Amended in Assembly August 4, 2014

Amended in Assembly July 2, 2014

Amended in Assembly May 27, 2014

Amended in Senate May 13, 2013

Amended in Senate May 7, 2013

Amended in Senate April 25, 2013

Amended in Senate April 15, 2013

Senate Bill No. 355

Introduced by Senator Beall

February 20, 2013

An act to amend begin delete Sections 37006, 37011, 37012, 37013, 37014, 37032, 37034, 37035, and 37036 of the Public Resources Code, and to amend end delete Sections 17053.30 and 23630 of the Revenue and Taxation Code, relating to begin delete conservation, and making an appropriation therefor. end delete begin insert taxation, to take effect immediately, tax levy. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 355, as amended, Beall. begin delete Conservation: tax credits: grant in lieu of tax credits. end delete begin insert Income taxes: credit: conservation. end insert

The Natural Heritage Preservation Tax Credit Act of 2000 requires the Wildlife Conservation Board to implement a program under which property, as defined, may be contributed to the state, any local government, as defined, or to any nonprofit organization designated by a local government, based on specified criteria, in order to provide for the protection of wildlife habitat, open space, and agricultural lands.

The Personal Income Tax Law and the Corporation Tax Law allow a credit against the taxes imposed by those laws in the amount equal to 55% of the fair market value of any qualified contribution, defined as begin insert a contribution of end insert property that has been approved for acceptance by the Wildlife Conservation Board, begin delete made, end delete begin insert that is made end insert no later than June 30, 2015, during the taxable year pursuant to the Natural Heritage Preservation Tax Credit Act of 2000, as provided. Those laws allow the credit to be carried over for 8 years if necessary.

begin delete

The Natural Heritage Preservation Tax Credit Act of 2000 establishes the Natural Heritage Preservation Tax Credit Reimbursement Account in the General Fund to receive bond fund moneys from a local government or a department that is authorized to expend the moneys to acquire property by donation under the act. Existing law requires moneys in the account to be transferred to the General Fund for reimbursement of tax credits claimed under the act.

end delete

This bill would extend the period for when a qualified contribution is made for which a tax credit would be allowed to June 30, 2020. This bill would also extend the carryover period to 15 years begin insert for a qualified contribution made on or after January 1, 2015 end insert .

begin delete

This bill would also allow, in lieu of those tax credits, a donor of a qualified contribution made on or after January 1, 2015, and not later than June 30, 2020, to make an irrevocable election to receive a grant, as specified. This bill would require a department or local government authorized to expend bond fund moneys to acquire property by donation to transfer amounts necessary to make the grants in lieu of the tax credits to the Natural Heritage Preservation Tax Credit Reimbursement Account. This bill would, upon receipt of funds in the Natural Heritage Preservation Tax Credit Reimbursement Account that are attributable to those grant amounts, continuously appropriate those funds to the Controller for transfer to the board to make the payment of those grants. This bill would exempt from gross income of a taxpayer any grant in lieu of the tax credit.

end delete begin insert

This bill would take effect immediately as a tax levy.

end insert

Vote: majority. Appropriation:  begin delete yes end delete begin insert no end insert . Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin delete

SECTION 1.  

Section 37006 of the Public Resources Code is
amended to read:

37006.  

(a) Under the program, upon approval by the board, a
donor may contribute qualified property to a donee and receive a
tax credit for a portion of the value of the property, as provided in
Sections 17053.30 and 23630 of the Revenue and Taxation Code.

(b) (1) In lieu of a tax credit under Section 17053.30 or Section
23630 of the Revenue and Taxation Code, a donor of a qualified
contribution made on or after January 1, 2015, and not later than
June 30, 2020, may elect to receive a grant under this subdivision.
The election shall be irrevocable and shall be reflected in the
application of the donor submitted pursuant to Section 37011.

(2) The board shall, subject to the requirements of this
subdivision and as permitted by available funds pursuant to Chapter
7 (commencing with Section 37030), provide a grant to the donor
of the qualified contribution.

(3) The amount of the grant under this subdivision shall be an
amount equal to 55 percent of the fair market value of any
contribution of property, as defined in Section 37002, that has been
approved for acceptance by the board pursuant to this division.

(4) The board shall make payment of any grant under this
subdivision during the 60-day period beginning on the latter of
either of the following:

(A) The date of the application for the grant.

(B) The date the qualified contribution was made.

(c) The board shall adopt guidelines or regulations to implement
the program, including procedures for applications submitted
pursuant to Chapter 4 (commencing with Section 37010), for the
grant in lieu of the tax credit, and for the evaluation of properties
proposed to be contributed pursuant to the program. Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code does not apply to the guidelines or
regulations adopted pursuant to this section.

SEC. 2.  

Section 37011 of the Public Resources Code is
amended to read:

37011.  

At a minimum, each application shall contain all of the
following:

(a) The identification of the donor and donee.

(b) A description of the property, including documentation of
how the property meets the criteria and qualifies for acceptance
under the program.

(c) A property appraisal meeting the requirements of Section
170 of Title 26 of the United States Code, setting forth the fair
market value of the property.

(d) (1) A certification by the donor that the donor received no
other valuable consideration for the donation of property.

(2) A certification by the donor that the contribution was not,
and is not, required to satisfy a condition imposed upon the donor
by any lease, permit, license, certificate, or other entitlement for
use issued by one or more public agencies, including, but not
limited to, the mitigation of significant effects on the environment
of a project pursuant to an approved environmental impact report
or mitigated negative declaration required pursuant to the California
Environmental Quality Act (Division 13 (commencing with Section
21000)).

(e) A certification by the donor that the application discloses
any known or suspected environmental conditions associated with
the property.

(f) Any election of the donor, irrevocable if made, to receive a
grant under Section 37006 in lieu of the tax credits under Sections
17053.30 and 23630 of the Revenue and Taxation Code.

SEC. 3.  

Section 37012 of the Public Resources Code is
amended to read:

37012.  

(a) Each donee shall evaluate applications submitted
to it and prepare a plan for the board that sets forth the donee’s
priorities for acquisition of property that qualifies under the
program. Consistent with the criteria established for the program,
each donee may use its own priority lists and procedures in
determining which properties or types of properties shall be given
priority.

(b) Each donee or the board may request that the applicant
supply further information reasonably necessary to allow the donee
or the board to evaluate the proposed donation.

(c) The department may accept contributions of money from
any taxpayer to pay or reimburse the costs of appraisal, escrow,
title, and other transaction costs associated with the contribution
of any particular property or set of properties, including any
environmental assessments required by the department, and the
costs of preparing any necessary management plan for the property
or set of properties.

(d) Prior to acquiring an easement or other interest in land
pursuant to this division, a public hearing shall be held by the
donee, if the donee is a public agency, or by the board if the donee
is a designated nonprofit organization, in the local community.
Notice shall be given by the donee or the board to the county board
of supervisors of the affected county, adjacent landowners, affected
water districts, local municipalities, and other interested parties,
as determined by the donee or the board.

(e) When submitting a donation of qualified property to the
board for final approval, the donee shall provide the board with
the fair market value of the property proposed for acceptance,
based on appraisals that have been reviewed and approved by the
Department of General Services.

(f) The donee shall notify the board of any irrevocable election
made by the donor to receive a grant under Section 37006 in lieu
of the tax credits under Sections 17053.30 and 23630 of the
Revenue and Taxation Code.

SEC. 4.  

Section 37013 of the Public Resources Code is
amended to read:

37013.  

The board shall provide a list to the Joint Legislative
Budget Committee and the Franchise Tax Board, in the form and
manner determined by the Franchise Tax Board, of the names,
taxpayer identification numbers, including taxpayer identification
numbers of each partner or shareholder, as applicable, a legal
description of the donated property, and the total amount of the
tax credit or grant in lieu of the tax credit approved for each
donation.

SEC. 5.  

Section 37014 of the Public Resources Code is
amended to read:

37014.  

Assets received by a donee pursuant to this division
shall not be deemed transfers pursuant to Chapter 9 (commencing
with Section 2780) of Division 3 of the Fish and Game Code.
Funds from the Habitat Conservation Fund, the Environmental
Enhancement and Mitigation Program Fund created pursuant to
Section 164.56 of the Streets and Highways Code, the State Parks
and Recreation Fund, and the Wildlife Restoration Fund, may not
be used to fund the tax credit or grant in lieu of the tax credit
authorized pursuant to this division.

SEC. 6.  

Section 37032 of the Public Resources Code is
amended to read:

37032.  

(a) If a department or local government identifies
property that may be acquired pursuant to this division and
determines that the acquisition would comply with the purpose of
a bond provision listed in subdivision (c) and any applicable
guidelines developed for that bond provision by the administering
agency, and all of the requirements of this division are met and
the department or local government acquires the property pursuant
to this division, the department or local government may expend
funds from the bond provision that have been appropriated,
allocated, or awarded to it, to acquire the property using the tax
credit or grant in lieu of the tax credit provided by this division.

(b) The applicable bond provisions from which a department
or local government may use bond funds to acquire property using
the tax credit or grant in lieu of the tax credit provided by this
division do not include grants of bond funds distributed through
a competitive process.

(c) The applicable bond provisions from which a department
or local government may expend bond funds pursuant to
subdivision (a) are the following:

(1) Section 5096.615.

(2) Subdivision (a) or (b), or paragraph (1) of subdivision (c),
of Section 5096.650.

(3) Funds under paragraph (2) of subdivision (c) of Section
5096.650 that are to be expended pursuant to paragraph (6) of
subdivision (b) of Section 31220.

(4) Section 79541 of the Water Code.

(5) Section 79542 of the Water Code.

(6) Section 79544 of the Water Code.

(7) Subdivision (e) or (f) of Section 79550 of the Water Code.

(8) Section 79565 of the Water Code.

(9) Section 79568 of the Water Code.

(10) Section 79570 of the Water Code.

(11) Section 79572 of the Water Code.

(12) Other bond funds, if the bond act specifies that its funds
may be used for the purposes of this division.

SEC. 7.  

Section 37034 of the Public Resources Code is
amended to read:

37034.  

(a) (1) If a department determines that property is
available for acquisition by donation, and that the acquisition of
the property would comply with the requirements of an applicable
bond provision specified in subdivision (c) of Section 37032 and
any applicable guidelines developed for that bond provision by
the administering agency, and the department believes the
acquisition of the property would comply with the requirements
of this division, the department may request the prospective donor
of the property to submit an application pursuant to Section 37010.
If the prospective donor agrees to submit that application, the
department may apply for approval of the donation pursuant to the
requirements of this division.

(2) If a local government determines that property is available
for acquisition by donation, and that the acquisition of the property
would comply with the requirements of an applicable bond
provision specified in subdivision (c) of Section 37032 and any
applicable guidelines developed for that bond provision by the
administering agency, and the local government believes that the
acquisition of the property would comply with the requirements
of this division, the local government may request the department
that allocated to it the relevant bond funds to determine whether
it agrees with the local government’s determinations and beliefs
made pursuant to this paragraph. If the department agrees with the
local government and gives its approval for the acquisition with
bond funds that it has allocated to the local government, the local
government may request the prospective donor of the property to
submit an application pursuant to Section 37010. If the prospective
donor agrees to submit the application, the local government may
apply for approval of the donation pursuant to the requirements
of this division.

(3) In addition to the requirements of Section 37011, the
application shall include, and shall not be accepted if it does not
include, a signed authorization by the donor, in a form and manner
mutually agreeable to the board and the Franchise Tax Board, for
the disclosure of the information necessary to make the payment
as required by subdivision (b). For purposes of subdivision (b) of
Section 1798.24 of the Civil Code, the signed authorization shall
be the donor’s voluntary consent to the disclosure of the
information.

(b) (1) If the board gives approval, the department or local
government may acquire the property pursuant to this division.
Through the process outlined in this section, the department shall
reimburse the General Fund for the tax credit claimed pursuant to
this chapter under Section 17053.30 or 23630 of the Revenue and
Taxation Code or fund the grant in lieu of those tax credits by
transferring bond funds identified under subdivision (c) of Section
37032 to the Natural Heritage Preservation Tax Credit
Reimbursement Account, on the basis of information provided to
the department under Section 37040 regarding credit claimed for
a qualified contribution under Section 17053.30 or 23630 of the
Revenue and Taxation Code in that tax year or information
provided to the department on the application pursuant to
subdivision (f) of Section 37011 regarding the irrevocable election
of the donor to receive a grant in lieu of the tax credit.

(2) If a local government applies directly to the board for
acceptance of a qualified donation, the board may provide
conditional approval for the local government to acquire the
property pursuant to this division. Through the process outlined
in this section, the local government shall reimburse the General
Fund for the tax credit claimed pursuant to this chapter under
Section 17053.30 or 23630 of the Revenue and Taxation Code or
to make the grant in lieu of those tax credits by transferring funds
in the full amount of the approved tax credit or grant to the board
for deposit into the Natural Heritage Preservation Tax Credit
Reimbursement Account.

(3) (A) Upon approval by the board, and prior to the time the
department, local government, or designated nonprofit organization
receives the property, the department shall encumber bond funds
identified under subdivision (c) of Section 37032 in an amount
necessary to pay for the tax credit as provided in Section 17053.30
or 23630, as applicable, of the Revenue and Taxation Code or to
make the grant in lieu of the tax credit.

(B) If a local government applies directly to the board for
acceptance of a qualified donation, and the board provides
conditional approval of the qualified donation, the local
government shall have 60 days to transfer to the board the full
amount of funds necessary to reimburse the General Fund or to
make the grant in lieu of the tax credit. Upon receipt of the funds
necessary to reimburse the General Fund or to make the grant in
lieu of the tax credit, the board shall provide the donor and the
local government with a notice of final approval of the tax credit
or grant in lieu of the tax credit. A tax credit or grant in lieu of the
tax credit is not approved until such time as the donor and local
government receive a final notification from the board that
sufficient funds have been received to reimburse the General Fund
for the loss of revenue associated with the tax credit or to make
the grant in lieu of the tax credit.

(C) The acquisition agreement or any other document that
clearly delineates the commitment pursuant to this division shall
be the only documentation required for the department to encumber
the bond funds as required by this paragraph.

(D) Except as prohibited by the relevant bond act,
notwithstanding Section 13340 of the Government Code or any
other provision of law, the encumbrance shall be available without
regard to fiscal years to allow payments to the Natural Heritage
Preservation Tax Credit Reimbursement Account for the tax credit
due the donor of the property under Section 17053.30 or 23630,
as applicable, of the Revenue and Taxation Code or to make any
grants in lieu of those tax credits.

(4) The Franchise Tax Board shall provide the board information
pursuant to subdivision (a) of Section 19560 of the Revenue and
Taxation Code on tax credits claimed. The information shall
include the tax year for which the credit was claimed. The board
shall provide the information required by Section 37040 to the
relevant department. Upon notification that a qualified tax credit
has been claimed, the department, pursuant to paragraph (1), shall
transfer bond funds in the amount of the tax credit for that tax year
to the Natural Heritage Preservation Tax Credit Reimbursement
Account within 60 days of receipt of the notification. The
department shall notify the board of this transfer.

(5) The board shall forward the information it receives pursuant
to paragraph (4) to the Controller and the Department of Finance,
which shall use the information for the purpose of attributing the
budgetary impact of the credit and bond fund transfer to the
appropriate tax and fiscal year.

SEC. 8.  

Section 37035 of the Public Resources Code is
amended to read:

37035.  

(a) (1) If a department determines that a designated
nonprofit organization, in lieu of the department, should accept
property that the department applies to acquire pursuant to
paragraph (1) of subdivision (a) of Section 37034, and determines
that the acceptance by the designated nonprofit organization would
comply with the purpose of the applicable bond provision specified
in subdivision (c) of Section 37032, the department may, upon
that determination and upon making the determinations and having
the belief required by paragraph (1) of subdivision (a) of Section
37034, apply to acquire the property for that designated nonprofit
organization pursuant to this division. The department shall not
make that application until the prospective donor agrees to submit
an application pursuant to Section 37010 and paragraph (3) of
subdivision (a) of Section 37034 and the designated nonprofit
organization agrees to accept the property if it is acquired pursuant
to this division.

(2) If a local government determines that a designated nonprofit
organization, in lieu of the local government, should accept
property that the local government applies to acquire pursuant to
paragraph (2) of subdivision (a) of Section 37034, and determines
that the acceptance by the designated nonprofit organization would
comply with the purpose of the applicable bond provision specified
in subdivision (c) of Section 37032, the local government may,
upon that determination and making the determinations and having
the belief required by paragraph (2) of subdivision (a) of Section
37034, request the department that allocated to it the relevant bond
funds to determine whether it agrees with the local government’s
determinations made pursuant to this paragraph. If the department
agrees with the local government, gives its approval for the
designated nonprofit organization’s acceptance of the property,
and gives its approval pursuant to paragraph (2) of subdivision (a)
of Section 37034, the local government may apply to acquire the
property for that designated nonprofit organization pursuant to this
division. The local government shall not make that application
until the prospective donor agrees to submit an application pursuant
to Section 37010 and paragraph (3) of subdivision (a) of Section
37034 and the designated nonprofit organization agrees to accept
the property if it is acquired pursuant to this division.

(b) If a department or local government applies for a designated
nonprofit organization to acquire property, pursuant to subdivision
(a), the department and donor, and the local government, if
applicable, shall comply with all requirements of this division that
apply to the department and donor, and to the local government,
if applicable, when the department or local government otherwise
applies to acquire property pursuant to this division.

(c) If a local government applies for a designated nonprofit
organization to acquire and accept donated property, the local
government shall comply with all requirements of this division
that apply to the local government transferring funds to the board
necessary to reimburse the General Fund or to make the grant in
lieu of the tax credits under Sections 17053.30 and 23630 of the
Revenue and Taxation Code.

SEC. 9.  

Section 37036 of the Public Resources Code is
amended to read:

37036.  

(a) The Natural Heritage Preservation Tax Credit
Reimbursement Account is established in the General Fund to
receive moneys paid pursuant to this chapter.

(b) Moneys in the Natural Heritage Preservation Tax Credit
Reimbursement Account shall be used only to reimburse the
General Fund or to make the grant in lieu of the tax credits as
determined by the departments pursuant to paragraph (1) of
subdivision (b) of Section 37034.

(c) Subject to subdivision (d), upon receipt of funds in the
Natural Heritage Preservation Tax Credit Reimbursement Account
and notification to the Legislature, the Controller shall transfer,
within 60 days of the notification, the balance of the Natural
Heritage Preservation Tax Credit Reimbursement Account to the
General Fund.

(d) Notwithstanding Section 13340 of the Government Code,
there is hereby continuously appropriated to the Controller, those
funds in the Natural Heritage Preservation Tax Credit
Reimbursement Account that are attributable to amounts to be
made as grants in lieu of the tax credits under Sections 17053.30
and 23630 of the Revenue and Taxation Code, for transfer by the
Controller to the board within the period described in paragraph
(4) of subdivision (b) of Section 37006, to make the payments of
the grants in lieu of those tax credits.

(e) The moneys in the Natural Heritage Preservation Tax Credit
Reimbursement Account may not be loaned to another fund and
may not accrue interest.

end delete

begin delete SEC. 10. end delete
begin insert SECTION 1. end insert   

Section 17053.30 of the Revenue and Taxation
Code is amended to read:

17053.30.  

(a) There shall be allowed as a credit against the
“net tax,” as defined in Section 17039, an amount equal to 55
percent of the fair market value of any qualified contribution made
on or after January 1, 2000, and not later than June 30, 2008, and
on or after January 1, 2010, and not later than June 30, 2020, by
the taxpayer during the taxable year to the state, any local
government, or any designated nonprofit organization, pursuant
to Division 28 (commencing with Section 37000) of the Public
Resources Code.

(b) For purposes of this section, “qualified contribution” means
a contribution of property, as defined in Section 37002 of the Public
Resources Code, that has been approved for acceptance by the
Wildlife Conservation Board pursuant to Division 28 (commencing
with Section 37000) of the Public Resources Code.

(c) In the case of any pass-thru entity, the fair market value of
any qualified contribution approved for acceptance under Division
28 (commencing with Section 37000) of the Public Resources
Code shall be passed through to the partners or shareholders of
the pass-thru entity in accordance with their interest in the pass-thru
entity as of the date of the qualified contribution. For purposes of
this subdivision, the term “pass-thru entity” means any partnership,
“S” corporation, or limited liability company treated as a
partnership.

(d)  begin delete If end delete begin insert (1) end insert begin insert   end insert begin insert For a qualified contribution made on or after January
1, 2000, and before January 1, 2015, if end insert 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 succeeding begin delete 14 end delete
begin insert seven end insert years if necessary, until the credit is exhausted.

begin insert

(2) For a qualified contribution made on or after January 1,
2015, if 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 succeeding 14 years if necessary, until the
credit is exhausted.

end insert

(e) This credit begin delete or a grant under Section 37006 of the Public
Resources Code end delete shall be in lieu of any other credit or deduction
which the taxpayer may otherwise claim pursuant to this part with
respect to the property or any interest therein that is contributed.

begin delete

(f) (1) No credit shall be allowed under this section if the
taxpayer has elected to receive a grant under subdivision (b) of
Section 37006 of the Public Resources Code for that qualified
contribution.

(2) Any grant received under Section 37006 of the Public
Resources Code shall not be included in the gross income of a
taxpayer.

end delete

begin delete SEC. 11. end delete
begin insert SEC. 2. end insert   

Section 23630 of the Revenue and Taxation Code is
amended to read:

23630.  

(a) There shall be allowed as a credit against the “tax,”
as defined in Section 23036, an amount equal to 55 percent of the
fair market value of any qualified contribution made on or after
January 1, 2000, and not later than June 30, 2008, and on or after
January 1, 2010, and not later than June 30, 2020, by the taxpayer
during the taxable year to the state, any local government, or any
designated nonprofit organization, pursuant to Division 28
(commencing with Section 37000) of the Public Resources Code.

(b) For purposes of this section, “qualified contribution” means
a contribution of property, as defined in Section 37002 of the Public
Resources Code, that has been approved for acceptance by the
Wildlife Conservation Board pursuant to Division 28 (commencing
with Section 37000) of the Public Resources Code.

(c) In the case of any pass-thru entity, the fair market value of
any qualified contribution approved for acceptance under Division
28 (commencing with Section 37000) of the Public Resources
Code shall be passed through to the partners or shareholders of
the pass-thru entity in accordance with their interest in the pass-thru
entity as of the date of the qualified contribution. For purposes of
this subdivision, the term “pass-thru entity” means any partnership
or “S” corporation.

(d)  begin delete If end delete begin insert (1) end insert begin insert   end insert begin insert For a qualified contribution made on or after January
1, 2000, and before January 1, 2015, if end insert 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 succeeding begin delete 14 end delete begin insert seven end insert years
if necessary, until the credit is exhausted.

begin insert

(2) For a qualified contribution made on or after January 1,
2015, if 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 succeeding 14 years if necessary, until the credit is
exhausted.

end insert

(e) This credit or a grant under Section 37006 of the Public
Resources Code shall be in lieu of any other credit or deduction
that the taxpayer may otherwise claim pursuant to this part with
respect to the property or any interest therein that is contributed.

begin delete

(f) (1) No credit shall be allowed under this section if a taxpayer
has elected to receive a grant under subdivision (b) of Section
37006 of the Public Resources Code for that qualified contribution.

end delete begin delete

(2) Any grant received under Section 37006 of the Public
Resources Code shall not be included in the gross income of a
taxpayer.

end delete

begin insert

begin insert SEC. 3. end insert   

end insert begin insert

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.

end insert