Amended in Assembly March 29, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2647

Introduced by Assembly Members Eduardo Garcia and Medina

(Principal coauthors: Assembly Members begin delete Brown and Chu) end delete begin insert Brown, Chu, and Dodd) end insert

February 19, 2016

An act to begin delete add Section 26011.9 to the Public Resources Code, and to end delete add Section 18410.3 to, and to add and repeal Sections 12283, 17053.9, and 23622.9 of, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 2647, as amended, Eduardo Garcia. Income taxation: insurance taxation: credits: California New Markets Tax Credit.

Existing federal law allows a New Markets Tax Credit to a taxpayer holding a qualified equity investment in an amount equal to the applicable percentage of the amount paid to the qualified community development entity for investment in low-income communities.

The state Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. Existing state constitutional law governing insurance taxation imposes an annual tax on the gross premiums of an insurer, as defined, doing business in this state at specified rates.

Existing law establishes the Governor’s Office of Business and Economic Development, also known as “ GO-Biz,” to, among other things, serve the Governor as the lead entity for economic strategy and the marketing begin delete of end delete
begin delete end delete
begin delete California end delete begin insert of California end insert on issues relating to business development, private sector investment, and economic growth.

This bill would allow a California New Markets Tax Credit under the Personal Income Tax begin delete Law and end delete begin insert Law, end insert the Corporation Tax Law, and the law governing insurance taxation, in modified conformity with begin delete a end delete begin insert the end insert federal New Markets Tax Credit, for taxable years beginning on or after January 1, 2017, and before January 1, begin delete 2029, end delete begin insert 2022, end insert in a specified amount for investments in low-income communities. The bill would limit the total annual amount of credit allowed pursuant to these provisions to begin delete an amount equal to any portion not granted under a specified sales and use tax exclusion, not to exceed end delete $40,000,000 per calendar begin delete year, and would limit the allocation of the credit to a cumulative total of no more than $200,000,000, as provided. end delete begin insert year. end insert The bill would impose specified duties on begin delete GO-Biz end delete begin insert the Responsible Tax Credit Administrator (RTCA), to be designated by the Governor, end insert with regard to the application for, and allocation of, the credit. The bill would require begin delete GO-Biz end delete begin insert the RTCA end insert to establish and impose reasonable fees upon entities that apply for the allocation of the credit, to be deposited in the California New Markets Tax Credit Fund established by the bill, and use the revenue, upon annual appropriation by the Legislature, to defray the cost of applying begin delete to, end delete begin insert to end insert and administering the credits, as specified. The bill would only authorize the allocation for these credits for those taxable years for which moneys are appropriated to begin delete GO-Biz end delete begin insert the RTCA end insert to administer these credits for those taxable years.

Existing law requires any bill authorizing a new personal or corporation income tax credit to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements, as provided.

This bill would also include that additional information required for any bill authorizing a new personal or corporation income tax credit.

The bill would provide that its provisions are severable.

This bill would take effect immediately as a tax levy.

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

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

SECTION 1.  

The Legislature finds and declares the following:

(a) While many areas of California have recovered from the
economic and community development impacts of the 2006
Financial Crisis and the 2010 global recession, Californians in a
number of communities and neighborhoods are still experiencing
their lingering effects. In some cases this has resulted in small and
medium businesses in low-income areas lacking sufficient access
to capital and technical assistance. Given that the state has many
needs and limited resources, moneys from the private sector are
necessary to fill this capital and investment gap.

(b) Initially enacted in 2000, the federal government established
the New Markets Tax Credit (NMTC) Program, which uses a
market-based approach for expanding capital and technical
assistance to businesses in lower income communities. The federal
program is jointly administered by the Community Development
Financial Institutions Fund (CDFI Fund) and the Internal Revenue
Service. The NMTC Program allocates federal tax incentives to
community development entities (CDE), which they then use to
attract private investors who contribute funds that can be used to
finance and invest in businesses and develop real estate in
low-income communities. Through the 2013-14 funding round,
the CDFI Fund had awarded approximately forty billion dollars
($40,000,000,000) in NMTC in 836 awards, including three billion
dollars ($3,000,000,000) in American Recovery and Investment
Act of 2009 awards and one billion dollars ($1,000,000,000) of
special allocation authority to be used for the recovery and
redevelopment of the Gulf Opportunity Zone.

begin insert

(c) Since 2003, the NMTC Program has created or retained an
estimated 197,585 jobs nationally. It has also supported the
construction of 32.4 million square feet of manufacturing space,
74.8 million square feet of office space, and 57.5 million square
feet of retail space. The United States Department of the Treasury
reports that a secondary benefit is that as these communities
develop, they become more attractive to investors, catalyzing a
ripple effect that spurs further investments and revitalization.

end insert begin insert

(d) For every one dollar ($1) invested by the federal government,
the NMTC Program generates over eight dollars ($8) of private
investment. The NMTC Program catalyzes investment in the most
economically challenged areas of the state. Over 75 percent of
New Markets Tax Credit investments have been made in highly
distressed areas, meaning the household income was less than 60
percent of statewide median income and the poverty rate was
higher than 30 percent.

end insert begin delete

(c)

end delete

begin insert (e) end insert  The federal NMTC totals 39 percent of the original
investment amount in the CDE and is claimed over a period of
seven years (5 percent for each of the first three begin delete years, end delete begin insert years end insert and
6 percent for each of the remaining four years). Any investment
by any taxpayer in the CDE redeemed before the end of the
seven-year period will be recaptured.

begin delete

(d)

end delete

begin insert (f) end insert  Fourteen states in the United States have adopted state
programs using the NMTC model including Alabama, Florida,
Illinois, Nevada, and Oregon. While some of the programs
substantially mirror the federal program, others vary in both the
percentage of the credit and some of the policies that form the
foundation of the credit. One of the reasons cited for establishing
state-level programs is to make a state more attractive to CDEs,
which results in increasing the amount of federal NMTCs being
utilized in a state. Further, several studies, including a January 1,
2011, case study by Pacific Community Ventures, showed that for
every dollar of forgone tax revenue, the federal NMTC leverages
begin delete $12 to $14 end delete begin insert twelve dollars ($12) to fourteen dollars ($14) end insert of private
investment.

begin delete

SEC. 2.  

Section 26011.9 is added to the Public Resources Code,
to read:

26011.9.  

The authority shall make a determination of the
amount of the one hundred million dollars ($100,000,000) in
exclusions not granted in the assigned calendar year pursuant to
Section 26011.8. An amount equal to that amount but not to exceed
forty million dollars ($40,000,000) shall be granted in the
subsequent calendar year through the California New Markets Tax
Credit Program pursuant to Sections 12283, 17053.9, and 23622.9
of the Revenue and Taxation Code. This section shall not prevent
a taxpayer granted an exclusion pursuant to Section 6010.8 of the
Revenue and Taxation Code from applying for, and receiving a
refund for, taxes paid under Part 1 (commencing with Section
6001) of Division 2 of the Revenue and Taxation Code.

end delete

begin delete SEC. 3. end delete

begin insert SEC. 2. end insert   

Section 12283 is added to the Revenue and Taxation
Code, to read:

12283.  

(a) There is hereby created the California New Markets
Tax Credit Program as provided in this section, Section 17053.9,
and Section 23622.9. The purpose of this program is to stimulate
private sector investment in lower income communities by
providing a tax incentive to community begin delete and economic end delete development
entities that can be leveraged by the entity to attract private sector
investment that in turn will be deployed by providing financing
and technical assistance to small- and begin delete medium-size end delete begin insert medium-sized end insert
businesses and the development of commercial, industrial, and
community development projects, including, but not limited to,
facilities for nonprofit service organizations, light manufacturing,
and mixed-use and transit-oriented development. begin delete GO-Biz end delete begin insert RTCA end insert
shall administer this program as provided in this section, Section
17053.9, and Section 23622.9. begin delete The Director of GO-Biz may
delegate the administration of all or portions of the program within
GO-Biz. end delete

(b) (1) For taxable years beginning on or after January 1, 2017,
and before January 1, begin delete 2029, end delete begin insert 2022, end insert and subject to subdivision (h),
there shall be allowed as a credit against the tax described in
Section 12201, in an amount determined in accordance with Section
45D of the Internal Revenue Code, relating to the new markets tax
credit, as modified in this section.

begin delete

(2) For the purposes of this section, “GO-Biz” means the
Governor’s Office of Business and Economic Development.

end delete begin insert

(2) For the purposes of this section, “RTCA” means the
Responsible Tax Credit Administrator, as designated by the
Governor.

end insert

(c) Section 45D of the Internal Revenue Code is modified as
follows:

(1) Section 45D(a)(2) of the Internal Revenue Code, relating to
applicable percentage, is modified by substituting for “(A) 5
percent with respect to the first 3 credit allowance dates, and (B)
6 percent with respect to the remainder of the credit allowance
dates” with the following:

(A) Zero percent with respect to the first two credit allowance
dates.

(B) Seven percent with respect to the third credit allowance
date.

(C) Eight percent with respect to the remainder of the credit
allowance dates.

(2) (A) Section 45D(c)(1) of the Internal Revenue Code, relating
to qualified community development entity, is modified to only
include a qualified community development entity, that is certified
by the Secretary of the Treasury, and its subsidiary qualified
community development entities that have entered into an
allocation agreement with the Community Development Financial
Institutions Fund of the United States Treasury Department, with
respect to credits authorized by Section 45D of the Internal
Revenue Code, that includes California within the service area and
is dated on or after January 1, 2012.

(B)  Section 45D(c)(2) of the Internal Revenue Code, relating
to special rules for certain organizations, is modified to only
include a specialized small business investment company or
community development financial institution that entered into an
allocation agreement with the Community Development Financial
Institutions Fund of the United States Treasury Department, with
respect to credits authorized by Section 45D of the Internal
Revenue Code, that includes California within the service area and
is dated on or after January 1, 2012.

(3) The term “qualified active low-income community business,”
as defined in Section 45D(d)(2) of the Internal Revenue Code, is
modified as follows:

(A) By substituting “any low-income community in California”
for “any low-income community” every place it appears in Section
45D of the Internal Revenue Code.

(B) A qualified active low-income community business shall
not include any business that derives, or projects to derive, 15
percent or more of its annual revenue from the rental or sale of
real estate. This exclusion does not apply to a business that is
controlled by, or under common control with, another business if
the second business: (i) does not derive or project to derive 15
percent or more of its annual revenue from the rental or sale of
real estate; and (ii) is the primary tenant of the real estate leased
from the first business.

(C) A qualified active low-income community business shall
only include a business that, at the time the initial investment is
made, has 250 or fewer employees and is located in one or more
California low-income communities. The operating business shall
meet all other conditions of a qualified active low-income
community business, except as modified by this paragraph. This
requirement does not apply to a business that is located on land
and is controlled by, or under common control with, a federally
recognized tribe.

(D) A qualified active low-income community business shall
only include a business located in census tracts with a poverty rate
greater than 30 percent, or census tracts, if located within a
nonmetropolitan area, with a median family income that does not
exceed 60 percent of median family income for this state, or census
tracts, if located within a metropolitan area, with a median family
income that does not exceed 60 percent of the greater of the
California median family income or the metropolitan area median
family income, or census tracts with unemployment rates at least
1.5 times the national average.

(E) A qualified active low-income community business shall
not include any business that operates or derives revenues from
the operation of a country club, gaming establishment, massage
parlor, liquor store, or golf course.

(F) A qualified active low-income community business shall
not include a sexually oriented business. A “sexually oriented
business” means a nightclub, bar, restaurant, or similar commercial
enterprise that provides for an audience of two or more individuals
live nude entertainment or live nude performances where the nudity
is a function of everyday business operations and where nudity is
a planned and intentional part of the entertainment or performance.
“Nude” means clothed in a manner that leaves uncovered or visible,
through less than fully opaque clothing, any portion of the genitals
or, in the case of a female, any portion of the breasts below the
top of the areola of the breasts.

(G) A qualified active low-income community business shall
not include a charter school.

(4) Section 45D(f) of the Internal Revenue Code, relating to
national limitation on amount of investments designated, is
modified as follows:

(A) The following shall apply in lieu of the provisions of Section
45D(f)(1) of the Internal Revenue Code: The aggregate amount
of qualified equity investments that may be allocated in any
calendar year for purposes of this section, Section 17053.9, and
Section 23622.9 shall be begin delete an amount as determined by GO-Biz in
consultation with the Department of Finance based upon any
unused portion of the one hundred million dollars ($100,000,000)
in exclusions, authorized pursuant to Section 6010.8, as determined
by the California Alternative Energy and Advanced Transportation
Financing Authority pursuant to Section 26011.9 of the Public
Resources Code and reported to GO-Biz, not to exceed an amount
based upon a credit of end delete forty million dollars begin delete ($40,000,000). GO-Biz
shall limit the allocation of investments that may be designated
under this section, Section 17053.9, and Section 23622.9 to a
cumulative total amount based on credits of no more than two
hundred million dollars ($200,000,000). end delete begin insert ($40,000,000) per
calendar year. end insert The allocation of any undesignated qualified equity
investments shall be returned to begin delete GO-Biz end delete begin insert RTCA end insert by March 1 of the
year following allocation and the value of the undesignated
qualified equity investment shall be available for allocation in the
following calendar years in accordance with the application
process. Any qualified equity investment attributable to recaptured
credits shall be available to begin delete GO-Biz end delete begin insert RTCA end insert on March 1 of the year
following recapture and shall be available for allocation in the
following calendar years in accordance with subparagraph (B) of
paragraph (5). Reallocated qualified equity investments attributable
to recapture credits shall not count against the annual or the
cumulative limit.

(B) The references to “the Secretary” in Section 45D(f)(2) of
the Internal Revenue Code, relating to allocation of limitation, is
modified to read begin delete “GO-Biz.” end delete begin insert “RTCA. end insert begin insert ” end insert

(C) The last sentence of Section 45D(f)(3) of the Internal
Revenue Code, relating to carryover of unused limitation, shall
not apply.

(5) Section 45D(g)(3) of the Internal Revenue Code, relating
to recapture event, is modified to add the following:

(A) The qualified community development entity fails to comply
with subparagraph begin delete (D) end delete begin insert (C) end insert of paragraph (5) of subdivision (d). In
this case, recapture shall be 100 percent of the credit.

(B)  begin delete GO-Biz end delete begin insert RTCA end insert shall establish a process, in consultation with
the Department of Insurance, for the recapture of credits allowed
under this section from the entity that claimed the credit on a return.

(C) Recaptured qualified equity investments revert back to
begin delete GO-Biz end delete begin insert RTCA end insert and shall be reissued. The reissue shall not count
toward the annual or cumulative allocation limitation. The reissue
shall be done in the following order:

(i) First, pro rata to applicants whose qualified equity investment
allocations were reduced pursuant to subparagraph begin delete (F) end delete begin insert (D) end insert of
paragraph (5) of subdivision (d) by the annual allocation limitation.

(ii) Thereafter, in accordance with the application process.

(D) Enforcement of each of the recapture provisions shall be
subject to a six-month cure period.

(d) (1)  begin delete GO-Biz end delete begin insert RTCA end insert shall adopt guidelines necessary or
appropriate to carry out its responsibilities with respect to the
allocation, monitoring, and management of the tax credit program
authorized by this section.

(2) (A)  begin delete GO-Biz end delete begin insert RTCA end insert shall establish and impose reasonable
fees upon entities that apply for the allocation pursuant to this
subdivision that in the aggregate defray the cost of reviewing
applications for the program. begin delete GO-Biz end delete begin insert RTCA end insert may impose other
reasonable fees upon entities that receive the allocation pursuant
to this subdivision that in the aggregate defray the cost of
administering the program.

(B) The fees collected shall be deposited in the California New
Markets Tax Credit Fund established in Section 18410.3.

(3) In developing guidelines, begin delete GO-Biz end delete begin insert RTCA end insert shall adopt an
allocation process that does all of the following:

(A) Creates an equitable distribution process that ensures that
low-income community populations across the state have an
opportunity to benefit from the program.

(B) Sets minimum organizational capacity standards that
applicants must meet in order to receive an allocation of authority
to designate qualified equity begin delete investments end delete begin insert investments, end insert including,
but not limited to, its business strategy, targeted community
outcomes, capitalization strategy, and management capacity.

(C) Considers the qualified community development entity’s
prior qualified low-income community investments under Section
45D of the Internal Revenue Code.

(D) Considers the qualified community development entity’s
prior qualified low-income community investments under this
section, including subparagraph begin delete (D) end delete begin insert (C) end insert of paragraph (5).

(4) (A) Subject to subdivision (h), begin delete GO-Biz end delete begin insert RTCA end insert shall begin
accepting applications on or before May 15, 2017, and shall award
authority to designate qualified equity investments annually
through begin delete 2029. end delete begin insert 2022. end insert

(B) In the instance where begin delete GO-Biz end delete begin insert RTCA end insert determines that an
application is incomplete, the qualified community development
entity shall be given five business days to provide the omitted
information.

(5) (A) In the 2017 awards cycle, begin delete GO-Biz end delete begin insert RTCA end insert shall award
authority to designate qualified equity investments to qualified
community development entities described in paragraph (2) of
subdivision (c) in the order applications are received by begin delete GO-Biz. end delete
begin insert RTCA. end insert Applications received on the same day shall be deemed to
have been received simultaneously.

(B) In the 2018 to begin delete 2029 end delete begin insert 2022 end insert award cycles, inclusive, at least
60 percent of the authority to designate qualified equity investments
shall be awarded pursuant to subparagraph (A). At the discretion
of begin delete GO-Biz, end delete begin insert RTCA, end insert a higher percentage of authority to designate
qualified equity investments may be awarded pursuant to
subparagraph (A).

(C)  begin delete GO-Biz end delete begin insert RTCA end insert shall award up to 40 percent of the authority
to designate qualified equity investments in the 2018 to begin delete 2029, end delete
begin insert 2022, end insert inclusive, award cycles, to qualified community development
entities on a competitive basis begin delete using blind end delete begin insert that meets the following
criteria: end insert

begin insert (i) end insert begin insert   end insert begin insert Awards shall be reviewed using blind end insert scoring and a review
committee that is composed of community development finance
practitioners and members having demonstrated experience in
assessing organizational business strategy, community outcomes,
capitalization strategy, and management capacity. begin delete A end delete

begin insert (ii) end insert begin insert   end insert begin insert A end insert member of the review committee shall not have a financial
interest, which includes, but is not limited to, asking, consenting,
or agreeing to receive any commission, emolument, gratuity,
money, property, or thing of value for his or her own use, benefit,
or personal advantage for procuring or endeavoring to procure for
any person, partnership, joint venture, association, or corporation
any qualified equity investment or other assistance from any
applicant.

begin delete

(D) (i) For qualified equity investments derived from the 2017
to 2029, inclusive, awards cycles, pursuant to subparagraphs (A),
(B), and (C), a qualified community development entity shall invest
at least 15 percent of the qualified equity investment in a qualified
low-income community business in consultation or in partnership
with either of the following:

(I) A qualified community development entity certified under
Section 45D of the Internal Revenue Code that has not received a
federal New Markets Tax Credit allocation on or after January 1,
2012, and has either a local service area that includes one or more
California communities or a California statewide service area, but
excluding qualified community development entities with a
national service area.

(II)

 
A nonprofit organization that does the following:

(ia)

 
Is tax exempt under Section 23701.

(ib)

 
Is registered with the Registry of Charitable Trusts, which is
administered by the Attorney General.

(ic)

 
Has articles of incorporation or articles of organization that
state the primary mission of the organization is focused on
improving the economic well-being of low-income communities
or individuals.

(id)

 
Has bylaws that provide that the organization maintains
accountability to residents of low-income communities through
their representation on any governing board or on an advisory
board of the nonprofit organization.

(ii) The 15-percent investment shall be calculated by multiplying
the total purchase price of the qualified equity investments issued
by the qualified community development entity by 15 percent.
Each community development entity application shall indicate
how the qualified community development entity will meet this
requirement.

(E)  In making competitive awards of authority to designate
qualified equity investments, priority shall be given to applications
that can demonstrate that the qualified equity investment authority
will allow the qualified community development entity to undertake
qualified low-income community investments in rural, suburban,
or urban areas that have been historically underserved and result
in the primary benefit to the hardest to serve and undercapitalized
lower income populations, 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.

end delete begin insert

(iii) Applications for awards shall include a commitment to
make at least 15 percent of qualified community development
investments to a qualified community development entity with the
assistance of a nonprofit organization, as documented by a
cooperation agreement that states the terms and conditions of that
assistance. For the purposes of this clause, the following shall
apply:

end insert begin insert

(I) A qualified community development entity shall be certified
under Section 45D of the Internal Revenue Code but has not
received a federal New Markets Tax Credit allocation on or after
January 1, 2012, and has either a local service area that includes
one or more California communities or a California statewide
service area, but excluding qualified community development
entities with a national service area.

end insert begin insert

(II) A nonprofit organization shall meet all of the following
requirements: Is tax exempt under Section 23701, is registered
with the Registry of Charitable Trusts, which is administered by
the Attorney General, has articles of incorporation or articles of
organization that state the primary mission of the organization is
focused on improving the economic well-being of low-income
communities or individuals, and has bylaws that provide that the
organization maintains accountability to residents of low-income
communities through their representation on any governing board
or on an advisory board of the nonprofit organization.

end insert begin insert

(iv) Priority shall be provided to both of the following:

end insert begin insert

(I) Applications that commit to addressing the hardest to serve
and undercapitalized lower income populations.

end insert begin insert

(II) Applications that support neighborhood revitalization
strategies driven by local grassroots stakeholders in multiple
low-income communities across one or more regions or the state.
These applications shall demonstrate how their investment activity
provides a scalable economic development model.

end insert begin delete

(F)

end delete

begin insert (D) end insert  (i)  For applications described in subparagraph (A), in the
event requests for authority to designate qualified equity
investments exceed the applicable annual allocation limitation,
begin delete GO-Biz end delete begin insert RTCA end insert shall certify, consistent with remaining qualified
equity investment capacity, qualified equity investments of
applicants in proportionate percentages based upon the ratio of the
amount of qualified equity investments requested in such
applications to the total amount of qualified equity investments
requested in all such applications received on the same day.

(ii) If a pending request cannot be fully certified due to this
limit, begin delete GO-Biz end delete begin insert RTCA end insert shall certify the portion that may be certified
unless the qualified community development entity elects to
withdraw its request rather than receive partial certification.

begin delete

(G)

end delete

begin insert (E) end insert  An approved applicant 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, provided that the applicant and the
transferee notify begin delete GO-Biz end delete begin insert RTCA end insert within 30 calendar days of such
transfer and include the information required in the application
with respect to such transferee with such notice. The transferee
shall be subject to the same rules, requirements, and limitations
applicable to the transferor.

begin delete

(H)

end delete

begin insert (F) end insert  Within 200 calendar days of begin delete GO-Biz end delete begin insert RTCA end insert sending notice
of certification, the qualified community development entity or
any transferee, under subparagraph begin delete (G), end delete begin insert (E), end insert shall issue the
qualified equity investment and receive cash in the amount of the
certified amount. The qualified community development entity or
transferee, under subparagraph begin delete (G), end delete begin insert (E), end insert shall provide begin delete GO-Biz end delete
begin insert RTCA end insert with evidence of the receipt of the cash investment within
205 calendar days of the applicant receiving notice of certification.
If the qualified community development entity or any transferee,
under subparagraph begin delete (G), end delete begin insert (E), end insert does not receive the cash investment
and issue the qualified equity investment within 200 calendar days
of begin delete GO-Biz end delete begin insert RTCA end insert sending the certification notice, the certification
shall lapse and the entity may not issue the qualified equity
investment without reapplying to begin delete GO-Biz end delete begin insert RTCA end insert for certification.
Lapsed certifications revert back to begin delete GO-Biz end delete begin insert RTCA end insert and shall be
reissued in the following order:

(i) First, pro rata to applicants whose qualified equity investment
allocations were reduced pursuant to subparagraph begin delete (F) end delete begin insert (D) end insert under
the annual allocation limitation of forty million dollars
($40,000,000) in paragraph (4) of subdivision (c).

(ii) Thereafter, in accordance with the application process.

begin delete

(I)

end delete

begin insert (G) end insert  A qualified community development entity that issues
qualified equity investments shall notify begin delete GO-Biz end delete begin insert RTCA end insert of the
names of taxpayers that are eligible to utilize tax credits pursuant
to this section and any transfer of a qualified equity investment.

(6) (A) A qualified community development entity that issues
qualified equity investments shall submit a report to begin delete GO-Biz end delete begin insert RTCA end insert
that provides documentation as to the investment of at least 85
percent of the funds being deployed within one year in qualified
low-income community investments in qualified active low-income
community businesses located in California. Such report shall
include all of the following:

(i) A bank statement of such qualified community development
entity evidencing each qualified low-income community
investment.

(ii) Evidence that such business was a qualified active
low-income community business at the time of such qualified
low-income community investment.

(iii) Evidence that the community development entity complied
with subparagraph begin delete (D) end delete begin insert (C) end insert of paragraph (5).

(iv) Evidence that each qualified low-income community
investment was determined to have a positive revenue impact on
the state. This requirement does not apply to reinvestments of
redeemed qualified low-income investments.

(v) Any other information required by begin delete GO-Biz end delete begin insert RTCA end insert as being
necessary to meet the requirements of this section.

(B) Thereafter, the qualified community development entity
shall submit an annual report to begin delete GO-Biz end delete begin insert RTCA end insert during the seven
years following submittal of the report, pursuant to subparagraph
(A). No annual report shall be due prior to the first anniversary of
the initial credit allowance date. The report shall include, but is
not limited to, the following:

(i) The social, environmental, and economic impact the credit
had on the low-income community during the report period and
cumulatively.

(ii) The amount of moneys used for qualified low-income
investments in qualified low-income community businesses.

(iii) The number of employment positions created and retained
as a result of qualified low-income community investments and
the average annual salary of such positions.

(iv) The number of operating businesses assisted as a result of
qualified low-income community investments, by industry and
number of employees.

(v) Number of owner-occupied real estate projects.

(vi) Location of each qualified low-income community business
assisted by a qualified low-income community investment.

(vii) Summary of the outcomes of each of the revenue impact
assessments undertaken by the qualified community development
entity during the year.

(viii) Any other information requested by begin delete GO-Biz. end delete begin insert RTCA. end insert

(e) (1) In the case where the credit allowed by this section
exceeds the tax described in Section 12201, the excess may be
carried over to reduce that tax in the following year, and the six
succeeding years if necessary, until the credit is exhausted.

(2) A taxpayer allowed a credit under this section for a qualified
equity investment shall not be eligible for any other credit under
this part with respect to that investment.

(3) The credit allowed under this section may be in addition to
any credit allowed under Section 45D of the Internal Revenue
Code.

(f)  begin delete GO-Biz end delete begin insert RTCA end insert shall annually report on its Internet Web site
the information provided by low-income community development
entities and on the geographic distribution of the qualified active
low-income community businesses assisted.

(g) (1) The Insurance Commissioner may prescribe any rules
or regulations that may be necessary or appropriate to implement
this section. The Insurance Commissioner shall have access to any
documentation held by begin delete GO-Biz end delete begin insert RTCA end insert relative to the application
and reporting of a qualified community development entity.

(2) A begin delete qualifying end delete begin insert qualified end insert community development entity shall
provide begin delete GO-Biz end delete begin insert RTCA end insert with the name, address, and tax
identification number of each investor and entity for which a
qualified equity investment was designated by the begin delete qualifying end delete
begin insert qualified end insert community development entity, pursuant to this section.
begin delete GO-Biz end delete begin insert RTCA end insert shall provide this information to the Insurance
Commissioner in a manner determined by the Insurance
Commissioner.

(h) (1) The credit authorized by this section shall only be
allowed for those taxable years for which moneys are appropriated
to begin delete GO-Biz end delete begin insert RTCA end insert to administer the California New Markets Tax
Credit pursuant to 18410.3 for that taxable year. The appropriation
shall specifically identify the California New Markets Tax Credit.

(2) For those taxable years for which those moneys are
appropriated pursuant to begin delete subdivision end delete begin insert paragraph end insert (1), begin delete GO-Biz end delete begin insert RTCA end insert
shall post notice of the appropriation on the homepage of its
Internet Web site and send notice of such appropriation to the
Secretary of State and the Legislative Counsel.

(i) This section shall be repealed on December 1, begin delete 2029. end delete begin insert 2022. end insert

begin delete SEC. 4. end delete

begin insert SEC. 3. end insert   

Section 17053.9 is added to the Revenue and Taxation
Code, to read:

17053.9.  

(a) There is hereby created the California New
Markets Tax Credit Program as provided in this section, Section
12283, and Section 23622.9. The purpose of this program is to
stimulate private sector investment in lower income communities
by providing a tax incentive to community and economic
development entities that can be leveraged by the entity to attract
private sector investment that in turn will be deployed by providing
financing and technical assistance to small- and begin delete medium-size end delete
begin insert medium-sized end insert businesses and the development of commercial,
industrial, and community development projects, including, but
not limited to, facilities for nonprofit service organizations, light
manufacturing, and mixed-use and transit-oriented development.
begin delete GO-Biz end delete begin insert RTCA end insert shall administer this program as provided in this
section, Section 12283, and Section 23622.9. begin delete The Director of
GO-Biz may delegate the administration of all or portions of the
program within GO-Biz. end delete

(b) (1) For taxable years beginning on or after January 1, 2017,
and before January 1, begin delete 2029, end delete begin insert 2022, end insert and subject to subdivision (h),
there shall be allowed as a credit against the “net tax,” as defined
in Section 17039, in an amount determined in accordance with
Section 45D of the Internal Revenue Code, relating to the new
markets tax credit, as modified in this section.

begin delete

(2) For the purposes of this section, “GO-Biz” means the
Governor’s Office of Business and Economic Development.

end delete begin insert

(2) For the purposes of this section, “RTCA” means the
Responsible Tax Credit Administrator, as designated by the
Governor.

end insert

(c) Section 45D of the Internal Revenue Code is modified as
follows:

(1) Section 45D(a)(2) of the Internal Revenue Code, relating to
applicable percentage, is modified by substituting for “(A)   5
percent with respect to the first 3 credit allowance dates, and (B)  
6 percent with respect to the remainder of the credit allowance
dates” with the following:

(A) Zero percent with respect to the first two credit allowance
dates.

(B) Seven percent with respect to the third credit allowance
date.

(C) Eight percent with respect to the remainder of the credit
allowance dates.

(2) (A) Section 45D(c)(1) of the Internal Revenue Code, relating
to qualified community development entity, is modified to only
include a qualified community development entity, that is certified
by the Secretary of the Treasury, and its subsidiary qualified
community development entities that have entered into an
allocation agreement with the Community Development Financial
Institutions Fund of the United States Treasury Department, with
respect to credits authorized by Section 45D of the Internal
Revenue Code, that includes California within the service area and
is dated on or after January 1, 2012.

(B) Section 45D(c)(2) of the Internal Revenue Code, relating
to special rules for certain organizations, is modified to only
include a specialized small business investment company or
community development financial institution that entered into an
allocation agreement with the Community Development Financial
Institutions Fund of the United States Treasury Department, with
respect to credits authorized by Section 45D of the Internal
Revenue Code, that includes California within the service area and
is dated on or after January 1, 2012.

(3) The term “qualified active low-income community business,”
as defined in Section 45D(d)(2) of the Internal Revenue Code, is
modified as follows:

(A) By substituting “any low-income community in California”
for “any low-income community” every place it appears in Section
45D of the Internal Revenue Code.

(B) A qualified active low-income community business shall
not include any business that derives, or projects to derive, 15
percent or more of its annual revenue from the rental or sale of
real estate. This exclusion does not apply to a business that is
controlled by, or under common control with, another business if
the second business: (i) does not derive or project to derive 15
percent or more of its annual revenue from the rental or sale of
real estate; and (ii) is the primary tenant of the real estate leased
from the first business.

(C) A qualified active low-income community business shall
only include a business that, at the time the initial investment is
made, has 250 or fewer employees and is located in one or more
California low-income communities. The operating business shall
meet all other conditions of a qualified active low-income
community business, except as modified by this paragraph. This
requirement does not apply to a business that is located on land
and is controlled by, or under common control with, a federally
recognized tribe.

(D) A qualified active low-income community business shall
only include a business located in census tracts with a poverty rate
greater than 30 percent, or census tracts, if located within a
nonmetropolitan area, with a median family income that does not
exceed 60 percent of median family income for this state, or census
tracts, if located within a metropolitan area, with a median family
income that does not exceed 60 percent of the greater of the
California median family income or the metropolitan area median
family income, or census tracts with unemployment rates at least
1.5 times the national average.

(E) A qualified active low-income community business shall
not include any business that operates or derives revenues from
the operation of a country club, gaming establishment, massage
parlor, liquor store, or golf course.

(F) A qualified active low-income community business shall
not include a sexually oriented business. A “sexually oriented
business” means a nightclub, bar, restaurant, or similar commercial
enterprise that provides for an audience of two or more individuals
live nude entertainment or live nude performances where the nudity
is a function of everyday business operations and where nudity is
a planned and intentional part of the entertainment or performance.
“Nude” means clothed in a manner that leaves uncovered or visible,
through less than fully opaque clothing, any portion of the genitals
or, in the case of a female, any portion of the breasts below the
top of the areola of the breasts.

(G) A qualified active low-income community business shall
not include a charter school.

(4) Section 45D(f) of the Internal Revenue Code, relating to
national limitation on amount of investments designated, is
modified as follows:

(A) The following shall apply in lieu of the provisions of Section
45D(f)(1) of the Internal Revenue Code: The aggregate amount
of qualified equity investments that may be allocated in any
calendar year for purposes of this section, Section 12283, and
Section 23622.9 shall be begin delete an amount as determined by GO-Biz in
consultation with the Department of Finance based upon any
unused portion of the one hundred million dollars ($100,000,000)
in exclusions, authorized pursuant to Section 6010.8, as determined
by the California Alternative Energy and Advanced Transportation
Financing Authority pursuant to Section 26011.9 of the Public
Resources Code and reported to GO-Biz, not to exceed an amount
based upon a credit of end delete forty million dollars begin delete ($40,000,000). GO-Biz
shall limit the allocation of investments that may be designated
under this section, Section 12283, and Section 23622.9 to a
cumulative total amount based on credits of no more than two
hundred million dollars ($200,000,000). end delete begin insert ($40,000,000) per
calendar year. end insert The allocation of any undesignated qualified equity
investments shall be returned to begin delete GO-Biz end delete begin insert RTCA end insert by March 1 of the
year following allocation and the value of the undesignated
qualified equity investment shall be available for allocation in the
following calendar years in accordance with the application
process. Any qualified equity investment attributable to recaptured
credits shall be available to begin delete GO-Biz end delete begin insert RTCA end insert on March 1 of the year
following recapture and shall be available for allocation in the
following calendar years in accordance with clause (ii) of
subparagraph (B) of paragraph (5). Reallocated qualified equity
investments attributable to recapture credits shall not count against
the annual or the cumulative limit.

(B) The references to “the Secretary” in Section 45D(f)(2) of
the Internal Revenue Code, relating to allocation of limitation, is
modified to read begin delete “GO-Biz.” end delete begin insert “RTCA. end insert begin insert ” end insert

(C) The last sentence of Section 45D(f)(3) of the Internal
Revenue Code, relating to carryover of unused limitation, shall
not apply.

(5) (A) Section 45D(g)(2)(B) of the Internal Revenue Code,
relating to credit recapture amount, is modified to substitute
“Section 19101 of this code” for “Section 6621.”

(B) Section 45D(g)(3) of the Internal Revenue Code, relating
to recapture event, is modified to add the following:

(i) The qualified community development entity fails to comply
with subparagraph begin delete (D) end delete begin insert (C) end insert of paragraph (5) of subdivision (d). In
this case, recapture shall be 100 percent of the credit.

(ii)  begin delete GO-Biz end delete begin insert RTCA end insert shall establish a process, in consultation with
the Franchise Tax Board, for the recapture of credits allowed under
this section from the entity that claimed the credit on a return.

(iii)  Recaptured qualified equity investments revert back to
begin delete GO-Biz end delete begin insert RTCA end insert and shall be reissued. The reissue shall not count
toward the annual or cumulative allocation limitation. The reissue
shall be done in the following order:

(I)  First, pro rata to applicants whose qualified equity
investment allocations were reduced pursuant to subparagraph begin delete (F) end delete
begin insert (D) end insert of paragraph (5) of subdivision (d) by the annual allocation
limitation.

(II)  Thereafter, in accordance with the application process.

(iv) Enforcement of each of the recapture provisions shall be
subject to a six-month cure period.

(d) (1)  begin delete GO-Biz end delete begin insert RTCA end insert shall adopt guidelines necessary or
appropriate to carry out its responsibilities with respect to the
allocation, monitoring, and management of the tax credit program
authorized by this section.

(2) (A)  begin delete GO-Biz end delete begin insert RTCA end insert shall establish and impose reasonable
fees upon entities that apply for the allocation pursuant to this
subdivision that in the aggregate defray the cost of reviewing
applications for the program. begin delete GO-Biz end delete begin insert RTCA end insert may impose other
reasonable fees upon entities that receive the allocation pursuant
to this subdivision that in the aggregate defray the cost of
administering the program.

(B) The fees collected shall be deposited in the California New
Markets Tax Credit Fund established in Section 18410.3.

(3) In developing guidelines, begin delete GO-Biz end delete begin insert RTCA end insert shall adopt an
allocation process that does all of the following:

(A) Creates an equitable distribution process that ensures that
low-income community populations across the state have an
opportunity to benefit from the program.

(B) Sets minimum organizational capacity standards that
applicants must meet in order to receive an allocation of authority
to designate qualified equity begin delete investments end delete begin insert investments, end insert including,
but not limited to, its business strategy, targeted community
outcomes, capitalization strategy, and management capacity.

(C) Considers the qualified community development entity’s
prior qualified low-income community investments under Section
45D of the Internal Revenue Code.

(D) Considers the qualified community development entity’s
prior qualified low-income community investments under this
section, including subparagraph begin delete (D) end delete begin insert (C) end insert of paragraph (5).

(4) (A) Subject to subdivision (h), begin delete GO-Biz end delete begin insert RTCA end insert shall begin
accepting applications on or before May 15, 2017, and shall award
authority to designate qualified equity investments annually
through begin delete 2029. end delete begin insert 2022. end insert

(B) In the instance where begin delete GO-Biz end delete begin insert RTCA end insert determines that an
application is incomplete, the qualified community development
entity shall be given five business days to provide the omitted
information.

(5) (A) In the 2017 awards cycle, begin delete GO-Biz end delete begin insert RTCA end insert shall award
authority to designate qualified equity investments to qualified
community development entities described in paragraph (2) of
subdivision (c) in the order applications are received by begin delete GO-Biz. end delete
begin insert RTCA. end insert Applications received on the same day shall be deemed to
have been received simultaneously.

(B) In the 2018 to begin delete 2029 end delete begin insert 2022 end insert award cycles, inclusive, at least
60 percent of the authority to designate qualified equity investments
shall be awarded pursuant to subparagraph (A). At the discretion
of begin delete GO-Biz, end delete begin insert RTCA, end insert a higher percentage of authority to designate
qualified equity investments may be awarded pursuant to
subparagraph (A).

(C)  begin delete GO-Biz end delete begin insert RTCA end insert shall award up to 40 percent of the authority
to designate qualified equity investments in the 2018 to begin delete 2029, end delete
begin insert 2022, end insert inclusive, award cycles, to qualified community development
entities on a competitive basis begin delete using blind end delete begin insert that meets the following
criteria: end insert

begin insert (i) end insert begin insert   end insert begin insert Awards shall be reviewed using blind end insert scoring and a review
committee that is composed of community development finance
practitioners and members having demonstrated experience in
assessing organizational business strategy, community outcomes,
capitalization strategy, and management capacity. begin delete A end delete

begin insert (ii) end insert begin insert   end insert begin insert A end insert member of the review committee shall not have a financial
interest, which includes, but is not limited to, asking, consenting,
or agreeing to receive any commission, emolument, gratuity,
money, property, or thing of value for his or her own use, benefit,
or personal advantage for procuring or endeavoring to procure for
any person, partnership, joint venture, association, or corporation
any qualified equity investment or other assistance from any
applicant.

begin delete

(D) (i) For qualified equity investments derived from the 2017
to 2029, inclusive, awards cycles, pursuant to subparagraphs (A),
(B), and (C), a qualified community development entity shall invest
at least 15 percent of the qualified equity investment in a qualified
low-income community business in consultation or in partnership
with either of the following:

(I) A qualified community development entity certified under
Section 45D of the Internal Revenue Code that has not received a
federal New Markets Tax Credit allocation on or after January 1,
2012, and has either a local service area that includes one or more
California communities or a California statewide service area, but
excluding qualified community development entities with a
national service area.

(II)

 
A nonprofit organization that does the following:

(ia)

 
Is tax exempt under Section 23701.

(ib)

 
Is registered with the Registry of Charitable Trusts, which is
administered by the Attorney General.

(ic)

 
Has articles of incorporation or articles of organization that
state the primary mission of the organization is focused on
improving the economic well-being of low-income communities
or individuals.

(id)

 
Has bylaws that provide that the organization maintains
accountability to residents of low-income communities through
their representation on any governing board or on an advisory
board of the nonprofit organization.

(ii) The 15-percent investment shall be calculated by multiplying
the total purchase price of the qualified equity investments issued
by the qualified community development entity by 15 percent.
Each community development entity application shall indicate
how the qualified community development entity will meet this
requirement.

(E) In making competitive awards of authority to designate
qualified equity investments, priority shall be given to applications
that can demonstrate that the qualified equity investment authority
will allow the qualified community development entity to undertake
qualified low-income community investments in rural, suburban,
or urban areas that have been historically underserved and result
in the primary benefit to the hardest to serve and undercapitalized
lower income populations, 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.

end delete begin insert

(iii) Applications for awards shall include a commitment to
make at least 15 percent of qualified community development
investments to a qualified community development entity with the
assistance of a nonprofit organization as documented by a
cooperation agreement that states the terms and conditions of that
assistance. For the purposes of this clause, the following shall
apply:

end insert begin insert

(I) A qualified community development entity shall be certified
under Section 45D of the Internal Revenue Code but has not
received a federal New Markets Tax Credit allocation on or after
January 1, 2012, and has either a local service area that includes
one or more California communities or a California statewide
service area, but excluding qualified community development
entities with a national service area.

end insert begin insert

(II) A nonprofit organization shall meet all of the following
requirements: Is tax exempt under Section 23701, is registered
with the Registry of Charitable Trusts, which is administered by
the Attorney General, has articles of incorporation or articles of
organization that state the primary mission of the organization is
focused on improving the economic well-being of low-income
communities or individuals, and has bylaws that provide that the
organization maintains accountability to residents of low-income
communities through their representation on any governing board
or on an advisory board of the nonprofit organization.

end insert begin insert

(iv) Priority shall be provided to both of the following:

end insert begin insert

(I) Applications that commit to addressing the hardest to serve
and undercapitalized lower income populations.

end insert begin insert

(II) Applications that support neighborhood revitalization
strategies driven by local grassroots stakeholders in multiple
low-income communities across one or more regions or the state.
These applications shall demonstrate how their investment activity
provides a scalable economic development model.

end insert begin delete

(F)

end delete

begin insert (D) end insert  (i) For applications described in subparagraph (A), in the
event requests for authority to designate qualified equity
investments exceed the applicable annual allocation limitation,
begin delete GO-Biz end delete begin insert RTCA end insert shall certify, consistent with remaining qualified
equity investment capacity, qualified equity investments of
applicants in proportionate percentages based upon the ratio of the
amount of qualified equity investments requested in such
applications to the total amount of qualified equity investments
requested in all such applications received on the same day.

(ii) If a pending request cannot be fully certified due to this
limit, begin delete GO-Biz end delete begin insert RTCA end insert shall certify the portion that may be certified
unless the qualified community development entity elects to
withdraw its request rather than receive partial certification.

begin delete

(G)

end delete

begin insert (E) end insert  An approved applicant 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, provided that the applicant and the
transferee notify begin delete GO-Biz end delete begin insert RTCA end insert within 30 calendar days of such
transfer and include the information required in the application
with respect to such transferee with such notice. The transferee
shall be subject to the same rules, requirements, and limitations
applicable to the transferor.

begin delete

(H)

end delete

begin insert (F) end insert  Within 200 calendar days of begin delete GO-Biz end delete begin insert RTCA end insert sending notice
of certification, the qualified community development entity or
any transferee, under subparagraph begin delete (G), end delete begin insert (E), end insert shall issue the
qualified equity investment and receive cash in the amount of the
certified amount. The qualified community development entity or
transferee, under subparagraph begin delete (G), end delete begin insert (E), end insert shall provide begin delete GO-Biz end delete
begin insert RTCA end insert with evidence of the receipt of the cash investment within
205 calendar days of the applicant receiving notice of certification.
If the qualified community development entity or any transferee,
under subparagraph begin delete (G), end delete begin insert (E), end insert does not receive the cash investment
and issue the qualified equity investment within 200 calendar days
of begin delete GO-Biz end delete begin insert RTCA end insert sending the certification notice, the certification
shall lapse and the entity may not issue the qualified equity
investment without reapplying to begin delete GO-Biz end delete begin insert RTCA end insert for certification.
Lapsed certifications revert back to begin delete GO-Biz end delete begin insert RTCA end insert and shall be
reissued in the following order:

(i) First, pro rata to applicants whose qualified equity investment
allocations were reduced pursuant to subparagraph begin delete (F) end delete begin insert (D) end insert under
the annual allocation limitation of forty million dollars
($40,000,000) in paragraph (4) of subdivision (c).

(ii) Thereafter, in accordance with the application process.

begin delete

(I)

end delete

begin insert (G) end insert  A qualified community development entity that issues
qualified equity investments shall notify begin delete GO-Biz end delete begin insert RTCA end insert of the
names of taxpayers that are eligible to utilize tax credits pursuant
to this section and any transfer of a qualified equity investment.

(6) (A) A qualified community development entity that issues
qualified equity investments shall submit a report to begin delete GO-Biz end delete begin insert RTCA end insert
that provides documentation as to the investment of at least 85
percent of the funds being deployed within one year in qualified
low-income community investments in qualified active low-income
community businesses located in California. Such report shall
include all of the following:

(i) A bank statement of such qualified community development
entity evidencing each qualified low-income community
investment.

(ii) Evidence that such business was a qualified active
low-income community business at the time of such qualified
low-income community investment.

(iii) Evidence that the community development entity complied
with subparagraph begin delete (D) end delete begin insert (C) end insert of paragraph (5).

(iv) Evidence that each qualified low-income community
investment was determined to have a positive revenue impact on
the state. This requirement does not apply to reinvestments of
redeemed qualified low-income investments.

(v) Any other information required by begin delete GO-Biz end delete begin insert RTCA end insert as being
necessary to meet the requirements of this section.

(B) Thereafter, the qualified community development entity
shall submit an annual report to begin delete GO-Biz end delete begin insert RTCA end insert during the seven
years following submittal of the report, pursuant to subparagraph
(A). No annual report shall be due prior to the first anniversary of
the initial credit allowance date. The report shall include, but is
not limited to, the following:

(i) The social, environmental, and economic impact the credit
had on the low-income community during the report period and
cumulatively.

(ii) The amount of moneys used for qualified low-income
investments in qualified low-income community businesses.

(iii) The number of employment positions created and retained
as a result of qualified low-income community investments and
the average annual salary of such positions.

(iv) The number of operating businesses assisted as a result of
qualified low-income community investments, by industry and
number of employees.

(v) Number of owner-occupied real estate projects.

(vi) Location of each qualified low-income community business
assisted by a qualified low-income community investment.

(vii) Summary of the outcomes of each of the revenue impact
assessments undertaken by the qualified community development
entity during the year.

(viii) Any other information requested by begin delete GO-Biz. end delete begin insert RTCA. end insert

(e) (1) 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” in the following year, and the six succeeding years
if necessary, until the credit is exhausted.

(2) A taxpayer allowed a credit under this section for a qualified
equity investment shall not be eligible for any other credit under
this part with respect to that investment.

(3) The credit allowed under this section may be in addition to
any credit allowed under Section 45D of the Internal Revenue
Code.

(f)  begin delete GO-Biz end delete begin insert RTCA end insert shall annually report on its Internet Web site
the information provided by low-income community development
entities and on the geographic distribution of the qualified active
low-income community businesses assisted.

(g) (1) The Franchise Tax Board may prescribe any rules or
regulations that may be necessary or appropriate to implement this
section. The Franchise Tax Board shall have access to any
documentation held by begin delete GO-Biz end delete begin insert RTCA end insert relative to the application
and reporting of a qualified community development entity.

(2) A begin delete qualifying end delete begin insert qualified end insert community development entity shall
provide begin delete GO-Biz end delete begin insert RTCA end insert with the name, address, and tax
identification number of each investor and entity for which a
qualified equity investment was designated by the begin delete qualifying end delete
begin insert qualified end insert community development entity, pursuant to this section.
begin delete GO-Biz end delete begin insert RTCA end insert shall provide this information to the Franchise Tax
Board in a manner determined by the Franchise Tax Board.

(h) (1) The credit authorized by this section shall only be
allowed for those taxable years for which moneys are appropriated
to begin delete GO-Biz end delete begin insert RTCA end insert to administer the California New Markets Tax
Credit pursuant to 18410.3 for that taxable year. The appropriation
shall specifically identify the California New Markets Tax Credit.

(2) For those taxable years for which those moneys are
appropriated pursuant to begin delete subdivision end delete begin insert paragraph end insert (1), begin delete GO-Biz end delete begin insert RTCA end insert
shall post notice of the appropriation on the homepage of its
Internet Web site and send notice of such appropriation to the
Secretary of State and the Legislative Counsel.

(i) This section shall be repealed on December 1, begin delete 2029. end delete begin insert 2022. end insert

begin delete SEC. 5. end delete

begin insert SEC. 4. end insert   

Section 18410.3 is added to the Revenue and Taxation
Code, to read:

18410.3.  

(a) The California New Markets Tax Credit Fund is
hereby established in the State Treasury.

(b) Upon annual appropriation, moneys in the fund shall be used
for the purposes described in subdivision (d) of Section 12283,
subdivision (d) of Section 17053.9, and subdivision (d) of Section
23622.9.

begin delete SEC. 6. end delete

begin insert SEC. 5. end insert   

Section 23622.9 is added to the Revenue and Taxation
Code, to read:

23622.9.  

(a) There is hereby created the California New
Markets Tax Credit Program as provided in this section, Section
12283, and Section 17053.9. The purpose of this program is to
stimulate private sector investment in lower income communities
by providing a tax incentive to community and economic
development entities that can be leveraged by the entity to attract
private sector investment that in turn will be deployed by providing
financing and technical assistance to small- and begin delete medium-size end delete
begin insert medium-sized end insert businesses and the development of commercial,
industrial, and community development projects, including, but
not limited to, facilities for nonprofit service organizations, light
manufacturing, and mixed-use and transit-oriented development.
begin delete GO-Biz end delete begin insert RTCA end insert shall administer this program as provided in this
section, Section 12283, and Section 17053.9. begin delete The Director of
GO-Biz may delegate the administration of all or portions of the
program within GO-Biz. end delete

(b) (1) For taxable years beginning on or after January 1, 2017,
and before January 1, begin delete 2029, end delete begin insert 2022, end insert and subject to subdivision (h),
there shall be allowed as a credit against the “tax,” as defined in
Section 23036, in an amount determined in accordance with Section
45D of the Internal Revenue Code, relating to the new markets tax
credit, as modified in this section.

begin delete

(2) For the purposes of this section, “GO-Biz” means the
Governor’s Office of Business and Economic Development.

end delete begin insert

(2) For the purposes of this section, “RTCA” means the
Responsible Tax Credit Administrator, as designated by the
Governor.

end insert

(c) Section 45D of the Internal Revenue Code is modified as
follows:

(1) Section 45D(a)(2) of the Internal Revenue Code, relating to
applicable percentage, is modified by substituting for “(A)   5
percent with respect to the first 3 credit allowance dates, and (B)  
6 percent with respect to the remainder of the credit allowance
dates” with the following:

(A) Zero percent with respect to the first two credit allowance
dates.

(B) Seven percent with respect to the third credit allowance
date.

(C) Eight percent with respect to the remainder of the credit
allowance dates.

(2) (A) Section 45D(c)(1) of the Internal Revenue Code, relating
to qualified community development entity, is modified to only
include a qualified community development entity, that is certified
by the Secretary of the Treasury, and its subsidiary qualified
community development entities that have entered into an
allocation agreement with the Community Development Financial
Institutions Fund of the United States Treasury Department, with
respect to credits authorized by Section 45D of the Internal
Revenue Code, that includes California within the service area and
is dated on or after January 1, 2012.

(B) Section 45D(c)(2) of the Internal Revenue Code, relating
to special rules for certain organizations, is modified to only
include a specialized small business investment company or
community development financial institution that entered into an
allocation agreement with the Community Development Financial
Institutions Fund of the United States Treasury Department, with
respect to credits authorized by Section 45D of the Internal
Revenue Code, that includes California within the service area and
is dated on or after January 1, 2012.

(3) The term “qualified active low-income community business,”
as defined in Section 45D(d)(2) of the Internal Revenue Code, is
modified as follows:

(A) By substituting “any low-income community in California”
for “any low-income community” every place it appears in Section
45D of the Internal Revenue Code.

(B) A qualified active low-income community business shall
not include any business that derives, or projects to derive, 15
percent or more of its annual revenue from the rental or sale of
real estate. This exclusion does not apply to a business that is
controlled by, or under common control with, another business if
the second business: (i) does not derive or project to derive 15
percent or more of its annual revenue from the rental or sale of
real estate; and (ii) is the primary tenant of the real estate leased
from the first business.

(C) A qualified active low-income community business shall
only include a business that, at the time the initial investment is
made, has 250 or fewer employees and is located in one or more
California low-income communities. The operating business shall
meet all other conditions of a qualified active low-income
community business, except as modified by this paragraph. This
requirement does not apply to a business that is located on land
and is controlled by, or under common control with, a federally
recognized tribe.

(D) A qualified active low-income community business shall
only include a business located in census tracts with a poverty rate
greater than 30 percent, or census tracts, if located within a
nonmetropolitan area, with a median family income that does not
exceed 60 percent of median family income for this state, or census
tracts, if located within a metropolitan area, with a median family
income that does not exceed 60 percent of the greater of the
California median family income or the metropolitan area median
family income, or census tracts with unemployment rates at least
1.5 times the national average.

(E) A qualified active low-income community business shall
not include any business that operates or derives revenues from
the operation of a country club, gaming establishment, massage
parlor, liquor store, or golf course.

(F) A qualified active low-income community business shall
not include a sexually oriented business. A “sexually oriented
business” means a nightclub, bar, restaurant, or similar commercial
enterprise that provides for an audience of two or more individuals
live nude entertainment or live nude performances where the nudity
is a function of everyday business operations and where nudity is
a planned and intentional part of the entertainment or performance.
“Nude” means clothed in a manner that leaves uncovered or visible,
through less than fully opaque clothing, any portion of the genitals
or, in the case of a female, any portion of the breasts below the
top of the areola of the breasts.

(G) A qualified active low-income community business shall
not include a charter school.

(4) Section 45D(f) of the Internal Revenue Code, relating to
national limitation on amount of investments designated, is
modified as follows:

(A) The following shall apply in lieu of the provisions of Section
45D(f)(1) of the Internal Revenue Code: The aggregate amount
of qualified equity investments that may be allocated in any
calendar year for purposes of this section, Section 12283, and
Section 17053.9 shall be begin delete an amount as determined by GO-Biz in
consultation with the Department of Finance based upon any
unused portion of the one hundred million dollars ($100,000,000)
in exclusions, authorized pursuant to Section 6010.8, as determined
by the California Alternative Energy and Advanced Transportation
Financing Authority pursuant to Section 26011.9 of the Public
Resources Code and reported to GO-Biz, not to exceed an amount
based upon a credit of end delete forty million dollars begin delete ($40,000,000). GO-Biz
shall limit the allocation of investments that may be designated
under this section, Section 12283, and Section 17053.9 to a
cumulative total amount based on credits of no more than two
hundred million dollars ($200,000,000). end delete begin insert ($40,000,000) per
calendar year. end insert The allocation of any undesignated qualified equity
investments shall be returned to begin delete GO-Biz end delete begin insert RTCA end insert by March 1 of the
year following allocation and the value of the undesignated
qualified equity investment shall be available for allocation in the
following calendar years in accordance with the application
process. Any qualified equity investment attributable to recaptured
credits shall be available to begin delete GO-Biz end delete begin insert RTCA end insert on March 1 of the year
following recapture and shall be available for allocation in the
following calendar years in accordance with clause (ii) of
subparagraph (B) of paragraph (5). Reallocated qualified equity
investments attributable to recapture credits shall not count against
the annual or the cumulative limit.

(B) The references to “the Secretary” in Section 45D(f)(2) of
the Internal Revenue Code, relating to allocation of limitation, is
modified to read begin delete “GO-Biz.” end delete begin insert “RTCA. end insert begin insert ” end insert

(C) The last sentence of Section 45D(f)(3) of the Internal
Revenue Code, relating to carryover of unused limitation, shall
not apply.

(5) (A) Section 45D(g)(2)(B) of the Internal Revenue Code,
relating to credit recapture amount, is modified to substitute
“Section 19101 of this code” for “Section 6621.”

(B) Section 45D(g)(3) of the Internal Revenue Code, relating
to recapture event, is modified to add the following:

(i) The qualified community development entity fails to comply
with subparagraph begin delete (D) end delete begin insert (C) end insert of paragraph (5) of subdivision (d). In
this case, recapture shall be 100 percent of the credit.

(ii)  begin delete GO-Biz end delete begin insert RTCA end insert shall establish a process, in consultation with
the Franchise Tax Board, for the recapture of credits allowed under
this section from the entity that claimed the credit on a return.

(iii) Recaptured qualified equity investments revert back to
begin delete GO-Biz end delete begin insert RTCA end insert and shall be reissued. The reissue shall not count
toward the annual or cumulative allocation limitation. The reissue
shall be done in the following order:

(I) First, pro rata to applicants whose qualified equity investment
allocations were reduced pursuant to subparagraph begin delete (F) end delete begin insert (D) end insert of
paragraph (5) of subdivision (d) by the annual allocation limitation.

(II) Thereafter, in accordance with the application process.

(iv) Enforcement of each of the recapture provisions shall be
subject to a six-month cure period.

(d) (1)  begin delete GO-Biz end delete begin insert RTCA end insert shall adopt guidelines necessary or
appropriate to carry out its responsibilities with respect to the
allocation, monitoring, and management of the tax credit program
authorized by this section.

(2) (A)  begin delete GO-Biz end delete begin insert RTCA end insert shall establish and impose reasonable
fees upon entities that apply for the allocation pursuant to this
subdivision that in the aggregate defray the cost of reviewing
applications for the program. begin delete GO-Biz end delete begin insert RTCA end insert may impose other
reasonable fees upon entities that receive the allocation pursuant
to this subdivision that in the aggregate defray the cost of
administering the program.

(B) The fees collected shall be deposited in the California New
Markets Tax Credit Fund established in Section 18410.3.

(3) In developing guidelines, begin delete GO-Biz end delete begin insert RTCA end insert shall adopt an
allocation process that does all of the following:

(A) Creates an equitable distribution process that ensures that
low-income community populations across the state have an
opportunity to benefit from the program.

(B) Sets minimum organizational capacity standards that
applicants must meet in order to receive an allocation of authority
to designate qualified equity begin delete investments end delete begin insert investments, end insert including,
but not limited to, its business strategy, targeted community
outcomes, capitalization strategy, and management capacity.

(C) Considers the qualified community development entity’s
prior qualified low-income community investments under Section
45D of the Internal Revenue Code.

(D) Considers the qualified community development entity’s
prior qualified low-income community investments under this
section, including subparagraph begin delete (D) end delete begin insert (C) end insert of paragraph (5).

(4) (A) Subject to subdivision (h), begin delete GO-Biz end delete begin insert RTCA end insert shall begin
accepting applications on or before May 15, 2017, and shall award
authority to designate qualified equity investments annually
through begin delete 2029. end delete begin insert 2022. end insert

(B) In the instance where begin delete GO-Biz end delete begin insert RTCA end insert determines that an
application is incomplete, the qualified community development
entity shall be given five business days to provide the omitted
information.

(5) (A) In the 2017 awards cycle, begin delete GO-Biz end delete begin insert RTCA end insert shall award
authority to designate qualified equity investments to qualified
community development entities described in paragraph (2) of
subdivision (c) in the order applications are received by begin delete GO-Biz. end delete
begin insert RTCA. end insert Applications received on the same day shall be deemed to
have been received simultaneously.

(B) In the 2018 to begin delete 2029 end delete begin insert 2022 end insert award cycles, inclusive, at least
60 percent of the authority to designate qualified equity investments
shall be awarded pursuant to subparagraph (A). At the discretion
of begin delete GO-Biz, end delete begin insert RTCA, end insert a higher percentage of authority to designate
qualified equity investments may be awarded pursuant to
subparagraph (A).

(C)  begin delete GO-Biz end delete begin insert RTCA end insert shall award up to 40 percent of the authority
to designate qualified equity investments in the 2018 to begin delete 2029, end delete
begin insert 2022, end insert inclusive, award cycles, to qualified community development
entities on a competitive basis begin delete using blind end delete begin insert that meets the following
criteria: end insert

begin insert (i) end insert begin insert   end insert begin insert Awards shall be reviewed using blind end insert scoring and a review
committee that is composed of community development finance
practitioners and members having demonstrated experience in
assessing organizational business strategy, community outcomes,
capitalization strategy, and management capacity. begin delete A end delete

begin insert (ii) end insert begin insert   end insert begin insert A end insert member of the review committee shall not have a financial
interest, which includes, but is not limited to, asking, consenting,
or agreeing to receive any commission, emolument, gratuity,
money, property, or thing of value for his or her own use, benefit,
or personal advantage for procuring or endeavoring to procure for
any person, partnership, joint venture, association, or corporation
any qualified equity investment or other assistance from any
applicant.

begin delete

(D) (i) For qualified equity investments derived from the 2017
to 2029, inclusive, awards cycles, pursuant to subparagraphs (A),
(B), and (C), a qualified community development entity shall invest
at least 15 percent of the qualified equity investment in a qualified
low-income community business in consultation or in partnership
with either of the following:

(I) A qualified community development entity certified under
Section 45D of the Internal Revenue Code that has not received a
federal New Markets Tax Credit allocation on or after January 1,
2012, and has either a local service area that includes one or more
California communities or a California statewide service area, but
excluding qualified community development entities with a
national service area.

(II)

 
A nonprofit organization that does the following:

(ia)

 
Is tax exempt under Section 23701.

(ib)

 
Is registered with the Registry of Charitable Trusts, which is
administered by the Attorney General.

(ic)

 
Has articles of incorporation or articles of organization that
state the primary mission of the organization is focused on
improving the economic well-being of low-income communities
or individuals.

(id)

 
Has bylaws that provide that the organization maintains
accountability to residents of low-income communities through
their representation on any governing board or on an advisory
board of the nonprofit organization.

(ii) The 15-percent investment shall be calculated by multiplying
the total purchase price of the qualified equity investments issued
by the qualified community development entity by 15 percent.
Each community development entity application shall indicate
how the qualified community development entity will meet this
requirement.

(E) In making competitive awards of authority to designate
qualified equity investments, priority shall be given to applications
that can demonstrate that the qualified equity investment authority
will allow the qualified community development entity to undertake
qualified low-income community investments in rural, suburban,
or urban areas that have been historically underserved and result
in the primary benefit to the hardest to serve and undercapitalized
lower income populations, 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.

end delete begin insert

(iii) Applications for awards shall include a commitment to
make at least 15 percent of qualified community development
investments with the assistance of a nonprofit organization as
documented by a cooperation agreement that states the terms and
conditions of that assistance. For the purposes of this clause, the
following shall apply:

end insert begin insert

(I) A qualified community development entity shall be certified
under Section 45D of the Internal Revenue Code but has not
received a federal New Markets Tax Credit allocation on or after
January 1, 2012, and has either a local service area that includes
one or more California communities or a California statewide
service area, but excluding qualified community development
entities with a national service area.

end insert begin insert

(II) A nonprofit organization shall meet all of the following
requirements: Is tax exempt under Section 23701, is registered
with the Registry of Charitable Trusts, which is administered by
the Attorney General, has articles of incorporation or articles of
organization that state the primary mission of the organization is
focused on improving the economic well-being of low-income
communities or individuals, and has bylaws that provide that the
organization maintains accountability to residents of low-income
communities through their representation on any governing board
or on an advisory board of the nonprofit organization.

end insert begin insert

(iv) Priority shall be provided to both of the following:

end insert begin insert

(I) Applications that commit to addressing the hardest to serve
and undercapitalized lower income populations.

end insert begin insert

(II) Applications that support neighborhood revitalization
strategies driven by local grassroots stakeholders in multiple
low-income communities across one or more regions or the state.
These applications shall demonstrate how their investment activity
provides a scalable economic development model.

end insert begin delete

(F)

end delete

begin insert (D) end insert  (i) For applications described in subparagraph (A), in the
event requests for authority to designate qualified equity
investments exceed the applicable annual allocation limitation,
begin delete GO-Biz end delete begin insert RTCA end insert shall certify, consistent with remaining qualified
equity investment capacity, qualified equity investments of
applicants in proportionate percentages based upon the ratio of the
amount of qualified equity investments requested in such
applications to the total amount of qualified equity investments
requested in all such applications received on the same day.

(ii) If a pending request cannot be fully certified due to this
limit, begin delete GO-Biz end delete begin insert RTCA end insert shall certify the portion that may be certified
unless the qualified community development entity elects to
withdraw its request rather than receive partial certification.

begin delete

(G)

end delete

begin insert (E) end insert  An approved applicant 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, provided that the applicant and the
transferee notify begin delete GO-Biz end delete begin insert RTCA end insert within 30 calendar days of such
transfer and include the information required in the application
with respect to such transferee with such notice. The transferee
shall be subject to the same rules, requirements, and limitations
applicable to the transferor.

begin delete

(H)

end delete

begin insert (F) end insert  Within 200 calendar days of begin delete GO-Biz end delete begin insert RTCA end insert sending notice
of certification, the qualified community development entity or
any transferee, under subparagraph begin delete (G), end delete begin insert (E), end insert shall issue the
qualified equity investment and receive cash in the amount of the
certified amount. The qualified community development entity or
transferee, under subparagraph begin delete (G), end delete begin insert (E), end insert shall provide begin delete GO-Biz end delete
begin insert RTCA end insert with evidence of the receipt of the cash investment within
205 calendar days of the applicant receiving notice of certification.
If the qualified community development entity or any transferee,
under subparagraph begin delete (G), end delete begin insert (E), end insert does not receive the cash investment
and issue the qualified equity investment within 200 calendar days
of begin delete GO-Biz end delete begin insert RTCA end insert sending the certification notice, the certification
shall lapse and the entity may not issue the qualified equity
investment without reapplying to begin delete GO-Biz end delete begin insert RTCA end insert for certification.
Lapsed certifications revert back to begin delete GO-Biz end delete begin insert RTCA end insert and shall be
reissued in the following order:

(i) First, pro rata to applicants whose qualified equity investment
allocations were reduced pursuant to subparagraph (F) under the
annual allocation limitation of forty million dollars ($40,000,000)
in paragraph (4) of subdivision (c).

(ii) Thereafter, in accordance with the application process.

begin delete

(I)

end delete

begin insert (G) end insert  A qualified community development entity that issues
qualified equity investments shall notify begin delete GO-Biz end delete begin insert RTCA end insert of the
names of taxpayers that are eligible to utilize tax credits pursuant
to this section and any transfer of a qualified equity investment.

(6) (A) A qualified community development entity that issues
qualified equity investments shall submit a report to begin delete GO-Biz end delete begin insert RTCA end insert
that provides documentation as to the investment of at least 85
percent of the funds being deployed within one year in qualified
low-income community investments in qualified active low-income
community businesses located in California. Such report shall
include all of the following:

(i) A bank statement of such qualified community development
entity evidencing each qualified low-income community
investment.

(ii) Evidence that such business was a qualified active
low-income community business at the time of such qualified
low-income community investment.

(iii) Evidence that the community development entity complied
with subparagraph begin delete (D) end delete begin insert (C) end insert of paragraph (5).

(iv) Evidence that each qualified low-income community
investment was determined to have a positive revenue impact on
the state. This requirement does not apply to reinvestments of
redeemed qualified low-income investments.

(v) Any other information required by begin delete GO-Biz end delete begin insert RTCA end insert as being
necessary to meet the requirements of this section.

(B) Thereafter, the qualified community development entity
shall submit an annual report to begin delete GO-Biz end delete begin insert RTCA end insert during the seven
years following submittal of the report, pursuant to subparagraph
(A). No annual report shall be due prior to the first anniversary of
the initial credit allowance date. The report shall include, but is
not limited to, the following:

(i) The social, environmental, and economic impact the credit
had on the low-income community during the report period and
cumulatively.

(ii) The amount of moneys used for qualified low-income
investments in qualified low-income community businesses.

(iii) The number of employment positions created and retained
as a result of qualified low-income community investments and
the average annual salary of such positions.

(iv) The number of operating businesses assisted as a result of
qualified low-income community investments, by industry and
number of employees.

(v) Number of owner-occupied real estate projects.

(vi) Location of each qualified low-income community business
assisted by a qualified low-income community investment.

(vii) Summary of the outcomes of each of the revenue impact
assessments undertaken by the qualified community development
entity during the year.

(viii) Any other information requested by begin delete GO-Biz. end delete begin insert RTCA. end insert

(e) (1) In the case where the credit allowed by this section
exceeds the “tax,” the excess may be carried over to reduce the
“tax” in the following year, and the six succeeding years if
necessary, until the credit is exhausted.

(2) A taxpayer allowed a credit under this section for a qualified
equity investment shall not be eligible for any other credit under
this part with respect to that investment.

(3) The credit allowed under this section may be in addition to
any credit allowed under Section 45D of the Internal Revenue
Code.

(f)  begin delete GO-Biz end delete begin insert RTCA end insert shall annually report on its Internet Web site
the information provided by low-income community development
entities and on the geographic distribution of the qualified active
low-income community businesses assisted.

(g) (1) The Franchise Tax Board may prescribe any rules or
regulations that may be necessary or appropriate to implement this
section. The Franchise Tax Board shall have access to any
documentation held by begin delete GO-Biz end delete begin insert RTCA end insert relative to the application
and reporting of a qualified community development entity.

(2) A begin delete qualifying end delete begin insert qualified end insert community development entity shall
provide begin delete GO-Biz end delete begin insert RTCA end insert with the name, address, and tax
identification number of each investor and entity for which a
qualified equity investment was designated by the begin delete qualifying end delete
begin insert qualified end insert community development entity, pursuant to this section.
begin delete GO-Biz end delete begin insert RTCA end insert shall provide this information to the Franchise Tax
Board in a manner determined by the Franchise Tax Board.

(h) (1) The credit authorized by this section shall only be
allowed for those taxable years for which moneys are appropriated
to begin delete GO-Biz end delete begin insert RTCA end insert to administer the California New Markets Tax
Credit pursuant to 18410.3 for that taxable year. The appropriation
shall specifically identify the California New Markets Tax Credit.

(2) For those taxable years for which those moneys are
appropriated pursuant to begin delete subdivision end delete begin insert paragraph end insert (1), begin delete GO-Biz end delete begin insert RTCA end insert
shall post notice of the appropriation on the homepage of its
Internet Web site and send notice of such appropriation to the
Secretary of State and the Legislative Counsel.

(i) This section shall be repealed on December 1, begin delete 2029. end delete begin insert 2022. end insert

begin delete SEC. 7. end delete

begin insert SEC. 6. end insert   

For the purposes of complying with Section 41 of the
Revenue and Taxation Code, the Legislature finds and declares as
follows:

(a) Specific goals, purposes, and objectives: attract private sector
investment in lower income communities in California.

(b) Performance indicators:

(1) Amount of qualified low-income community investments
issued.

(2) Amount of dollars deployed in qualified low-income
community investments.

(3) Number of operating businesses assisted as a result of
qualified low-income community investments.

(4) Number of employment positions created and retained as a
result of qualified low-income community investments and the
average annual salary of those positions.

(c) Data collection requirements and baseline measurements:

(1) The baseline measurements include:

(A) The amount of tax credits issued in the year.

(B) The unemployment rate of the area.

(C) The poverty rate of the area.

(2) Data to collect includes:

(A) The amount begin insert of end insert tax credits issued in the year.

(B) The number of operating businesses in a low-income
community assisted.

(C) The number of jobs created and retained as a result of
qualified low-income community investments.

begin delete SEC. 8. end delete

begin insert SEC. 7. end insert   

The provisions of this act are severable. If any
provision of this act or its application is held invalid, that invalidity
shall not affect other provisions or applications that can be given
effect without the invalid provision or application.

begin delete SEC. 9. end delete

begin insert SEC. 8. end insert   

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