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AB-1479 Opportunity Zone Credit Enhancement Act.(2019-2020)

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Date Published: 04/08/2019 02:00 PM
AB1479:v98#DOCUMENT

Amended  IN  Assembly  April 08, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1479


Introduced by Assembly Member Cervantes

February 22, 2019


An act to amend Sections 63044, 63045, and 63046 of the Government Code, relating to state government.


LEGISLATIVE COUNSEL'S DIGEST


AB 1479, as amended, Cervantes. Opportunity Zone Credit Enhancement Act.
The Bergeson-Peace Infrastructure and Economic Development Bank Act authorizes the California Infrastructure and Economic Development Bank to, among other things, provide financing for specified economic development projects, including economic development facilities, as defined. The act authorizes the bank to make credit enhancements to a sponsor or participating party as financial assistance for a project. The act prohibits the bank from providing financing if the bank has not determined that the financing meets specified public interest criteria.
Existing federal law authorizes the United States Secretary of the Treasury to certify and designate qualified opportunity zones. Existing federal law authorizes a taxpayer to defer to a later taxable year specified capital gains from certain investments in property located in a qualified opportunity zone. Under existing federal law, a qualified opportunity zone means a population census tract that is a low-income community.
This bill would require the bank to consider providing a credit enhancement to support an economic development facility in a qualified opportunity zone and to establish procedures for the expeditious review of applications for those credit enhancements. The bill would further authorize the bank to provide credit enhancements that support financing for economic development facilities located in a qualified opportunity zone. The bill would also create additional required public interest criteria that would apply to these credit enhancements.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 This act shall be known, and may be cited, as the Opportunity Zone Credit Enhancement Act.

SEC. 2.

 The Legislature finds and declares all of the following:
(a) California’s overall economic growth and increase in jobs has outpaced the United States in general, often ranking the state within the top five states in terms of its economic condition. Most recently, the Department of Finance announced that California has the fifth largest economy in the world. This success, however, has not been consistent throughout the state, with many regions and certain population groups still experiencing recession-related poor economic conditions.
(b) According to the United States Census Bureau, California’s poverty rate is 14.3 percent, while the national rate is 12.7 13.4 percent. It is estimated that nearly one-quarter of California’s children are living in households with annual incomes near or below the federal poverty line. Using the federal Supplemental Poverty Measure, which accounts for geographic differences, transfer payments, and out-of-pocket expenses, 20.4 19 percent of California residents on average lived in poverty between 2014 and 2016. 2015 and 2017. The national average poverty rate in that time period was 14.7 14.1 percent. Significant contributing factors to these poverty rates are education and basic skill deficits experienced by many Californians from rural and inner-city areas, other historically underserved population groups, and those who are more recently encountering employment challenges, including returning veterans.
(c) Provisions in the federal Tax Cuts and Jobs Act of 2017 authorize the establishment of opportunity zones in low-income areas of a state for the purpose of attracting private investment capital. Federal law authorizes a broad range of business investments, including investments in stock, partnership interest, and business property. A qualified opportunity zone business property investment may include new and substantially improved tangible property, including commercial buildings, equipment, and multifamily housing complexes.
(d) Many communities are looking at how they can leverage opportunity zones to bring new investments to often overlooked neighborhoods. However, development in these low-income areas is difficult. Communities will need to identify and remove, where possible, development impediments if they are to become investment ready and competitive with the nearly 8,000 census tracts outside of California that have been federally designated as an opportunity zone. opportunity zones.
(e) Cities and counties are encouraged to post on their internet websites opportunity zone eligible census tracts, including information on vacant land, zoning, and entitlement status of available properties within those census tracts.

SEC. 3.

 Section 63044 of the Government Code is amended to read:

63044.
 (a) The bank shall consider a project for conduit financing for economic development facilities upon filing of an application with the bank by an appropriate participating party, on the terms and conditions the bank shall determine. The bank shall establish procedures for the expeditious review of applications for the issuance or approval of bonds to finance economic development facilities.
(b) The bank shall consider providing a credit enhancement to support the development of an economic development facility in a qualified opportunity zone upon the filing of an application with the bank by an appropriate participating party, on the terms and conditions the bank shall determine, subject to the requirements described in subdivision (e) of Section 63045. The bank shall establish procedures for the expeditious review of applications for the issuance or approval of a credit enhancement to finance economic development facilities.

SEC. 4.

 Section 63045 of the Government Code is amended to read:

63045.
 In order to provide or arrange for the financing of economic development facilities, the bank may:
(a) Issue taxable revenue bonds pursuant to Chapter 5 (commencing with Section 63070) to provide financing for economic development projects compatible with the public interest as specified in Section 63046.
(b) Issue taxable revenue bonds pursuant to Chapter 5 (commencing with Section 63070) to provide financing for the revolving loan funds and economic development projects of small business development corporations, local economic development corporations, community development corporations, and nonprofit organizations, which revolving loan funds and economic development projects shall be compatible with the public interest.
(c) Issue tax-exempt revenue bonds pursuant to Chapter 5 (commencing with Section 63070) to provide financing for economic development facilities as permitted by federal law and in accordance with applicable California law relating to the distribution of state allocations for private activity bonds. Projects so financed shall be compatible with the public interest as specified in Section 63046.
(d) Issue tax-exempt revenue bonds pursuant to Chapter 5 (commencing with Section 63070) for economic development facilities of public sector and nonprofit organizations qualifying for exemption under federal law.
(e) Provide credit enhancements that support financing for economic development facilities located in a census tract in this state that the United States Secretary of the Treasury has designated as a qualified opportunity zone pursuant to Section 1400Z-1 of the Internal Revenue Code.

SEC. 5.

 Section 63046 of the Government Code is amended to read:

63046.
 (a) The bank shall not make financing under this article unless the bank has first determined that the financing or assistance meets all of the following public interest criteria:
(1) The financing, loan, grant, or other assistance is for a project or a use in the State of California.
(2) Those seeking funds or other assistance are capable of meeting obligations incurred under relevant agreements.
(3) In the case of loans or bonds, payments to be made under applicable financing documents are adequate to pay the current expenses of the bank in connection with the financing and to make payments on the bonds.
(4) The proposed financing is appropriate for the specific project.
(b) In addition to the requirements in subdivision (a), for credit enhancements that support financing for economic development facilities, facilities in opportunity zones, the bank shall determine that the project supports both of the following community development criteria:
(1) The facility provides economic opportunities for individuals currently residing in a census tract where the project is located, including wealth creation and asset formation.
(2) Development of the facility does not displace lower income residents.