BILL NUMBER: AB 32	CHAPTERED
	BILL TEXT

	CHAPTER  608
	FILED WITH SECRETARY OF STATE  OCTOBER 7, 2013
	APPROVED BY GOVERNOR  OCTOBER 7, 2013
	PASSED THE SENATE  SEPTEMBER 9, 2013
	PASSED THE ASSEMBLY  SEPTEMBER 10, 2013
	AMENDED IN SENATE  SEPTEMBER 3, 2013
	AMENDED IN SENATE  AUGUST 21, 2013
	AMENDED IN ASSEMBLY  APRIL 17, 2013
	AMENDED IN ASSEMBLY  MARCH 4, 2013

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, 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. 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. Existing
law requires a community development financial institution to apply
to the California Organized Investment Network on behalf of the
taxpayer for certification of the amount of the investment and the
credit amount allocated to the taxpayer.
   The bill would increase the $10,000,000 limitation on the
aggregate amount of qualified investments to $50,000,000. This bill
would require a community development financial institution to
provide in the application a detailed description of the intended use
of the investment funds, as described, and to provide specified
information about the taxpayer. This bill would require the
California Organized Investment Network, when accepting and
evaluating applications for certification from any community
development financial institution on behalf of the taxpayer and
issuing certificates, to grant highest priority to those applications
where the intended use of the investments has the greatest aggregate
benefit for low-to-moderate income areas or households or rural
areas or households. This bill would require the Insurance
Commissioner to establish tax credit issuance cycles throughout the
year as necessary in order to issue tax credit certificates to those
applications granted the highest priority. 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.
   This bill would require, on or before June 30, 2016, the
Legislative Analyst's Office to submit a report to the Legislature on
the effects of the tax credits allowed, with a focus on employment
in low-to-moderate income and rural areas, and on the benefits of
these tax credits to low-to-moderate income and rural persons.
   Existing law authorizes the Insurance Commissioner to issue
regulations to implement the credit.
   This bill would instead authorize the Insurance Commissioner to
adopt, amend, or repeal regulations to implement the credit, and
would deem the initial adoption of the regulations to be emergency
regulations, as specified.
   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.
   This bill would revise those conditions.
   This bill would include a change in state statute that would
result in a taxpayer paying a higher tax within the meaning of
Section 3 of Article XIII A of the California Constitution, and thus
would require for passage the approval of 2/3 of the membership of
each house of the Legislature.
   This bill would take effect immediately as a tax levy.



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

   (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.
   (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.
   (4) Priority among housing applications 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.
   (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) (A) 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.
   (B) Provide in the application a detailed description of the
intended use of the investment funds including, but not limited to,
the following:
   (i) All of the programs, projects, and services that would be
funded.
   (ii) The percentage of the intended use of the investment funds
that would directly benefit low-to-moderate income households.
   (iii) The percentage of the intended use of the investment funds
that would directly benefit rural areas.
   (iv) The percentage of the intended use of the investment funds
that is a green investment as defined in Section 926.1 of the
Insurance Code.
   (3) (A) Provide in the application required in paragraph (2) the
following information to the Department of Insurance, California
Organized Investment Network, or its successor:
   (i) Name of the taxpayer.
   (ii) Postal address of the taxpayer, or residential address of the
taxpayer if the taxpayer is an individual.
   (iii) Phone number of the taxpayer.
   (iv) Email address of the taxpayer.
   (v) The taxpayer's California company identification number for
tax administration purposes.
   (B) The information provided in subparagraph (A) shall be used
only for internal purposes by the Department of Insurance, California
Organized Investment Network, or its successor, and any public
disclosure of that information shall be limited to the name of the
taxpayer only.
   (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, 2017, but not after that date.
   (f) (1) 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, adopt, amend, or
repeal  regulations to implement the provisions of this section.
   (2) The initial adoption of the regulations implementing this
section shall be deemed to be an emergency and necessary in order to
address a situation calling for immediate action to avoid serious
harm to the public peace, health, safety, or general welfare.
   (3) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, any
emergency regulation adopted or amended by the Insurance Commissioner
pursuant to this section shall remain in effect until amended or
repealed by the department.
   (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), with highest
priority granted to those applications where the intended use of the
investments has the greatest aggregate benefit for low-to-moderate
income areas or households or rural areas or households. 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.
The Insurance Commissioner shall establish tax credit issuance cycles
throughout the year as necessary in order to issue tax credit
certificates to those applications granted the highest priority.
   (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) On or before June 30, 2016, the Legislative Analyst's Office
shall submit a report to the Legislature, in compliance with Section
9795 of the Government Code, on the effects of the tax credits
allowed under this section, Section 17053.57, and Section 23657, with
a focus on employment in low-to-moderate income and rural areas, and
on the benefits of these tax credits to low-to-moderate income and
rural persons.
   (m) 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) (A) The aggregate amount of qualified investments made by all
taxpayers pursuant to this section, Section 12209, and Section 23657
shall not exceed fifty million dollars ($50,000,000) for each
calendar year. However, if the aggregate amount of qualified
investments made in any calendar year is less than fifty million
dollars ($50,000,000), 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.

   (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.
   (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.
   (4) Priority among housing applications 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.
   (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) (A) 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.
   (B) Provide in the application a detailed description of the
intended use of the investment funds including, but not limited to,
the following:
   (i) All of the programs, projects, and services that would be
funded.
   (ii) The percentage of the intended use of the investment funds
that would directly benefit low-to-moderate income households.
   (iii) The percentage of the intended use of the investment funds
that would directly benefit rural areas.
   (iv) The percentage of the intended use of the investment funds
that is a green investment as defined in Section 926.1 of the
Insurance Code.
   (3) (A) Provide in the application required in paragraph (2) the
following information to the Department of Insurance, California
Organized Investment Network, or its successor:
   (i) Name of the taxpayer.
   (ii) Postal address of the taxpayer, or residential address of the
taxpayer if the taxpayer is an individual.
   (iii) Phone number of the taxpayer.
   (iv) Email address of the taxpayer.
   (v) The taxpayer's identification number, or in the case of a
partnership, the taxpayer identification numbers of all the partners
for tax administration purposes.
   (B) The information provided in subparagraph (A) shall be used
only for internal purposes by the Department of Insurance, California
Organized Investment Network, or its successor, and any Network, or
its successor shall limit all public disclosure of that information
shall be limited to the name of the taxpayer only.
   (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) (1) 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, adopt, amend, or
repeal  regulations to implement the provisions of this section.
   (2) The initial adoption of the regulations implementing this
section shall be deemed to be an emergency and necessary in order to
address a situation calling for immediate action to avoid serious
harm to the public peace, health, safety, or general welfare.
   (3) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, any
emergency regulation adopted or amended by the Insurance Commissioner
pursuant to this section shall remain in effect until amended or
repealed by the department.
   (e) The California Organized Investment Network may certify
investments for the credit allowed by this section on or before
January 1, 2017, 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), with highest
priority granted to those applications where the intended use of the
investments has the greatest aggregate benefit for low-to-moderate
income areas or households or rural areas or households. 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. The Insurance Commissioner shall establish tax
credit issuance cycles throughout the year as necessary in order to
issue tax credit certificates to those applications granted the
highest priority.
   (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) On or before June 30, 2016, the Legislative Analyst's Office
shall submit a report to the Legislature, in compliance with Section
9795 of the Government Code, on the effects of the tax credits
allowed under this section, Section 12209, and Section
                            23657, with a focus on employment in
low-to-moderate income and rural areas, and on the benefits of these
tax credits to low-to-moderate income and rural persons.
   (l) 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) (A) The aggregate amount of qualified investments made by all
taxpayers pursuant to this section, Section 12209, and Section
17053.57 shall not exceed fifty million dollars ($50,000,000) for
each calendar year. However, if the aggregate amount of qualified
investments made in any calendar year is less than fifty million
dollars ($50,000,000), 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.

   (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.
   (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.
   (4) Priority among housing applications 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.
   (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) (A) 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.
   (B) Provide in the application a detailed description of the
intended use of the investment funds including, but not limited to,
the following:
   (i) All of the programs, projects, and services that would be
funded.
   (ii) The percentage of the intended use of the investment funds
that would directly benefit low-to-moderate income households.
   (iii) The percentage of the intended use of the investment funds
that would directly benefit rural areas.
   (iv) The percentage of the intended use of the investment funds
that is a green investment as defined in Section 926.1 of the
Insurance Code.
   (3) (A) Provide in the application required in paragraph (2) the
following information to the Department of Insurance, California
Organized Investment Network, or its successor:
   (i) Name of the taxpayer.
   (ii) Postal address of the taxpayer, or residential address of the
taxpayer if the taxpayer is an individual.
   (iii) Phone number of the taxpayer.
   (iv) Email address of the taxpayer.
   (v) The taxpayer's California company identification number for
tax administration purposes, or in the case of an "S" corporation,
the taxpayer identification numbers of all the shareholders for tax
administration purposes.
   (B) The information provided in subparagraph (A) shall be used
only for internal purposes by the Department of Insurance, California
Organized Investment Network, or its successor, and any public
disclosure of that information shall be limited to the name of the
taxpayer only.
   (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, 2017, but not after that date.
   (e) (1) 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, adopt, amend, or
repeal regulations to implement the provisions of this section.
   (2) The initial adoption of the regulations implementing this
section shall be deemed to be an emergency and necessary in order to
address a situation calling for immediate action to avoid serious
harm to the public peace, health, safety, or general welfare.
   (3) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, any
emergency regulation adopted or amended by the Insurance Commissioner
pursuant to this section shall remain in effect until amended or
repealed by the department.
   (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), with highest
priority granted to those applications where the intended use of the
investments has the greatest aggregate benefit for low-to-moderate
income areas or households or rural areas or households. 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. The Insurance Commissioner shall establish tax
credit issuance cycles throughout the year as necessary in order to
issue tax credit certificates to those applications granted the
highest priority.
   (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) On or before June 30, 2016, the Legislative Analyst's Office
shall submit a report to the Legislature, in compliance with Section
9795 of the Government Code, on the effects of the tax credits
allowed under this section, Section 12209, and Section 17053.57, with
a focus on employment in low-to-moderate income and rural areas, and
on the benefits of these tax credits to low-to-moderate income and
rural persons.
   (l) 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.