
Department of Insurance, California Organized Investment Network, or
its successor, that, consistent with the legislative findings,
declarations, and intent in Section 12939 of the Insurance Code, has
community development as its primary mission, and that lends in
urban, rural, or reservation-based communities in this state. A
community development financial institution may include a community
development bank, a community development loan fund, a community
development credit union, a microenterprise fund, a community
development corporation-based
lender, or a community development venture fund.
(g)
(h) (1) If a qualified investment is withdrawn before
the end of the 60th month and not reinvested in another Community
Development Financial Institution within 60 days, there shall be
added to the "net tax," as defined in Section 17039, for the taxable
year in which the withdrawal occurs, the entire amount of any credit
previously allowed under this section.
(2) If a qualified investment is reduced before the end of the
60th month, but not below fifty thousand dollars ($50,000), there
shall be added to the "net tax," as defined in Section 17039, for the
taxable year in which the reduction occurs, an amount equal to 20
percent of the total reduction for the taxable year.
(h)
(i) 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" for the next four taxable years, or until the
credit has been exhausted, whichever occurs first.
(i)
(j) The Franchise Tax Board shall, as requested by the
Department of Insurance, California Organized Investment Network, or
its successor, advise and assist in the administration of this
section.
(j)
(k) This section shall remain in effect only until
December 1, 2017, and as of that date is repealed.
SEC. 4. Section 23657 of the Revenue and Taxation Code is amended
to read:
23657. (a) For each taxable year beginning on or after January 1,
1997, and before January 1, 2017, there shall be allowed as a credit
against the amount of "tax," as defined in Section 23036, an amount
equal to 20 percent of the amount of each qualified investment made
by a taxpayer during the taxable year into a community development
financial institution that is certified by the Department of
Insurance, California Organized Investment Network, or any successor
thereof.
(b) (1) Notwithstanding any other provision of this part, a credit
shall not be allowed under this section unless the California
Organized Investment Network, or its successor within the Department
of Insurance, certifies that the investment described in subdivision
(a) qualifies for the credit under this section and certifies the
total amount of the credit allocated to the taxpayer pursuant to this
section.
(2) A credit shall not be allowed by this section unless the
applicant and the taxpayer provide satisfactory substantiation to,
and in the form and manner requested by, the Department of Insurance,
California Organized Investment Network, or any successor thereof,
that the investment is a qualified investment, as defined in
paragraph (1) of subdivision (f) (g) .
In addition, on or after January 1, 2007, the aggregate
certified investments shall meet all of the following:
(A) Each year, until October 1, the total qualified investments
certified in any calendar year from any one community development
financial institution together with its affiliates, as defined in
Section 1215 of the Insurance Code, does not exceed the lesser of
either twenty million dollars ($20,000,000) or 40 percent of the
annual aggregate amount of qualified investments authorized in the
first sentence of paragraph (3), or until a date or an amount
determined in regulations promulgated by the Insurance Commissioner.
(B) Each year, until July 1, the annual aggregate amount of
qualified investments specified in the first sentence of paragraph
(3) that is reserved for investments by admitted insurers is 25
percent, or until a date or an amount determined in regulations
promulgated by the Insurance Commissioner.
(C) Each year, until July 1, the annual aggregate amount of
qualified investments authorized in the first sentence of paragraph
(3) that is reserved for individual investment amounts of less than
or equal to three hundred thousand dollars ($300,000) is three
million dollars ($3,000,000), or until a date or amounts determined
in regulations promulgated by the Insurance Commissioner.
(3) The aggregate amount of qualified investments made by all
taxpayers pursuant to this section, Section 12209, and Section
17053.57 shall not exceed twenty million dollars
($20,000,000) ten million dollars ($10,000,000)
for each calendar year. However, if the aggregate amount of qualified
investments made in any calendar year is less than twenty
million dollars ($20,000,000) ten million dollars
($10,000,000) , 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.
(4) If the California Organized Investment Network determines that
total qualified investments will exceed the aggregate amount of
qualified investments made by all taxpayers specified in paragraph
(3), priority shall be granted to those applications that meet any or
all of the following:
(A) Directly benefit low-income persons.
(B) Prioritize rental housing, mortgages for community-based
residential programs, and self-help housing ahead of single-family
owned housing.
(C) Represent investments from insurance companies subject to tax
under Section 12201 of this code or under Section 28 of Article XIII
of the California Constitution.
(c) The Community Development Financial Institution shall do all
of the following:
(1) Apply to the Department of Insurance, California Organized
Investment Network, or its successor, for certification of its status
as a Community Development Financial Institution.
(2) Apply to the Department of Insurance, California Organized
Investment Network, or its successor, 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 identification number, or in the case of
an "S" corporation, the taxpayer identification numbers of all the
shareholders for tax administration purposes and provide this
information to the Department of Insurance, California Organized
Investment Network, or its successor, with the application required
in paragraph (2).
(4) Provide an annual listing to the Franchise Tax Board, in the
form and manner agreed upon by the Franchise Tax Board and the
Department of Insurance, California Organized Investment Network, or
its successor, of the names and taxpayer 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.
(5) Submit reports to the department, California Organized
Investment Network, or any successor thereof, as required pursuant to
subdivision (a) of Section 12939.1 of the Insurance Code.
(d) The California Organized Investment Network may certify
investments for the credit allowed by this section on or before
January 1, 2015, but not after that date.
(d)
(e) The Insurance Commissioner may develop
instructions, procedures, and standards for applications, and for
administering the criteria for the evaluation of applications under
this section. The Insurance Commissioner may, from time to time,
issue regulations to implement the provisions of this section.
(e)
(f) The Department of Insurance, California Organized
Investment Network, or any successor thereof, shall do all of the
following:
(1) Accept and evaluate applications for certification from
financial institutions and issue certificates that the applicant is a
Community Development Financial Institution qualified to receive
qualified investments. To receive a certificate, an applicant shall
satisfy the Department of Insurance, California Organized Investment
Network, or any successor thereof, that it meets the specific
requirements to be a community development financial institution for
this state program as defined in paragraph (2) of subdivision
(f) (g) . The certificate may be issued
for a specified period of time, and may include reasonable
conditions to effectuate the intent of this section. The Insurance
Commissioner may suspend or revoke a certification, after affording
the institution notice and the opportunity to be heard, if the
commissioner finds that an institution no longer meets the
requirement for certification.
(2) Accept and evaluate applications for certification from any
Community Development Financial Institution on behalf of the taxpayer
and issue certificates to taxpayers in an aggregate amount that
shall not exceed the limit specified in subdivision (b). The
certificate shall include the amount eligible to be made as an
investment that qualifies for the credit and the total amount of the
credit to which the taxpayer is entitled for the taxable year.
Applications for tax credits shall be accepted and evaluated
throughout the year. Certificates shall be issued in the
order that complete applications are received. If the aggregate
amount of tax credit applications exceeds the amount of tax credits
available, tax credits shall be approved for qualifying investments
on a first-come-first-served basis as determined by the order in
which complete applications are received. All applications received
on the same business day are deemed to be received at the same time.
If the aggregate amount of tax credit applications received on a
single business day exceeds the amount of tax credits available, tax
credits shall be approved for qualifying investments received on that
day on a pro rata basis.
(3) Provide an annual listing to the Franchise Tax Board, in the
form or manner agreed upon by the Franchise Tax Board and the
Department of Insurance, California Organized Investment Network, or
its successor, of the taxpayers who were issued certificates, their
respective tax identification numbers, the amount of the qualified
investment made by each taxpayer, and the total amount of all
qualified investments.
(4) Include information specified pursuant to subdivision (b) of
Section 12939.1 of the Insurance Code in the report required by
Section 12922 of the Insurance Code.
(f)
(g) For purposes of this section:
(1) "Qualified investment" means an investment that is a deposit
or loan that does not earn interest, or an equity investment, or an
equity-like debt instrument that conforms to the specifications for
these instruments as prescribed by the United States Department of
the Treasury, Community Development Financial Institutions Fund, or
its successor, or, in the absence of that prescription, as defined by
the Insurance Commissioner. The investment must be equal to or
greater than fifty thousand dollars ($50,000) and made for a minimum
duration of 60 months. During that 60-month period, the community
development financial institution shall have full use and control of
the proceeds of the entire amount of the investment as well as any
earnings on the investment for its community development purposes.
The entire amount of the investment shall be received by the
community development financial institution before the application
for the tax credit is submitted. The community development financial
institution shall use the proceeds of the investment for a purpose
that is consistent with its community development mission and for the
benefit of economically disadvantaged communities and low-income
people in California.
(2) "Community development financial institution" means a private
financial institution located in this state that is certified by the
Department of Insurance, California Organized Investment Network, or
its successor, that, consistent with the legislative findings,
declarations, and intent in Section 12939 of the Insurance Code, has
community development as its primary mission, and that lends in
urban, rural, or reservation-based communities in this state. A
community development financial institution may include a community
development bank, a community development loan fund, a community
development credit union, a microenterprise fund, a community
development corporation-based lender, or a community development
venture fund.
(g)
(h) (1) If a qualified investment is withdrawn before
the end of the 60th month and not reinvested in another Community
Development Financial Institution within 60 days, there shall be
added to the "tax," as defined in Section 23036, for the taxable year
in which the withdrawal occurs, the entire amount of any credit
previously allowed under this section.
(2) If a qualified investment is reduced before the end of the
60th month, but not below fifty thousand dollars ($50,000), there
shall be added to the "tax," as defined in Section 23036, for the
taxable year in which the reduction occurs, an amount equal to 20
percent of the total reduction for the taxable year.
(h)
(i) 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 taxable years, or until the credit has
been exhausted, whichever occurs first.
(i)
(j) The Franchise Tax Board shall, as requested by the
Department of Insurance, California Organized Investment Network or
its successor, advise and assist in the administration of this
section.
(j)
(k) This section shall remain in effect only until
December 1, 2017, and as of that date is repealed.