Amended in Assembly March 4, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 32

Introduced by Assembly Member John A. Pérez

December 3, 2012

An act to amend Sections 12209, 17053.57, and 23657 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 32, as amended, John A. Pérez. Insurance taxes: income taxes: credits: community development financial institution investments.

Existing laws governing the taxation of insurers, the Personal Income Tax Law, and the Corporation Tax Law, authorize, until January 1, 2017, 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. begin insert Existing law provides that a credit shall not be allowed under those laws unless the California Organized Investment Network certifies that the investment made by the taxpayer is a qualified investment, as defined. end insert

The bill would increase the $10,000,000 limitation on the aggregate amount of qualified investments to begin delete $20,000,000 end delete begin insert $50,000,000 end insert . begin insert This bill would prohibit the total amount of investments certified by the California Organized Investment Network in any calendar year to any one community development financial institution from exceeding 30% of the annual aggregate amount of qualified investments, except as specified. This bill would require that each year 10% of the annual aggregate amount of qualified investments be reserved for investment amounts of less than or equal to $200,000, as specified. This bill would also allow the California Organized Investment Network to certify investments for the credit until January 1, 2017. end insert

begin insert

Existing law authorizes the California Organized Investment Network, in allocating qualified investment credits, when certain conditions are met, to prioritize applications for those credits, as specified.

end insert begin insert

This bill would revise those conditions.

end insert

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

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, 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 (h).

(3)  begin insert (A) end insert begin insert   end insert The aggregate amount of qualified investments made
by all taxpayers pursuant to this section, Section 17053.57, and
Section 23657 shall not exceed begin delete twenty million dollars
($20,000,000) end delete begin insert fifty million dollars ($50,000,000) end insert for each calendar
year. However, if the aggregate amount of qualified investments
made in any calendar year is less than begin delete twenty million dollars
($20,000,000) end delete begin insert fifty million dollars ($50,000,000) end insert , 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.

begin insert

(B) The total amount of qualified investments certified by the
California Organized Investment Network in any calendar year
to any one community development financial institution together
with its affiliates, as defined in Section 1215 of the Insurance Code,
shall not exceed 30 percent of the annual aggregate amount of
qualified investments certified by the California Organized
Investment Network. If after October 1, the California Organized
Investment Network has determined that the availability of tax
credits exceed their demand, then a community development
financial institution that has been allocated 30 percent of the
annual aggregate amount of qualified investments shall become
eligible to apply to be certified for any remaining tax credits in
that calendar year.

end insert begin insert

(C) Each year, 10 percent of the annual aggregate amount of
qualified investments shall be reserved for investment amounts of
less than or equal to two hundred thousand dollars ($200,000). If
after October 1, there remains an unallocated portion of the
amount reserved for investments of less than or equal to two
hundred thousand dollars ($200,000), then qualified investments
in excess of two hundred thousand dollars ($200,000) may be
eligible for that remaining unallocated portion.

end insert

(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 begin delete any or all end delete begin insert one or both end insert of the following:

(A) Directly benefit low-income persons.

begin delete

(B) Prioritize rental housing, mortgages for community-based
residential programs, and self-help housing ahead of single-family
owned housing.

end delete begin delete

(C)

end delete

begin insert (B) end insert  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.

begin insert

(5) If the application would support housing, priority shall be
given to applications that support affordable rental housing,
housing for veterans, mortgages for community-based residential
programs, and self-help housing ahead of single-family owned
housing.

end insert

(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, begin delete 2015 end delete begin insert 2017 end insert , but not after that date.

(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.

(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 (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.

(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.

(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 legislative
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.

(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.

(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 of Insurance, California Organized Investment
Network, or its successor, advise and assist in the administration
of this section.

(l) This section shall remain in effect only until December 1,
2017, and as of that date is repealed.

SEC. 2.  

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 (g).

(3)  begin insert (A) end insert begin insert   end insert The aggregate amount of qualified investments made
by all taxpayers pursuant to this section, Section 12209, and Section
23657 shall not exceed begin delete twenty million dollars ($20,000,000) end delete begin insert fifty
million dollars ($50,000,000) end insert for each calendar year. However, if
the aggregate amount of qualified investments made in any
calendar year is less than begin delete twenty million dollars ($20,000,000) end delete
begin insert fifty million dollars ($50,000,000) end insert , 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.

begin insert

(B) The total amount of qualified investments certified by the
California Organized Investment Network in any calendar year
to any one community development financial institution together
with its affiliates, as defined in Section 1215 of the Insurance Code,
shall not exceed 30 percent of the annual aggregate amount of
qualified investments certified by the California Organized
Investment Network. If after October 1, the California Organized
Investment Network has determined that the availability of tax
credits exceed their demand, then a community development
financial institution that has been allocated 30 percent of the
annual aggregate amount of qualified investments shall become
eligible to apply to be certified for any remaining tax credits in
that calendar year.

end insert begin insert

(C) Each year, 10 percent of the annual aggregate amount of
qualified investments shall be reserved for investment amounts of
less than or equal to two hundred thousand dollars ($200,000). If
after October 1, there remains an unallocated portion of the
amount reserved for investments of less than or equal to two
hundred thousand dollars ($200,000), then qualified investments
in excess of two hundred thousand dollars ($200,000) may be
eligible for that remaining unallocated portion.

end insert

(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 begin delete any or all end delete begin insert one or both end insert of the following:

(A) Directly benefit low-income persons.

begin delete

(B) Prioritize rental housing, mortgages for community-based
residential programs, and self-help housing ahead of single-family
owned housing.

(C)

end delete

begin insert (B) end insert  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.

begin insert

(5) If the application would support housing, priority shall be
given to applications that support affordable rental housing,
housing for veterans, mortgages for community-based residential
programs, and self-help housing ahead of single-family owned
housing.

end insert

(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, begin delete 2015 end delete begin insert 2017 end insert , but not after that date.

(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 (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.

(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 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) 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 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) (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.

(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.

(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.

(k) This section shall remain in effect only until December 1,
2017, and as of that date is repealed.

SEC. 3.  

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 (g).

(3)  begin insert (A) end insert begin insert   end insert The aggregate amount of qualified investments made
by all taxpayers pursuant to this section, Section 12209, and Section
17053.57 shall not exceed begin delete twenty million dollars ($20,000,000) end delete
begin insert fifty million dollars ($50,000,000) end insert for each calendar year. However,
if the aggregate amount of qualified investments made in any
calendar year is less than begin delete twenty million dollars ($20,000,000) end delete
begin insert fifty million dollars ($50,000,000) end insert , 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.

begin insert

(B) The total amount of qualified investments certified by the
California Organized Investment Network in any calendar year
to any one community development financial institution together
with its affiliates, as defined in Section 1215 of the Insurance Code,
shall not exceed 30 percent of the annual aggregate amount of
qualified investments certified by the California Organized
Investment Network. If after October 1, the California Organized
Investment Network has determined that the availability of tax
credits exceed their demand, then a community development
financial institution that has been allocated 30 percent of the
annual aggregate amount of qualified investments shall become
eligible to apply to be certified for any remaining tax credits in
that calendar year.

end insert begin insert

(C) Each year, 10 percent of the annual aggregate amount of
qualified investments shall be reserved for investment amounts of
less than or equal to two hundred thousand dollars ($200,000). If
after October 1, there remains an unallocated portion of the
amount reserved for investments of less than or equal to two
hundred thousand dollars ($200,000), then qualified investments
in excess of two hundred thousand dollars ($200,000) may be
eligible for that remaining unallocated portion.

end insert

(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 begin delete any or all end delete begin insert one or both end insert of the following:

(A) Directly benefit low-income persons.

begin delete

(B) Prioritize rental housing, mortgages for community-based
residential programs, and self-help housing ahead of single-family
owned housing.

(C)

end delete

begin insert (B) end insert  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.

begin insert

(5) If the application would support housing, priority shall be
given to applications that support affordable rental housing,
housing for veterans, mortgages for community-based residential
programs, and self-help housing ahead of single-family owned
housing.

end insert

(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, begin delete 2015 end delete begin insert 2017 end insert , but not after that date.

(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.

(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 (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.

(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 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) 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 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) (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.

(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.

(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.

(k) This section shall remain in effect only until December 1,
2017, and as of that date is repealed.

SEC. 4.  

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.