BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 355|
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THIRD READING
Bill No: SB 355
Author: Beall (D)
Amended: 5/13/13
Vote: 21 - Urgency
SENATE NATURAL RESOURCES AND WATER COMMITTEE : 8-1, 4/23/13
AYES: Pavley, Cannella, Evans, Hueso, Jackson, Lara, Monning,
Wolk
NOES: Fuller
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 5/1/13
AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu
SENATE APPROPRIATIONS COMMITTEE : 6-0, 1/23/14
AYES: De León, Gaines, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters
SUBJECT : Conservation: tax credits
SOURCE : California Council of Land Trusts
DIGEST : This bill allows for the transfer of the credit
allowed, pursuant to the Natural Heritage Preservation Tax
Credit Act of 2000 (Act) from prior years whose carry over
period has not expired by the taxpayer to an unrelated party, as
provided.
ANALYSIS :
Existing law:
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1. Requires, under the Act, the Wildlife Conservation Board
(Board) to implement a program under which property, as
defined, may be contributed to the state, any local
government, as defined, or to any nonprofit organization
designated by a local government, based on specified
criteria, in order to provide for the protection of wildlife
habitat, open space, and agricultural lands.
2. Allows, under the Personal Income Tax Law and the
Corporation Tax Law, a credit against the taxes imposed by
those laws in the amount equal to 55% of the fair market
value of any qualified contribution, as defined, contributed
during the taxable year pursuant to the Act, as provided.
This bill:
1. Allows for the transfer of the credit allowed pursuant to
the Act from prior years whose carry over period has not
expired by the taxpayer to an unrelated party, as provided.
2. Requires the taxpayer to report to the Board prior to the
transfer of the credit, in the form and manner specified by
the Board, all required information regarding the transfer of
the credit, including the social security or other taxpayer
identification number of the unrelated party to whom the
credit has been transferred and the face amount of the credit
transferred, for the approval of the Board.
3. Requires the Board, upon approval of the transfer, to
provide a certificate to the taxpayer evidencing the
approval, in the form and manner specified by the Franchise
Tax Board (FTB), that shall include all required information
regarding the credit.
4. Prohibits the Board from approving a transfer of a credit if
the consideration received by the taxpayer in exchange for
the credit is less than 90% of the value of the credit to be
transferred.
Background
The Board is a separate and independent board within the
Department of Fish and Wildlife (DFW) with authority and funding
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to carry out an acquisition and development program for wildlife
conservation. The Board consists of the President of the Fish
and Game Commission, the Director of the DFW and the Director of
the Department of Finance.
The Board's main functions are land protection, habitat
restoration, and development of wildlife-oriented public access
facilities. To those ends, the Board approves and funds land
acquisitions, conservation easement acquisitions, and habitat
restoration, enhancement, and public access projects.
The Act was intended to foster public/private partnerships to
resolve land use and water disputes, assist habitat stewardship,
and demonstrate the state's commitment to protect natural
resources by rewarding landowners who perceive habitat as an
asset rather than a liability. Consequently, the Act provided
up to $100 million in state tax credits for donations of water
rights or qualified land (fee title or easement) equal to 55% of
the appraised market value. The donation had to protect
wildlife habitat, parks and open space, archaeological
resources, agricultural land, or water. The donation could have
been to any department within the Agency, a local government, or
a qualified non-profit. Credit was limited to landowners "net
tax" liability. However, the credit could be carried over up to
eight years until the credit was exhausted. The tax credit
program was run through the Board.
The tax credit program was first implemented in 2001 but was
suspended in 2002 because of pressures on the General Fund (GF).
In 2005, an amended version of the program was reinstated
through June 30, 2008. Under the amended program, a donation
was only eligible for a tax credit if all the lost revenue
resulting from the tax credit could have been reimbursed to the
GF from another source, such as state bond funds including
Proposition 40 and Proposition 50.
The tax credit was continued in 2009, by, among other things,
extending the sunset date from June 30, 2008 to June 30, 2015,
removing the $100 million cap on the amount of tax credits that
can be approved by the Board, and allowing certain fund sources
other than bond funds to reimburse the GF for the revenue loss
resulting from the award of tax credits.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
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Local: No
According to the Senate Appropriations Committee, FTB estimates
that this bill will result in revenue losses of $700,000 in
2013-14, $3.4 million in 2014-15, and $4.5 million in 2015-16.
Existing law requires reimbursement from the National Heritage
Preservation Tax Credit Reimbursement Account; consequently, the
net current cost to the GF would be zero. To the extent that
these reimbursements come from bond fund expenditures or private
donations, there will be future GF impacts related to (1)
increased future debt-service costs, and (2) reduced future
revenues from increased deductions.
The FTB indicates that this bill will not significantly impact
its own costs. Costs to the Board are unknown, but likely
minor.
SUPPORT : (Verified 1/23/14)
California Council of Land Trusts (source)
California Rangeland Trust
Land Trust of Santa Cruz County
Marin Agricultural Land Trust
Peninsula Open Space Trust
Sequoia Riverlands Trust
Trust for Public Land
Wildlife Heritage Foundation
ARGUMENTS IN SUPPORT : According to this bill's sponsor,
California Council of Land Trusts, "The Natural Heritage
Preservation Tax Credit (NHPTC) has protected 8,006 acres with
the authorization of $48.5 M in tax credits for a total of 14
projects; and, it has delivered high value for the state's
dollar. While this success cannot be overlooked or minimized,
not a single eligible entity had taken advantage of the NHPTC
since 2005. Prior to 2005, many landowners were interested but
were unable to make it work for them. The primary reason is
that most landowners are simply unable to take advantage of the
state tax credit because they lack the state tax liability that
would make the tax credit under NHPTC attractive to them. In
contrast, California business entities frequently have state tax
liabilities. In recognition of this mismatch between the
realities of landownership and state tax liabilities, SB 355
proposes to modify the existing NHPTC so that landowners who are
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unable to utilize the tax credit can transfer the tax credit to
interested corporate entities who can utilize the tax credit."
RM:k 1/24/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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