BILL ANALYSIS Ó
AB 2728
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Date of Hearing: May 4, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2728 (Atkins) - As Amended April 25, 2016
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|Policy |Revenue and Taxation |Vote:|9 - 0 |
|Committee: | | | |
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| |Insurance | |13 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill extends the sunset dates for the California Organized
Investment Network (COIN) Advisory Board and COIN-certified tax
credits. In summary, this bill:
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1)Extends the sunset date on the COIN Advisory Board to January
1, 2022.
2)Extends the sunset date on the Community Development Financial
Institution (CDFI) tax credit program until January 1, 2022.
3)Adds definitions for qualified COIN investments in Native
American and rural communities and investments made by diverse
investment managers.
4)Makes technical and clarifying changes to definitions of
COIN-qualified investments.
5)Prioritizes insurance company investors in the allocation of
the tax credit.
6)States the Legislature's intent that the sunset date of
January 1, 2020, on a mandate that insurers submit community
development investment data, including data on investments
with diverse investment managers, to the Department of
Insurance (DOI) will be extended upon the DOI complying with
an existing requirement to provide COIN-related information on
its Internet Web site.
FISCAL EFFECT:
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1)Annual ongoing GF revenue loss in the range of $3.8 million
from the extension of the CDFI tax credit. This estimate
reflects the average credit cost across a five-year period
from FY 2013-14 to FY 2017-18, as projected, and includes
reduced Personal Income Tax (PIT), Corporation Tax (CT), and
insurer premium tax revenues.
2)Minor and absorbable administrative costs to DOI.
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 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
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request of the insurance industry as a potential alternative
to state legislation that would create a system similar to the
federal Community Reinvestment Act.
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. 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
3)CDFI tax credit: Under this program, investors receive a tax
credit worth 20 percent of their investment in one of the
community development financial institutions certified by the
California Organized Investment Network. The credit can be
applied against the corporation tax, personal income tax, or
insurer premium tax.
Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081
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