Amended in Assembly May 21, 2015

Amended in Assembly May 12, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 428


Introduced by Assembly Member Nazarian

February 19, 2015


An act to add and repeal Sections 17053.50 and 23650 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 428, as amended, Nazarian. Income taxes credit: seismic retrofits.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.

This bill would allow, for taxable years beginning on or after January 1, 2016, and before January 1, 2021, a tax credit under both laws in an amount equal to 30% of the qualified costs paid or incurred by a qualified taxpayer for any seismic retrofit construction on a qualified building, as defined. begin insertThis bill, prior to seismic retrofit construction, would require a taxpayer to obtain certification from the appropriate jurisdiction with local building code enforcement authority that the building has been certified as an at-risk property, as defined. end insertThis bill would begin insertalso end insertrequire a taxpayer to obtain a certification from the appropriate jurisdiction with authority for building code enforcement of the area in which the building is located that seismic retrofit construction, as defined, has been completed, and to providebegin delete that certificationend deletebegin insert those certificationsend insert to the Franchise Tax Board upon the request of the Franchise Tax Board.

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:

P2    1

SECTION 1.  

Section 17053.50 is added to the Revenue and
2Taxation Code
, to read:

3

17053.50.  

(a) For taxable years beginning on or after January
41, 2016, and before January 1, 2021, there shall be allowed to a
5qualified taxpayer a credit against the “net tax,” as defined in
6Section 17039, in an amount equal to 30 percent of the qualified
7taxpayer’s qualified costs.

8(b) For purposes of this section:

9(1) “At-risk property” means a building that is deemed
10hazardous and in danger of collapse in the event of a catastrophic
11earthquake, including, but not limited to, soft story buildings,
12nonductile concrete residential buildings, and pre-1994 concrete
13residential buildings.

14(2)  “Qualified building” means a building that has been certified
15as an at-risk propertybegin delete by the local building code enforcement for
16the area within which the building is located.end delete
begin insert pursuant to
17subparagraph (A) of paragraph (1) of subdivision (c).end insert
A qualified
18building includes a mobilehome registered by the Department of
19Housing and Community Development.

20(3)  “Qualified costs” means the costs paid or incurred by the
21qualified taxpayer for any completed seismic retrofit construction
22on a qualified building, including any engineering or architectural
23design work necessary to permit or complete the seismic retrofit
24 construction. “Qualified costs” do not include any of the following
25costs paid or incurred by the qualified taxpayer:

26(A) Maintenance, including abatement of deferred or inadequate
27maintenance, and correction of violations unrelated to the seismic
28retrofit construction.

29(B) Repair, including repair of earthquake damage.

30(C) Seismic retrofit construction required by local building
31codes as a result of addition, repair, building relocation, change
32of use, or occupancy.

P3    1(D) Other work or improvement required by local building or
2planning codes as a result of the intended seismic retrofit
3construction.

4(E) Rent reductions or other associated compensation,
5compliance actions, or other related coordination involving the
6qualified taxpayer and any other party, including a tenant, insurer,
7or lender.

8(F) Replacement of existing building components, including
9equipment, except as needed to complete the seismic retrofit
10construction.

11(G) Bracing or securing nonpermanent building contents.

12(H) The offset of costs, reimbursements, or other costs
13transferred from the qualified taxpayers to others.

14(I) Any amount paid by the qualified taxpayer to the jurisdiction
15with authority for building code enforcement for issuing the
16begin delete certificationend deletebegin insert certificationsend insert required pursuant tobegin delete subparagraph (A)
17of paragraph (1) ofend delete
subdivision (c).

18(4)  “Qualified taxpayer” means a taxpayer that is an owner of
19a qualified building located in this state. A taxpayer that owns a
20proportional share of a qualified building in this state may claim
21the credit allowed by this section based on the taxpayer’s share of
22the qualified costs.

23(5)begin insertend insertbegin insert(A)end insert “Seismic retrofit construction” means alteration of a
24qualified building or its components to substantially mitigate
25seismic damage. Seismic retrofit construction shall be for work
26performed voluntarily, and for which qualified costs were paid or
27incurred, on or after January 1, 2016. Seismic retrofit construction
28shall include, but not be limited to, the following:

begin delete

29(A)

end delete

30begin insert(i)end insert Anchoring the structure to the foundation.

begin delete

31(B)

end delete

32begin insert(ii)end insert Bracing cripple walls.

begin delete

33(C)

end delete

34begin insert(iii)end insert Bracing hot water heaters.

begin delete

35(D)

end delete

36begin insert(iv)end insert Installing automatic gas shutoff valves.

begin delete

37(E)

end delete

38begin insert(v)end insert Repairing or reinforcing the foundation to improve the
39integrity of the foundation against seismic damage.

begin delete

40(F)

end delete

P4    1begin insert(vi)end insert Anchoring fuel storage.

begin delete

2(G)

end delete

3begin insert(vii)end insert Installing earthquake resistant bracing system for
4mobilehomes that are registered with thebegin delete Californiaend delete Department
5of Housing and Community Development.

begin insert

6(B) Seismic retrofit construction does not include construction
7performed to bring a building into compliance with local building
8codes.

end insert

9(c) To be eligible for the credit under this section, the following
10begin delete mustend deletebegin insert shallend insert apply:

11(1) The qualified taxpayer shall dobegin delete bothend deletebegin insert all end insert of the following:

begin insert

12(A) Prior to seismic retrofit construction, obtain certification
13from the appropriate jurisdiction with local building code
14enforcement authority that the building is an at-risk property.
15Upon the request of the Franchise Tax Board, the qualified
16taxpayer shall provide a copy of the certification to the Franchise
17Tax Board.

end insert
begin delete

18(A)

end delete

19begin insert(B)end insert Obtain certification from the appropriate jurisdiction with
20authority for building code enforcement, upon a review of the
21building, that the completed construction satisfies the definition
22of seismic retrofit construction. The certification shall identify
23what part of the completed construction, if any, is not seismic
24retrofit construction. Upon the request of the Franchise Tax Board,
25the qualified taxpayer shall provide a copy of the certification to
26the Franchise Tax Board.

begin delete

27(B)

end delete

28begin insert(C)end insert Retain for his or her records a copy of thebegin delete certificationend delete
29begin insert certificationsend insert specified inbegin delete subparagraph (A).end deletebegin insert subparagraphs (A)
30and (B).end insert

31(2) The jurisdiction with authority for building code enforcement
32in which a qualified building is located has entered into an
33agreement with the state to provide certifications pursuant to this
34section and to not seek reimbursement pursuant to Section 6 of
35Article XIII B of the California Constitution for any costs incurred
36in providing those certifications.

37(d) (1) The credit amount allowed in subdivision (a) shall be
38claimed by a qualified taxpayer at the rate of one-fifth of the credit
39amount for the taxable year in which the credit is allowed, and
P5    1one-fifth of the credit amount for each of the subsequent four
2taxable years.

3(2) In the case where the credit allowed under this section
4exceeds the “net tax,” as defined in Section 17039, for a taxable
5year, the excess credit may be carried over to reduce the “net tax”
6in the following taxable year, and succeeding four taxable years,
7if necessary, until the credit has been exhausted.

8(e) For purposes of computing the credit provided by this
9section, the qualified costs shall be reduced by any grant provided
10by a public entity for the seismic retrofit construction.

11(f) This credit shall be in lieu of any other credit or deduction
12that the qualified taxpayer may otherwise claim pursuant to this
13part with respect to qualified costs.

14(g) Section 41 shall not apply to the credit allowed pursuant to
15this section.

16(h) This section shall remain in effect only until December 1,
172021, and as of that date is repealed.

18

SEC. 2.  

Section 23650 is added to the Revenue and Taxation
19Code
, to read:

20

23650.  

(a) For taxable years beginning on or after January 1,
212016, and before January 1, 2021, there shall be allowed to a
22qualified taxpayer a credit against the “tax,” as defined in Section
2323036, in an amount equal to 30 percent of the qualified taxpayer’s
24qualified costs.

25(b) For purposes of this section:

26(1) “At-risk property” means a building that is deemed
27hazardous and in danger of collapse in the event of a catastrophic
28earthquake, including, but not limited to, soft story buildings,
29nonductile concrete residential buildings, and pre-1994 concrete
30residential buildings.

31(2) “Qualified building” means a building that has been certified
32as an at-risk propertybegin delete by the local building code enforcement for
33the area within which the building is located.end delete
begin insert pursuant to
34subparagraph (A) of paragraph (1) of subdivision (c).end insert
A qualified
35building includes a mobilehome registered by the Department of
36Housing and Community Development.

37(3)  “Qualified costs” means the costs paid or incurred by the
38qualified taxpayer for any completed seismic retrofit construction
39on a qualified building, including any engineering or architectural
40design work necessary to permit or complete the seismic retrofit
P6    1 construction. “Qualified costs” do not include any of the following
2costs paid or incurred by the qualified taxpayer:

3(A) Maintenance, including abatement of deferred or inadequate
4maintenance, and correction of violations unrelated to the seismic
5retrofit construction.

6(B) Repair, including repair of earthquake damage.

7(C) Seismic retrofit construction required by local building
8codes as a result of addition, repair, building relocation, change
9of use, or occupancy.

10(D) Other work or improvement required by local building or
11planning codes as a result of the intended seismic retrofit
12construction.

13(E) Rent reductions or other associated compensation,
14compliance actions, or other related coordination involving the
15qualified taxpayer and any other party, including a tenant, insurer,
16or lender.

17(F) Replacement of existing building components, including
18equipment, except as needed to complete the seismic retrofit
19construction.

20(G) Bracing or securing nonpermanent building contents.

21(H) The offset of costs, reimbursements, or other costs
22transferred from the qualified taxpayers to others.

23(I) Any amount paid by the qualified taxpayer to the jurisdiction
24with authority for building code enforcement for issuing the
25begin delete certificationend deletebegin insert certificationsend insert required pursuant tobegin delete subparagraph (A)
26of paragraph (1) ofend delete
subdivision (c).

27(4) “Qualified taxpayer” means a taxpayer that is an owner of
28a qualified building located in this state. A taxpayer that owns a
29proportional share of a qualified building in this state may claim
30the credit allowed by this section based on the taxpayer’s share of
31the qualified costs.

32(5)begin insertend insertbegin insert(A)end insert “Seismic retrofit construction” means alteration of a
33qualified building or its components to substantially mitigate
34seismic damage. Seismic retrofit construction shall be for work
35performed voluntarily, and for which qualified costs were paid or
36incurred, on or after January 1, 2016. Seismic retrofit construction
37shall include, but not be limited to, the following:

begin delete

38(A)

end delete

39begin insert(i)end insert Anchoring the structure to the foundation.

begin delete

40(B)

end delete

P7    1begin insert(ii)end insert Bracing cripple walls.

begin delete

2(C)

end delete

3begin insert(iii)end insert Bracing hot water heaters.

begin delete

4(D)

end delete

5begin insert(iv)end insert Installing automatic gas shutoff valves.

begin delete

6(E)

end delete

7begin insert(v)end insert Repairing or reinforcing the foundation to improve the
8 integrity of the foundation against seismic damage.

begin delete

9(F)

end delete

10begin insert(vi)end insert Anchoring fuel storage.

begin delete

11(G)

end delete

12begin insert(vii)end insert Installing earthquake resistant bracing system for
13mobilehomes that are registered with the Department of Housing
14and Community Development.

begin insert

15(B) Seismic retrofit construction does not include construction
16performed to bring a building into compliance with local building
17codes.

end insert

18(c) To be eligible for the credit under this section, the following
19begin delete mustend deletebegin insert shallend insert apply:

20(1) The qualified taxpayer shall dobegin delete bothend deletebegin insert allend insert of the following:

begin insert

21(A) Prior to seismic retrofit construction, obtain certification
22from the appropriate jurisdiction with local building code
23enforcement authority that the building is an at-risk property.
24Upon the request of the Franchise Tax Board, the qualified
25taxpayer shall provide a copy of the certification to the Franchise
26Tax Board.

end insert
begin delete

27(A)

end delete

28begin insert(B)end insert Obtain certification from the appropriate jurisdiction with
29authority for building code enforcement, upon a review of the
30building, that the completed construction satisfies the definition
31of seismic retrofit construction. The certification shall identify
32what part of the completed construction, if any, is not seismic
33retrofit construction. Upon the request of the Franchise Tax Board,
34the qualified taxpayer shall provide a copy of the certification to
35the Franchise Tax Board.

begin delete

36(B)

end delete

37begin insert(C)end insert Retain for his or her records a copy of thebegin delete certificationend delete
38begin insert certificationsend insert specified inbegin delete subparagraph (A).end deletebegin insert subparagraphs (A)
39and (B).end insert

P8    1(2) The jurisdiction with authority for building code enforcement
2in which a qualified building is located has entered into an
3agreement with the state to provide certifications pursuant to this
4section and to not seek reimbursement pursuant to Section 6 of
5Article XIII B of the California Constitution for any costs incurred
6in providing those certifications.

7(d) (1) The credit amount allowed in subdivision (a) shall be
8claimed by a qualified taxpayer at the rate of one-fifth of the credit
9amount for the taxable year in which the credit is allowed, and
10one-fifth of the credit amount for each of the subsequent four
11taxable years.

12(2) In the case where the credit allowed under this section
13exceeds the “tax,” as defined in Section 23036, for a taxable year,
14the excess credit may be carried over to reduce the “tax” in the
15following taxable year, and succeeding four taxable years, if
16necessary, until the credit has been exhausted.

17(e) For purposes of computing the credit provided by this
18section, the qualified costs shall be reduced by any grant provided
19by a public entity for the seismic retrofit construction.

20(f) This credit shall be in lieu of any other credit or deduction
21that the qualified taxpayer may otherwise claim pursuant to this
22part with respect to qualified costs.

23(g) Section 41 shall not apply to the credit allowed pursuant to
24this section.

25(h) This section shall remain in effect only until December 1,
262021, and as of that date is repealed.

27

SEC. 3.  

This act provides for a tax levy within the meaning of
28Article IV of the Constitution and shall go into immediate effect.



O

    97