California Assembly Bill AB428 Amended / Bill

 BILL NUMBER: AB 428AMENDED BILL TEXT AMENDED IN ASSEMBLY MAY 21, 2015 AMENDED IN ASSEMBLY MAY 12, 2015 INTRODUCED BY Assembly Member Nazarian FEBRUARY 19, 2015 An act to add and repeal Sections 17053.50 and 23650 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGEST AB 428, as amended, Nazarian. Income taxes credit: seismic retrofits. The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill would allow, for taxable years beginning on or after January 1, 2016, and before January 1, 2021, a tax credit under both laws in an amount equal to 30% of the qualified costs paid or incurred by a qualified taxpayer for any seismic retrofit construction on a qualified building, as defined.  This bill, prior to seismic retrofit construction, would require a taxpayer to obtain certification from the appropriate jurisdiction with local building code enforcement authority that the building has been certified as an at-risk property, as defined.  This bill would  also    require a taxpayer to obtain a certification from the appropriate jurisdiction with authority for building code enforcement of the area in which the building is located that seismic retrofit construction, as defined, has been completed, and to provide  that certification   those certifications  to the Franchise Tax Board upon the request of the Franchise Tax Board. This bill would take effect immediately as a tax levy. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 17053.50 is added to the Revenue and Taxation Code, to read: 17053.50. (a) For taxable years beginning on or after January 1, 2016, and before January 1, 2021, there shall be allowed to a qualified taxpayer a credit against the "net tax," as defined in Section 17039, in an amount equal to 30 percent of the qualified taxpayer's qualified costs. (b) For purposes of this section: (1) "At-risk property" means a building that is deemed hazardous and in danger of collapse in the event of a catastrophic earthquake, including, but not limited to, soft story buildings, nonductile concrete residential buildings, and pre-1994 concrete residential buildings. (2) "Qualified building" means a building that has been certified as an at-risk property  by the local building code enforcement for the area within which the building is located.   pursuant to subparagraph (A) of paragraph (1) of subdivision (c).  A qualified building includes a mobilehome registered by the Department of Housing and Community Development. (3) "Qualified costs" means the costs paid or incurred by the qualified taxpayer for any completed seismic retrofit construction on a qualified building, including any engineering or architectural design work necessary to permit or complete the seismic retrofit construction. "Qualified costs" do not include any of the following costs paid or incurred by the qualified taxpayer: (A) Maintenance, including abatement of deferred or inadequate maintenance, and correction of violations unrelated to the seismic retrofit construction. (B) Repair, including repair of earthquake damage. (C) Seismic retrofit construction required by local building codes as a result of addition, repair, building relocation, change of use, or occupancy. (D) Other work or improvement required by local building or planning codes as a result of the intended seismic retrofit construction. (E) Rent reductions or other associated compensation, compliance actions, or other related coordination involving the qualified taxpayer and any other party, including a tenant, insurer, or lender. (F) Replacement of existing building components, including equipment, except as needed to complete the seismic retrofit construction. (G) Bracing or securing nonpermanent building contents. (H) The offset of costs, reimbursements, or other costs transferred from the qualified taxpayers to others. (I) Any amount paid by the qualified taxpayer to the jurisdiction with authority for building code enforcement for issuing the  certification   certifications  required pursuant to  subparagraph (A) of paragraph (1) of  subdivision (c). (4) "Qualified taxpayer" means a taxpayer that is an owner of a qualified building located in this state. A taxpayer that owns a proportional share of a qualified building in this state may claim the credit allowed by this section based on the taxpayer's share of the qualified costs. (5)    (A)  "Seismic retrofit construction" means alteration of a qualified building or its components to substantially mitigate seismic damage. Seismic retrofit construction shall be for work performed voluntarily, and for which qualified costs were paid or incurred, on or after January 1, 2016. Seismic retrofit construction shall include, but not be limited to, the following:  (A)   (i)  Anchoring the structure to the foundation.  (B)   (ii)  Bracing cripple walls.  (C)   (iii)  Bracing hot water heaters.  (D)   (iv)  Installing automatic gas shutoff valves.  (E)   (v)  Repairing or reinforcing the foundation to improve the integrity of the foundation against seismic damage.  (F)   (vi)  Anchoring fuel storage.  (G)   (vii)  Installing earthquake resistant bracing system for mobilehomes that are registered with the  California  Department of Housing and Community Development.  (B) Seismic retrofit construction does not include construction performed to bring a building into compliance with local building codes.  (c) To be eligible for the credit under this section, the following  must   shall  apply: (1) The qualified taxpayer shall do  both   all  of the following:  (A) Prior to seismic retrofit construction, obtain certification from the appropriate jurisdiction with local building code enforcement authority that the building is an at-risk property. Upon the request of the Franchise Tax Board, the qualified taxpayer shall provide a copy of the certification to the Franchise Tax Board.   (A)   (B)  Obtain certification from the appropriate jurisdiction with authority for building code enforcement, upon a review of the building, that the completed construction satisfies the definition of seismic retrofit construction. The certification shall identify what part of the completed construction, if any, is not seismic retrofit construction. Upon the request of the Franchise Tax Board, the qualified taxpayer shall provide a copy of the certification to the Franchise Tax Board.  (B)   (C)  Retain for his or her records a copy of the  certification  certific   ations  specified in  subparagraph (A).   subparagraphs (A) and (B).  (2) The jurisdiction with authority for building code enforcement in which a qualified building is located has entered into an agreement with the state to provide certifications pursuant to this section and to not seek reimbursement pursuant to Section 6 of Article XIII B of the California Constitution for any costs incurred in providing those certifications. (d) (1) The credit amount allowed in subdivision (a) shall be claimed by a qualified taxpayer at the rate of one-fifth of the credit amount for the taxable year in which the credit is allowed, and one-fifth of the credit amount for each of the subsequent four taxable years. (2) In the case where the credit allowed under this section exceeds the "net tax," as defined in Section 17039, for a taxable year, the excess credit may be carried over to reduce the "net tax" in the following taxable year, and succeeding four taxable years, if necessary, until the credit has been exhausted. (e) For purposes of computing the credit provided by this section, the qualified costs shall be reduced by any grant provided by a public entity for the seismic retrofit construction. (f) This credit shall be in lieu of any other credit or deduction that the qualified taxpayer may otherwise claim pursuant to this part with respect to qualified costs. (g) Section 41 shall not apply to the credit allowed pursuant to this section. (h) This section shall remain in effect only until December 1, 2021, and as of that date is repealed. SEC. 2. Section 23650 is added to the Revenue and Taxation Code, to read: 23650. (a) For taxable years beginning on or after January 1, 2016, and before January 1, 2021, there shall be allowed to a qualified taxpayer a credit against the "tax," as defined in Section 23036, in an amount equal to 30 percent of the qualified taxpayer's qualified costs. (b) For purposes of this section: (1) "At-risk property" means a building that is deemed hazardous and in danger of collapse in the event of a catastrophic earthquake, including, but not limited to, soft story buildings, nonductile concrete residential buildings, and pre-1994 concrete residential buildings. (2) "Qualified building" means a building that has been certified as an at-risk property  by the local building code enforcement for the area within which the building is located.   pursuant to subparagraph (A) of paragraph (1) of subdivision (c).  A qualified building includes a mobilehome registered by the Department of Housing and Community Development. (3) "Qualified costs" means the costs paid or incurred by the qualified taxpayer for any completed seismic retrofit construction on a qualified building, including any engineering or architectural design work necessary to permit or complete the seismic retrofit construction. "Qualified costs" do not include any of the following costs paid or incurred by the qualified taxpayer: (A) Maintenance, including abatement of deferred or inadequate maintenance, and correction of violations unrelated to the seismic retrofit construction. (B) Repair, including repair of earthquake damage. (C) Seismic retrofit construction required by local building codes as a result of addition, repair, building relocation, change of use, or occupancy. (D) Other work or improvement required by local building or planning codes as a result of the intended seismic retrofit construction. (E) Rent reductions or other associated compensation, compliance actions, or other related coordination involving the qualified taxpayer and any other party, including a tenant, insurer, or lender. (F) Replacement of existing building components, including equipment, except as needed to complete the seismic retrofit construction. (G) Bracing or securing nonpermanent building contents. (H) The offset of costs, reimbursements, or other costs transferred from the qualified taxpayers to others. (I) Any amount paid by the qualified taxpayer to the jurisdiction with authority for building code enforcement for issuing the  certification   certifications  required pursuant to  subparagraph (A) of paragraph (1) of  subdivision (c). (4) "Qualified taxpayer" means a taxpayer that is an owner of a qualified building located in this state. A taxpayer that owns a proportional share of a qualified building in this state may claim the credit allowed by this section based on the taxpayer's share of the qualified costs. (5)    (A)  "Seismic retrofit construction" means alteration of a qualified building or its components to substantially mitigate seismic damage. Seismic retrofit construction shall be for work performed voluntarily, and for which qualified costs were paid or incurred, on or after January 1, 2016. Seismic retrofit construction shall include, but not be limited to, the following:  (A)   (i)  Anchoring the structure to the foundation.  (B)   (ii)  Bracing cripple walls.  (C)   (iii) Bracing hot water heaters.  (D)   (iv)  Installing automatic gas shutoff valves.  (E)   (v)  Repairing or reinforcing the foundation to improve the integrity of the foundation against seismic damage.  (F)   (vi) Anchoring fuel storage.  (G)   (vii)  Installing earthquake resistant bracing system for mobilehomes that are registered with the Department of Housing and Community Development.  (B) Seismic retrofit construction does not include construction performed to bring a building into compliance with local building codes.  (c) To be eligible for the credit under this section, the following  must   shall  apply: (1) The qualified taxpayer shall do  both   all  of the following:  (A) Prior to seismic retrofit construction, obtain certification from the appropriate jurisdiction with local building code enforcement authority that the building is an at-risk property. Upon the request of the Franchise Tax Board, the qualified taxpayer shall provide a copy of the certification to the Franchise Tax Board.   (A)   (B)  Obtain certification from the appropriate jurisdiction with authority for building code enforcement, upon a review of the building, that the completed construction satisfies the definition of seismic retrofit construction. The certification shall identify what part of the completed construction, if any, is not seismic retrofit construction. Upon the request of the Franchise Tax Board, the qualified taxpayer shall provide a copy of the certification to the Franchise Tax Board.  (B)   (C)  Retain for his or her records a copy of the  certification   certifications  specified in  subparagraph (A).   subparagraphs (A) and (B).  (2) The jurisdiction with authority for building code enforcement in which a qualified building is located has entered into an agreement with the state to provide certifications pursuant to this section and to not seek reimbursement pursuant to Section 6 of Article XIII B of the California Constitution for any costs incurred in providing those certifications. (d) (1) The credit amount allowed in subdivision (a) shall be claimed by a qualified taxpayer at the rate of one-fifth of the credit amount for the taxable year in which the credit is allowed, and one-fifth of the credit amount for each of the subsequent four taxable years. (2) In the case where the credit allowed under this section exceeds the "tax," as defined in Section 23036, for a taxable year, the excess credit may be carried over to reduce the "tax" in the following taxable year, and succeeding four taxable years, if necessary, until the credit has been exhausted. (e) For purposes of computing the credit provided by this section, the qualified costs shall be reduced by any grant provided by a public entity for the seismic retrofit construction. (f) This credit shall be in lieu of any other credit or deduction that the qualified taxpayer may otherwise claim pursuant to this part with respect to qualified costs. (g) Section 41 shall not apply to the credit allowed pursuant to this section. (h) This section shall remain in effect only until December 1, 2021, and as of that date is repealed. SEC. 3. This act provides for a tax levy within the meaning of Article IV of the Constitution and shall go into immediate effect.