BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 2728 (Atkins) - Insurance: community development investments
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|Version: April 25, 2016 |Policy Vote: INS. 8 - 0, GOV. & |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 1, 2016 |Consultant: Debra Cooper |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 2728 would extend the sunset date for the
California Organized Investment Network (COIN) program and the
California Developmental Financial Institution (CDFI) tax
credit.
Fiscal
Impact:
Ongoing costs to the Department of Insurance (CDI) of $630,000
per year starting in fiscal year 2017-18 to retain five
limited term positions associated with the tax credit program
that will expire on June 30, 2017. (Insurance Fund)
The Franchise Tax Board estimates that the tax credit
extension will result in an annual revenue loss of $0.6
million in fiscal year 2016-17, $1.9 million in fiscal year
2017-18, and $3.2 million in fiscal year 2018-19. These
AB 2728 (Atkins) Page 1 of
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estimates do not include the revenue impact of tax credits
allowed against the insurance gross premiums tax.
Background: COIN, within CDI, is a "collaborative effort between the
California Department of Insurance, the insurance industry,
community affordable housing and economic development
organizations, and community advocates. COIN was established in
1996 at the request of the insurance industry as an alternative
to state legislation that would have required insurance
companies to invest in underserved communities." This program
serves as a liaison between insurers that are seeking investment
opportunities and community organizations that are seeking
investment capital for projects.
CDFIs are "mission-driven community organizations, separate from
government control, dedicated to providing financial products
and services to low-income communities underserved by
traditional financial markets."
Each year, CDI may allocate up to $10 million in tax credits
annually to leverage up to $50 million in community development
investments. Under the CDFI tax credit program, investors
receive a tax credit worth up to 20% of their investment in one
of the COIN certified CDFIs in the form of non-interest bearing
deposits, loans, or equity investments of at least $50,000 held
for at least 60 months. Investors can claim a credit against the
state personal income tax, corporation tax, or insurance gross
premium tax. Existing law sunsets the tax credit on December 1,
2017 and sunsets the program on January 1, 2020.
Existing law requires insurers to report data on the investments
in order to track insurer COIN investments. In 2015, CDI and the
COIN advisory board moved the data call deadline to March 2016.
Those data have been submitted and CDI is currently working to
publish the results.
Proposed Law:
This bill would:
Add definitions for qualified COIN investments in Native
AB 2728 (Atkins) Page 2 of
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American and rural communities, investments made by diverse
investment managers, and make technical and clarifying changes
to definitions of other COIN-qualified investments.
Extend the sunset date on the COIN Advisory Board and the CDFI
tax credit program until January 1, 2022.
Prioritize insurance company investors in the allocation of
the tax credit.
State the Legislature's intent to extend the sunset date on
the Community Investment Survey Data Call upon CDI complying
with an existing requirement to provide COIN-related
information on its Internet Web site.
Related
Legislation:
AB 2647 (E. Garcia, 2016) would have expanded the COIN tax
credit from $50 million to $120 million and extended the sunset
date to January 1, 2027. This bill was held in the Assembly
Committee on Appropriations.
AB 32 (Perez, Chapter 608, Statutes of 2013) increased the COIN
tax credit from $10 million to $50 million.
AB 624 (Perez, Chapter 436, Statutes of 2011) authorized the
establishment of the COIN Advisory Board.
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