BILL ANALYSIS Ó
AB 185
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Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT, AND THE ECONOMY
Eduardo Garcia, Chair
AB 185
(Eduardo Garcia) - As Introduced January 26, 2015
SUBJECT: Income taxation: insurance taxation: credits: California
New Markets Tax Credit
SUMMARY: Establishes a five-year $200 million tax credit program to
attract new private capital to very low-income neighborhoods in
California. In general, the new state credit parallels the federal
New Market Tax Credit (F-NMTC) Program. Specifically, this bill:
1)Establishes the California New Markets Tax Credit (C-NMTC) Program,
administered through the Governor's Office of Business and Economic
Development (GO-Biz), for the purpose of stimulating private sector
investment in lower income communities, as specified. The bill
authorizes GO-Biz to adopt guidelines for implementing the program
and provides that these guidelines are exempt from the
Administrative Procedures Act.
2)Directs the California Alternative Energy and Advanced
Transportation Authority to calculate the value of any unused
portion of the $100 million in State Sales and Use Tax Exclusion
(SUTE) program authority.
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3)Authorizes GO-Biz to award authority to designate qualified equity
investments to qualified community development entities (CDEs). In
order to finalize the designation of the qualified equity
investment, the qualified CDE obtains cash from a taxpayer in the
form of a qualified equity investment. Once the investment moneys
are raised, the CDE submits documentation to GO-Biz verifying that
the funds have been obtained. This process is technically referred
to the issuance of the qualified equity investment by the CDE.
Following the issuance, the qualified equity investment is available
to be deployed in qualified low-income communities in qualified
low-income community investments.
4)Authorizes GO-Biz, beginning in 2016 and concluding in 2020, to
award authority to designate qualified equity investments up to an
amount that the resulting tax credits do not exceed $40 million or
the unused SUTE authority, whichever is less. The aggregate amount
of qualified equity investments that may be awarded over the
five-years of the C-NMTC Program cannot exceed the tax credit value
of $200 million. The value of any undesignated qualified equity
investments and recaptured credits may be reissued without affecting
these limits, as specified.
5)Authorizes a 39% tax credit earned over the mandatory seven years
that the taxpayer's investment remains under the control of the CDE.
The credit may be applied against the taxpayer's personal,
corporate, or gross premium insurance tax liability. No credits may
be applied in the first two tax years of the investment. In tax
year three a 7% credit may be applied and in years four through
seven an 8% credit may be applied. [This differs from the F-NMTC,
as the bill allows for insurance companies to earn credits for
qualified investments made in qualified CDEs and provides for a
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different credit application schedule. The federal credit allows
taxpayers to apply the credit in the first year, as follows: 5% in
the first three years and 6% in the final four years.]
6)Requires that each qualified low-income community investment have a
positive revenue impact on the state over a 10-year period relative
to the aggregate tax credit utilization over the same 10-year
period. On a case-by-case basis, GO-Biz is authorized to waive
this requirement. The bill also requires GO-Biz to approve one or
more nationally recognized revenue impact assessment models for this
purpose.
7)Requires Go-Biz to begin accepting applications on or before May 1,
2016, to the extent tax incentive authority is available. In the
first year of the program all allocations shall be awarded in the
order that they are received, with all applications received on the
same day being considered as having been received simultaneously. If
the amount requested exceeds the available authority to designate
qualified equity investments, GO-Biz is directed to make awards on a
pro-rata basis, as specified.
In the second to fifth years of the C-NMTC Program, to the extent
tax incentive authority is available, at least 60% of the allocation
is to be awarded in the order that the applications are received and
up to 40% of the allocation may be awarded on a competitive basis.
8)Requires GO-Biz to develop an allocation process that, at a minimum,
includes or addresses the following:
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a) To the extent reasonable and consistent in carrying out the
purposes of the C-NMTC, GO-Biz is required to consider timing the
state allocation rounds to correspond with the F-NMTC Program;
b) Within 20 calendar days of submitting an application for an
award to designate a qualified equity investment, GO-Biz is to
certify the application's completeness or to identify what
additional information is necessary. The applicant is allowed
five days to furnish the missing information;
c) Within 20 calendar days of the application being certified as
complete, GO-Biz will approve or deny the application for an
award to designate the qualified equity investment allocation;
d) Within 60 calendar days of GO-Biz sending notice of an award
to designate a qualified equity investment, the qualified CDE is
required to raise the cash and issue the qualified equity
investment, as specified;
e) At the close of the 60 calendar days, any amount less than the
total amount of the designated qualified equity investment
reverts to GO-Biz for reallocation, as specified;
f) A qualified CDE may transfer all or a portion of its certified
qualified equity investment authority to its controlling entity
or any subsidiary qualified community development entity of the
controlling entity, as specified. The transferee shall be subject
to the same rules, requirements, and limitations applicable to
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the transferor;
g) A qualified community development entity that issues qualified
equity investments must notify GO-Biz of the names of taxpayers
that are eligible to utilize tax credits pursuant to this section
and any transfer of a qualified equity investment;
h) The competitive application process is required to result in
an equitable distribution of projects within qualified low-income
communities so that low-income community populations across the
state are engaged and have an opportunity to benefit from the
program;
i) The application for authority to designate qualified equity
investments is prohibited from requiring identification of the
specific qualified active community development business in which
invests will be made;
j) Applicants will have the demonstrate they can meet
organizational capacity standards including business strategy,
targeted community outcomes, capitalization strategy, and
management capacity; [These standards are consistent with the
F-NMTC allocation process]
9)Requires that priority in the competitive allocation process be
given to applications that can demonstrate that the resulting
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investments will be in:
a) Historically underserved communities and result in the
greatest benefit to the hardest to serve and undercapitalized
lower income populations; or
b) Newly established businesses, or in activities that support
neighborhood revitalization strategies driven by local grassroots
stakeholders in multiple low-income communities across one or
more regions or the state for the purpose of scaling economic
development activities that compliment regional industry clusters
that result in the greatest benefit to the largest number of
lower income individuals.
10)Requires a qualified CDE that issues qualified equity investments
to report to GO-Biz within the first five business days after the
first anniversary of the initial credit allowance date. The report
shall include documentation that at least 85% of the purchase price
in qualified low-income community investments has been made in
qualified active low-income community businesses. Specific
documentation will be determined by GO-Biz, but among other things,
the bill requires the documentation to include bank statements,
evidence that 15% of the investments were deployed in partnership or
in consultation with a California CDFI or nonprofit, as specified,
and that the investment was determined to have a positive revenue
impact on the state, as specified.
11)Requires annual reporting in the second through seventh years
following the issuance of the qualified equity investment on the
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following:
a) The social, environmental, and economic impact the qualified
equity investment on qualified low-income communities during the
report period and cumulatively;
b) The amount of money invested in qualified active low-income
community businesses;
c) The number of employment positions created and retained and
the average annual salary of such positions;
d) The number of operating businesses assisted by industry and
number of employees;
e) Number of owner-occupied real estate projects;
f) Geographic location of the assisted businesses; and
g) Summary of the outcomes of each of the revenue impact
assessments undertaken during the report period.
12)Defines a qualified community development entity as being certified
and remaining in good standing with the U.S. Treasury's Community
Development Financial Institution Fund (CDFI Fund), which includes
all of the following:
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a) Being a domestic corporation or partnership that has as its
primary mission of serving or providing capital for low-income
communities or low-income persons;
b) Maintaining accountability to residents of low-income
communities, as specified; and
c) Has entered into an allocation agreement with the CDFI Fund on
or after January 1, 2012 that includes California within its
service area.
Consistent with federal law, this bill also recognizes community
development financial institutions (CDFIs) and specialized small
business investment companies (SBICs) as meeting the requirements of
a qualified CDE, if they have also entered into an allocation
agreement with the CDFI Fund on or after January 1, 2012 that
includes California within its service area.
13)Requires at least 15% of qualified equity investments be invested
in partnership or in consultation with a CDFI, as defined, or a
nonprofit certified by GO-Biz. Failing to meet this requirement
results in 100% recapture of the credits.
14)Defines a qualified low-income community investment to mean the
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same as the F-NMTC:
a) Any capital or equity investment in, or loan to a qualified
low-income business, as defined;
b) Any capital or equity investment in, or a loan to, a real
estate project in a low-income community;
c) The purchase of a loan from another CDE that meets the other
requirements for a low-income community investment;
d) Financial counseling and other services in support of business
activities to businesses and residents of a low-income community;
or
e) Any equity investment in, or a loan to, a CDE.
15)Defines an equity investment as any stock, other than nonqualified
preferred stock, in a corporation or any capital interest in any
partnership.
16)Defines a qualified active low-income community business as meeting
the requirements of federal law with several modifications. The
qualified low-income community business shall:
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a) Have less than 250 employees. [There are no size limitations
in F-NMTC]
b) Derive less than 15% of its annual revenue from rental or sale
of real estate, as specified. [There are no similar limitations
in F-NMTC]
c) Be authorized to provide services outside the low-income
community, as specified. [The F-NMTC limits qualifying firms to
only those that substantially perform services within a
low-income community]
d) Be physically located in a census tract that has a poverty
rate above 30%, a median income less than 60% of California
median income, or an unemployment rate 1.5 times the national
average. [This is the federal definition for severely distressed
and is more stringent than the general eligibility of the F-NMTC,
which is 20% poverty and 80% median income]
17)Excludes financial assistance through the C-NMTC to a project that
has received funding through the Low-Income Housing Tax Credit.
18)Excludes any business that operates or derives revenues from the
operation of a charter school, country club, or golf course from
C-NMTC funding. The bill also excludes gaming establishments,
massage parlors, liquor stores, and sexually oriented business, as
defined, from qualifying as an active low-income community business.
[There are no similar exclusions in the F-NMTC. There are,
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however, other state tax credits which have similar limitations
including the California Competes Tax Credit.]
19)Prohibits a taxpayer from taking another state tax credit for the
same investment.
20)Requires GO-Biz to work with Insurance Commissioner and the
Franchise Tax Board on establishing a process for recapturing the
credits. Enforcement of the recapture provisions are subject to a
six-month cure period. In addition to the recapture provisions in
federal law, the measure requires 100% recapture of the value of the
credit under the following conditions:
a) Less than 15% of the issued qualified equity investment is
invested in a qualified active low-income community business in
consultation or in partnership with a CDFI, as defined, or a
nonprofit certified by GO-Biz, as defined; and
b) The qualified CDE makes an investment without performing a
revenue impact assessment, as specified.
21)Provides that recaptured credits revert to GO-Biz for reallocation.
The reallocation of these credits does not count toward the annual
or cumulative allocation limit. Reallocation of recaptured credit
is first awarded to applications that received a pro-rate share of
their requested designation amount due to limitations on award
authority. Thereafter, the reallocation process is defined by
GO-Biz.
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22)Authorizes GO-Biz to set fees to cover the costs for administering
the program. All fees are to be deposited in the California New
Markets Tax Credit Fund, which is established by this bill.
23)Specifies that GO-Biz shall only make a qualified equity investment
award to a CDE in a calendar year in which the Legislature
appropriates funds in the California New Markets Tax Credit Fund to
pay for the cost of administering the program.
24)Authorizes a six-year carryforward of any unused tax credits.
25)) Authorize the Insurance Commissioner and the Franchise Tax Board
to prescribe any rules or regulations that may be necessary or
appropriate to implement the C-NMTC Program. The bill provides the
Insurance Commissioner and the Franchise Tax Board with access to
any documentation held by GO-Biz relative to the application and
reporting of the qualified CDEs.
26)Contains a sunset of December 1, 2028.
27)Contains a severability clause.
28)Takes immediate effect as a tax levy.
EXISTING LAW establishes the CDFI Tax Credit, operated through the
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California Investment Opportunity Network Program, which authorizes a
taxpayer to claim a state credit equal to 20% of qualified investments
in community development financial institutions. The credit may be
used against the taxpayers' personal income tax, corporation tax, and
insurance premiums tax for non-interest bearing investments of at
least $50,000, which are held for a minimum of 60 months. Total
qualified investment for all tax payers are capped at $50 million per
year ($10 million in credits).
EXISTING FEDERAL LAW authorizes a taxpayer to claim a federal tax
credit for qualified investments made to qualified CDEs, as specified.
The value of the federal NMTC is 39% of the qualified equity
investment. The credit is applied by the taxpayer over a seven-year
period.
FISCAL EFFECT: Unknown
POLICY ISSUE FRAME:
Although California demonstrates policy leadership regarding the
future of its economy in areas that emphasize our state's role as a
technology giant, a leader in environmental sustainability, a
significant participant in global supply chains and as a driver for
middle-skill workforce development, California remains short on one
crucial piece. Equity remains unaddressed. Addressing inequity rooted
in race and geography requires public policy solutions that bring
market opportunity to the level of the neighborhood and integrate
low-income neighborhoods with their regional economies. Markets must
be engaged on matters of economic and place-based inequity if the
state wishes to achieve a truly prosperous future. These issues will
hold back that future if they remain ignored or inadequately
addressed.
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This measure proposes a program for delivering private capital to very
low-income neighborhoods in a manner that incentivizes investors and
empowers these communities in an innovative way.
The Comment section of this analysis includes a discussion of how the
NMTC may address the state's increasing income disparities, challenges
businesses face in accessing capital, background on the F-NMTC
Program, reports and assessments of the federal program, and examples
of NMTC programs in other states. Comment 7 includes a discussion of
the opposition's concerns relative to the F-NMTC Program and other
state credits.
COMMENTS:
1)Economic Justice: Research shows that the inequality between the
residents in low-income communities and those that reside in
California's most affluent communities has dramatically increased in
the past several decades. For example, the average
inflation-adjusted income of the top 1% of California's taxpayers
increased by 50.2% between 1987 and 2009 - from $778,000 to $1.2
million. In contrast, the average income of taxpayers in each of the
bottom four-fifths of the income distribution lost purchasing power.
This economic disparity has significant social and economic
ramifications for everyone in the state and directly challenges the
state's global competitiveness and long-term economic success.
Programs like the NMTC program proposed in this measure are based on
the economic principle that targeting significant incentives to
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lower income communities allows these communities to more
effectively compete for new businesses and retain existing
businesses, which results in increased tax revenues, less reliance
on social services, and lower public safety costs. Residents and
businesses also directly benefit from these more sustainable
economic conditions through improved neighborhoods, business
expansion, and job creation.
2)Challenges to Accessing Capital: Access to debt and equity financing
is critical for promoting the efficient operation and expansion of
small businesses. Small businesses rely on adequate short-term
(working capital) and long-term debt as well as equity financing to
purchase new equipment, replenish inventories, fund ongoing
operations, and market their services long before those activities
generate revenue. While financial institutions routinely extend
working capital and long-term debt products to established, larger
businesses, smaller businesses are often bypassed because they lack
the collateral and threshold operating and revenue generating
history of larger businesses.
The same dynamic occurs when small businesses attempt to access
equity financing, with investment funds often bypassing smaller
businesses because they lack the operating history and revenue
generating track record of larger businesses. The situation often
results in a "chicken or the egg" scenario whereby businesses are
told they need to grow in order to access financing, while at the
same time being denied access to the financing they need to grow.
AB 185 would support the development of new capital resources for
businesses in low-income neighborhoods.
3)Federal New Market Tax Credit Program: Congress enacted the NMTC
with the Community Renewal Tax Relief Act of 2000 for the purpose of
stimulating equity investments in low-income communities. Under the
program, CDE's and CDFIs apply to the U.S. Treasury's CDFI Fund, for
an allocation of federal tax credits, which the CDE can then offer
to individual and corporate investors in exchange for making an
equity investment in the CDE or its subsidiary.
In this way, the CDE serves as a community and financial
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intermediary between sources of private capital and low-income
communities. The value of the federal credit to the investor is 39%
of the original investment amount, claimed over a period of seven
years (5% for each of the first three years, and 6% for each of the
remaining four years). The investment in the CDE cannot be redeemed
before the end of the seven-year period.
The CDFI Fund received $19.9 billion in applications for the $5
billion available in 2014 credit allocation round. Over 260
applications were submitted from CDEs, CDFIs, and SBICs,
headquartered in 44 states, the District of Columbia, Guam, and
Puerto Rico. Since its inception, The CDFI Fund has made 836 awards
allocating a total of $40 billion in NMTC authority to CDEs through
its competitive application process. This $40 billion includes $3
billion in Recovery Act Awards and $1 billion of special allocation
authority to be used for the recovery and redevelopment of the Gulf
Opportunity Zone.
The Obama Administration is proposing to permanently reauthorize the
F-NMTC program in 2016 with a $5 billion allocation authority per
year. Several Members of Congress have introduced legislation to
also permanently extend the NMTC Program, which expired December 31,
2014. In its analysis of AB 185, the Franchise Tax Board states
that an extension of the F-NMTC Program is generally expected.
Supporters of the bill have expressed concern that California has
not received its fair share of federal NMTC allocations. States that
regularly receive larger shares have parallel state tax credit
programs or other resources that encourage community development
within lower income communities. In 2012, 29 California CDEs
received federal NMTC allocations totaling $17 million. Individual
allocations range from $1.4 million for the Northern California
Community Loan Fund to $100,000 to the Women's Economic Ventures of
Santa Barbara.
Since the program's inception, California-based CDEs, CDFIs, and
SBICs have received 85 F-NMTC awards for a total of $3.5 billion.
While that may seem like a considerable amount of money, it
represents less than 10% of funds. As California represents over
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12% of the population, it has 16% of individuals living under the
federal poverty line, and 24.4% of individuals living below the
supplemental poverty rate that includes, among other things, the
cost of shelter. In 2014, California-based CDFIs or CDEs received 8
awards for a total of $293 million (5.8%).
Compounding the impact of less than equitable F-NMTC allocations, is
that not every California-based CDE, CDFI, or SBIC uses the money
raised through the federal credit in the state where they are
headquartered. In fact, there are over 100 CDEs that have national
service areas. New Markets Tax Credits are designed to attract
private capital to very low-income neighborhoods including money
from national investment pools. The federal General Accounting
Office reports that the presence of the federal credit attracts
capital for projects that may otherwise be overlooked.
In its August 2014 report, the U.S. Treasury reports that there is
over $4 billion in capital raised through federal New Markets Tax
Credits that has not been deployed. Of those CDEs with nationwide
service areas, the report shows that over $2.4 billion of these
funds are with community development entities (CDEs) with national
service areas. These national CDEs prefer making investments in low
income neighborhoods located in states with their own NMTC Program.
4)Other State New Market Tax Credits: Since the inception of federal
NMTC, 14 other states have enacted matching programs to help
leverage more federal dollars in NMTC investments including: Ohio,
Florida, Missouri, Louisiana, Mississippi, Kentucky, Illinois,
Oklahoma, and Connecticut. According to information provided by the
author's office, several of these states have experienced a return
on investment of 13 to 1. In addition, the author states:
a) In Missouri, in the first two years the state New Markets Tax
Credit paid for itself, bringing in more in additional investment
dollars than was allocated in state funds for the entire
seven-year period.
b) In Illinois, federal allocations of NMTC funds more than
doubled after the Legislature implemented a matching state
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program in 2008. In the first year of implementation, allocations
jumped to $875 million. Prior to the 2008 law, federal
allocations never exceeded $400 million.
c) Most recently, the Georgia General Assembly passed a New
Markets Tax Credit bill in March 2015, which is currently in the
process of being reconciled before being sent to Georgia Governor
for signature. The latest version of the bill calls for a 55%
state credit with a $4 million per-development cap and a $100
million statewide cap. It does not state a sunset date. Similar
to AB 185, investments in qualified active low-income community
businesses are limited to businesses having fewer than 250
employees and the businesses cannot make more than 15% of their
income from real estate, whether in rents or sales.
5)NMTC Research Findings: Over the years the F-NMTC Program has been
reviewed and evaluated by a number of sources including the
Government Accountability Office (GAO), Pacific Community Ventures;
and the Urban Institute.
In 2010, the GAO released one of several statutorily mandated
reports on the New Market Tax Credit program that found:
a) Since 2003, NMTC investments totaling $26 billion have been
made in all 50 states, the District of Columbia and Puerto Rico.
b) NMTCs are often used as "gap financing," accounting for a
portion of total project costs.
c) NMTC investments in low-income community businesses generally
use leveraged structures, where equity is left in the businesses,
or subsidized loan structures, where below market interest rate
loans are offered.
According to a January 2011 case study prepared by Pacific Community
Ventures on the NMTC program, Impact Investing: A Framework for
Policy Design and Analysis:
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"Through 2009, CDEs made more than $16 billion in NMTC investments
in low income communities. Approximately 95% of NMTC funds are
invested in designated areas of distress. For every dollar of
forgone tax revenue, NMTC leverages $12-$14 of private investment."
In 2013, the Urban Institute released a report on the first four
years of the program (2002-2006). This was the first independent
evaluation of the F-NMTC program requested by the CDFI Fund:
a) The vast majority of qualified active low-income community
businesses (93%) either could not otherwise have obtained
financing or, compared with other available financing, received
better rates and terms in conjunction with F-NMTCs.
b) 77% of projects increased payroll, property, sales, corporate,
or other taxes to the benefit of the local community
c) 60% of projects saw an increase in their employment levels of
more than 33% compared with pre-NMTC levels,
1)July 2014 Report from the Government Accountability Office: In the
summer of 2014, the GAO issued a special report at the request of
U.S. Senator Tom Coburn (R-OK) regarding the F-NMTC Program. The
report was critical of the complexity of the projects and the lack
of consistent reporting. More specifically, the report made the
following findings:
a) Investments have become more complex and less transparent over
time. One reason is the practice of combining New Market Tax
Credits (NMTCs) with other government assistance. While the GAO
agrees that this can help finance projects that would not
otherwise be economically viable, it raises questions about
whether some amount of these additional subsidies are
unnecessary.
b) The increasingly complex financial structures may also be
masking investors' actual rates of return. The GAO is concerned
that the return on investment (ROI) may be above market and cite
a 24% ROI reported by one investor. The GAO reports that the IRS
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and U.S. Treasury have the authority, but have not updated
guidance to reflect the inclusion of other government resources.
c) GAO also recommends that the CDFI Fund collect additional data
on fees and other charges collected by the CDEs. Finally, the
GAO report expresses concern over the lack and quality of data on
equity remaining with the business in low-income areas and
failure rates of NMTC projects.
In conclusion, the GAO recommended the U.S. Treasury issue further
guidance to ensure:
a) Appropriate means for combining the F-NMTC with other
government programs;
b) Adequate controls to limit the risks of unnecessary
duplication and above-market rates of return;
c) That more complete and accurate data are collected on fees and
costs, the equity remaining in the business after 7 years, and
loan performance; and
d) That the CDFI Fund issues instructions to clarify the
reporting of loan performance and making the reporting of that
data mandatory.
The U.S. Treasury agreed with GAO's recommendations to improve data
collection on loan performance and equity remaining with the
low-income business. The GAO also established a working group in
response to the report to consider the other recommendations.
1)Opposition Position: AB 185 is opposed by the California Tax Reform
Association based, in part, on the GAO report and Senator Coburn's
own report which expressed the concern that the F-NMTC Program
overly rewards investors and raises questions as to the ultimate
beneficiary of the program. In two examples, the opposition letter
quotes the GAO report to say, "62% of NMTC projects received other
federal, state, or local government assistance from 2010 to 2012?and
found one investor apparently earning a 24% rate of return."
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2)Author Response to GAO Report: The GAO report focuses on NMTC
investments between 2010 and 2012. Although this would be the most
recent program data, it also represents the height of the global
recession. With global capital markets frozen, public policy
makers, including the President and the U.S. Congress, were taking
drastic actions to substitute public moneys where previously there
would have been private funds. Most notably, the federal government
passed the Stimulus Package (2009) and the Small Business Jobs Act
(2011). The GAO report is absolutely silent on the potential
economic impact of the assessment period on either the complexity of
the financial structures or on the increase in the use of other
government programs. The author also noted that AB 185 includes a
number of tighter controls on accountability, reporting, and
prohibits a taxpayer from claiming another state credit for the same
C-NMTC investment.
3)Related Legislation: Below is a list of bills from prior sessions.
a) AB 1399 (Medina and V. Manuel Pérez) State New Market Tax
Credit: This bill authorizes the creation of a New Markets Tax
Credit for qualified investments made in low income communities
beginning in the 2015 tax year. The NMTC Program will be
administered through the Governor's Office of Business and
Economic Development. The bill authorizes $40 million in tax
credits over a five-year period for a total program of $200
million in credits. Total private investment raised is estimated
at $512 million. Tax credit authority comes from the
reallocation of the unused portion of the State Sales and Use Tax
Exclusion Program. Status: Vetoed by the Governor. In his veto
message the Governor states, "This bill creates a new market tax
credit that will cost - over time - $200 million. I certainly
endorse programs that result in private investments to help low
income areas, but a bill to spend this much should be considered
with other priorities during the annual budget."
b) AB 305 (V. Manuel Pérez) State New Market Tax Credit: This
bill would have authorized the creation of a New Markets Tax
Credit for qualified investments made in low income communities
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beginning in the 2013 tax year. The NMTC Program would have been
administered through the California Tax Credit Allocation
Committee. The bill authorized $30 million in tax credits over a
seven-year period for a total program of $200 million. Tax
credit authority came through the elimination of the
underutilized Small Business New Hire Credit. Status: Held in
the Assembly Committee on Appropriations in 2013.
c) AB 2037 (Davis and V. Manuel Pérez) State New Market Tax
Credit: This bill would have authorized the creation of a New
Markets Tax Credit for qualified investments made in low income
communities beginning in the 2011 tax year. The NMTC Program
would have been administered through the California Tax Credit
Allocation Committee. Tax credit authority came through the
elimination of the underutilized Small Business New Hire Credit.
Status: Held in the Assembly Committee on Appropriations in
2011.
d) AB 643 (Davis and V. Manuel Pérez) State New Market Tax
Credit: This bill would have created a New Markets Tax Credit
for qualified investments made in low income communities
beginning in the 2012 tax year. The State Treasurer's Office
would administer the new credit program and allocate credits of
up to $50 million per year for a total amount equal to $300
million over six years. Status: Held in the Assembly Committee
on Appropriations in 2012.
e) SB 1316 (Romero) State New Market Tax Credit: This bill would
have authorized the creation of a New Markets Tax Credit for
qualified investments made in low income communities beginning in
the 2011 calendar year. The State Treasurer's Office would
administer the new credit program and allocate credits in an
amount equal to the estimated revenue gains resulting from the
temporary elimination of specified like-kind property exchanges.
Status: Died on the Senate inactive file in 2010.
1)Double Referral: The Assembly Rules Committee has referred this
measure to the Assembly Committee on Jobs, Economic Development and
the Economy and to the Assembly Committee on Revenue and Taxation
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(R&T). Should this measure pass the committee, it will be referred
to R&T for further policy consideration.
REGISTERED SUPPORT / OPPOSITION:
Support
Advantage Capital Partners
Bay Area Council
Business Council of San Joaquin County
California Association for Local Economic Development
California Association for Micro Enterprise Opportunity
California Bankers Association
California Communities United Institute
California Urban Partnership
Capital Impact Partners
East Bay Leadership Council
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Enhanced Capital
Fresno Community Development Financial Institution
Fresno Economic Opportunities Commission
Genesis LA Economic Growth Corporation
Greater Fresno Area Chamber of Commerce
Indian Wells, City of
Inland Empire Economic Partnership
Joint Venture
League of California Cities
Long Beach Area Chamber of Commerce
Los Angeles Area Chamber of Commerce
Los Angeles County Economic Development Corporation
North Bay Leadership Council
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Northern California Community Loan Fund
Oakland Metropolitan Chamber of Commerce
Opportunity Fund
Orange County Business Council
Sacramento Metro Chamber of Commerce
San Diego Economic Development Corporation
San Diego Regional Chamber of Commerce
San Francisco Chamber of Commerce
San Gabriel Valley Economic Partnership
San Jose Silicon Valley Chamber of Commerce
Silicon Valley Leadership Group
Small Business California
TELACU
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Opposition
California Tax Reform Association
Analysis Prepared by:Toni Symonds / J., E.D., & E. / (916) 319-2090