BILL ANALYSIS Ó
AB 2728
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON INSURANCE
Tom Daly, Chair
AB 2728
(Atkins) - As Introduced February 19, 2016
AND AS PROPOSED TO BE AMENDED
SUBJECT: Insurance: community development investments
SUMMARY: Extends the sunset dates for the California Organized
Investment Network (COIN) Advisory Board and COIN-certified tax
credits. Specifically, this bill:
1)Extends the sunset date on the COIN Advisory Board to January
1, 2027.
2)Adds definitions for qualified COIN investments in Native
American and rural communities.
3)Makes technical and clarifying changes to definitions of
COIN-qualified investments.
4)States the Legislature's intent that the sunset date of
January 1, 2020 on a mandate that insurers submit community
development investment data to the Department of Insurance
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(DOI) will be extended upon the DOI complying with an existing
requirement to provide COIN-related information on its
Internet Web site.
5)Extends the sunset date on the Community Development Financial
Institution (CDFI) tax credit program until January 1, 2027.
EXISTING LAW:
1)Establishes a COIN Advisory Board to consult with and advise
the DOI with respect to issues associated with the COIN
program.
2)Sunsets the Advisory Board on January 1, 2020.
3)Requires any admitted insurer that writes at least
$100,000,000 in California premium to file, by July 1, 2016,
data with DOI detailing its investment activity for the past 3
years with respect to community development investments.
4)Requires the DOI, by December 31, 2016, to provide information
on its Internet Web site:
a) Concerning the community development investments made by
insurers, specifically noting information concerning
investments that are innovative, responsive to community
needs, not routinely made by insurers, and that have a high
impact on low and moderate income communities, and
b) On the actions taken by the COIN program to analyze
insurer data for purposes of identifying potential insurer
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investment opportunities, and on COIN's outreach and
marketing efforts, and
c) Identifying the amount of California public debt
purchased by insurers, the amount of identified California
investments by insurers, and the amount of green
investments by insurers.
5)Provides that the data call and information posting provisions
will sunset on January 1, 2020.
FISCAL EFFECT: According to the Revenue and Tax Committee
analysis of this bill, the Franchise Tax Board staff estimates
that the bill will result in an annual General Fund loss of
$600,000 in FY 2016-17, $1.9 million in FY 2017-18, and $3.2
million in FY 2018-19.
COMMENTS:
1)Purpose . The author argues that the CDFI tax credit program
administered by the DOI's COIN program provides a valuable
economic incentive for insurers to invest in California low
and moderate income communities. COIN directly administers
the tax credit program, and is tasked with encouraging
insurers to make other qualified investments in California's
low and moderate income communities. The bill extends the
sunset date on the tax credit component of the COIN program,
and it is the author's intent to, upon reviewing the
information provided by the DOI after July 1, 2016, to extend
the sunset on the remainder of the COIN program's activities
as well as the insurer data call provisions.
2)Background . The COIN program has existed within the DOI for
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20 years, in one form or another. Originally created
administratively, the purposes of COIN have been clarified,
and its operations formalized, in statute. Encouraging
community development investments was the primary goal of the
program. However, over time its role expanded to
administering the tax credit program, and managing the data
insurers have been required to file concerning their efforts
at making socially desirable community development investments
with some portion of the premium dollars collected from
California policyholders.
3)Tax Credit program . This bill was double-referred to
Insurance Committee and Revenue and Taxation Committee. DOI
proposed sunset date extensions and some reforms to the tax
credit program, and the Revenue and Taxation Committee
proposed some modifications to those proposals. The bill will
be before the Insurance Committee in the event it passes
Revenue and Taxation when it is heard April 18.
4)Recent legislation . The current sunset dates for the COIN
program were established by AB 624 (Perez), Statutes 2011,
Chapter 426 (tax credit), and AB 2128 (Gordon), Statutes 2014,
Chapter 384 (data call). Stakeholders engaged in substantial
discussions prior to enactment of AB 2128, and many
stakeholders maintain that extending the sunset date on future
data call mandates ought to wait until after the DOI completes
its analysis and information posting responsibilities,
currently required to be completed by December 31 of this
year. For this reason, the author opted to refrain from
including sunset extensions on that portion of the COIN
program, instead adding language declaring the Legislature's
intent to extend that sunset date upon the DOI fulfilling its
responsibilities.
REGISTERED SUPPORT / OPPOSITION:
AB 2728
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Support
California Department of Insurance
Burbank Housing Development Corporation
Redwood Valley Little River Bank of Pomo Indians
Opposition
None received
Analysis Prepared by:Mark Rakich / INS. / (916) 319-2086