BILL NUMBER: AB 2647	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MARCH 29, 2016

INTRODUCED BY   Assembly Members Eduardo Garcia and Medina
   (Principal coauthors: Assembly Members  Brown 
   and Chu   Brown,  
Chu,   and Dodd  )

                        FEBRUARY 19, 2016

   An act to  add Section 26011.9 to the Public Resources
Code, and to  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  of 
 California   of California  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  Law and   Law, 
the Corporation Tax Law, and the law governing insurance taxation, in
modified conformity with  a   the  federal
New Markets Tax Credit, for taxable years beginning on or after
January 1, 2017, and before January 1,  2029,  
2022,  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  an amount equal to
any portion not granted under a specified sales and use tax
exclusion, not to exceed  $40,000,000 per calendar 
year, and would limit the allocation of the credit to a cumulative
total of no more than $200,000,000, as provided.   year.
 The bill would impose specified duties on  GO-Biz
  the Responsible Tax Credit Administrator (RTCA), to be
designated by the Governor,  with regard to the application
for, and allocation of, the credit. The bill would require 
GO-Biz   the RTCA  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
 to,   to  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
 GO-Biz   the RTCA  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. 
   (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.  
   (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.  
   (c) 
    (e)  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  years,
  years  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. 
   (d) 
    (f)  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
 $12 to $14   twelve dollars ($12) to fourteen
dollars ($14)  of private investment. 
  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. 
   SEC. 3.   SEC. 2.   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  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  medium-size
  medium-sized  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.  GO-Biz   RTCA
 shall administer this program as provided in this section,
Section 17053.9, and Section 23622.9.  The Director of GO-Biz
may delegate the administration of all or portions of the program
within GO-Biz. 
   (b) (1) For taxable years beginning on or after January 1, 2017,
and before January 1,  2029,   2022,  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. 

   (2) For the purposes of this section, "GO-Biz" means the Governor'
s Office of Business and Economic Development.  
   (2) For the purposes of this section, "RTCA" means the Responsible
Tax Credit Administrator, as designated by the Governor. 
   (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  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  forty million dollars 
($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).  
($40,000,000) per calendar year.  The allocation of any
undesignated qualified equity investments shall be returned to
 GO-Biz   RTCA  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  GO-Biz   RTCA  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  "GO-Biz."   "RTCA.  
" 
   (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  (D)   (C)  of paragraph
(5) of subdivision (d). In this case, recapture shall be 100 percent
of the credit.
   (B)  GO-Biz   RTCA  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
 GO-Biz   RTCA  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 
(F)   (D)  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)  GO-Biz   RTCA  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)  GO-Biz   RTCA  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.  GO-Biz
  RTCA  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,  GO-Biz   RTCA
 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  investments  
investments,  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  (D)   (C)  of
paragraph (5).
   (4) (A) Subject to subdivision (h),  GO-Biz  
RTCA  shall begin accepting applications on or before May 15,
2017, and shall award authority to designate qualified equity
investments annually through  2029.  2022. 

   (B) In the instance where  GO-Biz   RTCA
 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,  GO-Biz  
RTCA  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  GO-Biz.  RTCA.  Applications
received on the same day shall be deemed to have been received
simultaneously.
   (B) In the 2018 to  2029   2022  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  GO-Biz, 
 RTCA,  a higher percentage of authority to designate
qualified equity investments may be awarded pursuant to subparagraph
(A).
   (C)  GO-Biz   RTCA    shall
award up to 40 percent of the authority to designate qualified equity
investments in the 2018 to  2029,   2022, 
inclusive, award cycles, to qualified community development entities
on a competitive basis  using blind   that
meets the following criteria: 
    (i)     Awards shall be reviewed using
blind  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.  A 
    (ii)     A  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. 
   (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. 

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

   (I) Applications that commit to addressing the hardest to serve
and undercapitalized lower income populations.  
   (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.  
   (F) 
    (D)  (i)  For applications described in subparagraph
(A), in the event requests for authority to designate qualified
equity investments exceed the applicable annual allocation
limitation,  GO-Biz   RTCA  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,  GO-Biz   RTCA  shall certify the
portion that may be certified unless the qualified community
development entity elects to withdraw its request rather than receive
partial certification. 
   (G) 
    (E)  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  GO-Biz   RTCA  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. 
   (H) 
   (F)  Within 200 calendar days of  GO-Biz
  RTCA  sending notice of certification, the
qualified community development entity or any transferee, under
subparagraph  (G),   (E),  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  (G),   (E),
 shall provide  GO-Biz   RTCA  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  (G),   (E),  does not receive
the cash investment and issue the qualified equity investment within
200 calendar days of  GO-Biz   RTCA 
sending the certification notice, the certification shall lapse and
the entity may not issue the qualified equity investment without
reapplying to  GO-Biz   RTCA  for
certification. Lapsed certifications revert back to  GO-Biz
  RTCA  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)   (D)  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. 
   (I) 
   (G)  A qualified community development entity that issues
qualified equity investments shall notify  GO-Biz 
 RTCA  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  GO-Biz
  RTCA  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  (D)   (C)  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  GO-Biz 
 RTCA  as being necessary to meet the requirements of this
section.
   (B) Thereafter, the qualified community development entity shall
submit an annual report to  GO-Biz   RTCA 
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  GO-Biz.
  RTCA. 
   (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)  GO-Biz   RTCA  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  GO-Biz   RTCA 
relative to the application and reporting of a qualified community
development entity.
   (2) A  qualifying   qualified  community
development entity shall provide  GO-Biz   RTCA
 with the name, address, and tax identification number of each
investor and entity for which a qualified equity investment was
designated by the  qualifying   qualified 
community development entity, pursuant to this section. 
GO-Biz  RTCA  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
 GO-Biz   RTCA  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  subdivision  
paragraph  (1),  GO-Biz   RTCA  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,  2029.
  2022. 
   SEC. 4.   SEC. 3.   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  medium-size   medium-sized 
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.  GO-Biz
  RTCA  shall administer this program as provided
in this section, Section 12283, and Section 23622.9.  The
Director of GO-Biz may delegate the administration of all or portions
of the program within GO-Biz. 
   (b) (1) For taxable years beginning on or after January 1, 2017,
and before January 1,  2029,   2022,  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. 
   (2) For the purposes of this section, "GO-Biz" means the Governor'
s Office of Business and Economic Development.  
   (2) For the purposes of this section, "RTCA" means the Responsible
Tax Credit Administrator, as designated by the Governor. 
   (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  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 
forty million dollars  ($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).   ($40,000,000) per calendar year. 
The allocation of any undesignated qualified equity investments
shall be returned to  GO-Biz   RTCA  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  GO-Biz 
 RTCA  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  "GO-Biz."   "RTCA.  
" 
   (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  (D)   (C)  of paragraph
(5) of subdivision (d). In this case, recapture shall be 100 percent
of the credit.
   (ii)  GO-Biz   RTCA   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
 GO-Biz   RTCA  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 
(F)   (D)  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)  GO-Biz   RTCA  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)  GO-Biz   RTCA    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. 
GO-Biz   RTCA  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,  GO-Biz   RTCA
 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  investments  
investments,  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  (D)   (C)  of
paragraph (5).
   (4) (A) Subject to subdivision (h),  GO-Biz  
RTCA  shall begin accepting applications on or before May 15,
2017, and shall award authority to designate qualified equity
investments annually through  2029.   2022.

   (B) In the instance where  GO-Biz   RTCA
 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,  GO-Biz  
RTCA  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 GO-Biz.   RTCA.  Applications
received on the same day shall be deemed to have been received
simultaneously.
   (B) In the 2018 to  2029   2022  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  GO-Biz, 
 RTCA,  a higher percentage of authority to designate
qualified equity investments may be awarded pursuant to subparagraph
(A).
   (C)  GO-Biz   RTCA    shall
award up to 40 percent of the authority to designate qualified equity
investments in the 2018 to  2029,   2022, 
inclusive, award cycles, to qualified community development entities
on a competitive basis  using blind   that
meets the following criteria: 
    (i)     Awards shall be reviewed using
blind  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.  A 
    (ii)     A  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. 
   (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. 

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

   (I) Applications that commit to addressing the hardest to serve
and undercapitalized lower income populations.  
   (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.  
   (F) 
    (D)  (i) For applications described in subparagraph (A),
in the event requests for authority to designate qualified equity
investments exceed the applicable annual allocation limitation,
 GO-Biz   RTCA  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,  GO-Biz   RTCA  shall certify the
portion that may be certified unless the qualified community
development entity elects to withdraw its request rather than receive
partial certification. 
   (G) 
    (E)  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  GO-Biz   RTCA  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. 
   (H) 
    (F)  Within 200 calendar days of  GO-Biz
  RTCA  sending notice of certification, the
qualified community development entity or any transferee, under
subparagraph  (G),   (E),  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  (G),   (E),
 shall provide  GO-Biz   RTCA  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  (G),   (E),  does not receive
the cash investment and issue the qualified equity investment within
200 calendar days of  GO-Biz   RTCA 
sending the certification notice, the certification shall lapse and
the entity may not issue the qualified equity investment without
reapplying to  GO-Biz   RTCA  for
certification. Lapsed certifications revert back to  GO-Biz
                                           RTCA 
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)   (D)  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.

   (I) 
    (G)  A qualified community development entity that
issues qualified equity investments shall notify  GO-Biz
  RTCA  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  GO-Biz
  RTCA  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  (D)   (C)  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  GO-Biz 
 RTCA  as being necessary to meet the requirements of this
section.
   (B) Thereafter, the qualified community development entity shall
submit an annual report to  GO-Biz   RTCA 
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  GO-Biz.
  RTCA. 
   (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)  GO-Biz   RTCA  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  GO-Biz   RTCA 
relative to the application and reporting of a qualified community
development entity.
   (2) A  qualifying   qualified  community
development entity shall provide  GO-Biz   RTCA
 with the name, address, and tax identification number of each
investor and entity for which a qualified equity investment was
designated by the  qualifying   qualified 
community development entity, pursuant to this section. 
GO-Biz   RTCA  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
 GO-Biz   RTCA  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  subdivision  
paragraph  (1),  GO-Biz   RTCA  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,  2029.
  2022. 
   SEC. 5.   SEC. 4.   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.
   SEC. 6.   SEC. 5.   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  medium-size   medium-sized 
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.  GO-Biz
  RTCA shall administer this program as provided in
this section, Section 12283, and Section 17053.9.  The
Director of GO-Biz may delegate the administration of all or portions
of the program within GO-Biz. 
   (b) (1) For taxable years beginning on or after January 1, 2017,
and before January 1,  2029,   2022,  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. 
   (2) For the purposes of this section, "GO-Biz" means the Governor'
s Office of Business and Economic Development.  
   (2) For the purposes of this section, "RTCA" means the Responsible
Tax Credit Administrator, as designated by the Governor. 
   (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  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 
forty million dollars  ($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).   ($40,000,000) per calendar year. 
The allocation of any undesignated qualified equity investments
shall be returned to  GO-Biz   RTCA  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  GO-Biz 
 RTCA  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  "GO-Biz."   "RTCA.  
" 
   (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  (D)   (C)  of paragraph
(5) of subdivision (d). In this case, recapture shall be 100 percent
of the credit.
   (ii)  GO-Biz   RTCA    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
 GO-Biz   RTCA  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 
(F)   (D)  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)  GO-Biz   RTCA  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)  GO-Biz   RTCA    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. 
GO-Biz   RTCA  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,  GO-Biz   RTCA
 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  investments  
investments,  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  (D)   (C)  of
paragraph (5).
   (4) (A) Subject to subdivision (h),  GO-Biz  
RTCA  shall begin accepting applications on or before May 15,
2017, and shall award authority to designate qualified equity
investments annually through  2029.   2022.

   (B) In the instance where  GO-Biz   RTCA
 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,  GO-Biz  
RTCA  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  GO-Biz.   RTCA.  Applications
received on the same day shall be deemed to have been received
simultaneously.
   (B) In the 2018 to  2029   2022  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  GO-Biz, 
 RTCA,  a higher percentage of authority to designate
qualified equity investments may be awarded pursuant to subparagraph
(A).
   (C)  GO-Biz   RTCA    shall
award up to 40 percent of the authority to designate qualified equity
investments in the 2018 to  2029,  2022, 
inclusive, award cycles, to qualified community development entities
on a competitive basis  using blind   that meets
the following criteria: 
    (i)     Awards shall be reviewed using
blind  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.  A 
    (ii)     A  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. 
   (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.

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

   (I) Applications that commit to addressing the hardest to serve
and undercapitalized lower income populations.  
   (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.  
   (F) 
    (D)  (i) For applications described in subparagraph (A),
in the event requests for authority to designate qualified equity
investments exceed the applicable annual allocation limitation,
 GO-Biz   RTCA  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,  GO-Biz   RTCA  shall certify the
portion that may be certified unless the qualified community
development entity elects to withdraw its request rather than receive
partial certification. 
   (G) 
    (E)  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  GO-Biz   RTCA  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. 
   (H) 
    (F)  Within 200 calendar days of  GO-Biz
  RTCA  sending notice of certification, the
qualified community development entity or any transferee, under
subparagraph  (G),   (E),  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 
               (G),   (E),  shall provide 
GO-Biz   RTCA  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  (G), 
 (E),  does not receive the cash investment and issue the
qualified equity investment within 200 calendar days of 
GO-Biz   RTCA sending the certification notice, the
certification shall lapse and the entity may not issue the qualified
equity investment without reapplying to  GO-Biz 
 RTCA  for certification. Lapsed certifications revert back
to  GO-Biz   RTCA  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.

   (I) 
    (G)  A qualified community development entity that
issues qualified equity investments shall notify  GO-Biz
 RTCA  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  GO-Biz
  RTCA  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  (D)   (C)  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  GO-Biz 
 RTCA  as being necessary to meet the requirements of this
section.
   (B) Thereafter, the qualified community development entity shall
submit an annual report to  GO-Biz   RTCA 
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  GO-Biz.
  RTCA. 
   (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)  GO-Biz   RTCA  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  GO-Biz   RTCA 
relative to the application and reporting of a qualified community
development entity.
   (2) A  qualifying   qualified  community
development entity shall provide  GO-Biz   RTCA
 with the name, address, and tax identification number of each
investor and entity for which a qualified equity investment was
designated by the  qualifying   qualified 
community development entity, pursuant to this section. 
GO-Biz   RTCA  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
 GO-Biz   RTCA  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  subdivision  
paragraph  (1),  GO-Biz   RTCA  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,  2029.
  2022. 
   SEC. 7.   SEC. 6.   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  of  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.
   SEC. 8.   SEC. 7.   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.
   SEC. 9.   SEC. 8.  This act provides for
a tax levy within the meaning of Article IV of the Constitution and
shall go into immediate effect.