SB 1230

Bill Subjects

Abstract

(1) Existing law establishes the Governor's Office of Business and Economic Development, known as "GO-Biz," within the Governor's office to serve the Governor as the lead entity for economic strategy and the marketing of California on issues relating to business development, private sector investment, and economic growth. Existing federal law establishes the Capital Magnet Fund and makes moneys in that fund available to the United States Secretary of the Treasury to carry out a competitive grant program to attract private capital for, and increase investment in, certain affordable housing and economic development projects by providing grants, as provided, to Treasury-certified community development financial institutions or nonprofit organizations that meet specified criteria. This bill would establish the Community Development Financial Institutions Grant Program, administered by GO-Biz, for the purpose of providing grants to qualified community development financial institutions. The bill would establish the Community Development Financial Institutions Grant Fund and, upon appropriation, require GO-Biz to award a grant to an eligible recipient, defined as a community development financial institution that meets specified criteria under the program, as provided. The bill would require, among other things, that an eligible recipient provide matching funds on a dollar-for-dollar basis with moneys received from private, nongovernmental sources. The bill would specify authorized uses of grant funds, including providing loans, grants, equity investments, or technical assistance within low-income communities or for purposes that have a direct and substantial benefit to lower income households. (2) Previously existing law, until January 1, 2017, allowed a credit under the Personal Income Tax Law, the Corporation Tax Law, and a credit against the tax imposed on an insurer in an amount equal to 20% of a qualified investment, as defined, made in a community development financial institution, as defined, but not to exceed, in the aggregate amount under all those laws, $50,000,000 per year. Previously existing law authorized the certification of investments for the credit until January 1, 2017. Previously existing law required that certification applications for which the intended use of the investments had the greatest aggregate benefit for low- to moderate-income or rural areas or households be given the highest priority. Credits that had been allowed were completely recaptured if the qualified investment was subsequently withdrawn and not similarly reinvested, and were partially recaptured if the qualified investment was subsequently reduced. This bill would establish similar credits under the Personal Income Tax Law, the Corporation Tax Law, and the law governing the taxation of insurers, for taxable years beginning on or after January 1, 2021. The bill would require that the credit amount be equal to the applicable credit percentage of a qualified investment, as defined, made in a community development financial institution, as defined, certified as provided by GO-Biz, but would provide that the applicable credit percentage for each taxable year is 0% unless otherwise specified in the Budget Act or other act making an appropriation for these purposes. The bill would require GO-Biz to certify investments and community development financial institutions for these purposes and to allocate credits in a manner similar to the above-described previously allowed credits. In this regard, the bill would also authorize GO-Biz to allocate tax credits for the current year and reserve tax credits for subsequent years. Existing law requires any bill introduced on or after January 1, 2020, that would authorize certain tax expenditures, as defined, to identify specific goals, purposes, and objectives that the expenditure will achieve, detailed performance indicators, and data collection requirements. The bill would require a community development financial institution that receives a qualified investment for which a tax credit is allowed under the bill to submit a report to GO-Biz, as specified, on the use of that qualified investment. On or before January 1, 2025, the bill would require the Legislative Analyst to prepare an analysis, based on data provided by the California Department of Tax and Fee Administration, the Franchise Tax Board, and GO-Biz on or before September 30, 2024, of the tax credit investments provided for in the bill. The bill would require the Legislative Analyst to submit a report to the Legislature by June 30, 2025, on the effects of these tax credits that includes this analysis.