BILL ANALYSIS Ó
AB 2647
Page 1
Date of Hearing: May 25, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2647 (Eduardo Garcia) - As Amended May 17, 2016
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|Policy |Jobs, Economic Development, |Vote:|9 - 0 |
|Committee: |and the Economy | | |
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| |Revenue and Taxation | |9 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill expands California Organized Investment Network (COIN)
tax credits. Specifically, this bill:
AB 2647
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1)Extends the January 1, 2017, sunset date on the COIN tax
credits to January 1, 2027.
2)Increases the aggregate amount of qualified investments that
may be made by taxpayers from $50 million to $120 million.
FISCAL EFFECT:
1)Annual GF revenue loss in the range of $6 million, $10.5
million, and $15 million in calendar years 2017, 2018, and
2019.
2)Minor and absorbable administrative costs to the Department of
Insurance (DOI).
COMMENTS:
1)Background. The COIN program was created in 1996 as a
public-private partnership by DOI, the insurance industry,
state government leaders, and community development
organizations with the goal of helping to address the unmet
capital needs for economic development and affordable housing
in low-income urban and rural communities throughout
California. This voluntary program was established at the
request of the insurance industry as a potential alternative
to state legislation that would create a system similar to the
federal Community Reinvestment Act.
AB 2647
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The COIN program serves as a liaison between insurers that are
seeking investment opportunities and the community
organizations that are seeking investment capital for
projects. Community Development Financial Institutions (CDFIs)
work with COIN - an office within the California Department of
Insurance - as financial intermediaries providing access to
credit, loans, and investments to small businesses and
non-profits that serve economically disadvantaged communities.
CDFIs also offer administrative and technical assistance in
these low-income communities. Generally, CDFIs lend to
borrowers that do not satisfy the criteria for conventional
lenders and focus on a particular community or certain groups
of people
2)CDFI tax credit: Under this program, investors receive a tax
credit worth 20 percent of their investment in one of the
CDFIs certified by the California Organized Investment
Network. The credit can be applied against the corporation
tax, personal income tax, or insurer premium tax.
3)Purpose. According to the author's office and supporters, this
bill will help address some of the fundamental challenges
facing California's lower income and disadvantaged
communities. Programs like COIN are crucial to address
California's growing income inequality.
4)Recent amendments. As introduced, AB 2647 established the
California New Markets Tax Credit Program, with the stated
purpose of stimulating private sector investment in lower
AB 2647
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income communities. However, the bill was amended in the
Assembly Committee on Revenue and Taxation to instead make the
focus of the bill the COIN program. This makes the bill
similar to AB 2728 (Atkins), which would extend the COIN tax
credit program to January 1, 2022.
Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081