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1 | + | CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 1210Introduced by Senator Bradford(Coauthor: Senator Galgiani)(Coauthor: Assembly Member Mayes)February 20, 2020 An act to add Article 6 (commencing with Section 12264) to Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGESTSB 1210, as introduced, Bradford. Insurance taxation: credit: California Jobs and Upward Mobility Progression (JUMP) Act.Existing statutory law imposes taxes on the gross premiums of an insurer, as defined, and allows various credits against those taxes. The California Constitution imposes exactions against insurers from another state or country under specified conditions.This bill would allow a credit against those taxes for a taxable year beginning on or after January 1, 2021, and before January 1, 2031, in an amount equal to a cash investment in a growth fund, as defined, that meets specified requirements. The bill would require the Treasurer to, among other things, accept applications beginning January 1, 2021, for approval as a growth fund that meet specified requirements, including that the application include an estimate of the total new full-time employees that will result from the applicants growth investments, as defined. The bill also would require the Treasurer to recapture any tax credit allowed and revoke the tax credit certificates issued to a taxpayer if the taxpayer engages in specified behavior, including not investing 60% of its investment authority in growth investments in this state within 2 years, and 100% of its investment authority in growth investments in this state within 3 years, of the date on which a growth fund has collected the investment authority authorized by the Treasurer.The bill would require a growth fund to annually certify under penalty of perjury that the growth fund has not violated any of the grounds for revocation and recapture of credits. By expanding the crime of perjury, this bill would create a state-mandated local program.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that no reimbursement is required by this act for a specified reason.This bill would take effect immediately as a tax levy.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill TextThe people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) According to a 2018 report taken from American Community Survey Data, California is seeing the second fastest growing income inequality and the largest wage gap between middle income and high wage earners of all 50 states.(b) California workers are increasingly commuting long distances to find suitable living wage employment or affordable housing.(c) Income inequality creates a tax burden on the state, as families with shrinking incomes must rely more heavily on state services.(d) The growing disparity in income inequality is further compounded by the struggles entrepreneurs and small business owners in Californias Opportunity Zones and rural areas face in securing affordable, flexible financing to grow their businesses and create well-paying jobs with benefits in their own communities.(e) Since the global financial crisis, the availability of senior lending from banks for small businesses and startups, particularly those in underserved areas, has significantly changed. Today, small business loans of less than $1 million account for less than 20 percent of the overall bank loan portfolios nationally, down from over 40 percent in 2004. These banks are making fewer small loans, precisely the type of investments on which underserved small businesses rely.(f) The 2017 California Small Business Credit Survey found that 42 percent of firms experienced a financial challenge in paying operating expenses and 39 percent of firms experienced a financial challenge in credit availability.(g) The best way to achieve a California for All is through a postperformance tax credit program with strong, important safeguards to protect the taxpayer and ensure policy goals are met.(h) While California has many available programs and incentives, most are geared toward keeping or attracting big businesses, with only a small percentage of investments or tax credits being utilized by existing small businesses.(i) To accelerate wage mobility and improve California workers ability to earn living wages with benefits closer to home, it is the intent of the Legislature to incentivize experienced, federally licensed investors to raise up to $500 million exclusively for investment to deploy in targeted small businesses in Californias Opportunity Zones and rural areas.SEC. 2. Article 6 (commencing with Section 12264) is added to Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code, to read: Article 6. Jobs and Upward Mobility Progression (JUMP) Act12264. As used in this article:(a) (1) Affiliate means an entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another entity.(2) For the purposes of this subdivision, an entity is controlled by another entity if the controlling entity holds, directly or indirectly, the majority voting or ownership interest in the controlled entity or has control over the day-to-day operations of the controlled entity.(b) Closing date means the date on which a growth fund has collected all amounts specified by Section 12268.(c) (1) Employment offset means an amount calculated annually that is equal to the sum of both of the following:(A) The product of twenty-five thousand dollars ($25,000) and the number of new full-time employees of a growth funds growth businesses.(B) A one-time amount of ten thousand dollars ($10,000) for each full-time employee hired by a growth business that is a targeted employee.(2) (A) The number of new full-time employees of a growth funds growth businesses referenced in subparagraph (A) of paragraph (1) shall be calculated annually as the difference between the following:(i) The average monthly number of full-time employees at a growth business in the preceding calendar year or portion thereof if the initial growth investment occurred in the year.(ii) The number of full-time employees at the growth business on the date of the initial growth investment.(B) If the resulting difference between the amounts derived from clauses (i) and (ii) of subparagraph (A) is less than zero, the number of new full-time employees shall be deemed to be zero.(d) Full-time employee means any of the following:(1) An employment position that is filled at a growth business.(2) An employment position that receives wages that are at least 100 percent of the county median wage.(3) An employment position that is paid hourly wages for an average of at least 35 hours per week or any other period of time generally accepted by custom, industry, or practice as full-time employment.(4) An employment position that is salaried and paid for full-time employment within the meaning of Section 515 of the Labor Code.(e) Growth business means a business that, at the time a growth fund initially invests in the business, meets all of the following requirements:(1) The business has, together with its affiliates, fewer than 100 employees.(2) The business has aggregate gross receipts, less returns and allowances reportable to the state, of less than ten million dollars ($10,000,000) during the previous taxable year.(3) The business has its principal business operations in at least one growth zone in the state.(4) The business is engaged in North American Industry Classification System sector 11, 22, 23, 31, 32, 33, 48, 49, 54, or 62 or, if not engaged in those industries, the Treasurer determines that the investment will create desirable economic outcomes related to income mobility.(f) Growth fund means an entity certified by the Treasurer pursuant to Section 12267.(g) (1) Growth investment means a capital or equity investment in a growth business or a loan to a growth business with a stated maturity of at least one year after the date of issuance.(2) Growth investment does not include the provision of a revolving line of credit.(h) Growth zone means any of the following:(1) An opportunity zone located in the state.(2) A census tract in the state meeting either of the following requirements:(A) The census tract has a poverty rate that is greater than 20 percent.(B) The census tract has a median family income that does not exceed the following:(i) If the census tract is not located in a metropolitan area, the statewide median family income.(ii) If the census tract is located in a metropolitan area, the greater of the statewide median family income and the metropolitan area median family income.(3) All locations outside of census places with a population greater than or equal to 50,000 as of the latest decennial census and their adjacent and contiguous urbanized areas.(i) Investment authority means the amount certified by the Treasurer pursuant to Section 12267.(j) Investor contribution means a cash investment in a growth fund that meets both of the following requirements:(1) The cash investment is equal to the amount specified for that entity in the Treasurers approval of the growth funds application pursuant to Section 12267.(2) The cash investment purchased any of the following:(A) An equity interest in the growth fund.(B) A debt instrument that has a maturity date of at least six years from the closing date and a repayment schedule that is not greater than level principal amortization over six years.(k) Opportunity zone means a qualified opportunity zone, as defined by Section 1400Z-1 of Title 26 of the United States Code.(l) (1) Principal business operations means the location that meets either of the following requirements:(A) At least 60 percent of a business employees work at the location.(B) Employees who are paid at least 60 percent of the business payroll work at the location.(2) A business that has agreed to relocate employees using the proceeds of a growth investment to establish its principal business operations in a growth zone shall be deemed to have its principal business operations in a growth zone if it satisfies the requirements of paragraph (1) within 180 days after receiving a growth investment.(m) (1) State clawback amount means the difference between both of the following:(A) The growth funds total investor contributions.(B) The sum of the annual employment offsets reported by the growth fund pursuant to Section 12272.(2) If the amount derived from paragraph (1) is zero or less than zero, the state clawback amount shall be zero.(n) Targeted employee means a qualified new full-time employee who meets any of the following requirements:(1) (A) The employee was unemployed for the six months immediately preceding being hired and did not complete a baccalaureate, postgraduate, or professional degree at a college or university within the 12 months immediately preceding being hired.(B) For purposes of this paragraph, a person is unemployed when that person satisfies all of the following requirements:(i) The person is not receiving wages subject to withholding.(ii) The person is not self-employed.(iii) The person is not a full-time student at a high school, college, university, or postsecondary education institution.(2) The employee is a veteran separated from the Armed Forces of the United States in the preceding 12 months.(3) The employee received the federal Earned Income Tax Credit in the prior taxable year.(4) The employee has been convicted of a felony.(5) The employee is a current recipient of benefits pursuant to Article 3.2 (commencing with Section 11320) of Chapter 2 of Part 3 of Division 9 of the Welfare and Institutions Code.(6) The employee is provided, or reimbursed for, education or training leading to an official skill certification.(7) The employee is provided housing, a relocation bonus, or other housing assistance, by the qualifying growth business, that exceeds a value of ten thousand dollars ($10,000).(8) The employee is employed by a growth business in an area where a borrower would be qualified pursuant to Section 4279.108(c)(1) of the Code of Federal Regulations.(o) Treasurer means the State Treasurer.12265. (a) For taxable years beginning on or after January 1, 2021, and before January 1, 2031, there shall be allowed as a credit against the taxes imposed by this part and against the exactions imposed by paragraph (3) of subdivision (f) of Section 28 of Article XIII of the State Constitution, a JUMP Act tax credit in an amount equal to an investor contribution, as defined in Section 12264.(b) If the credit allowed by this section exceeds the taxes described in subdivision (a), the excess may be carried over to reduce those taxes in the following year, and the succeeding four years if necessary, until the credit is exhausted.(c) The credit is nonrefundable and may not be sold, transferred, or allocated to an entity other than an affiliate that was an affiliate of the taxpayer on the date that the taxpayer signed its affidavit included in the growth funds application pursuant to subdivision (a) of Section 12266.(d) A taxpayer claiming a credit under this section shall submit a copy of the tax credit certificate issued pursuant to Section 12267 with the taxpayers return for each taxable year for which the credit is claimed.(e) (1) The aggregate amount of investment authority that may be certified pursuant to Section 12267 shall be five hundred million dollars ($500,000,000) and the aggregate amount of credit that may be allocated and certified pursuant to this section shall be an amount equal to seventy-five million dollars ($75,000,000) in any taxable year and three hundred million dollars ($300,000,000) in total for all taxable years for which the JUMP Act tax credit is authorized.(2) If requests for investment authority and credits exceed the limitations described in paragraph (1), the Treasurer shall proportionally reduce the investment authority and credits certified for each approved application as necessary to avoid exceeding the limit.12266. (a) Beginning January 1, 2021, the Treasurer shall accept applications for approval as a growth fund, pursuant to rules and regulations adopted by the Treasurer, which shall meet all of the following requirements:(1) The total investment authority sought by the applicant shall not exceed five hundred million dollars ($500,000,000).(2) The application shall include evidence of all of the following:(A) A certification by an executive officer of the applicant that certifies that the applicant or an affiliate of the applicant is licensed as a rural business investment company under Section 2009cc of Title 7 of the United States Code or as a small business investment company under Section 681 of Title 15 of the United States Code.(B) At least one principal in a rural business investment company or a small business investment company is, and has been for at least four years, an officer or employee of the applicant or an affiliate of the applicant on the date the application is submitted.(C) As of the date the application is submitted, the applicant or affiliates of the applicant have invested at least one hundred million dollars ($100,000,000) in nonpublic companies located in non-metropolitan counties as defined by the Office of Management and Budget within the Office of the President of the United States on the basis of county or county-equivalent units or one hundred million dollars ($100,000,000) in opportunity zones.(3) The application shall include an estimate of the total new full-time employees that will result from the applicants growth investments.(4) The application shall include a signed affidavit from each taxpayer stating the amount of investor contribution the taxpayer will make. At least 60 percent of a growth funds requested investment authority shall consist of investor contributions.(5) The application shall include the growth funds federal employer identification number.(6) The application shall include a one-time application fee of ten thousand dollars ($10,000).(b) (1) The Treasurer shall review an application received pursuant to this section in the order in which it was received and shall either approve or deny the application within 45 days of receipt.(2) Applications that are received on the same day shall be deemed to have been received simultaneously.(c) The Treasurer may approve investment authority only in an aggregate amount that is not greater than five hundred million dollars ($500,000,000).(d) The Treasurer shall deny an application only if any of the following are true:(1) The application is incomplete.(2) The applicant does not meet the requirements of paragraph (2) or (4) of subdivision (a).(3) The Treasurer has already approved the maximum amount of investment authority allowed pursuant to subdivision (c).(e) (1) If the Treasurer denies an application, the applicant, within 15 business days after receiving notice of the denial, may provide additional information to the Treasurer to cure any defects in the application, except for failure to comply with paragraph (4) of subdivision (a).(2) The Treasurer shall review and reconsider applications corrected pursuant to paragraph (1) within thirty days.(3) If the Treasurer subsequently approves the application, the application shall be considered approved as of its original submission date and shall receive the pro rata allocation of investment authority that the applicant would have received if it had been approved on the original date of submission.12267. (a) After approving an application submitted pursuant to Section 12266, the Treasurer shall certify all of the following:(1) The applicant is a growth fund.(2) The amount of the applicants approved investment authority.(3) The investor contributions required from each investor that submitted an affidavit with the growth funds application.(b) Upon receipt of the documentation required by Section 12268, the Treasurer shall provide a tax credit certificate to each taxpayer that has made an investor contribution in the amount of the investor contribution.12268. (a) (1) Within 60 days of receiving the certification described in subdivision (a) of Section 12267, a growth fund shall collect all investor contributions and collect additional investments of cash that, when added to the investor contributions, equal the growth funds investment authority.(2) At least 10 percent of the growth funds investment authority shall consist of equity investments contributed directly or indirectly by affiliates of the growth fund.(3) Within 65 days after receiving the certification described in subdivision (a) of Section 12267, a growth fund shall send to the Treasurer the date on which the investment authority was collected and documentation that it has collected the amounts required by subdivision (a).(b) If the growth fund fails to fully comply with paragraphs (1) and (2) of subdivision (a), the Treasurer shall revoke the growth funds certification.12269. (a) A qualified growth fund shall be charged an annual fee, payable to the Treasurer, of 0.02 percent of the investment authority authorized.(b) (1) The initial annual fee is due and payable to the Treasurer within 65 days after receiving the certification issued pursuant to Section 12267.(2) After payment of the initial annual fee, the annual fee shall be due and payable to the Treasurer before March 1.(c) An annual fee shall not be required once a growth fund has exited the program pursuant to Section 12271.12270. (a) The Treasurer shall recapture, based on information in the growth funds annual report or its failure to make the certification set forth in paragraph (7) of subdivision (a) of Section 12272, any tax credit allowed pursuant to this article and revoke the tax credit certificates issued pursuant to Section 12267 if any of the following occur with respect to a growth fund before the growth fund exits the program in accordance with Section 12271:(1) The growth fund does not invest 60 percent of its investment authority in growth investments in this state within two years and 100 percent of its investment authority in growth investments in this state within three years of the closing date.(2) The growth fund, after initially satisfying paragraph (1), fails to maintain growth investments equal to 100 percent of its investment authority until the seventh anniversary of the closing date.(3) The growth fund makes a distribution or payment that results in the growth fund having less than 100 percent of its investment authority invested in growth investments in this state or available for investment in growth investments and held in cash, bank deposits, and marketable securities.(4) The growth fund fails to make growth investments in growth businesses with principal business operations in an area qualified under Section 4279.108(c)(1) of Title 7 of the Code of Federal Regulations that when added together equal at least 6 percent of the growth funds capital investment authority.(5) The growth fund invests in a growth business that directly or through an affiliate does any of the following:(A) Owns an investment in the growth fund.(B) Has the right to acquire an ownership interest in the growth fund.(C) Makes a loan to the growth fund.(D) (i) Makes an investment in the growth fund, an affiliate of the growth fund, or an investor in the growth fund.(ii) For purposes of this paragraph, a growth fund is not considered an affiliate of a growth business solely because of its growth investment.(b) For purposes of paragraphs (1) and (2) of subdivision (a), both of the following apply:(1) An investment is deemed to be maintained even if it is sold or repaid, so long as the growth fund reinvests an amount equal to the capital returned or recovered from the original investment, exclusive of any profits realized, in other growth investments in this state within 12 months of the receipt of that capital.(2) Amounts received periodically by a growth fund shall be treated as continuously invested in growth investments if the amounts are reinvested in one or more growth investments by the end of the calendar year following receipt of those amounts.(c) Paragraph (5) of subdivision (a) shall not apply to investments in publicly traded securities made by a growth business or an owner or affiliate of the growth business.(d) (1) Before making a growth investment, a growth fund may request a written determination from the Treasurer as to whether the business in which it proposes to invest satisfies the definition of a growth business to which the Treasurer shall respond no more than 15 business days from the date of receipt thereof.(2) If the Treasurer fails to issue a determination letter pursuant to paragraph (1), the business in which the growth fund proposes to invest shall be considered a growth business.(e) The maximum amount of growth investments in a particular growth business, including amounts invested in affiliates of the growth business, that a growth fund may count in satisfying the requirements of paragraphs (1) and (2) of subdivision (a) is the greater of five million dollars ($5,000,000) or 10 percent of its investment authority, exclusive of repaid or redeemed growth investments.(f) (1) Before revoking a tax credit certificate or recapturing credits pursuant to this section, the Treasurer shall notify the growth fund of the reasons for the pending revocation or recapture.(2) The growth fund shall have 90 days from the date the notice was received to correct a violation outlined in the notice to the satisfaction of the Treasurer and avoid recapture of tax credits and revocation of the tax credit certificate.(g) The Treasurer shall not revoke a tax credit certificate or recapture credits after a growth fund exits from the program in accordance with Section 12271.12271. (a) (1) A growth fund may, but only on or after the seventh anniversary of the closing date, apply to the Treasurer to exit the program, and upon exiting, shall no longer be subject to the provisions of this article, except as provided in subdivision (c).(2) The Treasurer shall approve or deny an application made pursuant to subdivision (a) within 30 days of receipt.(3) The Treasurer shall approve an application made pursuant to this section if, with respect to the applicant, no tax credit certificates have been revoked and the growth fund has not received a notice of revocation or recapture that has not been cured.(4) The Treasurer shall not unreasonably deny an application submitted pursuant to this section.(5) If the Treasurer denies an application, the notice of denial shall include the reasons for the determination.(b) After its exit from the program, a growth fund may not make distributions to its equity holders or pay any fees in excess of its investment authority until it has paid any state clawback amount due.(c) Each growth fund shall continue to report annually to the Treasurer both of the following:(1) The number of new full-time employees at each growth business, and that number shall continue to reduce the state clawback amount.(2) Employment offset until its state clawback amount equals zero or it has distributed all of its assets.12272. (a) Each growth fund shall submit an annual report to the Treasurer on or before the fifth business day after each anniversary of the closing date before its exit from the program pursuant to Section 12271. The report shall identify each growth investment made by the growth fund and shall include all of the following:(1) A bank statement evidencing each growth investment if not previously reported.(2) The name, location, and industry of each growth business receiving a growth investment, including either the determination letter set forth in Section 12270 or evidence that the business qualified as a growth business at the time the investment was made, if not previously reported.(3) For each growth business receiving a growth investment, evidence for the Treasurer to verify the number of full-time employees at each growth business on the date of the growth funds initial growth investment.(4) The number of new full-time employees at each growth business, the average salary of those employees, and evidence sufficient for the Treasurer to verify whether a new full-time employee is a targeted employee.(5) A calculation of the growth funds employment offset for that year.(6) The cumulative amount of growth investments made in each growth business.(7) A certification under penalty of perjury that the growth fund has not violated any of the grounds for revocation and recapture of credits set forth in subdivision (a) of Section 12270.(8) Any other information required by the Treasurer for purposes of carrying out the Treasurers duties under this article.(b) The growth fund is not required to provide information with respect to growth investments that have been redeemed or repaid as part of the annual report required by this section but shall provide that information if available.12273. (a) If the Treasurer revokes a growth funds certification pursuant to subdivision (b) of Section 12268 or a tax credit certificate pursuant to Section 12270, the associated investment authority and investor contributions will not count toward the limit on total investment authority and investor contributions set forth in subdivision (c) of Section 12266.(b) (1) The Treasurer shall first award reverted investment authority pro rata to each growth fund that was awarded less than the requested investment authority for which it applied, and that growth fund may allocate the associated investor contribution authority to any taxpayer with state premium tax liability in its discretion.(2) The Treasurer may award any remaining investment authority to new applicants.12274. (a) The Treasurer may adopt rules and regulations for the purpose of implementing the provisions of this article.(b) The Treasurer shall adopt forms and notices necessary to implement this article.(c) The Treasurer shall notify the Department of Insurance of the name of any insurance company allocated tax credits under this act and the amount of those credits.SEC. 3. For purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Article 6 (commencing with Section 12264) of Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code as added by this act, the Legislature finds as follows:(a) The California Jobs and Upward Mobility Progression (JUMP) Act concerns communities underserved by traditional small business lending and flexible growth capital. Despite having the worlds fifth largest economy, California has the second fastest growing income inequality of all 50 states and the largest wage gap between middle-income and high-wage earners, often forcing workers in underserved areas to commute long distances to find suitable employment or affordable housing. This tax credit addresses these issues by incentivizing federally licensed Small Business Administration (SBA) and United States Department of Agriculture (USDA) investors to raise funds exclusively for investment in California small businesses located in distressed areas throughout the state, including all 879 designated opportunity zones. This tax credit will enable small businesses to grow and create quality well-paying jobs, thereby accelerating wage mobility and improving quality of life for California residents.(b) To measure whether the credit achieves its intended purpose, the Treasurer shall, on July 1, 2022, and annually thereafter in each year the program is in effect, submit a report, in compliance with Section 9795 of the Government Code, to the Legislature containing all of the following:(1) Bank statements evidencing each funds growth investments.(2) The name, location, and industry of each growth business receiving a growth investment.(3) A verifiable number of full-time employees at each growth business receiving a growth investment on the date of the growth funds initial growth investment.(4) A verifiable average salary of new full-time employees at each growth business that demonstrates a new full-time employee is a targeted employee in accordance with the program.(5) A calculation of the growth funds employment offset for that year.(6) The cumulative amount of growth investments made in each growth business as a result of this credit.(c) The Treasurer shall submit the report required by this section to the Senate Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Senate and Assembly Committees on Appropriations, the Senate Committee on Governance and Finance, and the Assembly Committee on Revenue and Taxation.SEC. 4. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.SEC. 5. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. | |
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3 | + | CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 1210Introduced by Senator Bradford(Coauthor: Senator Galgiani)(Coauthor: Assembly Member Mayes)February 20, 2020 An act to add Article 6 (commencing with Section 12264) to Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGESTSB 1210, as introduced, Bradford. Insurance taxation: credit: California Jobs and Upward Mobility Progression (JUMP) Act.Existing statutory law imposes taxes on the gross premiums of an insurer, as defined, and allows various credits against those taxes. The California Constitution imposes exactions against insurers from another state or country under specified conditions.This bill would allow a credit against those taxes for a taxable year beginning on or after January 1, 2021, and before January 1, 2031, in an amount equal to a cash investment in a growth fund, as defined, that meets specified requirements. The bill would require the Treasurer to, among other things, accept applications beginning January 1, 2021, for approval as a growth fund that meet specified requirements, including that the application include an estimate of the total new full-time employees that will result from the applicants growth investments, as defined. The bill also would require the Treasurer to recapture any tax credit allowed and revoke the tax credit certificates issued to a taxpayer if the taxpayer engages in specified behavior, including not investing 60% of its investment authority in growth investments in this state within 2 years, and 100% of its investment authority in growth investments in this state within 3 years, of the date on which a growth fund has collected the investment authority authorized by the Treasurer.The bill would require a growth fund to annually certify under penalty of perjury that the growth fund has not violated any of the grounds for revocation and recapture of credits. By expanding the crime of perjury, this bill would create a state-mandated local program.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that no reimbursement is required by this act for a specified reason.This bill would take effect immediately as a tax levy.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES | |
4 | 4 | ||
5 | - | Amended IN Senate May 18, 2020 | |
6 | 5 | ||
7 | - | Amended IN Senate May 18, 2020 | |
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9 | 9 | CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION | |
10 | 10 | ||
11 | 11 | Senate Bill | |
12 | 12 | ||
13 | 13 | No. 1210 | |
14 | 14 | ||
15 | 15 | Introduced by Senator Bradford(Coauthor: Senator Galgiani)(Coauthor: Assembly Member Mayes)February 20, 2020 | |
16 | 16 | ||
17 | 17 | Introduced by Senator Bradford(Coauthor: Senator Galgiani)(Coauthor: Assembly Member Mayes) | |
18 | 18 | February 20, 2020 | |
19 | 19 | ||
20 | 20 | An act to add Article 6 (commencing with Section 12264) to Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. | |
21 | 21 | ||
22 | 22 | LEGISLATIVE COUNSEL'S DIGEST | |
23 | 23 | ||
24 | 24 | ## LEGISLATIVE COUNSEL'S DIGEST | |
25 | 25 | ||
26 | - | SB 1210, as | |
26 | + | SB 1210, as introduced, Bradford. Insurance taxation: credit: California Jobs and Upward Mobility Progression (JUMP) Act. | |
27 | 27 | ||
28 | - | ||
28 | + | Existing statutory law imposes taxes on the gross premiums of an insurer, as defined, and allows various credits against those taxes. The California Constitution imposes exactions against insurers from another state or country under specified conditions.This bill would allow a credit against those taxes for a taxable year beginning on or after January 1, 2021, and before January 1, 2031, in an amount equal to a cash investment in a growth fund, as defined, that meets specified requirements. The bill would require the Treasurer to, among other things, accept applications beginning January 1, 2021, for approval as a growth fund that meet specified requirements, including that the application include an estimate of the total new full-time employees that will result from the applicants growth investments, as defined. The bill also would require the Treasurer to recapture any tax credit allowed and revoke the tax credit certificates issued to a taxpayer if the taxpayer engages in specified behavior, including not investing 60% of its investment authority in growth investments in this state within 2 years, and 100% of its investment authority in growth investments in this state within 3 years, of the date on which a growth fund has collected the investment authority authorized by the Treasurer.The bill would require a growth fund to annually certify under penalty of perjury that the growth fund has not violated any of the grounds for revocation and recapture of credits. By expanding the crime of perjury, this bill would create a state-mandated local program.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that no reimbursement is required by this act for a specified reason.This bill would take effect immediately as a tax levy. | |
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30 | 30 | Existing statutory law imposes taxes on the gross premiums of an insurer, as defined, and allows various credits against those taxes. The California Constitution imposes exactions against insurers from another state or country under specified conditions. | |
31 | 31 | ||
32 | - | This bill | |
32 | + | This bill would allow a credit against those taxes for a taxable year beginning on or after January 1, 2021, and before January 1, 2031, in an amount equal to a cash investment in a growth fund, as defined, that meets specified requirements. The bill would require the Treasurer to, among other things, accept applications beginning January 1, 2021, for approval as a growth fund that meet specified requirements, including that the application include an estimate of the total new full-time employees that will result from the applicants growth investments, as defined. The bill also would require the Treasurer to recapture any tax credit allowed and revoke the tax credit certificates issued to a taxpayer if the taxpayer engages in specified behavior, including not investing 60% of its investment authority in growth investments in this state within 2 years, and 100% of its investment authority in growth investments in this state within 3 years, of the date on which a growth fund has collected the investment authority authorized by the Treasurer. | |
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34 | - | This bill would require, among other things, the office of the Treasurer to undertake outreach activities to encourage investment in underrepresented groups, including, but not limited to, partnering with organizations representing persons and business enterprises from underrepresented groups, as described. The bill would also establish in the State Treasury a special fund to be known as the Treasury Relief Investment Fund. The bill would require that all moneys appropriated to the office of the Treasurer for purposes of the act be deposited or paid into the fund and be used to carry out the office of the Treasurers duties specified in the act and those rules and regulations promulgated to implement the act. The bill would make related findings and declarations. | |
35 | - | ||
36 | - | This bill would require a relief fund that has not decertified to annually certify under penalty of perjury that the relief fund has not violated any of the grounds for revocation and recapture of credits. By expanding the crime of perjury, this bill would create a state-mandated local program. | |
34 | + | The bill would require a growth fund to annually certify under penalty of perjury that the growth fund has not violated any of the grounds for revocation and recapture of credits. By expanding the crime of perjury, this bill would create a state-mandated local program. | |
37 | 35 | ||
38 | 36 | The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. | |
39 | 37 | ||
40 | 38 | This bill would provide that no reimbursement is required by this act for a specified reason. | |
41 | 39 | ||
42 | 40 | This bill would take effect immediately as a tax levy. | |
43 | 41 | ||
44 | - | Existing statutory law imposes taxes on the gross premiums of an insurer, as defined, and allows various credits against those taxes. The California Constitution imposes exactions against insurers from another state or country under specified conditions. | |
45 | - | ||
46 | - | ||
47 | - | ||
48 | - | This bill would allow a credit against those taxes for a taxable year beginning on or after January 1, 2021, and before January 1, 2031, in an amount equal to a cash investment in a growth fund, as defined, that meets specified requirements. The bill would require the Treasurer to, among other things, accept applications beginning January 1, 2021, for approval as a growth fund that meet specified requirements, including that the application include an estimate of the total new full-time employees that will result from the applicants growth investments, as defined. The bill also would require the Treasurer to recapture any tax credit allowed and revoke the tax credit certificates issued to a taxpayer if the taxpayer engages in specified behavior, including not investing 60% of its investment authority in growth investments in this state within 2 years, and 100% of its investment authority in growth investments in this state within 3 years, of the date on which a growth fund has collected the investment authority authorized by the Treasurer. | |
49 | - | ||
50 | - | ||
51 | - | ||
52 | - | The bill would require a growth fund to annually certify under penalty of perjury that the growth fund has not violated any of the grounds for revocation and recapture of credits. By expanding the crime of perjury, this bill would create a state-mandated local program. | |
53 | - | ||
54 | - | ||
55 | - | ||
56 | - | The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. | |
57 | - | ||
58 | - | ||
59 | - | ||
60 | - | This bill would provide that no reimbursement is required by this act for a specified reason. | |
61 | - | ||
62 | - | ||
63 | - | ||
64 | - | This bill would take effect immediately as a tax levy. | |
65 | - | ||
66 | - | ||
67 | - | ||
68 | 42 | ## Digest Key | |
69 | 43 | ||
70 | 44 | ## Bill Text | |
71 | 45 | ||
72 | - | The people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) The State | |
46 | + | The people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) According to a 2018 report taken from American Community Survey Data, California is seeing the second fastest growing income inequality and the largest wage gap between middle income and high wage earners of all 50 states.(b) California workers are increasingly commuting long distances to find suitable living wage employment or affordable housing.(c) Income inequality creates a tax burden on the state, as families with shrinking incomes must rely more heavily on state services.(d) The growing disparity in income inequality is further compounded by the struggles entrepreneurs and small business owners in Californias Opportunity Zones and rural areas face in securing affordable, flexible financing to grow their businesses and create well-paying jobs with benefits in their own communities.(e) Since the global financial crisis, the availability of senior lending from banks for small businesses and startups, particularly those in underserved areas, has significantly changed. Today, small business loans of less than $1 million account for less than 20 percent of the overall bank loan portfolios nationally, down from over 40 percent in 2004. These banks are making fewer small loans, precisely the type of investments on which underserved small businesses rely.(f) The 2017 California Small Business Credit Survey found that 42 percent of firms experienced a financial challenge in paying operating expenses and 39 percent of firms experienced a financial challenge in credit availability.(g) The best way to achieve a California for All is through a postperformance tax credit program with strong, important safeguards to protect the taxpayer and ensure policy goals are met.(h) While California has many available programs and incentives, most are geared toward keeping or attracting big businesses, with only a small percentage of investments or tax credits being utilized by existing small businesses.(i) To accelerate wage mobility and improve California workers ability to earn living wages with benefits closer to home, it is the intent of the Legislature to incentivize experienced, federally licensed investors to raise up to $500 million exclusively for investment to deploy in targeted small businesses in Californias Opportunity Zones and rural areas.SEC. 2. Article 6 (commencing with Section 12264) is added to Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code, to read: Article 6. Jobs and Upward Mobility Progression (JUMP) Act12264. As used in this article:(a) (1) Affiliate means an entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another entity.(2) For the purposes of this subdivision, an entity is controlled by another entity if the controlling entity holds, directly or indirectly, the majority voting or ownership interest in the controlled entity or has control over the day-to-day operations of the controlled entity.(b) Closing date means the date on which a growth fund has collected all amounts specified by Section 12268.(c) (1) Employment offset means an amount calculated annually that is equal to the sum of both of the following:(A) The product of twenty-five thousand dollars ($25,000) and the number of new full-time employees of a growth funds growth businesses.(B) A one-time amount of ten thousand dollars ($10,000) for each full-time employee hired by a growth business that is a targeted employee.(2) (A) The number of new full-time employees of a growth funds growth businesses referenced in subparagraph (A) of paragraph (1) shall be calculated annually as the difference between the following:(i) The average monthly number of full-time employees at a growth business in the preceding calendar year or portion thereof if the initial growth investment occurred in the year.(ii) The number of full-time employees at the growth business on the date of the initial growth investment.(B) If the resulting difference between the amounts derived from clauses (i) and (ii) of subparagraph (A) is less than zero, the number of new full-time employees shall be deemed to be zero.(d) Full-time employee means any of the following:(1) An employment position that is filled at a growth business.(2) An employment position that receives wages that are at least 100 percent of the county median wage.(3) An employment position that is paid hourly wages for an average of at least 35 hours per week or any other period of time generally accepted by custom, industry, or practice as full-time employment.(4) An employment position that is salaried and paid for full-time employment within the meaning of Section 515 of the Labor Code.(e) Growth business means a business that, at the time a growth fund initially invests in the business, meets all of the following requirements:(1) The business has, together with its affiliates, fewer than 100 employees.(2) The business has aggregate gross receipts, less returns and allowances reportable to the state, of less than ten million dollars ($10,000,000) during the previous taxable year.(3) The business has its principal business operations in at least one growth zone in the state.(4) The business is engaged in North American Industry Classification System sector 11, 22, 23, 31, 32, 33, 48, 49, 54, or 62 or, if not engaged in those industries, the Treasurer determines that the investment will create desirable economic outcomes related to income mobility.(f) Growth fund means an entity certified by the Treasurer pursuant to Section 12267.(g) (1) Growth investment means a capital or equity investment in a growth business or a loan to a growth business with a stated maturity of at least one year after the date of issuance.(2) Growth investment does not include the provision of a revolving line of credit.(h) Growth zone means any of the following:(1) An opportunity zone located in the state.(2) A census tract in the state meeting either of the following requirements:(A) The census tract has a poverty rate that is greater than 20 percent.(B) The census tract has a median family income that does not exceed the following:(i) If the census tract is not located in a metropolitan area, the statewide median family income.(ii) If the census tract is located in a metropolitan area, the greater of the statewide median family income and the metropolitan area median family income.(3) All locations outside of census places with a population greater than or equal to 50,000 as of the latest decennial census and their adjacent and contiguous urbanized areas.(i) Investment authority means the amount certified by the Treasurer pursuant to Section 12267.(j) Investor contribution means a cash investment in a growth fund that meets both of the following requirements:(1) The cash investment is equal to the amount specified for that entity in the Treasurers approval of the growth funds application pursuant to Section 12267.(2) The cash investment purchased any of the following:(A) An equity interest in the growth fund.(B) A debt instrument that has a maturity date of at least six years from the closing date and a repayment schedule that is not greater than level principal amortization over six years.(k) Opportunity zone means a qualified opportunity zone, as defined by Section 1400Z-1 of Title 26 of the United States Code.(l) (1) Principal business operations means the location that meets either of the following requirements:(A) At least 60 percent of a business employees work at the location.(B) Employees who are paid at least 60 percent of the business payroll work at the location.(2) A business that has agreed to relocate employees using the proceeds of a growth investment to establish its principal business operations in a growth zone shall be deemed to have its principal business operations in a growth zone if it satisfies the requirements of paragraph (1) within 180 days after receiving a growth investment.(m) (1) State clawback amount means the difference between both of the following:(A) The growth funds total investor contributions.(B) The sum of the annual employment offsets reported by the growth fund pursuant to Section 12272.(2) If the amount derived from paragraph (1) is zero or less than zero, the state clawback amount shall be zero.(n) Targeted employee means a qualified new full-time employee who meets any of the following requirements:(1) (A) The employee was unemployed for the six months immediately preceding being hired and did not complete a baccalaureate, postgraduate, or professional degree at a college or university within the 12 months immediately preceding being hired.(B) For purposes of this paragraph, a person is unemployed when that person satisfies all of the following requirements:(i) The person is not receiving wages subject to withholding.(ii) The person is not self-employed.(iii) The person is not a full-time student at a high school, college, university, or postsecondary education institution.(2) The employee is a veteran separated from the Armed Forces of the United States in the preceding 12 months.(3) The employee received the federal Earned Income Tax Credit in the prior taxable year.(4) The employee has been convicted of a felony.(5) The employee is a current recipient of benefits pursuant to Article 3.2 (commencing with Section 11320) of Chapter 2 of Part 3 of Division 9 of the Welfare and Institutions Code.(6) The employee is provided, or reimbursed for, education or training leading to an official skill certification.(7) The employee is provided housing, a relocation bonus, or other housing assistance, by the qualifying growth business, that exceeds a value of ten thousand dollars ($10,000).(8) The employee is employed by a growth business in an area where a borrower would be qualified pursuant to Section 4279.108(c)(1) of the Code of Federal Regulations.(o) Treasurer means the State Treasurer.12265. (a) For taxable years beginning on or after January 1, 2021, and before January 1, 2031, there shall be allowed as a credit against the taxes imposed by this part and against the exactions imposed by paragraph (3) of subdivision (f) of Section 28 of Article XIII of the State Constitution, a JUMP Act tax credit in an amount equal to an investor contribution, as defined in Section 12264.(b) If the credit allowed by this section exceeds the taxes described in subdivision (a), the excess may be carried over to reduce those taxes in the following year, and the succeeding four years if necessary, until the credit is exhausted.(c) The credit is nonrefundable and may not be sold, transferred, or allocated to an entity other than an affiliate that was an affiliate of the taxpayer on the date that the taxpayer signed its affidavit included in the growth funds application pursuant to subdivision (a) of Section 12266.(d) A taxpayer claiming a credit under this section shall submit a copy of the tax credit certificate issued pursuant to Section 12267 with the taxpayers return for each taxable year for which the credit is claimed.(e) (1) The aggregate amount of investment authority that may be certified pursuant to Section 12267 shall be five hundred million dollars ($500,000,000) and the aggregate amount of credit that may be allocated and certified pursuant to this section shall be an amount equal to seventy-five million dollars ($75,000,000) in any taxable year and three hundred million dollars ($300,000,000) in total for all taxable years for which the JUMP Act tax credit is authorized.(2) If requests for investment authority and credits exceed the limitations described in paragraph (1), the Treasurer shall proportionally reduce the investment authority and credits certified for each approved application as necessary to avoid exceeding the limit.12266. (a) Beginning January 1, 2021, the Treasurer shall accept applications for approval as a growth fund, pursuant to rules and regulations adopted by the Treasurer, which shall meet all of the following requirements:(1) The total investment authority sought by the applicant shall not exceed five hundred million dollars ($500,000,000).(2) The application shall include evidence of all of the following:(A) A certification by an executive officer of the applicant that certifies that the applicant or an affiliate of the applicant is licensed as a rural business investment company under Section 2009cc of Title 7 of the United States Code or as a small business investment company under Section 681 of Title 15 of the United States Code.(B) At least one principal in a rural business investment company or a small business investment company is, and has been for at least four years, an officer or employee of the applicant or an affiliate of the applicant on the date the application is submitted.(C) As of the date the application is submitted, the applicant or affiliates of the applicant have invested at least one hundred million dollars ($100,000,000) in nonpublic companies located in non-metropolitan counties as defined by the Office of Management and Budget within the Office of the President of the United States on the basis of county or county-equivalent units or one hundred million dollars ($100,000,000) in opportunity zones.(3) The application shall include an estimate of the total new full-time employees that will result from the applicants growth investments.(4) The application shall include a signed affidavit from each taxpayer stating the amount of investor contribution the taxpayer will make. At least 60 percent of a growth funds requested investment authority shall consist of investor contributions.(5) The application shall include the growth funds federal employer identification number.(6) The application shall include a one-time application fee of ten thousand dollars ($10,000).(b) (1) The Treasurer shall review an application received pursuant to this section in the order in which it was received and shall either approve or deny the application within 45 days of receipt.(2) Applications that are received on the same day shall be deemed to have been received simultaneously.(c) The Treasurer may approve investment authority only in an aggregate amount that is not greater than five hundred million dollars ($500,000,000).(d) The Treasurer shall deny an application only if any of the following are true:(1) The application is incomplete.(2) The applicant does not meet the requirements of paragraph (2) or (4) of subdivision (a).(3) The Treasurer has already approved the maximum amount of investment authority allowed pursuant to subdivision (c).(e) (1) If the Treasurer denies an application, the applicant, within 15 business days after receiving notice of the denial, may provide additional information to the Treasurer to cure any defects in the application, except for failure to comply with paragraph (4) of subdivision (a).(2) The Treasurer shall review and reconsider applications corrected pursuant to paragraph (1) within thirty days.(3) If the Treasurer subsequently approves the application, the application shall be considered approved as of its original submission date and shall receive the pro rata allocation of investment authority that the applicant would have received if it had been approved on the original date of submission.12267. (a) After approving an application submitted pursuant to Section 12266, the Treasurer shall certify all of the following:(1) The applicant is a growth fund.(2) The amount of the applicants approved investment authority.(3) The investor contributions required from each investor that submitted an affidavit with the growth funds application.(b) Upon receipt of the documentation required by Section 12268, the Treasurer shall provide a tax credit certificate to each taxpayer that has made an investor contribution in the amount of the investor contribution.12268. (a) (1) Within 60 days of receiving the certification described in subdivision (a) of Section 12267, a growth fund shall collect all investor contributions and collect additional investments of cash that, when added to the investor contributions, equal the growth funds investment authority.(2) At least 10 percent of the growth funds investment authority shall consist of equity investments contributed directly or indirectly by affiliates of the growth fund.(3) Within 65 days after receiving the certification described in subdivision (a) of Section 12267, a growth fund shall send to the Treasurer the date on which the investment authority was collected and documentation that it has collected the amounts required by subdivision (a).(b) If the growth fund fails to fully comply with paragraphs (1) and (2) of subdivision (a), the Treasurer shall revoke the growth funds certification.12269. (a) A qualified growth fund shall be charged an annual fee, payable to the Treasurer, of 0.02 percent of the investment authority authorized.(b) (1) The initial annual fee is due and payable to the Treasurer within 65 days after receiving the certification issued pursuant to Section 12267.(2) After payment of the initial annual fee, the annual fee shall be due and payable to the Treasurer before March 1.(c) An annual fee shall not be required once a growth fund has exited the program pursuant to Section 12271.12270. (a) The Treasurer shall recapture, based on information in the growth funds annual report or its failure to make the certification set forth in paragraph (7) of subdivision (a) of Section 12272, any tax credit allowed pursuant to this article and revoke the tax credit certificates issued pursuant to Section 12267 if any of the following occur with respect to a growth fund before the growth fund exits the program in accordance with Section 12271:(1) The growth fund does not invest 60 percent of its investment authority in growth investments in this state within two years and 100 percent of its investment authority in growth investments in this state within three years of the closing date.(2) The growth fund, after initially satisfying paragraph (1), fails to maintain growth investments equal to 100 percent of its investment authority until the seventh anniversary of the closing date.(3) The growth fund makes a distribution or payment that results in the growth fund having less than 100 percent of its investment authority invested in growth investments in this state or available for investment in growth investments and held in cash, bank deposits, and marketable securities.(4) The growth fund fails to make growth investments in growth businesses with principal business operations in an area qualified under Section 4279.108(c)(1) of Title 7 of the Code of Federal Regulations that when added together equal at least 6 percent of the growth funds capital investment authority.(5) The growth fund invests in a growth business that directly or through an affiliate does any of the following:(A) Owns an investment in the growth fund.(B) Has the right to acquire an ownership interest in the growth fund.(C) Makes a loan to the growth fund.(D) (i) Makes an investment in the growth fund, an affiliate of the growth fund, or an investor in the growth fund.(ii) For purposes of this paragraph, a growth fund is not considered an affiliate of a growth business solely because of its growth investment.(b) For purposes of paragraphs (1) and (2) of subdivision (a), both of the following apply:(1) An investment is deemed to be maintained even if it is sold or repaid, so long as the growth fund reinvests an amount equal to the capital returned or recovered from the original investment, exclusive of any profits realized, in other growth investments in this state within 12 months of the receipt of that capital.(2) Amounts received periodically by a growth fund shall be treated as continuously invested in growth investments if the amounts are reinvested in one or more growth investments by the end of the calendar year following receipt of those amounts.(c) Paragraph (5) of subdivision (a) shall not apply to investments in publicly traded securities made by a growth business or an owner or affiliate of the growth business.(d) (1) Before making a growth investment, a growth fund may request a written determination from the Treasurer as to whether the business in which it proposes to invest satisfies the definition of a growth business to which the Treasurer shall respond no more than 15 business days from the date of receipt thereof.(2) If the Treasurer fails to issue a determination letter pursuant to paragraph (1), the business in which the growth fund proposes to invest shall be considered a growth business.(e) The maximum amount of growth investments in a particular growth business, including amounts invested in affiliates of the growth business, that a growth fund may count in satisfying the requirements of paragraphs (1) and (2) of subdivision (a) is the greater of five million dollars ($5,000,000) or 10 percent of its investment authority, exclusive of repaid or redeemed growth investments.(f) (1) Before revoking a tax credit certificate or recapturing credits pursuant to this section, the Treasurer shall notify the growth fund of the reasons for the pending revocation or recapture.(2) The growth fund shall have 90 days from the date the notice was received to correct a violation outlined in the notice to the satisfaction of the Treasurer and avoid recapture of tax credits and revocation of the tax credit certificate.(g) The Treasurer shall not revoke a tax credit certificate or recapture credits after a growth fund exits from the program in accordance with Section 12271.12271. (a) (1) A growth fund may, but only on or after the seventh anniversary of the closing date, apply to the Treasurer to exit the program, and upon exiting, shall no longer be subject to the provisions of this article, except as provided in subdivision (c).(2) The Treasurer shall approve or deny an application made pursuant to subdivision (a) within 30 days of receipt.(3) The Treasurer shall approve an application made pursuant to this section if, with respect to the applicant, no tax credit certificates have been revoked and the growth fund has not received a notice of revocation or recapture that has not been cured.(4) The Treasurer shall not unreasonably deny an application submitted pursuant to this section.(5) If the Treasurer denies an application, the notice of denial shall include the reasons for the determination.(b) After its exit from the program, a growth fund may not make distributions to its equity holders or pay any fees in excess of its investment authority until it has paid any state clawback amount due.(c) Each growth fund shall continue to report annually to the Treasurer both of the following:(1) The number of new full-time employees at each growth business, and that number shall continue to reduce the state clawback amount.(2) Employment offset until its state clawback amount equals zero or it has distributed all of its assets.12272. (a) Each growth fund shall submit an annual report to the Treasurer on or before the fifth business day after each anniversary of the closing date before its exit from the program pursuant to Section 12271. The report shall identify each growth investment made by the growth fund and shall include all of the following:(1) A bank statement evidencing each growth investment if not previously reported.(2) The name, location, and industry of each growth business receiving a growth investment, including either the determination letter set forth in Section 12270 or evidence that the business qualified as a growth business at the time the investment was made, if not previously reported.(3) For each growth business receiving a growth investment, evidence for the Treasurer to verify the number of full-time employees at each growth business on the date of the growth funds initial growth investment.(4) The number of new full-time employees at each growth business, the average salary of those employees, and evidence sufficient for the Treasurer to verify whether a new full-time employee is a targeted employee.(5) A calculation of the growth funds employment offset for that year.(6) The cumulative amount of growth investments made in each growth business.(7) A certification under penalty of perjury that the growth fund has not violated any of the grounds for revocation and recapture of credits set forth in subdivision (a) of Section 12270.(8) Any other information required by the Treasurer for purposes of carrying out the Treasurers duties under this article.(b) The growth fund is not required to provide information with respect to growth investments that have been redeemed or repaid as part of the annual report required by this section but shall provide that information if available.12273. (a) If the Treasurer revokes a growth funds certification pursuant to subdivision (b) of Section 12268 or a tax credit certificate pursuant to Section 12270, the associated investment authority and investor contributions will not count toward the limit on total investment authority and investor contributions set forth in subdivision (c) of Section 12266.(b) (1) The Treasurer shall first award reverted investment authority pro rata to each growth fund that was awarded less than the requested investment authority for which it applied, and that growth fund may allocate the associated investor contribution authority to any taxpayer with state premium tax liability in its discretion.(2) The Treasurer may award any remaining investment authority to new applicants.12274. (a) The Treasurer may adopt rules and regulations for the purpose of implementing the provisions of this article.(b) The Treasurer shall adopt forms and notices necessary to implement this article.(c) The Treasurer shall notify the Department of Insurance of the name of any insurance company allocated tax credits under this act and the amount of those credits.SEC. 3. For purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Article 6 (commencing with Section 12264) of Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code as added by this act, the Legislature finds as follows:(a) The California Jobs and Upward Mobility Progression (JUMP) Act concerns communities underserved by traditional small business lending and flexible growth capital. Despite having the worlds fifth largest economy, California has the second fastest growing income inequality of all 50 states and the largest wage gap between middle-income and high-wage earners, often forcing workers in underserved areas to commute long distances to find suitable employment or affordable housing. This tax credit addresses these issues by incentivizing federally licensed Small Business Administration (SBA) and United States Department of Agriculture (USDA) investors to raise funds exclusively for investment in California small businesses located in distressed areas throughout the state, including all 879 designated opportunity zones. This tax credit will enable small businesses to grow and create quality well-paying jobs, thereby accelerating wage mobility and improving quality of life for California residents.(b) To measure whether the credit achieves its intended purpose, the Treasurer shall, on July 1, 2022, and annually thereafter in each year the program is in effect, submit a report, in compliance with Section 9795 of the Government Code, to the Legislature containing all of the following:(1) Bank statements evidencing each funds growth investments.(2) The name, location, and industry of each growth business receiving a growth investment.(3) A verifiable number of full-time employees at each growth business receiving a growth investment on the date of the growth funds initial growth investment.(4) A verifiable average salary of new full-time employees at each growth business that demonstrates a new full-time employee is a targeted employee in accordance with the program.(5) A calculation of the growth funds employment offset for that year.(6) The cumulative amount of growth investments made in each growth business as a result of this credit.(c) The Treasurer shall submit the report required by this section to the Senate Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Senate and Assembly Committees on Appropriations, the Senate Committee on Governance and Finance, and the Assembly Committee on Revenue and Taxation.SEC. 4. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.SEC. 5. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. | |
73 | 47 | ||
74 | 48 | The people of the State of California do enact as follows: | |
75 | 49 | ||
76 | 50 | ## The people of the State of California do enact as follows: | |
77 | 51 | ||
78 | - | SECTION 1. The Legislature finds and declares all of the following:(a) The State | |
52 | + | SECTION 1. The Legislature finds and declares all of the following:(a) According to a 2018 report taken from American Community Survey Data, California is seeing the second fastest growing income inequality and the largest wage gap between middle income and high wage earners of all 50 states.(b) California workers are increasingly commuting long distances to find suitable living wage employment or affordable housing.(c) Income inequality creates a tax burden on the state, as families with shrinking incomes must rely more heavily on state services.(d) The growing disparity in income inequality is further compounded by the struggles entrepreneurs and small business owners in Californias Opportunity Zones and rural areas face in securing affordable, flexible financing to grow their businesses and create well-paying jobs with benefits in their own communities.(e) Since the global financial crisis, the availability of senior lending from banks for small businesses and startups, particularly those in underserved areas, has significantly changed. Today, small business loans of less than $1 million account for less than 20 percent of the overall bank loan portfolios nationally, down from over 40 percent in 2004. These banks are making fewer small loans, precisely the type of investments on which underserved small businesses rely.(f) The 2017 California Small Business Credit Survey found that 42 percent of firms experienced a financial challenge in paying operating expenses and 39 percent of firms experienced a financial challenge in credit availability.(g) The best way to achieve a California for All is through a postperformance tax credit program with strong, important safeguards to protect the taxpayer and ensure policy goals are met.(h) While California has many available programs and incentives, most are geared toward keeping or attracting big businesses, with only a small percentage of investments or tax credits being utilized by existing small businesses.(i) To accelerate wage mobility and improve California workers ability to earn living wages with benefits closer to home, it is the intent of the Legislature to incentivize experienced, federally licensed investors to raise up to $500 million exclusively for investment to deploy in targeted small businesses in Californias Opportunity Zones and rural areas. | |
79 | 53 | ||
80 | - | SECTION 1. The Legislature finds and declares all of the following:(a) The State | |
54 | + | SECTION 1. The Legislature finds and declares all of the following:(a) According to a 2018 report taken from American Community Survey Data, California is seeing the second fastest growing income inequality and the largest wage gap between middle income and high wage earners of all 50 states.(b) California workers are increasingly commuting long distances to find suitable living wage employment or affordable housing.(c) Income inequality creates a tax burden on the state, as families with shrinking incomes must rely more heavily on state services.(d) The growing disparity in income inequality is further compounded by the struggles entrepreneurs and small business owners in Californias Opportunity Zones and rural areas face in securing affordable, flexible financing to grow their businesses and create well-paying jobs with benefits in their own communities.(e) Since the global financial crisis, the availability of senior lending from banks for small businesses and startups, particularly those in underserved areas, has significantly changed. Today, small business loans of less than $1 million account for less than 20 percent of the overall bank loan portfolios nationally, down from over 40 percent in 2004. These banks are making fewer small loans, precisely the type of investments on which underserved small businesses rely.(f) The 2017 California Small Business Credit Survey found that 42 percent of firms experienced a financial challenge in paying operating expenses and 39 percent of firms experienced a financial challenge in credit availability.(g) The best way to achieve a California for All is through a postperformance tax credit program with strong, important safeguards to protect the taxpayer and ensure policy goals are met.(h) While California has many available programs and incentives, most are geared toward keeping or attracting big businesses, with only a small percentage of investments or tax credits being utilized by existing small businesses.(i) To accelerate wage mobility and improve California workers ability to earn living wages with benefits closer to home, it is the intent of the Legislature to incentivize experienced, federally licensed investors to raise up to $500 million exclusively for investment to deploy in targeted small businesses in Californias Opportunity Zones and rural areas. | |
81 | 55 | ||
82 | 56 | SECTION 1. The Legislature finds and declares all of the following: | |
83 | 57 | ||
84 | 58 | ### SECTION 1. | |
85 | 59 | ||
86 | - | (a) The | |
60 | + | (a) According to a 2018 report taken from American Community Survey Data, California is seeing the second fastest growing income inequality and the largest wage gap between middle income and high wage earners of all 50 states. | |
87 | 61 | ||
88 | - | (b) | |
62 | + | (b) California workers are increasingly commuting long distances to find suitable living wage employment or affordable housing. | |
89 | 63 | ||
90 | - | (c) | |
64 | + | (c) Income inequality creates a tax burden on the state, as families with shrinking incomes must rely more heavily on state services. | |
91 | 65 | ||
92 | - | (d) | |
66 | + | (d) The growing disparity in income inequality is further compounded by the struggles entrepreneurs and small business owners in Californias Opportunity Zones and rural areas face in securing affordable, flexible financing to grow their businesses and create well-paying jobs with benefits in their own communities. | |
93 | 67 | ||
94 | - | (e) The | |
68 | + | (e) Since the global financial crisis, the availability of senior lending from banks for small businesses and startups, particularly those in underserved areas, has significantly changed. Today, small business loans of less than $1 million account for less than 20 percent of the overall bank loan portfolios nationally, down from over 40 percent in 2004. These banks are making fewer small loans, precisely the type of investments on which underserved small businesses rely. | |
95 | 69 | ||
96 | - | (f) | |
70 | + | (f) The 2017 California Small Business Credit Survey found that 42 percent of firms experienced a financial challenge in paying operating expenses and 39 percent of firms experienced a financial challenge in credit availability. | |
97 | 71 | ||
98 | - | (g) | |
72 | + | (g) The best way to achieve a California for All is through a postperformance tax credit program with strong, important safeguards to protect the taxpayer and ensure policy goals are met. | |
99 | 73 | ||
100 | - | (h) | |
74 | + | (h) While California has many available programs and incentives, most are geared toward keeping or attracting big businesses, with only a small percentage of investments or tax credits being utilized by existing small businesses. | |
101 | 75 | ||
102 | - | (i) | |
76 | + | (i) To accelerate wage mobility and improve California workers ability to earn living wages with benefits closer to home, it is the intent of the Legislature to incentivize experienced, federally licensed investors to raise up to $500 million exclusively for investment to deploy in targeted small businesses in Californias Opportunity Zones and rural areas. | |
103 | 77 | ||
104 | - | (j) Although the federal small business stimulus programs will provide short-term relief for some California small businesses, demand for the loans are so high and have overwhelmed the Small Business Administration. A complementary state-based approach with greater speed, size and flexibility, that accounts for investment gaps in underrepresented business owners and communities, is needed to assist in full small business recovery. | |
105 | - | ||
106 | - | (k) The California Jumpstart Act is a mechanism designed to address the growing economic hardships California small businesses, workers, and vulnerable communities are grappling with and provide a long-term recovery solution. | |
107 | - | ||
108 | - | (l) The California Jumpstart Act will incentivize and mobilize rapid and scalable private sector investment that encourages economic growth beyond the initial relief provided under the federal small business stimulus programs, enabling small business growth, job creation and relief for families with no immediate fiscal impact to the state budget. | |
109 | - | ||
110 | - | SEC. 2. Article 6 (commencing with Section 12264) is added to Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code, to read: Article 6. California Jumpstart Act12264. This article shall be known, and may be cited, as the California Jumpstart Act.12264.5. As used in this article, the following definitions apply:(a) Affiliate means an entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another entity. For purposes of this subdivision, an entity is controlled by another entity if the controlling entity holds, directly or indirectly, the majority voting or ownership interest in the controlled entity or has control over the day-to-day operations of the controlled entity.(b) Closing date means the date on which a relief fund has collected all amounts specified in subdivision (a) of Section 12268.(c) Full-time employee means any of the following:(1) An employment position that is filled at a small business.(2) An employment position that is paid hourly wages for an average of at least 35 hours per week or any other period of time generally accepted by custom, industry, or practice as full-time employment.(3) An employment position that is salaried and paid for full-time employment within the meaning of Section 515 of the Labor Code.(d) Investment authority means the amount certified by the Treasurer pursuant to Section 12267.(e) Premium taxes means the taxes imposed by paragraph (3) of subdivision (f) of Section 28 of Article XIII of the California Constitution.(f) (1) Principal business operations means the location that meets either of the following requirements:(A) At least 60 percent of the businesss employees work at the location.(B) Employees who are paid at least 60 percent of the businesss payroll work at the location.(2) A business that has agreed to use the proceeds of a relief investment to establish its principal business operations in the state shall be deemed to have its principal business operations in a relief zone if it satisfies the requirements of paragraph (1) within 180 days after receiving a relief investment.(g) Relief contribution means an investment of cash, by an entity subject to premium taxes in this state, in a relief fund that equals the amount specified on a notice of tax credit allocation issued by the Treasurer under subdivision (c) of Section 12267 and that is used to purchase an equity interest in the relief fund or to purchase, at par value or premium, a debt instrument issued by the fund that meets both of the following requirements:(1) Has an original maturity date of at least five years after the date of issuance.(2) Has a repayment schedule that is not faster than a level principal amortization over five years.(h) Relief fund means an entity certified by the office of the Treasurer under subdivision (a) of Section 12267.(i) (1) Relief investment means any capital or equity investment in a small business or any loan to a small business with a stated maturity of at least two years.(2) A secured loan is a relief investment only if it has an initial interest rate of less than 2 percent or principal and interest payments are deferred for at least one year.(3) A subordinate loan is a relief investment only if it has an initial interest rate of less than 6 percent or principal and interest payments are deferred for at least one year.(4) An equity investment is a relief investment only if the relief fund does not acquire a majority interest in the small business as an initial investment in the small business.(5) Relief investment does not include any transaction that includes an origination fee.(j) Relief zone means any of the following locations in this state:(1) A census tract in the state meeting either of the following requirements:(A) The census tract has a poverty rate that is greater than 20 percent.(B) The census tract has a median family income that does not exceed the following:(i) If the census tract is not located in a metropolitan area, the statewide median family income.(ii) If the census tract is located in a metropolitan area, the greater of the statewide median family income and the metropolitan area median family income.(2) All locations in the state but outside of census places with a population greater than or equal to 50,000 as of the latest decennial census and their adjacent and contiguous urbanized areas.(3) A High Unemployment Area (HUA) in the state as designated by the Employment Training Panel at any time for taxable years beginning January 1, 2020, but before January 1, 2022.(k) Small business means any business that, at the time a relief fund initially invests in the business, meets all of the following requirements:(1) The total number of employees the business has does not exceed the greater of 250 and the number of employees set forth for the businesss North American Industry Classification System code in Section 121.201 of Title 13 of the Code of Federal Regulations at the time the initial relief investment is made.(2) The business has gross receipts, less returns and allowances reportable to the state, of less than ten million dollars ($10,000,000) during the previous taxable year.(3) The business has its principal business operations in a relief zone in the state.(4) The business is engaged in North American Industry Classification System sector 11, 22, 23, 31, 32, 33, 48, 49, 54, or 62 or, if not engaged in those industries, the office of the Treasurer determines that the investment will create desirable economic outcomes in line with the goals of this article.(l) Treasurer means the State Treasurer.12265. (a) (1) For taxable years beginning on or after January 1, 2022, there shall be allowed a credit against premium taxes a California Jumpstart Act tax credit in an amount equal to the amount of a relief contribution, as defined in subdivision (g) of Section 12264.5.(2) A taxpayer claiming a credit under this section shall claim the credit pursuant to the utilization schedule issued by the office of the Treasurer pursuant to subdivision (a) of Section 12269.(b) If the credit allowed by this section exceeds the taxes described in subdivision (a), the excess may be carried over to reduce those taxes in the following year, and the four succeeding years if necessary, until the credit is exhausted. Tax credits shall not be carried forward after the 203031 taxable year.(c) The credit is nonrefundable and may not be sold, transferred, or allocated to an entity other than an affiliate that was an affiliate of the taxpayer on the date that the taxpayer signed its affidavit included in the relief funds application pursuant to subdivision (a) of Section 12266.(d) No additional retaliatory tax shall be required as a result of receiving the tax credit described in this subdivision.(e) A taxpayer claiming a credit under this section shall submit a copy of the tax credit certificate issued pursuant to Section 12269 with the taxpayers return for each taxable year for which the credit is claimed.(f) (1) The aggregate amount of investment authority that may be certified shall be three hundred seventy-five million dollars ($375,000,000) and the aggregate amount of credit that may be allocated and certified pursuant to this section shall be three hundred million dollars ($300,000,000) in total for all taxable years for which the California Jumpstart Act tax credit is authorized.(2) If requests for investment authority and credits exceed the limitations described in paragraph (1), the office of the Treasurer shall proportionally reduce the investment authority and credits certified for each approved application as necessary to avoid exceeding the limit.12266. (a) Beginning 30 days after the enactment of this act, and ending on January 1, 2026, the office of the Treasurer shall accept applications for certification of relief funds and relief contributions. The application shall meet all of the following requirements:(1) The total relief investment authority sought by the applicant, which shall not exceed three hundred seventy-five million dollars ($375,000,000).(2) The applicant shall include evidence to prove, to the satisfaction of the office of the Treasurer, that the applicant meets all of the following criteria:(A) The applicant or an affiliate of the applicant is a federally approved or licensed rural business investment company pursuant to Section 2009cc of Title 7 of the United States Code or a small business investment company pursuant to Section 681 of Title 15 of the United States Code. The applicant shall include a certificate executed by an executive officer of the applicant attesting that the approval or license remains in effect and has not been revoked and evidence that at least one principal or similar officer of the entity is, and has been for at least four years, an officer or employee of the applicant or an affiliate of the applicant on the date the application is submitted.(B) As of the date the application is submitted, the applicant and its affiliates have invested more than one hundred million dollars ($100,000,000) in small businesses. As used in this subparagraph, a small business is not required to have principal business operations in California.(3) A signed affidavit from each investor agreeing to make a relief contribution and that states the amount of the investors relief contribution. Eighty percent of the investment authority sought by the applicant shall be comprised of relief contributions.(4) A nonrefundable application fee of ten thousand dollars ($10,000).(5) A detailed inclusive outreach plan intended to increase investment sourcing opportunities under the program in small businesses of interest, including, but not limited to, those owned by minority, women, disabled veterans, lesbian, gay, bisexual, or transgender persons, and other disadvantaged groups.(b) (1) Except as provided in paragraph (2) of this subdivision, the office of the Treasurer shall review and make determinations with respect to applications within 30 days of receipt. Applications received by the office of the Treasurer on the same day shall be deemed to have been received simultaneously.(2) The office of the Treasurer may approve investment authority only in an aggregate amount that is not greater than three hundred seventy-five million dollars ($375,000,000).(3) If the office of the Treasurer denies an application for certification as a relief fund, and approving a subsequently submitted application would result in exceeding the dollar limitation on relief investment authority or relief contributions if the previously denied application is completed, clarified, or cured pursuant to subdivision (e), the office of the Treasurer shall refrain from making a determination on the subsequently submitted application until the previously denied application is reconsidered or the 15-day period for submitting additional information for the previously denied application has passed, whichever comes first.(c) The office of the Treasurer shall deny an application submitted under this section if any of the following apply:(1) The application is incomplete.(2) The application fee is not paid in full.(3) The application does not satisfy all the criteria described in paragraph (2) of subdivision (a).(4) The office of the Treasurer has already approved the maximum total relief investment authority and relief contributions allowed pursuant to subdivision (f) of Section 12265.(5) The applicant fails to submit affidavits equal to 80 percent of the relief investment authority sought.(d) The office of the Treasurer shall not deny a relief fund application or reduce the requested relief investment authority for reasons other than those described in subdivisions (b) and (c).(e) (1) If the office of the Treasurer denies an application, the office of the Treasurer shall notify the applicant of the reasons for denial. If the application was denied for any reason other than the reasons specified in paragraph (3), (4) or (5) of subdivision (c), the applicant may provide additional information to the agency to cure defects in the application, provided the information is submitted within 15 days of receipt of the notice of denial.(2) Upon receipt of additional information, the office of the Treasurer shall reconsider and make a determination on the application within 15 days of receiving the additional information and, if approved, treat the application as approved as of its original filing date.12267. After approving an application submitted pursuant to Section 12266, the Treasurer shall issue a written notice to the applicant certifying all of the following:(a) The applicant is a relief fund.(b) The amount of the applicants investment authority.(c) The relief contributions required from each investor that submitted an affidavit with the relief funds application.12268. (a) (1) Within 60 days after receiving the certification issued pursuant to Section 12267, a relief fund shall do both of the following:(A) Collect relief contributions equal to the amount certified in Section 12267 from each investor whose affidavit was included in the application.(B) Collect additional investments of cash that, when added to the investor contributions, equal the relief funds investment authority.(2) At least 5 percent of the relief funds investment authority shall consist of direct or indirect equity investments from affiliates of the relief fund, including employees, officers, and directors of the affiliates.(b) Within 65 days after receiving certification pursuant to Section 12267, the relief fund shall send to the Treasurer documentation to prove that the amounts required by subdivision (a) have been collected.(c) If the relief fund fails to comply with subdivision (a) or (b), the Treasurer shall revoke the relief funds certification and provide written notice to the relief fund of the revocation.12269. (a) (1) Upon receipt of the documentation required by subdivision (b) of Section 12268, the office of the Treasurer shall issue, to each investor or affiliate identified in subdivision (b) of Section 12268, a notice of the amount and utilization schedule of the tax credits allocated to that investor or affiliate as a result of its relief contribution.(2) The office of the Treasurer shall issue, to each investor or affiliate identified in subdivision (b) of Section 12268, the first tax credit certificate for one-fourth of the relief contributions made by the investor or affiliate on or before the second anniversary of the closing date. Thereafter, the office of the Treasurer shall issue a tax credit certificate for one-fourth of the relief contributions allocated to the investor or affiliate on or before each of the following three anniversaries of the closing date.(b) The Treasurer shall not be required to issue a tax credit certificate if the relief fund does not invest 70 percent of its investment authority in relief investments within one year of the closing date and 100 percent of its relief investment authority in relief investments within two years of the closing date.12269.5. (a) An annual fee of one hundred fifty thousand dollars ($150,000), to be prorated amongst all relief funds that have not exited pursuant to Section 12271, shall be payable to the office of the Treasurer.(b) The initial annual fee is due and payable to the office of the Treasurer within 65 days after receiving the certification issued pursuant to Section 12267.(c) After payment of the initial annual fee, the annual fee shall be due and payable to the office of the Treasurer before March 1.(d) Application and annual fees paid to the office of the Treasurer shall be deposited in the Treasury Relief Investment Fund established under Section 12276.12270. (a) (1) The office of the Treasurer may recapture tax credits claimed pursuant to Section 12264 and revoke the tax credit certificates issued if any of the following occur with respect to the relief fund:(A) Prior to investing 100 percent of its relief investment authority in relief investments, the relief fund makes a distribution or payment in excess of the cumulative investment earnings of the fund as of the date of payment or distribution, taking into account all past payments and distributions.(B) After investing 100 percent of its relief investment authority in relief investments, the fund fails to maintain that level of investment until the fifth anniversary of the closing date. For the purposes of this paragraph, an investment is maintained even if the investment is sold or repaid as long as the fund reinvests an amount equal to the capital returned or recovered by the fund from the original investment, exclusive of any profits realized, in other relief investments in this state within one year of the receipt of such capital. Regularly scheduled principal payments on a loan that is a relief investment shall be deemed continuously invested in a relief investment if the amounts are reinvested in one or more relief investments by the end of the following calendar year.(C) After investing 100 percent of its relief investment authority in relief investments and before the fund decertifies under Section 12271, the fund makes a distribution or payment that results in the fund having less than 100 percent of its relief investment authority invested in relief investments or in cash or marketable securities available for investment in relief investments.(D) (i) The relief fund makes a relief investment in a small business that directly or indirectly through an affiliate owns, has the right to acquire an ownership interest, makes a loan to, or makes an investment in the relief fund, an affiliate of the fund, or an investor in the relief fund, excluding investments in publicly traded securities by a small business or an owner or affiliate of a small business.(ii) Before recapturing tax credits or revoking a tax credit certificate pursuant to this section, the office of the Treasurer shall notify the relief fund of the reasons for the pending recapture or revocation. If the fund corrects the violations outlined in the notice to the satisfaction of the office of the Treasurer within 90 days of the date the notice was dispatched, the office of the Treasurer shall not recapture the tax credits or revoke the tax credit certificate, as applicable.(2) (A) The Treasurer shall not recapture a tax credit or revoke a tax credit certificate due to any actions of a fund that occur after decertification pursuant to Section 12271.(B) Notwithstanding subparagraph (A), the Treasurer may recapture a relief funds tax credits or revoke a tax credit certificate related to actions of the relief fund that occurred prior to decertification, even if the actions are discovered after decertification.(b) The amount by which one or more relief investments by a relief fund in the same small business exceeds seven million five hundred thousand dollars ($7,500,000) shall not be considered as a relief investment for purposes of this section, exclusive of capital repaid or redeemed by the small business and reinvested as a relief investment in the small business. A relief investment in an affiliate of a small business shall be treated as a relief investment in that small business for purposes of this subdivision.12271. (a) (1) On or after the sixth anniversary of the closing date, a relief fund that has invested 100 percent of its relief investment authority in relief investments may apply to the office of the Treasurer to decertify as a relief fund.(2) The office of the Treasurer shall approve or deny an application made pursuant to paragraph (1) within 60 days after receiving the application.(b) The office of the Treasurer shall not deny the application unless there is a reasonable basis for the denial. In evaluating the application, whether a tax credit was recaptured with respect to the decertifying relief fund shall be evidence to prove that the relief fund is eligible for decertification.(c) The office of the Treasurer shall send notice of its determination with respect to decertification and reasons for denial, if applicable, to the relief fund requesting decertification.12272. (a) A relief fund may request a written opinion from the office of the Treasurer as to whether the business qualifies as a small business.(b) The relief fund shall include evidence that the business satisfies the definition of a small business and a certification by an executive officer of the business attesting that the business satisfies such definition.(c) The office of the Treasurer shall issue a written opinion to the fund within 10 business days of receiving the request. If the office of the Treasurer determines that the business qualifies as a small business or if the office of the Treasurer fails to timely issue the written opinion, the business shall be considered a small business for purposes of this article.12273. (a) If the office of the Treasurer revokes a relief funds certification pursuant to Section 12268 or a tax credit certificate pursuant to Section 12270, the associated investment authority and investor contributions will not count toward the limit on total investment authority and investor contributions set forth in subdivision (f) of Section 12265.(b) (1) The office of the Treasurer shall first award reverted investment authority pro rata to each relief fund that was awarded less than the requested investment authority for which it applied.(2) The office of the Treasurer may award any remaining investment authority to new applicants.12274. (a) Each relief fund shall submit a report to the office of the Treasurer on or before the first day of each April following the end of the calendar year that includes the closing date until the calendar year after the relief fund has been decertified. The report shall provide an itemization of the relief funds relief investments and shall include the following documents and information:(1) A bank statement evidencing each relief funds relief investments.(2) The name, location, and industry class of each business that received a relief investment from the fund, evidence that the business qualified as a small business at the time the investment was made if the relief fund did not obtain a written opinion from the office of the Treasurer pursuant to Section 12272, and a certification executed by an executive officer of each business attesting that the business was a small business at the time of the initial relief investment in the business.(3) For each small business receiving a relief investment, evidence for the Treasurer to verify the number of full-time employees at each small business at the time the investment was made, if not previously reported.(4) A verifiable number of jobs created and retained as a result of each relief investment.(5) The cumulative amount of relief investments made in each small business as a result of this credit.(6) The number of relief investments made in small businesses of interest, disaggregated by classifications, including, but not limited to, those owned by women, minority, disabled veterans, lesbian, gay, bisexual, or transgender persons, and other disadvantaged groups.(7) A certification under penalty of perjury that the relief fund has not violated any of the grounds for revocation and recapture of credits set forth in subdivision (b) of Section 12267.(8) Any other information required by the office of the Treasurer.(b) Each fund shall submit a report to the office of the Treasurer on or before the fifth business day after the first and second anniversaries of the closing date that provides documentation to prove that the fund has met the investment thresholds described in subdivision (a) of Section 12267 and has not implicated any of the other recapture provisions described in subdivision (b) of Section 12267.12275. The office of the Treasurer shall undertake outreach activities to encourage investment in underrepresented groups, including, but not limited to, by partnering with organizations representing persons and business enterprises from underrepresented groups, in a manner that will inform and educate members of these organizations on investment opportunities through the program provided in this article. Underrepresented groups include, but are not limited to, minority, women, disabled veterans, lesbian, gay, bisexual, or transgender persons, and other disadvantaged groups.12276. There is hereby established in the State Treasury a special fund to be known as the Treasury Relief Investment Fund. All moneys appropriated to the office of the Treasurer for purposes of this article shall be deposited or paid into this fund and shall solely be used to carry out the office of the Treasurers duties specified in this article and those rules and regulations promulgated to implement this article.12277. (a) The office of the Treasurer may adopt rules and regulations for purposes of implementing the provisions of this article.(b) The office of the Treasurer shall adopt forms and notices necessary to implement this article.(c) The office of the Treasurer shall notify the Department of Insurance of the name of any insurance company allocated tax credits under this article and the amount of those credits. | |
78 | + | SEC. 2. Article 6 (commencing with Section 12264) is added to Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code, to read: Article 6. Jobs and Upward Mobility Progression (JUMP) Act12264. As used in this article:(a) (1) Affiliate means an entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another entity.(2) For the purposes of this subdivision, an entity is controlled by another entity if the controlling entity holds, directly or indirectly, the majority voting or ownership interest in the controlled entity or has control over the day-to-day operations of the controlled entity.(b) Closing date means the date on which a growth fund has collected all amounts specified by Section 12268.(c) (1) Employment offset means an amount calculated annually that is equal to the sum of both of the following:(A) The product of twenty-five thousand dollars ($25,000) and the number of new full-time employees of a growth funds growth businesses.(B) A one-time amount of ten thousand dollars ($10,000) for each full-time employee hired by a growth business that is a targeted employee.(2) (A) The number of new full-time employees of a growth funds growth businesses referenced in subparagraph (A) of paragraph (1) shall be calculated annually as the difference between the following:(i) The average monthly number of full-time employees at a growth business in the preceding calendar year or portion thereof if the initial growth investment occurred in the year.(ii) The number of full-time employees at the growth business on the date of the initial growth investment.(B) If the resulting difference between the amounts derived from clauses (i) and (ii) of subparagraph (A) is less than zero, the number of new full-time employees shall be deemed to be zero.(d) Full-time employee means any of the following:(1) An employment position that is filled at a growth business.(2) An employment position that receives wages that are at least 100 percent of the county median wage.(3) An employment position that is paid hourly wages for an average of at least 35 hours per week or any other period of time generally accepted by custom, industry, or practice as full-time employment.(4) An employment position that is salaried and paid for full-time employment within the meaning of Section 515 of the Labor Code.(e) Growth business means a business that, at the time a growth fund initially invests in the business, meets all of the following requirements:(1) The business has, together with its affiliates, fewer than 100 employees.(2) The business has aggregate gross receipts, less returns and allowances reportable to the state, of less than ten million dollars ($10,000,000) during the previous taxable year.(3) The business has its principal business operations in at least one growth zone in the state.(4) The business is engaged in North American Industry Classification System sector 11, 22, 23, 31, 32, 33, 48, 49, 54, or 62 or, if not engaged in those industries, the Treasurer determines that the investment will create desirable economic outcomes related to income mobility.(f) Growth fund means an entity certified by the Treasurer pursuant to Section 12267.(g) (1) Growth investment means a capital or equity investment in a growth business or a loan to a growth business with a stated maturity of at least one year after the date of issuance.(2) Growth investment does not include the provision of a revolving line of credit.(h) Growth zone means any of the following:(1) An opportunity zone located in the state.(2) A census tract in the state meeting either of the following requirements:(A) The census tract has a poverty rate that is greater than 20 percent.(B) The census tract has a median family income that does not exceed the following:(i) If the census tract is not located in a metropolitan area, the statewide median family income.(ii) If the census tract is located in a metropolitan area, the greater of the statewide median family income and the metropolitan area median family income.(3) All locations outside of census places with a population greater than or equal to 50,000 as of the latest decennial census and their adjacent and contiguous urbanized areas.(i) Investment authority means the amount certified by the Treasurer pursuant to Section 12267.(j) Investor contribution means a cash investment in a growth fund that meets both of the following requirements:(1) The cash investment is equal to the amount specified for that entity in the Treasurers approval of the growth funds application pursuant to Section 12267.(2) The cash investment purchased any of the following:(A) An equity interest in the growth fund.(B) A debt instrument that has a maturity date of at least six years from the closing date and a repayment schedule that is not greater than level principal amortization over six years.(k) Opportunity zone means a qualified opportunity zone, as defined by Section 1400Z-1 of Title 26 of the United States Code.(l) (1) Principal business operations means the location that meets either of the following requirements:(A) At least 60 percent of a business employees work at the location.(B) Employees who are paid at least 60 percent of the business payroll work at the location.(2) A business that has agreed to relocate employees using the proceeds of a growth investment to establish its principal business operations in a growth zone shall be deemed to have its principal business operations in a growth zone if it satisfies the requirements of paragraph (1) within 180 days after receiving a growth investment.(m) (1) State clawback amount means the difference between both of the following:(A) The growth funds total investor contributions.(B) The sum of the annual employment offsets reported by the growth fund pursuant to Section 12272.(2) If the amount derived from paragraph (1) is zero or less than zero, the state clawback amount shall be zero.(n) Targeted employee means a qualified new full-time employee who meets any of the following requirements:(1) (A) The employee was unemployed for the six months immediately preceding being hired and did not complete a baccalaureate, postgraduate, or professional degree at a college or university within the 12 months immediately preceding being hired.(B) For purposes of this paragraph, a person is unemployed when that person satisfies all of the following requirements:(i) The person is not receiving wages subject to withholding.(ii) The person is not self-employed.(iii) The person is not a full-time student at a high school, college, university, or postsecondary education institution.(2) The employee is a veteran separated from the Armed Forces of the United States in the preceding 12 months.(3) The employee received the federal Earned Income Tax Credit in the prior taxable year.(4) The employee has been convicted of a felony.(5) The employee is a current recipient of benefits pursuant to Article 3.2 (commencing with Section 11320) of Chapter 2 of Part 3 of Division 9 of the Welfare and Institutions Code.(6) The employee is provided, or reimbursed for, education or training leading to an official skill certification.(7) The employee is provided housing, a relocation bonus, or other housing assistance, by the qualifying growth business, that exceeds a value of ten thousand dollars ($10,000).(8) The employee is employed by a growth business in an area where a borrower would be qualified pursuant to Section 4279.108(c)(1) of the Code of Federal Regulations.(o) Treasurer means the State Treasurer.12265. (a) For taxable years beginning on or after January 1, 2021, and before January 1, 2031, there shall be allowed as a credit against the taxes imposed by this part and against the exactions imposed by paragraph (3) of subdivision (f) of Section 28 of Article XIII of the State Constitution, a JUMP Act tax credit in an amount equal to an investor contribution, as defined in Section 12264.(b) If the credit allowed by this section exceeds the taxes described in subdivision (a), the excess may be carried over to reduce those taxes in the following year, and the succeeding four years if necessary, until the credit is exhausted.(c) The credit is nonrefundable and may not be sold, transferred, or allocated to an entity other than an affiliate that was an affiliate of the taxpayer on the date that the taxpayer signed its affidavit included in the growth funds application pursuant to subdivision (a) of Section 12266.(d) A taxpayer claiming a credit under this section shall submit a copy of the tax credit certificate issued pursuant to Section 12267 with the taxpayers return for each taxable year for which the credit is claimed.(e) (1) The aggregate amount of investment authority that may be certified pursuant to Section 12267 shall be five hundred million dollars ($500,000,000) and the aggregate amount of credit that may be allocated and certified pursuant to this section shall be an amount equal to seventy-five million dollars ($75,000,000) in any taxable year and three hundred million dollars ($300,000,000) in total for all taxable years for which the JUMP Act tax credit is authorized.(2) If requests for investment authority and credits exceed the limitations described in paragraph (1), the Treasurer shall proportionally reduce the investment authority and credits certified for each approved application as necessary to avoid exceeding the limit.12266. (a) Beginning January 1, 2021, the Treasurer shall accept applications for approval as a growth fund, pursuant to rules and regulations adopted by the Treasurer, which shall meet all of the following requirements:(1) The total investment authority sought by the applicant shall not exceed five hundred million dollars ($500,000,000).(2) The application shall include evidence of all of the following:(A) A certification by an executive officer of the applicant that certifies that the applicant or an affiliate of the applicant is licensed as a rural business investment company under Section 2009cc of Title 7 of the United States Code or as a small business investment company under Section 681 of Title 15 of the United States Code.(B) At least one principal in a rural business investment company or a small business investment company is, and has been for at least four years, an officer or employee of the applicant or an affiliate of the applicant on the date the application is submitted.(C) As of the date the application is submitted, the applicant or affiliates of the applicant have invested at least one hundred million dollars ($100,000,000) in nonpublic companies located in non-metropolitan counties as defined by the Office of Management and Budget within the Office of the President of the United States on the basis of county or county-equivalent units or one hundred million dollars ($100,000,000) in opportunity zones.(3) The application shall include an estimate of the total new full-time employees that will result from the applicants growth investments.(4) The application shall include a signed affidavit from each taxpayer stating the amount of investor contribution the taxpayer will make. At least 60 percent of a growth funds requested investment authority shall consist of investor contributions.(5) The application shall include the growth funds federal employer identification number.(6) The application shall include a one-time application fee of ten thousand dollars ($10,000).(b) (1) The Treasurer shall review an application received pursuant to this section in the order in which it was received and shall either approve or deny the application within 45 days of receipt.(2) Applications that are received on the same day shall be deemed to have been received simultaneously.(c) The Treasurer may approve investment authority only in an aggregate amount that is not greater than five hundred million dollars ($500,000,000).(d) The Treasurer shall deny an application only if any of the following are true:(1) The application is incomplete.(2) The applicant does not meet the requirements of paragraph (2) or (4) of subdivision (a).(3) The Treasurer has already approved the maximum amount of investment authority allowed pursuant to subdivision (c).(e) (1) If the Treasurer denies an application, the applicant, within 15 business days after receiving notice of the denial, may provide additional information to the Treasurer to cure any defects in the application, except for failure to comply with paragraph (4) of subdivision (a).(2) The Treasurer shall review and reconsider applications corrected pursuant to paragraph (1) within thirty days.(3) If the Treasurer subsequently approves the application, the application shall be considered approved as of its original submission date and shall receive the pro rata allocation of investment authority that the applicant would have received if it had been approved on the original date of submission.12267. (a) After approving an application submitted pursuant to Section 12266, the Treasurer shall certify all of the following:(1) The applicant is a growth fund.(2) The amount of the applicants approved investment authority.(3) The investor contributions required from each investor that submitted an affidavit with the growth funds application.(b) Upon receipt of the documentation required by Section 12268, the Treasurer shall provide a tax credit certificate to each taxpayer that has made an investor contribution in the amount of the investor contribution.12268. (a) (1) Within 60 days of receiving the certification described in subdivision (a) of Section 12267, a growth fund shall collect all investor contributions and collect additional investments of cash that, when added to the investor contributions, equal the growth funds investment authority.(2) At least 10 percent of the growth funds investment authority shall consist of equity investments contributed directly or indirectly by affiliates of the growth fund.(3) Within 65 days after receiving the certification described in subdivision (a) of Section 12267, a growth fund shall send to the Treasurer the date on which the investment authority was collected and documentation that it has collected the amounts required by subdivision (a).(b) If the growth fund fails to fully comply with paragraphs (1) and (2) of subdivision (a), the Treasurer shall revoke the growth funds certification.12269. (a) A qualified growth fund shall be charged an annual fee, payable to the Treasurer, of 0.02 percent of the investment authority authorized.(b) (1) The initial annual fee is due and payable to the Treasurer within 65 days after receiving the certification issued pursuant to Section 12267.(2) After payment of the initial annual fee, the annual fee shall be due and payable to the Treasurer before March 1.(c) An annual fee shall not be required once a growth fund has exited the program pursuant to Section 12271.12270. (a) The Treasurer shall recapture, based on information in the growth funds annual report or its failure to make the certification set forth in paragraph (7) of subdivision (a) of Section 12272, any tax credit allowed pursuant to this article and revoke the tax credit certificates issued pursuant to Section 12267 if any of the following occur with respect to a growth fund before the growth fund exits the program in accordance with Section 12271:(1) The growth fund does not invest 60 percent of its investment authority in growth investments in this state within two years and 100 percent of its investment authority in growth investments in this state within three years of the closing date.(2) The growth fund, after initially satisfying paragraph (1), fails to maintain growth investments equal to 100 percent of its investment authority until the seventh anniversary of the closing date.(3) The growth fund makes a distribution or payment that results in the growth fund having less than 100 percent of its investment authority invested in growth investments in this state or available for investment in growth investments and held in cash, bank deposits, and marketable securities.(4) The growth fund fails to make growth investments in growth businesses with principal business operations in an area qualified under Section 4279.108(c)(1) of Title 7 of the Code of Federal Regulations that when added together equal at least 6 percent of the growth funds capital investment authority.(5) The growth fund invests in a growth business that directly or through an affiliate does any of the following:(A) Owns an investment in the growth fund.(B) Has the right to acquire an ownership interest in the growth fund.(C) Makes a loan to the growth fund.(D) (i) Makes an investment in the growth fund, an affiliate of the growth fund, or an investor in the growth fund.(ii) For purposes of this paragraph, a growth fund is not considered an affiliate of a growth business solely because of its growth investment.(b) For purposes of paragraphs (1) and (2) of subdivision (a), both of the following apply:(1) An investment is deemed to be maintained even if it is sold or repaid, so long as the growth fund reinvests an amount equal to the capital returned or recovered from the original investment, exclusive of any profits realized, in other growth investments in this state within 12 months of the receipt of that capital.(2) Amounts received periodically by a growth fund shall be treated as continuously invested in growth investments if the amounts are reinvested in one or more growth investments by the end of the calendar year following receipt of those amounts.(c) Paragraph (5) of subdivision (a) shall not apply to investments in publicly traded securities made by a growth business or an owner or affiliate of the growth business.(d) (1) Before making a growth investment, a growth fund may request a written determination from the Treasurer as to whether the business in which it proposes to invest satisfies the definition of a growth business to which the Treasurer shall respond no more than 15 business days from the date of receipt thereof.(2) If the Treasurer fails to issue a determination letter pursuant to paragraph (1), the business in which the growth fund proposes to invest shall be considered a growth business.(e) The maximum amount of growth investments in a particular growth business, including amounts invested in affiliates of the growth business, that a growth fund may count in satisfying the requirements of paragraphs (1) and (2) of subdivision (a) is the greater of five million dollars ($5,000,000) or 10 percent of its investment authority, exclusive of repaid or redeemed growth investments.(f) (1) Before revoking a tax credit certificate or recapturing credits pursuant to this section, the Treasurer shall notify the growth fund of the reasons for the pending revocation or recapture.(2) The growth fund shall have 90 days from the date the notice was received to correct a violation outlined in the notice to the satisfaction of the Treasurer and avoid recapture of tax credits and revocation of the tax credit certificate.(g) The Treasurer shall not revoke a tax credit certificate or recapture credits after a growth fund exits from the program in accordance with Section 12271.12271. (a) (1) A growth fund may, but only on or after the seventh anniversary of the closing date, apply to the Treasurer to exit the program, and upon exiting, shall no longer be subject to the provisions of this article, except as provided in subdivision (c).(2) The Treasurer shall approve or deny an application made pursuant to subdivision (a) within 30 days of receipt.(3) The Treasurer shall approve an application made pursuant to this section if, with respect to the applicant, no tax credit certificates have been revoked and the growth fund has not received a notice of revocation or recapture that has not been cured.(4) The Treasurer shall not unreasonably deny an application submitted pursuant to this section.(5) If the Treasurer denies an application, the notice of denial shall include the reasons for the determination.(b) After its exit from the program, a growth fund may not make distributions to its equity holders or pay any fees in excess of its investment authority until it has paid any state clawback amount due.(c) Each growth fund shall continue to report annually to the Treasurer both of the following:(1) The number of new full-time employees at each growth business, and that number shall continue to reduce the state clawback amount.(2) Employment offset until its state clawback amount equals zero or it has distributed all of its assets.12272. (a) Each growth fund shall submit an annual report to the Treasurer on or before the fifth business day after each anniversary of the closing date before its exit from the program pursuant to Section 12271. The report shall identify each growth investment made by the growth fund and shall include all of the following:(1) A bank statement evidencing each growth investment if not previously reported.(2) The name, location, and industry of each growth business receiving a growth investment, including either the determination letter set forth in Section 12270 or evidence that the business qualified as a growth business at the time the investment was made, if not previously reported.(3) For each growth business receiving a growth investment, evidence for the Treasurer to verify the number of full-time employees at each growth business on the date of the growth funds initial growth investment.(4) The number of new full-time employees at each growth business, the average salary of those employees, and evidence sufficient for the Treasurer to verify whether a new full-time employee is a targeted employee.(5) A calculation of the growth funds employment offset for that year.(6) The cumulative amount of growth investments made in each growth business.(7) A certification under penalty of perjury that the growth fund has not violated any of the grounds for revocation and recapture of credits set forth in subdivision (a) of Section 12270.(8) Any other information required by the Treasurer for purposes of carrying out the Treasurers duties under this article.(b) The growth fund is not required to provide information with respect to growth investments that have been redeemed or repaid as part of the annual report required by this section but shall provide that information if available.12273. (a) If the Treasurer revokes a growth funds certification pursuant to subdivision (b) of Section 12268 or a tax credit certificate pursuant to Section 12270, the associated investment authority and investor contributions will not count toward the limit on total investment authority and investor contributions set forth in subdivision (c) of Section 12266.(b) (1) The Treasurer shall first award reverted investment authority pro rata to each growth fund that was awarded less than the requested investment authority for which it applied, and that growth fund may allocate the associated investor contribution authority to any taxpayer with state premium tax liability in its discretion.(2) The Treasurer may award any remaining investment authority to new applicants.12274. (a) The Treasurer may adopt rules and regulations for the purpose of implementing the provisions of this article.(b) The Treasurer shall adopt forms and notices necessary to implement this article.(c) The Treasurer shall notify the Department of Insurance of the name of any insurance company allocated tax credits under this act and the amount of those credits. | |
111 | 79 | ||
112 | 80 | SEC. 2. Article 6 (commencing with Section 12264) is added to Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code, to read: | |
113 | 81 | ||
114 | 82 | ### SEC. 2. | |
115 | 83 | ||
116 | - | Article 6. | |
84 | + | Article 6. Jobs and Upward Mobility Progression (JUMP) Act12264. As used in this article:(a) (1) Affiliate means an entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another entity.(2) For the purposes of this subdivision, an entity is controlled by another entity if the controlling entity holds, directly or indirectly, the majority voting or ownership interest in the controlled entity or has control over the day-to-day operations of the controlled entity.(b) Closing date means the date on which a growth fund has collected all amounts specified by Section 12268.(c) (1) Employment offset means an amount calculated annually that is equal to the sum of both of the following:(A) The product of twenty-five thousand dollars ($25,000) and the number of new full-time employees of a growth funds growth businesses.(B) A one-time amount of ten thousand dollars ($10,000) for each full-time employee hired by a growth business that is a targeted employee.(2) (A) The number of new full-time employees of a growth funds growth businesses referenced in subparagraph (A) of paragraph (1) shall be calculated annually as the difference between the following:(i) The average monthly number of full-time employees at a growth business in the preceding calendar year or portion thereof if the initial growth investment occurred in the year.(ii) The number of full-time employees at the growth business on the date of the initial growth investment.(B) If the resulting difference between the amounts derived from clauses (i) and (ii) of subparagraph (A) is less than zero, the number of new full-time employees shall be deemed to be zero.(d) Full-time employee means any of the following:(1) An employment position that is filled at a growth business.(2) An employment position that receives wages that are at least 100 percent of the county median wage.(3) An employment position that is paid hourly wages for an average of at least 35 hours per week or any other period of time generally accepted by custom, industry, or practice as full-time employment.(4) An employment position that is salaried and paid for full-time employment within the meaning of Section 515 of the Labor Code.(e) Growth business means a business that, at the time a growth fund initially invests in the business, meets all of the following requirements:(1) The business has, together with its affiliates, fewer than 100 employees.(2) The business has aggregate gross receipts, less returns and allowances reportable to the state, of less than ten million dollars ($10,000,000) during the previous taxable year.(3) The business has its principal business operations in at least one growth zone in the state.(4) The business is engaged in North American Industry Classification System sector 11, 22, 23, 31, 32, 33, 48, 49, 54, or 62 or, if not engaged in those industries, the Treasurer determines that the investment will create desirable economic outcomes related to income mobility.(f) Growth fund means an entity certified by the Treasurer pursuant to Section 12267.(g) (1) Growth investment means a capital or equity investment in a growth business or a loan to a growth business with a stated maturity of at least one year after the date of issuance.(2) Growth investment does not include the provision of a revolving line of credit.(h) Growth zone means any of the following:(1) An opportunity zone located in the state.(2) A census tract in the state meeting either of the following requirements:(A) The census tract has a poverty rate that is greater than 20 percent.(B) The census tract has a median family income that does not exceed the following:(i) If the census tract is not located in a metropolitan area, the statewide median family income.(ii) If the census tract is located in a metropolitan area, the greater of the statewide median family income and the metropolitan area median family income.(3) All locations outside of census places with a population greater than or equal to 50,000 as of the latest decennial census and their adjacent and contiguous urbanized areas.(i) Investment authority means the amount certified by the Treasurer pursuant to Section 12267.(j) Investor contribution means a cash investment in a growth fund that meets both of the following requirements:(1) The cash investment is equal to the amount specified for that entity in the Treasurers approval of the growth funds application pursuant to Section 12267.(2) The cash investment purchased any of the following:(A) An equity interest in the growth fund.(B) A debt instrument that has a maturity date of at least six years from the closing date and a repayment schedule that is not greater than level principal amortization over six years.(k) Opportunity zone means a qualified opportunity zone, as defined by Section 1400Z-1 of Title 26 of the United States Code.(l) (1) Principal business operations means the location that meets either of the following requirements:(A) At least 60 percent of a business employees work at the location.(B) Employees who are paid at least 60 percent of the business payroll work at the location.(2) A business that has agreed to relocate employees using the proceeds of a growth investment to establish its principal business operations in a growth zone shall be deemed to have its principal business operations in a growth zone if it satisfies the requirements of paragraph (1) within 180 days after receiving a growth investment.(m) (1) State clawback amount means the difference between both of the following:(A) The growth funds total investor contributions.(B) The sum of the annual employment offsets reported by the growth fund pursuant to Section 12272.(2) If the amount derived from paragraph (1) is zero or less than zero, the state clawback amount shall be zero.(n) Targeted employee means a qualified new full-time employee who meets any of the following requirements:(1) (A) The employee was unemployed for the six months immediately preceding being hired and did not complete a baccalaureate, postgraduate, or professional degree at a college or university within the 12 months immediately preceding being hired.(B) For purposes of this paragraph, a person is unemployed when that person satisfies all of the following requirements:(i) The person is not receiving wages subject to withholding.(ii) The person is not self-employed.(iii) The person is not a full-time student at a high school, college, university, or postsecondary education institution.(2) The employee is a veteran separated from the Armed Forces of the United States in the preceding 12 months.(3) The employee received the federal Earned Income Tax Credit in the prior taxable year.(4) The employee has been convicted of a felony.(5) The employee is a current recipient of benefits pursuant to Article 3.2 (commencing with Section 11320) of Chapter 2 of Part 3 of Division 9 of the Welfare and Institutions Code.(6) The employee is provided, or reimbursed for, education or training leading to an official skill certification.(7) The employee is provided housing, a relocation bonus, or other housing assistance, by the qualifying growth business, that exceeds a value of ten thousand dollars ($10,000).(8) The employee is employed by a growth business in an area where a borrower would be qualified pursuant to Section 4279.108(c)(1) of the Code of Federal Regulations.(o) Treasurer means the State Treasurer.12265. (a) For taxable years beginning on or after January 1, 2021, and before January 1, 2031, there shall be allowed as a credit against the taxes imposed by this part and against the exactions imposed by paragraph (3) of subdivision (f) of Section 28 of Article XIII of the State Constitution, a JUMP Act tax credit in an amount equal to an investor contribution, as defined in Section 12264.(b) If the credit allowed by this section exceeds the taxes described in subdivision (a), the excess may be carried over to reduce those taxes in the following year, and the succeeding four years if necessary, until the credit is exhausted.(c) The credit is nonrefundable and may not be sold, transferred, or allocated to an entity other than an affiliate that was an affiliate of the taxpayer on the date that the taxpayer signed its affidavit included in the growth funds application pursuant to subdivision (a) of Section 12266.(d) A taxpayer claiming a credit under this section shall submit a copy of the tax credit certificate issued pursuant to Section 12267 with the taxpayers return for each taxable year for which the credit is claimed.(e) (1) The aggregate amount of investment authority that may be certified pursuant to Section 12267 shall be five hundred million dollars ($500,000,000) and the aggregate amount of credit that may be allocated and certified pursuant to this section shall be an amount equal to seventy-five million dollars ($75,000,000) in any taxable year and three hundred million dollars ($300,000,000) in total for all taxable years for which the JUMP Act tax credit is authorized.(2) If requests for investment authority and credits exceed the limitations described in paragraph (1), the Treasurer shall proportionally reduce the investment authority and credits certified for each approved application as necessary to avoid exceeding the limit.12266. (a) Beginning January 1, 2021, the Treasurer shall accept applications for approval as a growth fund, pursuant to rules and regulations adopted by the Treasurer, which shall meet all of the following requirements:(1) The total investment authority sought by the applicant shall not exceed five hundred million dollars ($500,000,000).(2) The application shall include evidence of all of the following:(A) A certification by an executive officer of the applicant that certifies that the applicant or an affiliate of the applicant is licensed as a rural business investment company under Section 2009cc of Title 7 of the United States Code or as a small business investment company under Section 681 of Title 15 of the United States Code.(B) At least one principal in a rural business investment company or a small business investment company is, and has been for at least four years, an officer or employee of the applicant or an affiliate of the applicant on the date the application is submitted.(C) As of the date the application is submitted, the applicant or affiliates of the applicant have invested at least one hundred million dollars ($100,000,000) in nonpublic companies located in non-metropolitan counties as defined by the Office of Management and Budget within the Office of the President of the United States on the basis of county or county-equivalent units or one hundred million dollars ($100,000,000) in opportunity zones.(3) The application shall include an estimate of the total new full-time employees that will result from the applicants growth investments.(4) The application shall include a signed affidavit from each taxpayer stating the amount of investor contribution the taxpayer will make. At least 60 percent of a growth funds requested investment authority shall consist of investor contributions.(5) The application shall include the growth funds federal employer identification number.(6) The application shall include a one-time application fee of ten thousand dollars ($10,000).(b) (1) The Treasurer shall review an application received pursuant to this section in the order in which it was received and shall either approve or deny the application within 45 days of receipt.(2) Applications that are received on the same day shall be deemed to have been received simultaneously.(c) The Treasurer may approve investment authority only in an aggregate amount that is not greater than five hundred million dollars ($500,000,000).(d) The Treasurer shall deny an application only if any of the following are true:(1) The application is incomplete.(2) The applicant does not meet the requirements of paragraph (2) or (4) of subdivision (a).(3) The Treasurer has already approved the maximum amount of investment authority allowed pursuant to subdivision (c).(e) (1) If the Treasurer denies an application, the applicant, within 15 business days after receiving notice of the denial, may provide additional information to the Treasurer to cure any defects in the application, except for failure to comply with paragraph (4) of subdivision (a).(2) The Treasurer shall review and reconsider applications corrected pursuant to paragraph (1) within thirty days.(3) If the Treasurer subsequently approves the application, the application shall be considered approved as of its original submission date and shall receive the pro rata allocation of investment authority that the applicant would have received if it had been approved on the original date of submission.12267. (a) After approving an application submitted pursuant to Section 12266, the Treasurer shall certify all of the following:(1) The applicant is a growth fund.(2) The amount of the applicants approved investment authority.(3) The investor contributions required from each investor that submitted an affidavit with the growth funds application.(b) Upon receipt of the documentation required by Section 12268, the Treasurer shall provide a tax credit certificate to each taxpayer that has made an investor contribution in the amount of the investor contribution.12268. (a) (1) Within 60 days of receiving the certification described in subdivision (a) of Section 12267, a growth fund shall collect all investor contributions and collect additional investments of cash that, when added to the investor contributions, equal the growth funds investment authority.(2) At least 10 percent of the growth funds investment authority shall consist of equity investments contributed directly or indirectly by affiliates of the growth fund.(3) Within 65 days after receiving the certification described in subdivision (a) of Section 12267, a growth fund shall send to the Treasurer the date on which the investment authority was collected and documentation that it has collected the amounts required by subdivision (a).(b) If the growth fund fails to fully comply with paragraphs (1) and (2) of subdivision (a), the Treasurer shall revoke the growth funds certification.12269. (a) A qualified growth fund shall be charged an annual fee, payable to the Treasurer, of 0.02 percent of the investment authority authorized.(b) (1) The initial annual fee is due and payable to the Treasurer within 65 days after receiving the certification issued pursuant to Section 12267.(2) After payment of the initial annual fee, the annual fee shall be due and payable to the Treasurer before March 1.(c) An annual fee shall not be required once a growth fund has exited the program pursuant to Section 12271.12270. (a) The Treasurer shall recapture, based on information in the growth funds annual report or its failure to make the certification set forth in paragraph (7) of subdivision (a) of Section 12272, any tax credit allowed pursuant to this article and revoke the tax credit certificates issued pursuant to Section 12267 if any of the following occur with respect to a growth fund before the growth fund exits the program in accordance with Section 12271:(1) The growth fund does not invest 60 percent of its investment authority in growth investments in this state within two years and 100 percent of its investment authority in growth investments in this state within three years of the closing date.(2) The growth fund, after initially satisfying paragraph (1), fails to maintain growth investments equal to 100 percent of its investment authority until the seventh anniversary of the closing date.(3) The growth fund makes a distribution or payment that results in the growth fund having less than 100 percent of its investment authority invested in growth investments in this state or available for investment in growth investments and held in cash, bank deposits, and marketable securities.(4) The growth fund fails to make growth investments in growth businesses with principal business operations in an area qualified under Section 4279.108(c)(1) of Title 7 of the Code of Federal Regulations that when added together equal at least 6 percent of the growth funds capital investment authority.(5) The growth fund invests in a growth business that directly or through an affiliate does any of the following:(A) Owns an investment in the growth fund.(B) Has the right to acquire an ownership interest in the growth fund.(C) Makes a loan to the growth fund.(D) (i) Makes an investment in the growth fund, an affiliate of the growth fund, or an investor in the growth fund.(ii) For purposes of this paragraph, a growth fund is not considered an affiliate of a growth business solely because of its growth investment.(b) For purposes of paragraphs (1) and (2) of subdivision (a), both of the following apply:(1) An investment is deemed to be maintained even if it is sold or repaid, so long as the growth fund reinvests an amount equal to the capital returned or recovered from the original investment, exclusive of any profits realized, in other growth investments in this state within 12 months of the receipt of that capital.(2) Amounts received periodically by a growth fund shall be treated as continuously invested in growth investments if the amounts are reinvested in one or more growth investments by the end of the calendar year following receipt of those amounts.(c) Paragraph (5) of subdivision (a) shall not apply to investments in publicly traded securities made by a growth business or an owner or affiliate of the growth business.(d) (1) Before making a growth investment, a growth fund may request a written determination from the Treasurer as to whether the business in which it proposes to invest satisfies the definition of a growth business to which the Treasurer shall respond no more than 15 business days from the date of receipt thereof.(2) If the Treasurer fails to issue a determination letter pursuant to paragraph (1), the business in which the growth fund proposes to invest shall be considered a growth business.(e) The maximum amount of growth investments in a particular growth business, including amounts invested in affiliates of the growth business, that a growth fund may count in satisfying the requirements of paragraphs (1) and (2) of subdivision (a) is the greater of five million dollars ($5,000,000) or 10 percent of its investment authority, exclusive of repaid or redeemed growth investments.(f) (1) Before revoking a tax credit certificate or recapturing credits pursuant to this section, the Treasurer shall notify the growth fund of the reasons for the pending revocation or recapture.(2) The growth fund shall have 90 days from the date the notice was received to correct a violation outlined in the notice to the satisfaction of the Treasurer and avoid recapture of tax credits and revocation of the tax credit certificate.(g) The Treasurer shall not revoke a tax credit certificate or recapture credits after a growth fund exits from the program in accordance with Section 12271.12271. (a) (1) A growth fund may, but only on or after the seventh anniversary of the closing date, apply to the Treasurer to exit the program, and upon exiting, shall no longer be subject to the provisions of this article, except as provided in subdivision (c).(2) The Treasurer shall approve or deny an application made pursuant to subdivision (a) within 30 days of receipt.(3) The Treasurer shall approve an application made pursuant to this section if, with respect to the applicant, no tax credit certificates have been revoked and the growth fund has not received a notice of revocation or recapture that has not been cured.(4) The Treasurer shall not unreasonably deny an application submitted pursuant to this section.(5) If the Treasurer denies an application, the notice of denial shall include the reasons for the determination.(b) After its exit from the program, a growth fund may not make distributions to its equity holders or pay any fees in excess of its investment authority until it has paid any state clawback amount due.(c) Each growth fund shall continue to report annually to the Treasurer both of the following:(1) The number of new full-time employees at each growth business, and that number shall continue to reduce the state clawback amount.(2) Employment offset until its state clawback amount equals zero or it has distributed all of its assets.12272. (a) Each growth fund shall submit an annual report to the Treasurer on or before the fifth business day after each anniversary of the closing date before its exit from the program pursuant to Section 12271. The report shall identify each growth investment made by the growth fund and shall include all of the following:(1) A bank statement evidencing each growth investment if not previously reported.(2) The name, location, and industry of each growth business receiving a growth investment, including either the determination letter set forth in Section 12270 or evidence that the business qualified as a growth business at the time the investment was made, if not previously reported.(3) For each growth business receiving a growth investment, evidence for the Treasurer to verify the number of full-time employees at each growth business on the date of the growth funds initial growth investment.(4) The number of new full-time employees at each growth business, the average salary of those employees, and evidence sufficient for the Treasurer to verify whether a new full-time employee is a targeted employee.(5) A calculation of the growth funds employment offset for that year.(6) The cumulative amount of growth investments made in each growth business.(7) A certification under penalty of perjury that the growth fund has not violated any of the grounds for revocation and recapture of credits set forth in subdivision (a) of Section 12270.(8) Any other information required by the Treasurer for purposes of carrying out the Treasurers duties under this article.(b) The growth fund is not required to provide information with respect to growth investments that have been redeemed or repaid as part of the annual report required by this section but shall provide that information if available.12273. (a) If the Treasurer revokes a growth funds certification pursuant to subdivision (b) of Section 12268 or a tax credit certificate pursuant to Section 12270, the associated investment authority and investor contributions will not count toward the limit on total investment authority and investor contributions set forth in subdivision (c) of Section 12266.(b) (1) The Treasurer shall first award reverted investment authority pro rata to each growth fund that was awarded less than the requested investment authority for which it applied, and that growth fund may allocate the associated investor contribution authority to any taxpayer with state premium tax liability in its discretion.(2) The Treasurer may award any remaining investment authority to new applicants.12274. (a) The Treasurer may adopt rules and regulations for the purpose of implementing the provisions of this article.(b) The Treasurer shall adopt forms and notices necessary to implement this article.(c) The Treasurer shall notify the Department of Insurance of the name of any insurance company allocated tax credits under this act and the amount of those credits. | |
117 | 85 | ||
118 | - | Article 6. | |
86 | + | Article 6. Jobs and Upward Mobility Progression (JUMP) Act12264. As used in this article:(a) (1) Affiliate means an entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another entity.(2) For the purposes of this subdivision, an entity is controlled by another entity if the controlling entity holds, directly or indirectly, the majority voting or ownership interest in the controlled entity or has control over the day-to-day operations of the controlled entity.(b) Closing date means the date on which a growth fund has collected all amounts specified by Section 12268.(c) (1) Employment offset means an amount calculated annually that is equal to the sum of both of the following:(A) The product of twenty-five thousand dollars ($25,000) and the number of new full-time employees of a growth funds growth businesses.(B) A one-time amount of ten thousand dollars ($10,000) for each full-time employee hired by a growth business that is a targeted employee.(2) (A) The number of new full-time employees of a growth funds growth businesses referenced in subparagraph (A) of paragraph (1) shall be calculated annually as the difference between the following:(i) The average monthly number of full-time employees at a growth business in the preceding calendar year or portion thereof if the initial growth investment occurred in the year.(ii) The number of full-time employees at the growth business on the date of the initial growth investment.(B) If the resulting difference between the amounts derived from clauses (i) and (ii) of subparagraph (A) is less than zero, the number of new full-time employees shall be deemed to be zero.(d) Full-time employee means any of the following:(1) An employment position that is filled at a growth business.(2) An employment position that receives wages that are at least 100 percent of the county median wage.(3) An employment position that is paid hourly wages for an average of at least 35 hours per week or any other period of time generally accepted by custom, industry, or practice as full-time employment.(4) An employment position that is salaried and paid for full-time employment within the meaning of Section 515 of the Labor Code.(e) Growth business means a business that, at the time a growth fund initially invests in the business, meets all of the following requirements:(1) The business has, together with its affiliates, fewer than 100 employees.(2) The business has aggregate gross receipts, less returns and allowances reportable to the state, of less than ten million dollars ($10,000,000) during the previous taxable year.(3) The business has its principal business operations in at least one growth zone in the state.(4) The business is engaged in North American Industry Classification System sector 11, 22, 23, 31, 32, 33, 48, 49, 54, or 62 or, if not engaged in those industries, the Treasurer determines that the investment will create desirable economic outcomes related to income mobility.(f) Growth fund means an entity certified by the Treasurer pursuant to Section 12267.(g) (1) Growth investment means a capital or equity investment in a growth business or a loan to a growth business with a stated maturity of at least one year after the date of issuance.(2) Growth investment does not include the provision of a revolving line of credit.(h) Growth zone means any of the following:(1) An opportunity zone located in the state.(2) A census tract in the state meeting either of the following requirements:(A) The census tract has a poverty rate that is greater than 20 percent.(B) The census tract has a median family income that does not exceed the following:(i) If the census tract is not located in a metropolitan area, the statewide median family income.(ii) If the census tract is located in a metropolitan area, the greater of the statewide median family income and the metropolitan area median family income.(3) All locations outside of census places with a population greater than or equal to 50,000 as of the latest decennial census and their adjacent and contiguous urbanized areas.(i) Investment authority means the amount certified by the Treasurer pursuant to Section 12267.(j) Investor contribution means a cash investment in a growth fund that meets both of the following requirements:(1) The cash investment is equal to the amount specified for that entity in the Treasurers approval of the growth funds application pursuant to Section 12267.(2) The cash investment purchased any of the following:(A) An equity interest in the growth fund.(B) A debt instrument that has a maturity date of at least six years from the closing date and a repayment schedule that is not greater than level principal amortization over six years.(k) Opportunity zone means a qualified opportunity zone, as defined by Section 1400Z-1 of Title 26 of the United States Code.(l) (1) Principal business operations means the location that meets either of the following requirements:(A) At least 60 percent of a business employees work at the location.(B) Employees who are paid at least 60 percent of the business payroll work at the location.(2) A business that has agreed to relocate employees using the proceeds of a growth investment to establish its principal business operations in a growth zone shall be deemed to have its principal business operations in a growth zone if it satisfies the requirements of paragraph (1) within 180 days after receiving a growth investment.(m) (1) State clawback amount means the difference between both of the following:(A) The growth funds total investor contributions.(B) The sum of the annual employment offsets reported by the growth fund pursuant to Section 12272.(2) If the amount derived from paragraph (1) is zero or less than zero, the state clawback amount shall be zero.(n) Targeted employee means a qualified new full-time employee who meets any of the following requirements:(1) (A) The employee was unemployed for the six months immediately preceding being hired and did not complete a baccalaureate, postgraduate, or professional degree at a college or university within the 12 months immediately preceding being hired.(B) For purposes of this paragraph, a person is unemployed when that person satisfies all of the following requirements:(i) The person is not receiving wages subject to withholding.(ii) The person is not self-employed.(iii) The person is not a full-time student at a high school, college, university, or postsecondary education institution.(2) The employee is a veteran separated from the Armed Forces of the United States in the preceding 12 months.(3) The employee received the federal Earned Income Tax Credit in the prior taxable year.(4) The employee has been convicted of a felony.(5) The employee is a current recipient of benefits pursuant to Article 3.2 (commencing with Section 11320) of Chapter 2 of Part 3 of Division 9 of the Welfare and Institutions Code.(6) The employee is provided, or reimbursed for, education or training leading to an official skill certification.(7) The employee is provided housing, a relocation bonus, or other housing assistance, by the qualifying growth business, that exceeds a value of ten thousand dollars ($10,000).(8) The employee is employed by a growth business in an area where a borrower would be qualified pursuant to Section 4279.108(c)(1) of the Code of Federal Regulations.(o) Treasurer means the State Treasurer.12265. (a) For taxable years beginning on or after January 1, 2021, and before January 1, 2031, there shall be allowed as a credit against the taxes imposed by this part and against the exactions imposed by paragraph (3) of subdivision (f) of Section 28 of Article XIII of the State Constitution, a JUMP Act tax credit in an amount equal to an investor contribution, as defined in Section 12264.(b) If the credit allowed by this section exceeds the taxes described in subdivision (a), the excess may be carried over to reduce those taxes in the following year, and the succeeding four years if necessary, until the credit is exhausted.(c) The credit is nonrefundable and may not be sold, transferred, or allocated to an entity other than an affiliate that was an affiliate of the taxpayer on the date that the taxpayer signed its affidavit included in the growth funds application pursuant to subdivision (a) of Section 12266.(d) A taxpayer claiming a credit under this section shall submit a copy of the tax credit certificate issued pursuant to Section 12267 with the taxpayers return for each taxable year for which the credit is claimed.(e) (1) The aggregate amount of investment authority that may be certified pursuant to Section 12267 shall be five hundred million dollars ($500,000,000) and the aggregate amount of credit that may be allocated and certified pursuant to this section shall be an amount equal to seventy-five million dollars ($75,000,000) in any taxable year and three hundred million dollars ($300,000,000) in total for all taxable years for which the JUMP Act tax credit is authorized.(2) If requests for investment authority and credits exceed the limitations described in paragraph (1), the Treasurer shall proportionally reduce the investment authority and credits certified for each approved application as necessary to avoid exceeding the limit.12266. (a) Beginning January 1, 2021, the Treasurer shall accept applications for approval as a growth fund, pursuant to rules and regulations adopted by the Treasurer, which shall meet all of the following requirements:(1) The total investment authority sought by the applicant shall not exceed five hundred million dollars ($500,000,000).(2) The application shall include evidence of all of the following:(A) A certification by an executive officer of the applicant that certifies that the applicant or an affiliate of the applicant is licensed as a rural business investment company under Section 2009cc of Title 7 of the United States Code or as a small business investment company under Section 681 of Title 15 of the United States Code.(B) At least one principal in a rural business investment company or a small business investment company is, and has been for at least four years, an officer or employee of the applicant or an affiliate of the applicant on the date the application is submitted.(C) As of the date the application is submitted, the applicant or affiliates of the applicant have invested at least one hundred million dollars ($100,000,000) in nonpublic companies located in non-metropolitan counties as defined by the Office of Management and Budget within the Office of the President of the United States on the basis of county or county-equivalent units or one hundred million dollars ($100,000,000) in opportunity zones.(3) The application shall include an estimate of the total new full-time employees that will result from the applicants growth investments.(4) The application shall include a signed affidavit from each taxpayer stating the amount of investor contribution the taxpayer will make. At least 60 percent of a growth funds requested investment authority shall consist of investor contributions.(5) The application shall include the growth funds federal employer identification number.(6) The application shall include a one-time application fee of ten thousand dollars ($10,000).(b) (1) The Treasurer shall review an application received pursuant to this section in the order in which it was received and shall either approve or deny the application within 45 days of receipt.(2) Applications that are received on the same day shall be deemed to have been received simultaneously.(c) The Treasurer may approve investment authority only in an aggregate amount that is not greater than five hundred million dollars ($500,000,000).(d) The Treasurer shall deny an application only if any of the following are true:(1) The application is incomplete.(2) The applicant does not meet the requirements of paragraph (2) or (4) of subdivision (a).(3) The Treasurer has already approved the maximum amount of investment authority allowed pursuant to subdivision (c).(e) (1) If the Treasurer denies an application, the applicant, within 15 business days after receiving notice of the denial, may provide additional information to the Treasurer to cure any defects in the application, except for failure to comply with paragraph (4) of subdivision (a).(2) The Treasurer shall review and reconsider applications corrected pursuant to paragraph (1) within thirty days.(3) If the Treasurer subsequently approves the application, the application shall be considered approved as of its original submission date and shall receive the pro rata allocation of investment authority that the applicant would have received if it had been approved on the original date of submission.12267. (a) After approving an application submitted pursuant to Section 12266, the Treasurer shall certify all of the following:(1) The applicant is a growth fund.(2) The amount of the applicants approved investment authority.(3) The investor contributions required from each investor that submitted an affidavit with the growth funds application.(b) Upon receipt of the documentation required by Section 12268, the Treasurer shall provide a tax credit certificate to each taxpayer that has made an investor contribution in the amount of the investor contribution.12268. (a) (1) Within 60 days of receiving the certification described in subdivision (a) of Section 12267, a growth fund shall collect all investor contributions and collect additional investments of cash that, when added to the investor contributions, equal the growth funds investment authority.(2) At least 10 percent of the growth funds investment authority shall consist of equity investments contributed directly or indirectly by affiliates of the growth fund.(3) Within 65 days after receiving the certification described in subdivision (a) of Section 12267, a growth fund shall send to the Treasurer the date on which the investment authority was collected and documentation that it has collected the amounts required by subdivision (a).(b) If the growth fund fails to fully comply with paragraphs (1) and (2) of subdivision (a), the Treasurer shall revoke the growth funds certification.12269. (a) A qualified growth fund shall be charged an annual fee, payable to the Treasurer, of 0.02 percent of the investment authority authorized.(b) (1) The initial annual fee is due and payable to the Treasurer within 65 days after receiving the certification issued pursuant to Section 12267.(2) After payment of the initial annual fee, the annual fee shall be due and payable to the Treasurer before March 1.(c) An annual fee shall not be required once a growth fund has exited the program pursuant to Section 12271.12270. (a) The Treasurer shall recapture, based on information in the growth funds annual report or its failure to make the certification set forth in paragraph (7) of subdivision (a) of Section 12272, any tax credit allowed pursuant to this article and revoke the tax credit certificates issued pursuant to Section 12267 if any of the following occur with respect to a growth fund before the growth fund exits the program in accordance with Section 12271:(1) The growth fund does not invest 60 percent of its investment authority in growth investments in this state within two years and 100 percent of its investment authority in growth investments in this state within three years of the closing date.(2) The growth fund, after initially satisfying paragraph (1), fails to maintain growth investments equal to 100 percent of its investment authority until the seventh anniversary of the closing date.(3) The growth fund makes a distribution or payment that results in the growth fund having less than 100 percent of its investment authority invested in growth investments in this state or available for investment in growth investments and held in cash, bank deposits, and marketable securities.(4) The growth fund fails to make growth investments in growth businesses with principal business operations in an area qualified under Section 4279.108(c)(1) of Title 7 of the Code of Federal Regulations that when added together equal at least 6 percent of the growth funds capital investment authority.(5) The growth fund invests in a growth business that directly or through an affiliate does any of the following:(A) Owns an investment in the growth fund.(B) Has the right to acquire an ownership interest in the growth fund.(C) Makes a loan to the growth fund.(D) (i) Makes an investment in the growth fund, an affiliate of the growth fund, or an investor in the growth fund.(ii) For purposes of this paragraph, a growth fund is not considered an affiliate of a growth business solely because of its growth investment.(b) For purposes of paragraphs (1) and (2) of subdivision (a), both of the following apply:(1) An investment is deemed to be maintained even if it is sold or repaid, so long as the growth fund reinvests an amount equal to the capital returned or recovered from the original investment, exclusive of any profits realized, in other growth investments in this state within 12 months of the receipt of that capital.(2) Amounts received periodically by a growth fund shall be treated as continuously invested in growth investments if the amounts are reinvested in one or more growth investments by the end of the calendar year following receipt of those amounts.(c) Paragraph (5) of subdivision (a) shall not apply to investments in publicly traded securities made by a growth business or an owner or affiliate of the growth business.(d) (1) Before making a growth investment, a growth fund may request a written determination from the Treasurer as to whether the business in which it proposes to invest satisfies the definition of a growth business to which the Treasurer shall respond no more than 15 business days from the date of receipt thereof.(2) If the Treasurer fails to issue a determination letter pursuant to paragraph (1), the business in which the growth fund proposes to invest shall be considered a growth business.(e) The maximum amount of growth investments in a particular growth business, including amounts invested in affiliates of the growth business, that a growth fund may count in satisfying the requirements of paragraphs (1) and (2) of subdivision (a) is the greater of five million dollars ($5,000,000) or 10 percent of its investment authority, exclusive of repaid or redeemed growth investments.(f) (1) Before revoking a tax credit certificate or recapturing credits pursuant to this section, the Treasurer shall notify the growth fund of the reasons for the pending revocation or recapture.(2) The growth fund shall have 90 days from the date the notice was received to correct a violation outlined in the notice to the satisfaction of the Treasurer and avoid recapture of tax credits and revocation of the tax credit certificate.(g) The Treasurer shall not revoke a tax credit certificate or recapture credits after a growth fund exits from the program in accordance with Section 12271.12271. (a) (1) A growth fund may, but only on or after the seventh anniversary of the closing date, apply to the Treasurer to exit the program, and upon exiting, shall no longer be subject to the provisions of this article, except as provided in subdivision (c).(2) The Treasurer shall approve or deny an application made pursuant to subdivision (a) within 30 days of receipt.(3) The Treasurer shall approve an application made pursuant to this section if, with respect to the applicant, no tax credit certificates have been revoked and the growth fund has not received a notice of revocation or recapture that has not been cured.(4) The Treasurer shall not unreasonably deny an application submitted pursuant to this section.(5) If the Treasurer denies an application, the notice of denial shall include the reasons for the determination.(b) After its exit from the program, a growth fund may not make distributions to its equity holders or pay any fees in excess of its investment authority until it has paid any state clawback amount due.(c) Each growth fund shall continue to report annually to the Treasurer both of the following:(1) The number of new full-time employees at each growth business, and that number shall continue to reduce the state clawback amount.(2) Employment offset until its state clawback amount equals zero or it has distributed all of its assets.12272. (a) Each growth fund shall submit an annual report to the Treasurer on or before the fifth business day after each anniversary of the closing date before its exit from the program pursuant to Section 12271. The report shall identify each growth investment made by the growth fund and shall include all of the following:(1) A bank statement evidencing each growth investment if not previously reported.(2) The name, location, and industry of each growth business receiving a growth investment, including either the determination letter set forth in Section 12270 or evidence that the business qualified as a growth business at the time the investment was made, if not previously reported.(3) For each growth business receiving a growth investment, evidence for the Treasurer to verify the number of full-time employees at each growth business on the date of the growth funds initial growth investment.(4) The number of new full-time employees at each growth business, the average salary of those employees, and evidence sufficient for the Treasurer to verify whether a new full-time employee is a targeted employee.(5) A calculation of the growth funds employment offset for that year.(6) The cumulative amount of growth investments made in each growth business.(7) A certification under penalty of perjury that the growth fund has not violated any of the grounds for revocation and recapture of credits set forth in subdivision (a) of Section 12270.(8) Any other information required by the Treasurer for purposes of carrying out the Treasurers duties under this article.(b) The growth fund is not required to provide information with respect to growth investments that have been redeemed or repaid as part of the annual report required by this section but shall provide that information if available.12273. (a) If the Treasurer revokes a growth funds certification pursuant to subdivision (b) of Section 12268 or a tax credit certificate pursuant to Section 12270, the associated investment authority and investor contributions will not count toward the limit on total investment authority and investor contributions set forth in subdivision (c) of Section 12266.(b) (1) The Treasurer shall first award reverted investment authority pro rata to each growth fund that was awarded less than the requested investment authority for which it applied, and that growth fund may allocate the associated investor contribution authority to any taxpayer with state premium tax liability in its discretion.(2) The Treasurer may award any remaining investment authority to new applicants.12274. (a) The Treasurer may adopt rules and regulations for the purpose of implementing the provisions of this article.(b) The Treasurer shall adopt forms and notices necessary to implement this article.(c) The Treasurer shall notify the Department of Insurance of the name of any insurance company allocated tax credits under this act and the amount of those credits. | |
119 | 87 | ||
120 | - | Article 6. | |
88 | + | Article 6. Jobs and Upward Mobility Progression (JUMP) Act | |
121 | 89 | ||
122 | - | Article 6. | |
90 | + | Article 6. Jobs and Upward Mobility Progression (JUMP) Act | |
123 | 91 | ||
124 | - | 12264. This article shall be | |
92 | + | 12264. As used in this article:(a) (1) Affiliate means an entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another entity.(2) For the purposes of this subdivision, an entity is controlled by another entity if the controlling entity holds, directly or indirectly, the majority voting or ownership interest in the controlled entity or has control over the day-to-day operations of the controlled entity.(b) Closing date means the date on which a growth fund has collected all amounts specified by Section 12268.(c) (1) Employment offset means an amount calculated annually that is equal to the sum of both of the following:(A) The product of twenty-five thousand dollars ($25,000) and the number of new full-time employees of a growth funds growth businesses.(B) A one-time amount of ten thousand dollars ($10,000) for each full-time employee hired by a growth business that is a targeted employee.(2) (A) The number of new full-time employees of a growth funds growth businesses referenced in subparagraph (A) of paragraph (1) shall be calculated annually as the difference between the following:(i) The average monthly number of full-time employees at a growth business in the preceding calendar year or portion thereof if the initial growth investment occurred in the year.(ii) The number of full-time employees at the growth business on the date of the initial growth investment.(B) If the resulting difference between the amounts derived from clauses (i) and (ii) of subparagraph (A) is less than zero, the number of new full-time employees shall be deemed to be zero.(d) Full-time employee means any of the following:(1) An employment position that is filled at a growth business.(2) An employment position that receives wages that are at least 100 percent of the county median wage.(3) An employment position that is paid hourly wages for an average of at least 35 hours per week or any other period of time generally accepted by custom, industry, or practice as full-time employment.(4) An employment position that is salaried and paid for full-time employment within the meaning of Section 515 of the Labor Code.(e) Growth business means a business that, at the time a growth fund initially invests in the business, meets all of the following requirements:(1) The business has, together with its affiliates, fewer than 100 employees.(2) The business has aggregate gross receipts, less returns and allowances reportable to the state, of less than ten million dollars ($10,000,000) during the previous taxable year.(3) The business has its principal business operations in at least one growth zone in the state.(4) The business is engaged in North American Industry Classification System sector 11, 22, 23, 31, 32, 33, 48, 49, 54, or 62 or, if not engaged in those industries, the Treasurer determines that the investment will create desirable economic outcomes related to income mobility.(f) Growth fund means an entity certified by the Treasurer pursuant to Section 12267.(g) (1) Growth investment means a capital or equity investment in a growth business or a loan to a growth business with a stated maturity of at least one year after the date of issuance.(2) Growth investment does not include the provision of a revolving line of credit.(h) Growth zone means any of the following:(1) An opportunity zone located in the state.(2) A census tract in the state meeting either of the following requirements:(A) The census tract has a poverty rate that is greater than 20 percent.(B) The census tract has a median family income that does not exceed the following:(i) If the census tract is not located in a metropolitan area, the statewide median family income.(ii) If the census tract is located in a metropolitan area, the greater of the statewide median family income and the metropolitan area median family income.(3) All locations outside of census places with a population greater than or equal to 50,000 as of the latest decennial census and their adjacent and contiguous urbanized areas.(i) Investment authority means the amount certified by the Treasurer pursuant to Section 12267.(j) Investor contribution means a cash investment in a growth fund that meets both of the following requirements:(1) The cash investment is equal to the amount specified for that entity in the Treasurers approval of the growth funds application pursuant to Section 12267.(2) The cash investment purchased any of the following:(A) An equity interest in the growth fund.(B) A debt instrument that has a maturity date of at least six years from the closing date and a repayment schedule that is not greater than level principal amortization over six years.(k) Opportunity zone means a qualified opportunity zone, as defined by Section 1400Z-1 of Title 26 of the United States Code.(l) (1) Principal business operations means the location that meets either of the following requirements:(A) At least 60 percent of a business employees work at the location.(B) Employees who are paid at least 60 percent of the business payroll work at the location.(2) A business that has agreed to relocate employees using the proceeds of a growth investment to establish its principal business operations in a growth zone shall be deemed to have its principal business operations in a growth zone if it satisfies the requirements of paragraph (1) within 180 days after receiving a growth investment.(m) (1) State clawback amount means the difference between both of the following:(A) The growth funds total investor contributions.(B) The sum of the annual employment offsets reported by the growth fund pursuant to Section 12272.(2) If the amount derived from paragraph (1) is zero or less than zero, the state clawback amount shall be zero.(n) Targeted employee means a qualified new full-time employee who meets any of the following requirements:(1) (A) The employee was unemployed for the six months immediately preceding being hired and did not complete a baccalaureate, postgraduate, or professional degree at a college or university within the 12 months immediately preceding being hired.(B) For purposes of this paragraph, a person is unemployed when that person satisfies all of the following requirements:(i) The person is not receiving wages subject to withholding.(ii) The person is not self-employed.(iii) The person is not a full-time student at a high school, college, university, or postsecondary education institution.(2) The employee is a veteran separated from the Armed Forces of the United States in the preceding 12 months.(3) The employee received the federal Earned Income Tax Credit in the prior taxable year.(4) The employee has been convicted of a felony.(5) The employee is a current recipient of benefits pursuant to Article 3.2 (commencing with Section 11320) of Chapter 2 of Part 3 of Division 9 of the Welfare and Institutions Code.(6) The employee is provided, or reimbursed for, education or training leading to an official skill certification.(7) The employee is provided housing, a relocation bonus, or other housing assistance, by the qualifying growth business, that exceeds a value of ten thousand dollars ($10,000).(8) The employee is employed by a growth business in an area where a borrower would be qualified pursuant to Section 4279.108(c)(1) of the Code of Federal Regulations.(o) Treasurer means the State Treasurer. | |
125 | 93 | ||
126 | 94 | ||
127 | 95 | ||
128 | - | 12264. This article | |
96 | + | 12264. As used in this article: | |
129 | 97 | ||
130 | - | ||
98 | + | (a) (1) Affiliate means an entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another entity. | |
131 | 99 | ||
100 | + | (2) For the purposes of this subdivision, an entity is controlled by another entity if the controlling entity holds, directly or indirectly, the majority voting or ownership interest in the controlled entity or has control over the day-to-day operations of the controlled entity. | |
132 | 101 | ||
102 | + | (b) Closing date means the date on which a growth fund has collected all amounts specified by Section 12268. | |
133 | 103 | ||
134 | - | ||
104 | + | (c) (1) Employment offset means an amount calculated annually that is equal to the sum of both of the following: | |
135 | 105 | ||
136 | - | (a) | |
106 | + | (A) The product of twenty-five thousand dollars ($25,000) and the number of new full-time employees of a growth funds growth businesses. | |
137 | 107 | ||
138 | - | (b) | |
108 | + | (B) A one-time amount of ten thousand dollars ($10,000) for each full-time employee hired by a growth business that is a targeted employee. | |
139 | 109 | ||
140 | - | ( | |
110 | + | (2) (A) The number of new full-time employees of a growth funds growth businesses referenced in subparagraph (A) of paragraph (1) shall be calculated annually as the difference between the following: | |
141 | 111 | ||
142 | - | ( | |
112 | + | (i) The average monthly number of full-time employees at a growth business in the preceding calendar year or portion thereof if the initial growth investment occurred in the year. | |
143 | 113 | ||
144 | - | ( | |
114 | + | (ii) The number of full-time employees at the growth business on the date of the initial growth investment. | |
145 | 115 | ||
146 | - | ( | |
116 | + | (B) If the resulting difference between the amounts derived from clauses (i) and (ii) of subparagraph (A) is less than zero, the number of new full-time employees shall be deemed to be zero. | |
147 | 117 | ||
148 | - | (d) | |
118 | + | (d) Full-time employee means any of the following: | |
149 | 119 | ||
150 | - | ( | |
120 | + | (1) An employment position that is filled at a growth business. | |
151 | 121 | ||
152 | - | ( | |
122 | + | (2) An employment position that receives wages that are at least 100 percent of the county median wage. | |
153 | 123 | ||
154 | - | ( | |
124 | + | (3) An employment position that is paid hourly wages for an average of at least 35 hours per week or any other period of time generally accepted by custom, industry, or practice as full-time employment. | |
155 | 125 | ||
156 | - | ( | |
126 | + | (4) An employment position that is salaried and paid for full-time employment within the meaning of Section 515 of the Labor Code. | |
157 | 127 | ||
158 | - | ( | |
128 | + | (e) Growth business means a business that, at the time a growth fund initially invests in the business, meets all of the following requirements: | |
159 | 129 | ||
160 | - | ( | |
130 | + | (1) The business has, together with its affiliates, fewer than 100 employees. | |
161 | 131 | ||
162 | - | ( | |
132 | + | (2) The business has aggregate gross receipts, less returns and allowances reportable to the state, of less than ten million dollars ($10,000,000) during the previous taxable year. | |
163 | 133 | ||
164 | - | ( | |
134 | + | (3) The business has its principal business operations in at least one growth zone in the state. | |
165 | 135 | ||
166 | - | ( | |
136 | + | (4) The business is engaged in North American Industry Classification System sector 11, 22, 23, 31, 32, 33, 48, 49, 54, or 62 or, if not engaged in those industries, the Treasurer determines that the investment will create desirable economic outcomes related to income mobility. | |
167 | 137 | ||
168 | - | ( | |
138 | + | (f) Growth fund means an entity certified by the Treasurer pursuant to Section 12267. | |
169 | 139 | ||
170 | - | ( | |
140 | + | (g) (1) Growth investment means a capital or equity investment in a growth business or a loan to a growth business with a stated maturity of at least one year after the date of issuance. | |
171 | 141 | ||
172 | - | ( | |
142 | + | (2) Growth investment does not include the provision of a revolving line of credit. | |
173 | 143 | ||
174 | - | ( | |
144 | + | (h) Growth zone means any of the following: | |
175 | 145 | ||
176 | - | ( | |
146 | + | (1) An opportunity zone located in the state. | |
177 | 147 | ||
178 | - | (j) Relief zone means any of the following locations in this state: | |
179 | - | ||
180 | - | (1) A census tract in the state meeting either of the following requirements: | |
148 | + | (2) A census tract in the state meeting either of the following requirements: | |
181 | 149 | ||
182 | 150 | (A) The census tract has a poverty rate that is greater than 20 percent. | |
183 | 151 | ||
184 | 152 | (B) The census tract has a median family income that does not exceed the following: | |
185 | 153 | ||
186 | 154 | (i) If the census tract is not located in a metropolitan area, the statewide median family income. | |
187 | 155 | ||
188 | 156 | (ii) If the census tract is located in a metropolitan area, the greater of the statewide median family income and the metropolitan area median family income. | |
189 | 157 | ||
190 | - | ( | |
158 | + | (3) All locations outside of census places with a population greater than or equal to 50,000 as of the latest decennial census and their adjacent and contiguous urbanized areas. | |
191 | 159 | ||
192 | - | ( | |
160 | + | (i) Investment authority means the amount certified by the Treasurer pursuant to Section 12267. | |
193 | 161 | ||
194 | - | ( | |
162 | + | (j) Investor contribution means a cash investment in a growth fund that meets both of the following requirements: | |
195 | 163 | ||
196 | - | (1) The | |
164 | + | (1) The cash investment is equal to the amount specified for that entity in the Treasurers approval of the growth funds application pursuant to Section 12267. | |
197 | 165 | ||
198 | - | (2) The | |
166 | + | (2) The cash investment purchased any of the following: | |
199 | 167 | ||
200 | - | ( | |
168 | + | (A) An equity interest in the growth fund. | |
201 | 169 | ||
202 | - | ( | |
170 | + | (B) A debt instrument that has a maturity date of at least six years from the closing date and a repayment schedule that is not greater than level principal amortization over six years. | |
203 | 171 | ||
204 | - | ( | |
172 | + | (k) Opportunity zone means a qualified opportunity zone, as defined by Section 1400Z-1 of Title 26 of the United States Code. | |
205 | 173 | ||
206 | - | 12265. (a) (1) For taxable years beginning on or after January 1, 2022, there shall be allowed a credit against premium taxes a California Jumpstart Act tax credit in an amount equal to the amount of a relief contribution, as defined in subdivision (g) of Section 12264.5.(2) A taxpayer claiming a credit under this section shall claim the credit pursuant to the utilization schedule issued by the office of the Treasurer pursuant to subdivision (a) of Section 12269.(b) If the credit allowed by this section exceeds the taxes described in subdivision (a), the excess may be carried over to reduce those taxes in the following year, and the four succeeding years if necessary, until the credit is exhausted. Tax credits shall not be carried forward after the 203031 taxable year.(c) The credit is nonrefundable and may not be sold, transferred, or allocated to an entity other than an affiliate that was an affiliate of the taxpayer on the date that the taxpayer signed its affidavit included in the relief funds application pursuant to subdivision (a) of Section 12266.(d) No additional retaliatory tax shall be required as a result of receiving the tax credit described in this subdivision.(e) A taxpayer claiming a credit under this section shall submit a copy of the tax credit certificate issued pursuant to Section 12269 with the taxpayers return for each taxable year for which the credit is claimed.(f) (1) The aggregate amount of investment authority that may be certified shall be three hundred seventy-five million dollars ($375,000,000) and the aggregate amount of credit that may be allocated and certified pursuant to this section shall be three hundred million dollars ($300,000,000) in total for all taxable years for which the California Jumpstart Act tax credit is authorized.(2) If requests for investment authority and credits exceed the limitations described in paragraph (1), the office of the Treasurer shall proportionally reduce the investment authority and credits certified for each approved application as necessary to avoid exceeding the limit. | |
174 | + | (l) (1) Principal business operations means the location that meets either of the following requirements: | |
175 | + | ||
176 | + | (A) At least 60 percent of a business employees work at the location. | |
177 | + | ||
178 | + | (B) Employees who are paid at least 60 percent of the business payroll work at the location. | |
179 | + | ||
180 | + | (2) A business that has agreed to relocate employees using the proceeds of a growth investment to establish its principal business operations in a growth zone shall be deemed to have its principal business operations in a growth zone if it satisfies the requirements of paragraph (1) within 180 days after receiving a growth investment. | |
181 | + | ||
182 | + | (m) (1) State clawback amount means the difference between both of the following: | |
183 | + | ||
184 | + | (A) The growth funds total investor contributions. | |
185 | + | ||
186 | + | (B) The sum of the annual employment offsets reported by the growth fund pursuant to Section 12272. | |
187 | + | ||
188 | + | (2) If the amount derived from paragraph (1) is zero or less than zero, the state clawback amount shall be zero. | |
189 | + | ||
190 | + | (n) Targeted employee means a qualified new full-time employee who meets any of the following requirements: | |
191 | + | ||
192 | + | (1) (A) The employee was unemployed for the six months immediately preceding being hired and did not complete a baccalaureate, postgraduate, or professional degree at a college or university within the 12 months immediately preceding being hired. | |
193 | + | ||
194 | + | (B) For purposes of this paragraph, a person is unemployed when that person satisfies all of the following requirements: | |
195 | + | ||
196 | + | (i) The person is not receiving wages subject to withholding. | |
197 | + | ||
198 | + | (ii) The person is not self-employed. | |
199 | + | ||
200 | + | (iii) The person is not a full-time student at a high school, college, university, or postsecondary education institution. | |
201 | + | ||
202 | + | (2) The employee is a veteran separated from the Armed Forces of the United States in the preceding 12 months. | |
203 | + | ||
204 | + | (3) The employee received the federal Earned Income Tax Credit in the prior taxable year. | |
205 | + | ||
206 | + | (4) The employee has been convicted of a felony. | |
207 | + | ||
208 | + | (5) The employee is a current recipient of benefits pursuant to Article 3.2 (commencing with Section 11320) of Chapter 2 of Part 3 of Division 9 of the Welfare and Institutions Code. | |
209 | + | ||
210 | + | (6) The employee is provided, or reimbursed for, education or training leading to an official skill certification. | |
211 | + | ||
212 | + | (7) The employee is provided housing, a relocation bonus, or other housing assistance, by the qualifying growth business, that exceeds a value of ten thousand dollars ($10,000). | |
213 | + | ||
214 | + | (8) The employee is employed by a growth business in an area where a borrower would be qualified pursuant to Section 4279.108(c)(1) of the Code of Federal Regulations. | |
215 | + | ||
216 | + | (o) Treasurer means the State Treasurer. | |
217 | + | ||
218 | + | 12265. (a) For taxable years beginning on or after January 1, 2021, and before January 1, 2031, there shall be allowed as a credit against the taxes imposed by this part and against the exactions imposed by paragraph (3) of subdivision (f) of Section 28 of Article XIII of the State Constitution, a JUMP Act tax credit in an amount equal to an investor contribution, as defined in Section 12264.(b) If the credit allowed by this section exceeds the taxes described in subdivision (a), the excess may be carried over to reduce those taxes in the following year, and the succeeding four years if necessary, until the credit is exhausted.(c) The credit is nonrefundable and may not be sold, transferred, or allocated to an entity other than an affiliate that was an affiliate of the taxpayer on the date that the taxpayer signed its affidavit included in the growth funds application pursuant to subdivision (a) of Section 12266.(d) A taxpayer claiming a credit under this section shall submit a copy of the tax credit certificate issued pursuant to Section 12267 with the taxpayers return for each taxable year for which the credit is claimed.(e) (1) The aggregate amount of investment authority that may be certified pursuant to Section 12267 shall be five hundred million dollars ($500,000,000) and the aggregate amount of credit that may be allocated and certified pursuant to this section shall be an amount equal to seventy-five million dollars ($75,000,000) in any taxable year and three hundred million dollars ($300,000,000) in total for all taxable years for which the JUMP Act tax credit is authorized.(2) If requests for investment authority and credits exceed the limitations described in paragraph (1), the Treasurer shall proportionally reduce the investment authority and credits certified for each approved application as necessary to avoid exceeding the limit. | |
207 | 219 | ||
208 | 220 | ||
209 | 221 | ||
210 | - | 12265. (a | |
222 | + | 12265. (a) For taxable years beginning on or after January 1, 2021, and before January 1, 2031, there shall be allowed as a credit against the taxes imposed by this part and against the exactions imposed by paragraph (3) of subdivision (f) of Section 28 of Article XIII of the State Constitution, a JUMP Act tax credit in an amount equal to an investor contribution, as defined in Section 12264. | |
211 | 223 | ||
212 | - | ( | |
224 | + | (b) If the credit allowed by this section exceeds the taxes described in subdivision (a), the excess may be carried over to reduce those taxes in the following year, and the succeeding four years if necessary, until the credit is exhausted. | |
213 | 225 | ||
214 | - | ( | |
226 | + | (c) The credit is nonrefundable and may not be sold, transferred, or allocated to an entity other than an affiliate that was an affiliate of the taxpayer on the date that the taxpayer signed its affidavit included in the growth funds application pursuant to subdivision (a) of Section 12266. | |
215 | 227 | ||
216 | - | ( | |
228 | + | (d) A taxpayer claiming a credit under this section shall submit a copy of the tax credit certificate issued pursuant to Section 12267 with the taxpayers return for each taxable year for which the credit is claimed. | |
217 | 229 | ||
218 | - | ( | |
230 | + | (e) (1) The aggregate amount of investment authority that may be certified pursuant to Section 12267 shall be five hundred million dollars ($500,000,000) and the aggregate amount of credit that may be allocated and certified pursuant to this section shall be an amount equal to seventy-five million dollars ($75,000,000) in any taxable year and three hundred million dollars ($300,000,000) in total for all taxable years for which the JUMP Act tax credit is authorized. | |
219 | 231 | ||
220 | - | ( | |
232 | + | (2) If requests for investment authority and credits exceed the limitations described in paragraph (1), the Treasurer shall proportionally reduce the investment authority and credits certified for each approved application as necessary to avoid exceeding the limit. | |
221 | 233 | ||
222 | - | (f) (1) The aggregate amount of investment authority that may be certified shall be three hundred seventy-five million dollars ($375,000,000) and the aggregate amount of credit that may be allocated and certified pursuant to this section shall be three hundred million dollars ($300,000,000) in total for all taxable years for which the California Jumpstart Act tax credit is authorized. | |
223 | - | ||
224 | - | (2) If requests for investment authority and credits exceed the limitations described in paragraph (1), the office of the Treasurer shall proportionally reduce the investment authority and credits certified for each approved application as necessary to avoid exceeding the limit. | |
225 | - | ||
226 | - | 12266. (a) Beginning 30 days after the enactment of this act, and ending on January 1, 2026, the office of the Treasurer shall accept applications for certification of relief funds and relief contributions. The application shall meet all of the following requirements:(1) The total relief investment authority sought by the applicant, which shall not exceed three hundred seventy-five million dollars ($375,000,000).(2) The applicant shall include evidence to prove, to the satisfaction of the office of the Treasurer, that the applicant meets all of the following criteria:(A) The applicant or an affiliate of the applicant is a federally approved or licensed rural business investment company pursuant to Section 2009cc of Title 7 of the United States Code or a small business investment company pursuant to Section 681 of Title 15 of the United States Code. The applicant shall include a certificate executed by an executive officer of the applicant attesting that the approval or license remains in effect and has not been revoked and evidence that at least one principal or similar officer of the entity is, and has been for at least four years, an officer or employee of the applicant or an affiliate of the applicant on the date the application is submitted.(B) As of the date the application is submitted, the applicant and its affiliates have invested more than one hundred million dollars ($100,000,000) in small businesses. As used in this subparagraph, a small business is not required to have principal business operations in California.(3) A signed affidavit from each investor agreeing to make a relief contribution and that states the amount of the investors relief contribution. Eighty percent of the investment authority sought by the applicant shall be comprised of relief contributions.(4) A nonrefundable application fee of ten thousand dollars ($10,000).(5) A detailed inclusive outreach plan intended to increase investment sourcing opportunities under the program in small businesses of interest, including, but not limited to, those owned by minority, women, disabled veterans, lesbian, gay, bisexual, or transgender persons, and other disadvantaged groups.(b) (1) Except as provided in paragraph (2) of this subdivision, the office of the Treasurer shall review and make determinations with respect to applications within 30 days of receipt. Applications received by the office of the Treasurer on the same day shall be deemed to have been received simultaneously.(2) The office of the Treasurer may approve investment authority only in an aggregate amount that is not greater than three hundred seventy-five million dollars ($375,000,000).(3) If the office of the Treasurer denies an application for certification as a relief fund, and approving a subsequently submitted application would result in exceeding the dollar limitation on relief investment authority or relief contributions if the previously denied application is completed, clarified, or cured pursuant to subdivision (e), the office of the Treasurer shall refrain from making a determination on the subsequently submitted application until the previously denied application is reconsidered or the 15-day period for submitting additional information for the previously denied application has passed, whichever comes first.(c) The office of the Treasurer shall deny an application submitted under this section if any of the following apply:(1) The application is incomplete.(2) The application fee is not paid in full.(3) The application does not satisfy all the criteria described in paragraph (2) of subdivision (a).(4) The office of the Treasurer has already approved the maximum total relief investment authority and relief contributions allowed pursuant to subdivision (f) of Section 12265.(5) The applicant fails to submit affidavits equal to 80 percent of the relief investment authority sought.(d) The office of the Treasurer shall not deny a relief fund application or reduce the requested relief investment authority for reasons other than those described in subdivisions (b) and (c).(e) (1) If the office of the Treasurer denies an application, the office of the Treasurer shall notify the applicant of the reasons for denial. If the application was denied for any reason other than the reasons specified in paragraph (3), (4) or (5) of subdivision (c), the applicant may provide additional information to the agency to cure defects in the application, provided the information is submitted within 15 days of receipt of the notice of denial.(2) Upon receipt of additional information, the office of the Treasurer shall reconsider and make a determination on the application within 15 days of receiving the additional information and, if approved, treat the application as approved as of its original filing date. | |
234 | + | 12266. (a) Beginning January 1, 2021, the Treasurer shall accept applications for approval as a growth fund, pursuant to rules and regulations adopted by the Treasurer, which shall meet all of the following requirements:(1) The total investment authority sought by the applicant shall not exceed five hundred million dollars ($500,000,000).(2) The application shall include evidence of all of the following:(A) A certification by an executive officer of the applicant that certifies that the applicant or an affiliate of the applicant is licensed as a rural business investment company under Section 2009cc of Title 7 of the United States Code or as a small business investment company under Section 681 of Title 15 of the United States Code.(B) At least one principal in a rural business investment company or a small business investment company is, and has been for at least four years, an officer or employee of the applicant or an affiliate of the applicant on the date the application is submitted.(C) As of the date the application is submitted, the applicant or affiliates of the applicant have invested at least one hundred million dollars ($100,000,000) in nonpublic companies located in non-metropolitan counties as defined by the Office of Management and Budget within the Office of the President of the United States on the basis of county or county-equivalent units or one hundred million dollars ($100,000,000) in opportunity zones.(3) The application shall include an estimate of the total new full-time employees that will result from the applicants growth investments.(4) The application shall include a signed affidavit from each taxpayer stating the amount of investor contribution the taxpayer will make. At least 60 percent of a growth funds requested investment authority shall consist of investor contributions.(5) The application shall include the growth funds federal employer identification number.(6) The application shall include a one-time application fee of ten thousand dollars ($10,000).(b) (1) The Treasurer shall review an application received pursuant to this section in the order in which it was received and shall either approve or deny the application within 45 days of receipt.(2) Applications that are received on the same day shall be deemed to have been received simultaneously.(c) The Treasurer may approve investment authority only in an aggregate amount that is not greater than five hundred million dollars ($500,000,000).(d) The Treasurer shall deny an application only if any of the following are true:(1) The application is incomplete.(2) The applicant does not meet the requirements of paragraph (2) or (4) of subdivision (a).(3) The Treasurer has already approved the maximum amount of investment authority allowed pursuant to subdivision (c).(e) (1) If the Treasurer denies an application, the applicant, within 15 business days after receiving notice of the denial, may provide additional information to the Treasurer to cure any defects in the application, except for failure to comply with paragraph (4) of subdivision (a).(2) The Treasurer shall review and reconsider applications corrected pursuant to paragraph (1) within thirty days.(3) If the Treasurer subsequently approves the application, the application shall be considered approved as of its original submission date and shall receive the pro rata allocation of investment authority that the applicant would have received if it had been approved on the original date of submission. | |
227 | 235 | ||
228 | 236 | ||
229 | 237 | ||
230 | - | 12266. (a) Beginning | |
238 | + | 12266. (a) Beginning January 1, 2021, the Treasurer shall accept applications for approval as a growth fund, pursuant to rules and regulations adopted by the Treasurer, which shall meet all of the following requirements: | |
231 | 239 | ||
232 | - | (1) The total | |
240 | + | (1) The total investment authority sought by the applicant shall not exceed five hundred million dollars ($500,000,000). | |
233 | 241 | ||
234 | - | (2) The | |
242 | + | (2) The application shall include evidence of all of the following: | |
235 | 243 | ||
236 | - | (A) The applicant or an affiliate of the applicant is a | |
244 | + | (A) A certification by an executive officer of the applicant that certifies that the applicant or an affiliate of the applicant is licensed as a rural business investment company under Section 2009cc of Title 7 of the United States Code or as a small business investment company under Section 681 of Title 15 of the United States Code. | |
237 | 245 | ||
238 | - | (B) | |
246 | + | (B) At least one principal in a rural business investment company or a small business investment company is, and has been for at least four years, an officer or employee of the applicant or an affiliate of the applicant on the date the application is submitted. | |
239 | 247 | ||
240 | - | ( | |
248 | + | (C) As of the date the application is submitted, the applicant or affiliates of the applicant have invested at least one hundred million dollars ($100,000,000) in nonpublic companies located in non-metropolitan counties as defined by the Office of Management and Budget within the Office of the President of the United States on the basis of county or county-equivalent units or one hundred million dollars ($100,000,000) in opportunity zones. | |
241 | 249 | ||
242 | - | ( | |
250 | + | (3) The application shall include an estimate of the total new full-time employees that will result from the applicants growth investments. | |
243 | 251 | ||
244 | - | ( | |
252 | + | (4) The application shall include a signed affidavit from each taxpayer stating the amount of investor contribution the taxpayer will make. At least 60 percent of a growth funds requested investment authority shall consist of investor contributions. | |
245 | 253 | ||
246 | - | ( | |
254 | + | (5) The application shall include the growth funds federal employer identification number. | |
247 | 255 | ||
248 | - | ( | |
256 | + | (6) The application shall include a one-time application fee of ten thousand dollars ($10,000). | |
249 | 257 | ||
250 | - | ( | |
258 | + | (b) (1) The Treasurer shall review an application received pursuant to this section in the order in which it was received and shall either approve or deny the application within 45 days of receipt. | |
251 | 259 | ||
252 | - | (c) The office of the Treasurer shall deny an application submitted under this section if any of the following apply: | |
260 | + | (2) Applications that are received on the same day shall be deemed to have been received simultaneously. | |
261 | + | ||
262 | + | (c) The Treasurer may approve investment authority only in an aggregate amount that is not greater than five hundred million dollars ($500,000,000). | |
263 | + | ||
264 | + | (d) The Treasurer shall deny an application only if any of the following are true: | |
253 | 265 | ||
254 | 266 | (1) The application is incomplete. | |
255 | 267 | ||
256 | - | (2) The | |
268 | + | (2) The applicant does not meet the requirements of paragraph (2) or (4) of subdivision (a). | |
257 | 269 | ||
258 | - | (3) The | |
270 | + | (3) The Treasurer has already approved the maximum amount of investment authority allowed pursuant to subdivision (c). | |
259 | 271 | ||
260 | - | ( | |
272 | + | (e) (1) If the Treasurer denies an application, the applicant, within 15 business days after receiving notice of the denial, may provide additional information to the Treasurer to cure any defects in the application, except for failure to comply with paragraph (4) of subdivision (a). | |
261 | 273 | ||
262 | - | ( | |
274 | + | (2) The Treasurer shall review and reconsider applications corrected pursuant to paragraph (1) within thirty days. | |
263 | 275 | ||
264 | - | ( | |
276 | + | (3) If the Treasurer subsequently approves the application, the application shall be considered approved as of its original submission date and shall receive the pro rata allocation of investment authority that the applicant would have received if it had been approved on the original date of submission. | |
265 | 277 | ||
266 | - | (e) (1) If the office of the Treasurer denies an application, the office of the Treasurer shall notify the applicant of the reasons for denial. If the application was denied for any reason other than the reasons specified in paragraph (3), (4) or (5) of subdivision (c), the applicant may provide additional information to the agency to cure defects in the application, provided the information is submitted within 15 days of receipt of the notice of denial. | |
267 | - | ||
268 | - | (2) Upon receipt of additional information, the office of the Treasurer shall reconsider and make a determination on the application within 15 days of receiving the additional information and, if approved, treat the application as approved as of its original filing date. | |
269 | - | ||
270 | - | 12267. After approving an application submitted pursuant to Section 12266, the Treasurer shall issue a written notice to the applicant certifying all of the following:(a) The applicant is a relief fund.(b) The amount of the applicants investment authority.(c) The relief contributions required from each investor that submitted an affidavit with the relief funds application. | |
278 | + | 12267. (a) After approving an application submitted pursuant to Section 12266, the Treasurer shall certify all of the following:(1) The applicant is a growth fund.(2) The amount of the applicants approved investment authority.(3) The investor contributions required from each investor that submitted an affidavit with the growth funds application.(b) Upon receipt of the documentation required by Section 12268, the Treasurer shall provide a tax credit certificate to each taxpayer that has made an investor contribution in the amount of the investor contribution. | |
271 | 279 | ||
272 | 280 | ||
273 | 281 | ||
274 | - | 12267. After approving an application submitted pursuant to Section 12266, the Treasurer shall | |
282 | + | 12267. (a) After approving an application submitted pursuant to Section 12266, the Treasurer shall certify all of the following: | |
275 | 283 | ||
276 | - | ( | |
284 | + | (1) The applicant is a growth fund. | |
277 | 285 | ||
278 | - | ( | |
286 | + | (2) The amount of the applicants approved investment authority. | |
279 | 287 | ||
280 | - | ( | |
288 | + | (3) The investor contributions required from each investor that submitted an affidavit with the growth funds application. | |
281 | 289 | ||
282 | - | 12268. (a) (1) Within 60 days after receiving the certification issued pursuant to Section 12267, a relief fund shall do both of the following:(A) Collect relief contributions equal to the amount certified in Section 12267 from each investor whose affidavit was included in the application.(B) Collect additional investments of cash that, when added to the investor contributions, equal the relief funds investment authority.(2) At least 5 percent of the relief funds investment authority shall consist of direct or indirect equity investments from affiliates of the relief fund, including employees, officers, and directors of the affiliates.(b) Within 65 days after receiving certification pursuant to Section 12267, the relief fund shall send to the Treasurer documentation to prove that the amounts required by subdivision (a) have been collected.(c) If the relief fund fails to comply with subdivision (a) or (b), the Treasurer shall revoke the relief funds certification and provide written notice to the relief fund of the revocation. | |
290 | + | (b) Upon receipt of the documentation required by Section 12268, the Treasurer shall provide a tax credit certificate to each taxpayer that has made an investor contribution in the amount of the investor contribution. | |
291 | + | ||
292 | + | 12268. (a) (1) Within 60 days of receiving the certification described in subdivision (a) of Section 12267, a growth fund shall collect all investor contributions and collect additional investments of cash that, when added to the investor contributions, equal the growth funds investment authority.(2) At least 10 percent of the growth funds investment authority shall consist of equity investments contributed directly or indirectly by affiliates of the growth fund.(3) Within 65 days after receiving the certification described in subdivision (a) of Section 12267, a growth fund shall send to the Treasurer the date on which the investment authority was collected and documentation that it has collected the amounts required by subdivision (a).(b) If the growth fund fails to fully comply with paragraphs (1) and (2) of subdivision (a), the Treasurer shall revoke the growth funds certification. | |
283 | 293 | ||
284 | 294 | ||
285 | 295 | ||
286 | - | 12268. (a) (1) Within 60 days | |
296 | + | 12268. (a) (1) Within 60 days of receiving the certification described in subdivision (a) of Section 12267, a growth fund shall collect all investor contributions and collect additional investments of cash that, when added to the investor contributions, equal the growth funds investment authority. | |
287 | 297 | ||
288 | - | ( | |
298 | + | (2) At least 10 percent of the growth funds investment authority shall consist of equity investments contributed directly or indirectly by affiliates of the growth fund. | |
289 | 299 | ||
290 | - | ( | |
300 | + | (3) Within 65 days after receiving the certification described in subdivision (a) of Section 12267, a growth fund shall send to the Treasurer the date on which the investment authority was collected and documentation that it has collected the amounts required by subdivision (a). | |
291 | 301 | ||
292 | - | (2) | |
302 | + | (b) If the growth fund fails to fully comply with paragraphs (1) and (2) of subdivision (a), the Treasurer shall revoke the growth funds certification. | |
293 | 303 | ||
294 | - | (b) Within 65 days after receiving certification pursuant to Section 12267, the relief fund shall send to the Treasurer documentation to prove that the amounts required by subdivision (a) have been collected. | |
295 | - | ||
296 | - | (c) If the relief fund fails to comply with subdivision (a) or (b), the Treasurer shall revoke the relief funds certification and provide written notice to the relief fund of the revocation. | |
297 | - | ||
298 | - | 12269. (a) (1) Upon receipt of the documentation required by subdivision (b) of Section 12268, the office of the Treasurer shall issue, to each investor or affiliate identified in subdivision (b) of Section 12268, a notice of the amount and utilization schedule of the tax credits allocated to that investor or affiliate as a result of its relief contribution.(2) The office of the Treasurer shall issue, to each investor or affiliate identified in subdivision (b) of Section 12268, the first tax credit certificate for one-fourth of the relief contributions made by the investor or affiliate on or before the second anniversary of the closing date. Thereafter, the office of the Treasurer shall issue a tax credit certificate for one-fourth of the relief contributions allocated to the investor or affiliate on or before each of the following three anniversaries of the closing date.(b) The Treasurer shall not be required to issue a tax credit certificate if the relief fund does not invest 70 percent of its investment authority in relief investments within one year of the closing date and 100 percent of its relief investment authority in relief investments within two years of the closing date. | |
304 | + | 12269. (a) A qualified growth fund shall be charged an annual fee, payable to the Treasurer, of 0.02 percent of the investment authority authorized.(b) (1) The initial annual fee is due and payable to the Treasurer within 65 days after receiving the certification issued pursuant to Section 12267.(2) After payment of the initial annual fee, the annual fee shall be due and payable to the Treasurer before March 1.(c) An annual fee shall not be required once a growth fund has exited the program pursuant to Section 12271. | |
299 | 305 | ||
300 | 306 | ||
301 | 307 | ||
302 | - | 12269. (a) | |
308 | + | 12269. (a) A qualified growth fund shall be charged an annual fee, payable to the Treasurer, of 0.02 percent of the investment authority authorized. | |
303 | 309 | ||
304 | - | ( | |
310 | + | (b) (1) The initial annual fee is due and payable to the Treasurer within 65 days after receiving the certification issued pursuant to Section 12267. | |
305 | 311 | ||
306 | - | ( | |
312 | + | (2) After payment of the initial annual fee, the annual fee shall be due and payable to the Treasurer before March 1. | |
307 | 313 | ||
308 | - | 12269.5. (a) An annual fee of one hundred fifty thousand dollars ($150,000), to be prorated amongst all relief funds that have not exited pursuant to Section 12271, shall be payable to the office of the Treasurer.(b) The initial annual fee is due and payable to the office of the Treasurer within 65 days after receiving the certification issued pursuant to Section 12267.(c) After payment of the initial annual fee, the annual fee shall be due and payable to the office of the Treasurer before March 1.(d) Application and annual fees paid to the office of the Treasurer shall be deposited in the Treasury Relief Investment Fund established under Section 12276. | |
314 | + | (c) An annual fee shall not be required once a growth fund has exited the program pursuant to Section 12271. | |
315 | + | ||
316 | + | 12270. (a) The Treasurer shall recapture, based on information in the growth funds annual report or its failure to make the certification set forth in paragraph (7) of subdivision (a) of Section 12272, any tax credit allowed pursuant to this article and revoke the tax credit certificates issued pursuant to Section 12267 if any of the following occur with respect to a growth fund before the growth fund exits the program in accordance with Section 12271:(1) The growth fund does not invest 60 percent of its investment authority in growth investments in this state within two years and 100 percent of its investment authority in growth investments in this state within three years of the closing date.(2) The growth fund, after initially satisfying paragraph (1), fails to maintain growth investments equal to 100 percent of its investment authority until the seventh anniversary of the closing date.(3) The growth fund makes a distribution or payment that results in the growth fund having less than 100 percent of its investment authority invested in growth investments in this state or available for investment in growth investments and held in cash, bank deposits, and marketable securities.(4) The growth fund fails to make growth investments in growth businesses with principal business operations in an area qualified under Section 4279.108(c)(1) of Title 7 of the Code of Federal Regulations that when added together equal at least 6 percent of the growth funds capital investment authority.(5) The growth fund invests in a growth business that directly or through an affiliate does any of the following:(A) Owns an investment in the growth fund.(B) Has the right to acquire an ownership interest in the growth fund.(C) Makes a loan to the growth fund.(D) (i) Makes an investment in the growth fund, an affiliate of the growth fund, or an investor in the growth fund.(ii) For purposes of this paragraph, a growth fund is not considered an affiliate of a growth business solely because of its growth investment.(b) For purposes of paragraphs (1) and (2) of subdivision (a), both of the following apply:(1) An investment is deemed to be maintained even if it is sold or repaid, so long as the growth fund reinvests an amount equal to the capital returned or recovered from the original investment, exclusive of any profits realized, in other growth investments in this state within 12 months of the receipt of that capital.(2) Amounts received periodically by a growth fund shall be treated as continuously invested in growth investments if the amounts are reinvested in one or more growth investments by the end of the calendar year following receipt of those amounts.(c) Paragraph (5) of subdivision (a) shall not apply to investments in publicly traded securities made by a growth business or an owner or affiliate of the growth business.(d) (1) Before making a growth investment, a growth fund may request a written determination from the Treasurer as to whether the business in which it proposes to invest satisfies the definition of a growth business to which the Treasurer shall respond no more than 15 business days from the date of receipt thereof.(2) If the Treasurer fails to issue a determination letter pursuant to paragraph (1), the business in which the growth fund proposes to invest shall be considered a growth business.(e) The maximum amount of growth investments in a particular growth business, including amounts invested in affiliates of the growth business, that a growth fund may count in satisfying the requirements of paragraphs (1) and (2) of subdivision (a) is the greater of five million dollars ($5,000,000) or 10 percent of its investment authority, exclusive of repaid or redeemed growth investments.(f) (1) Before revoking a tax credit certificate or recapturing credits pursuant to this section, the Treasurer shall notify the growth fund of the reasons for the pending revocation or recapture.(2) The growth fund shall have 90 days from the date the notice was received to correct a violation outlined in the notice to the satisfaction of the Treasurer and avoid recapture of tax credits and revocation of the tax credit certificate.(g) The Treasurer shall not revoke a tax credit certificate or recapture credits after a growth fund exits from the program in accordance with Section 12271. | |
309 | 317 | ||
310 | 318 | ||
311 | 319 | ||
312 | - | ||
320 | + | 12270. (a) The Treasurer shall recapture, based on information in the growth funds annual report or its failure to make the certification set forth in paragraph (7) of subdivision (a) of Section 12272, any tax credit allowed pursuant to this article and revoke the tax credit certificates issued pursuant to Section 12267 if any of the following occur with respect to a growth fund before the growth fund exits the program in accordance with Section 12271: | |
313 | 321 | ||
314 | - | ( | |
322 | + | (1) The growth fund does not invest 60 percent of its investment authority in growth investments in this state within two years and 100 percent of its investment authority in growth investments in this state within three years of the closing date. | |
315 | 323 | ||
316 | - | ( | |
324 | + | (2) The growth fund, after initially satisfying paragraph (1), fails to maintain growth investments equal to 100 percent of its investment authority until the seventh anniversary of the closing date. | |
317 | 325 | ||
318 | - | ( | |
326 | + | (3) The growth fund makes a distribution or payment that results in the growth fund having less than 100 percent of its investment authority invested in growth investments in this state or available for investment in growth investments and held in cash, bank deposits, and marketable securities. | |
319 | 327 | ||
320 | - | 12270. (a) (1) The office of the Treasurer may recapture tax credits claimed pursuant to Section 12264 and revoke the tax credit certificates issued if any of the following occur with respect to the relief fund:(A) Prior to investing 100 percent of its relief investment authority in relief investments, the relief fund makes a distribution or payment in excess of the cumulative investment earnings of the fund as of the date of payment or distribution, taking into account all past payments and distributions.(B) After investing 100 percent of its relief investment authority in relief investments, the fund fails to maintain that level of investment until the fifth anniversary of the closing date. For the purposes of this paragraph, an investment is maintained even if the investment is sold or repaid as long as the fund reinvests an amount equal to the capital returned or recovered by the fund from the original investment, exclusive of any profits realized, in other relief investments in this state within one year of the receipt of such capital. Regularly scheduled principal payments on a loan that is a relief investment shall be deemed continuously invested in a relief investment if the amounts are reinvested in one or more relief investments by the end of the following calendar year.(C) After investing 100 percent of its relief investment authority in relief investments and before the fund decertifies under Section 12271, the fund makes a distribution or payment that results in the fund having less than 100 percent of its relief investment authority invested in relief investments or in cash or marketable securities available for investment in relief investments.(D) (i) The relief fund makes a relief investment in a small business that directly or indirectly through an affiliate owns, has the right to acquire an ownership interest, makes a loan to, or makes an investment in the relief fund, an affiliate of the fund, or an investor in the relief fund, excluding investments in publicly traded securities by a small business or an owner or affiliate of a small business.(ii) Before recapturing tax credits or revoking a tax credit certificate pursuant to this section, the office of the Treasurer shall notify the relief fund of the reasons for the pending recapture or revocation. If the fund corrects the violations outlined in the notice to the satisfaction of the office of the Treasurer within 90 days of the date the notice was dispatched, the office of the Treasurer shall not recapture the tax credits or revoke the tax credit certificate, as applicable.(2) (A) The Treasurer shall not recapture a tax credit or revoke a tax credit certificate due to any actions of a fund that occur after decertification pursuant to Section 12271.(B) Notwithstanding subparagraph (A), the Treasurer may recapture a relief funds tax credits or revoke a tax credit certificate related to actions of the relief fund that occurred prior to decertification, even if the actions are discovered after decertification.(b) The amount by which one or more relief investments by a relief fund in the same small business exceeds seven million five hundred thousand dollars ($7,500,000) shall not be considered as a relief investment for purposes of this section, exclusive of capital repaid or redeemed by the small business and reinvested as a relief investment in the small business. A relief investment in an affiliate of a small business shall be treated as a relief investment in that small business for purposes of this subdivision. | |
328 | + | (4) The growth fund fails to make growth investments in growth businesses with principal business operations in an area qualified under Section 4279.108(c)(1) of Title 7 of the Code of Federal Regulations that when added together equal at least 6 percent of the growth funds capital investment authority. | |
329 | + | ||
330 | + | (5) The growth fund invests in a growth business that directly or through an affiliate does any of the following: | |
331 | + | ||
332 | + | (A) Owns an investment in the growth fund. | |
333 | + | ||
334 | + | (B) Has the right to acquire an ownership interest in the growth fund. | |
335 | + | ||
336 | + | (C) Makes a loan to the growth fund. | |
337 | + | ||
338 | + | (D) (i) Makes an investment in the growth fund, an affiliate of the growth fund, or an investor in the growth fund. | |
339 | + | ||
340 | + | (ii) For purposes of this paragraph, a growth fund is not considered an affiliate of a growth business solely because of its growth investment. | |
341 | + | ||
342 | + | (b) For purposes of paragraphs (1) and (2) of subdivision (a), both of the following apply: | |
343 | + | ||
344 | + | (1) An investment is deemed to be maintained even if it is sold or repaid, so long as the growth fund reinvests an amount equal to the capital returned or recovered from the original investment, exclusive of any profits realized, in other growth investments in this state within 12 months of the receipt of that capital. | |
345 | + | ||
346 | + | (2) Amounts received periodically by a growth fund shall be treated as continuously invested in growth investments if the amounts are reinvested in one or more growth investments by the end of the calendar year following receipt of those amounts. | |
347 | + | ||
348 | + | (c) Paragraph (5) of subdivision (a) shall not apply to investments in publicly traded securities made by a growth business or an owner or affiliate of the growth business. | |
349 | + | ||
350 | + | (d) (1) Before making a growth investment, a growth fund may request a written determination from the Treasurer as to whether the business in which it proposes to invest satisfies the definition of a growth business to which the Treasurer shall respond no more than 15 business days from the date of receipt thereof. | |
351 | + | ||
352 | + | (2) If the Treasurer fails to issue a determination letter pursuant to paragraph (1), the business in which the growth fund proposes to invest shall be considered a growth business. | |
353 | + | ||
354 | + | (e) The maximum amount of growth investments in a particular growth business, including amounts invested in affiliates of the growth business, that a growth fund may count in satisfying the requirements of paragraphs (1) and (2) of subdivision (a) is the greater of five million dollars ($5,000,000) or 10 percent of its investment authority, exclusive of repaid or redeemed growth investments. | |
355 | + | ||
356 | + | (f) (1) Before revoking a tax credit certificate or recapturing credits pursuant to this section, the Treasurer shall notify the growth fund of the reasons for the pending revocation or recapture. | |
357 | + | ||
358 | + | (2) The growth fund shall have 90 days from the date the notice was received to correct a violation outlined in the notice to the satisfaction of the Treasurer and avoid recapture of tax credits and revocation of the tax credit certificate. | |
359 | + | ||
360 | + | (g) The Treasurer shall not revoke a tax credit certificate or recapture credits after a growth fund exits from the program in accordance with Section 12271. | |
361 | + | ||
362 | + | 12271. (a) (1) A growth fund may, but only on or after the seventh anniversary of the closing date, apply to the Treasurer to exit the program, and upon exiting, shall no longer be subject to the provisions of this article, except as provided in subdivision (c).(2) The Treasurer shall approve or deny an application made pursuant to subdivision (a) within 30 days of receipt.(3) The Treasurer shall approve an application made pursuant to this section if, with respect to the applicant, no tax credit certificates have been revoked and the growth fund has not received a notice of revocation or recapture that has not been cured.(4) The Treasurer shall not unreasonably deny an application submitted pursuant to this section.(5) If the Treasurer denies an application, the notice of denial shall include the reasons for the determination.(b) After its exit from the program, a growth fund may not make distributions to its equity holders or pay any fees in excess of its investment authority until it has paid any state clawback amount due.(c) Each growth fund shall continue to report annually to the Treasurer both of the following:(1) The number of new full-time employees at each growth business, and that number shall continue to reduce the state clawback amount.(2) Employment offset until its state clawback amount equals zero or it has distributed all of its assets. | |
321 | 363 | ||
322 | 364 | ||
323 | 365 | ||
324 | - | ||
366 | + | 12271. (a) (1) A growth fund may, but only on or after the seventh anniversary of the closing date, apply to the Treasurer to exit the program, and upon exiting, shall no longer be subject to the provisions of this article, except as provided in subdivision (c). | |
325 | 367 | ||
326 | - | (A) | |
368 | + | (2) The Treasurer shall approve or deny an application made pursuant to subdivision (a) within 30 days of receipt. | |
327 | 369 | ||
328 | - | ( | |
370 | + | (3) The Treasurer shall approve an application made pursuant to this section if, with respect to the applicant, no tax credit certificates have been revoked and the growth fund has not received a notice of revocation or recapture that has not been cured. | |
329 | 371 | ||
330 | - | ( | |
372 | + | (4) The Treasurer shall not unreasonably deny an application submitted pursuant to this section. | |
331 | 373 | ||
332 | - | ( | |
374 | + | (5) If the Treasurer denies an application, the notice of denial shall include the reasons for the determination. | |
333 | 375 | ||
334 | - | ( | |
376 | + | (b) After its exit from the program, a growth fund may not make distributions to its equity holders or pay any fees in excess of its investment authority until it has paid any state clawback amount due. | |
335 | 377 | ||
336 | - | ( | |
378 | + | (c) Each growth fund shall continue to report annually to the Treasurer both of the following: | |
337 | 379 | ||
338 | - | ( | |
380 | + | (1) The number of new full-time employees at each growth business, and that number shall continue to reduce the state clawback amount. | |
339 | 381 | ||
340 | - | ( | |
382 | + | (2) Employment offset until its state clawback amount equals zero or it has distributed all of its assets. | |
341 | 383 | ||
342 | - | ||
384 | + | 12272. (a) Each growth fund shall submit an annual report to the Treasurer on or before the fifth business day after each anniversary of the closing date before its exit from the program pursuant to Section 12271. The report shall identify each growth investment made by the growth fund and shall include all of the following:(1) A bank statement evidencing each growth investment if not previously reported.(2) The name, location, and industry of each growth business receiving a growth investment, including either the determination letter set forth in Section 12270 or evidence that the business qualified as a growth business at the time the investment was made, if not previously reported.(3) For each growth business receiving a growth investment, evidence for the Treasurer to verify the number of full-time employees at each growth business on the date of the growth funds initial growth investment.(4) The number of new full-time employees at each growth business, the average salary of those employees, and evidence sufficient for the Treasurer to verify whether a new full-time employee is a targeted employee.(5) A calculation of the growth funds employment offset for that year.(6) The cumulative amount of growth investments made in each growth business.(7) A certification under penalty of perjury that the growth fund has not violated any of the grounds for revocation and recapture of credits set forth in subdivision (a) of Section 12270.(8) Any other information required by the Treasurer for purposes of carrying out the Treasurers duties under this article.(b) The growth fund is not required to provide information with respect to growth investments that have been redeemed or repaid as part of the annual report required by this section but shall provide that information if available. | |
343 | 385 | ||
344 | 386 | ||
345 | 387 | ||
346 | - | ||
388 | + | 12272. (a) Each growth fund shall submit an annual report to the Treasurer on or before the fifth business day after each anniversary of the closing date before its exit from the program pursuant to Section 12271. The report shall identify each growth investment made by the growth fund and shall include all of the following: | |
347 | 389 | ||
348 | - | ||
390 | + | (1) A bank statement evidencing each growth investment if not previously reported. | |
349 | 391 | ||
350 | - | ( | |
392 | + | (2) The name, location, and industry of each growth business receiving a growth investment, including either the determination letter set forth in Section 12270 or evidence that the business qualified as a growth business at the time the investment was made, if not previously reported. | |
351 | 393 | ||
352 | - | ( | |
394 | + | (3) For each growth business receiving a growth investment, evidence for the Treasurer to verify the number of full-time employees at each growth business on the date of the growth funds initial growth investment. | |
353 | 395 | ||
354 | - | 12272. (a) A relief fund may request a written opinion from the office of the Treasurer as to whether the business qualifies as a small business.(b) The relief fund shall include evidence that the business satisfies the definition of a small business and a certification by an executive officer of the business attesting that the business satisfies such definition.(c) The office of the Treasurer shall issue a written opinion to the fund within 10 business days of receiving the request. If the office of the Treasurer determines that the business qualifies as a small business or if the office of the Treasurer fails to timely issue the written opinion, the business shall be considered a small business for purposes of this article. | |
396 | + | (4) The number of new full-time employees at each growth business, the average salary of those employees, and evidence sufficient for the Treasurer to verify whether a new full-time employee is a targeted employee. | |
397 | + | ||
398 | + | (5) A calculation of the growth funds employment offset for that year. | |
399 | + | ||
400 | + | (6) The cumulative amount of growth investments made in each growth business. | |
401 | + | ||
402 | + | (7) A certification under penalty of perjury that the growth fund has not violated any of the grounds for revocation and recapture of credits set forth in subdivision (a) of Section 12270. | |
403 | + | ||
404 | + | (8) Any other information required by the Treasurer for purposes of carrying out the Treasurers duties under this article. | |
405 | + | ||
406 | + | (b) The growth fund is not required to provide information with respect to growth investments that have been redeemed or repaid as part of the annual report required by this section but shall provide that information if available. | |
407 | + | ||
408 | + | 12273. (a) If the Treasurer revokes a growth funds certification pursuant to subdivision (b) of Section 12268 or a tax credit certificate pursuant to Section 12270, the associated investment authority and investor contributions will not count toward the limit on total investment authority and investor contributions set forth in subdivision (c) of Section 12266.(b) (1) The Treasurer shall first award reverted investment authority pro rata to each growth fund that was awarded less than the requested investment authority for which it applied, and that growth fund may allocate the associated investor contribution authority to any taxpayer with state premium tax liability in its discretion.(2) The Treasurer may award any remaining investment authority to new applicants. | |
355 | 409 | ||
356 | 410 | ||
357 | 411 | ||
358 | - | ||
412 | + | 12273. (a) If the Treasurer revokes a growth funds certification pursuant to subdivision (b) of Section 12268 or a tax credit certificate pursuant to Section 12270, the associated investment authority and investor contributions will not count toward the limit on total investment authority and investor contributions set forth in subdivision (c) of Section 12266. | |
359 | 413 | ||
360 | - | (b) The | |
414 | + | (b) (1) The Treasurer shall first award reverted investment authority pro rata to each growth fund that was awarded less than the requested investment authority for which it applied, and that growth fund may allocate the associated investor contribution authority to any taxpayer with state premium tax liability in its discretion. | |
361 | 415 | ||
362 | - | ( | |
416 | + | (2) The Treasurer may award any remaining investment authority to new applicants. | |
363 | 417 | ||
364 | - | ||
418 | + | 12274. (a) The Treasurer may adopt rules and regulations for the purpose of implementing the provisions of this article.(b) The Treasurer shall adopt forms and notices necessary to implement this article.(c) The Treasurer shall notify the Department of Insurance of the name of any insurance company allocated tax credits under this act and the amount of those credits. | |
365 | 419 | ||
366 | 420 | ||
367 | 421 | ||
368 | - | ||
422 | + | 12274. (a) The Treasurer may adopt rules and regulations for the purpose of implementing the provisions of this article. | |
369 | 423 | ||
370 | - | (b) | |
424 | + | (b) The Treasurer shall adopt forms and notices necessary to implement this article. | |
371 | 425 | ||
372 | - | ( | |
426 | + | (c) The Treasurer shall notify the Department of Insurance of the name of any insurance company allocated tax credits under this act and the amount of those credits. | |
373 | 427 | ||
374 | - | ||
428 | + | SEC. 3. For purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Article 6 (commencing with Section 12264) of Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code as added by this act, the Legislature finds as follows:(a) The California Jobs and Upward Mobility Progression (JUMP) Act concerns communities underserved by traditional small business lending and flexible growth capital. Despite having the worlds fifth largest economy, California has the second fastest growing income inequality of all 50 states and the largest wage gap between middle-income and high-wage earners, often forcing workers in underserved areas to commute long distances to find suitable employment or affordable housing. This tax credit addresses these issues by incentivizing federally licensed Small Business Administration (SBA) and United States Department of Agriculture (USDA) investors to raise funds exclusively for investment in California small businesses located in distressed areas throughout the state, including all 879 designated opportunity zones. This tax credit will enable small businesses to grow and create quality well-paying jobs, thereby accelerating wage mobility and improving quality of life for California residents.(b) To measure whether the credit achieves its intended purpose, the Treasurer shall, on July 1, 2022, and annually thereafter in each year the program is in effect, submit a report, in compliance with Section 9795 of the Government Code, to the Legislature containing all of the following:(1) Bank statements evidencing each funds growth investments.(2) The name, location, and industry of each growth business receiving a growth investment.(3) A verifiable number of full-time employees at each growth business receiving a growth investment on the date of the growth funds initial growth investment.(4) A verifiable average salary of new full-time employees at each growth business that demonstrates a new full-time employee is a targeted employee in accordance with the program.(5) A calculation of the growth funds employment offset for that year.(6) The cumulative amount of growth investments made in each growth business as a result of this credit.(c) The Treasurer shall submit the report required by this section to the Senate Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Senate and Assembly Committees on Appropriations, the Senate Committee on Governance and Finance, and the Assembly Committee on Revenue and Taxation. | |
375 | 429 | ||
430 | + | SEC. 3. For purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Article 6 (commencing with Section 12264) of Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code as added by this act, the Legislature finds as follows:(a) The California Jobs and Upward Mobility Progression (JUMP) Act concerns communities underserved by traditional small business lending and flexible growth capital. Despite having the worlds fifth largest economy, California has the second fastest growing income inequality of all 50 states and the largest wage gap between middle-income and high-wage earners, often forcing workers in underserved areas to commute long distances to find suitable employment or affordable housing. This tax credit addresses these issues by incentivizing federally licensed Small Business Administration (SBA) and United States Department of Agriculture (USDA) investors to raise funds exclusively for investment in California small businesses located in distressed areas throughout the state, including all 879 designated opportunity zones. This tax credit will enable small businesses to grow and create quality well-paying jobs, thereby accelerating wage mobility and improving quality of life for California residents.(b) To measure whether the credit achieves its intended purpose, the Treasurer shall, on July 1, 2022, and annually thereafter in each year the program is in effect, submit a report, in compliance with Section 9795 of the Government Code, to the Legislature containing all of the following:(1) Bank statements evidencing each funds growth investments.(2) The name, location, and industry of each growth business receiving a growth investment.(3) A verifiable number of full-time employees at each growth business receiving a growth investment on the date of the growth funds initial growth investment.(4) A verifiable average salary of new full-time employees at each growth business that demonstrates a new full-time employee is a targeted employee in accordance with the program.(5) A calculation of the growth funds employment offset for that year.(6) The cumulative amount of growth investments made in each growth business as a result of this credit.(c) The Treasurer shall submit the report required by this section to the Senate Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Senate and Assembly Committees on Appropriations, the Senate Committee on Governance and Finance, and the Assembly Committee on Revenue and Taxation. | |
376 | 431 | ||
377 | - | ||
378 | - | 12274. (a) Each relief fund shall submit a report to the office of the Treasurer on or before the first day of each April following the end of the calendar year that includes the closing date until the calendar year after the relief fund has been decertified. The report shall provide an itemization of the relief funds relief investments and shall include the following documents and information: | |
379 | - | ||
380 | - | (1) A bank statement evidencing each relief funds relief investments. | |
381 | - | ||
382 | - | (2) The name, location, and industry class of each business that received a relief investment from the fund, evidence that the business qualified as a small business at the time the investment was made if the relief fund did not obtain a written opinion from the office of the Treasurer pursuant to Section 12272, and a certification executed by an executive officer of each business attesting that the business was a small business at the time of the initial relief investment in the business. | |
383 | - | ||
384 | - | (3) For each small business receiving a relief investment, evidence for the Treasurer to verify the number of full-time employees at each small business at the time the investment was made, if not previously reported. | |
385 | - | ||
386 | - | (4) A verifiable number of jobs created and retained as a result of each relief investment. | |
387 | - | ||
388 | - | (5) The cumulative amount of relief investments made in each small business as a result of this credit. | |
389 | - | ||
390 | - | (6) The number of relief investments made in small businesses of interest, disaggregated by classifications, including, but not limited to, those owned by women, minority, disabled veterans, lesbian, gay, bisexual, or transgender persons, and other disadvantaged groups. | |
391 | - | ||
392 | - | (7) A certification under penalty of perjury that the relief fund has not violated any of the grounds for revocation and recapture of credits set forth in subdivision (b) of Section 12267. | |
393 | - | ||
394 | - | (8) Any other information required by the office of the Treasurer. | |
395 | - | ||
396 | - | (b) Each fund shall submit a report to the office of the Treasurer on or before the fifth business day after the first and second anniversaries of the closing date that provides documentation to prove that the fund has met the investment thresholds described in subdivision (a) of Section 12267 and has not implicated any of the other recapture provisions described in subdivision (b) of Section 12267. | |
397 | - | ||
398 | - | 12275. The office of the Treasurer shall undertake outreach activities to encourage investment in underrepresented groups, including, but not limited to, by partnering with organizations representing persons and business enterprises from underrepresented groups, in a manner that will inform and educate members of these organizations on investment opportunities through the program provided in this article. Underrepresented groups include, but are not limited to, minority, women, disabled veterans, lesbian, gay, bisexual, or transgender persons, and other disadvantaged groups. | |
399 | - | ||
400 | - | ||
401 | - | ||
402 | - | 12275. The office of the Treasurer shall undertake outreach activities to encourage investment in underrepresented groups, including, but not limited to, by partnering with organizations representing persons and business enterprises from underrepresented groups, in a manner that will inform and educate members of these organizations on investment opportunities through the program provided in this article. Underrepresented groups include, but are not limited to, minority, women, disabled veterans, lesbian, gay, bisexual, or transgender persons, and other disadvantaged groups. | |
403 | - | ||
404 | - | 12276. There is hereby established in the State Treasury a special fund to be known as the Treasury Relief Investment Fund. All moneys appropriated to the office of the Treasurer for purposes of this article shall be deposited or paid into this fund and shall solely be used to carry out the office of the Treasurers duties specified in this article and those rules and regulations promulgated to implement this article. | |
405 | - | ||
406 | - | ||
407 | - | ||
408 | - | 12276. There is hereby established in the State Treasury a special fund to be known as the Treasury Relief Investment Fund. All moneys appropriated to the office of the Treasurer for purposes of this article shall be deposited or paid into this fund and shall solely be used to carry out the office of the Treasurers duties specified in this article and those rules and regulations promulgated to implement this article. | |
409 | - | ||
410 | - | 12277. (a) The office of the Treasurer may adopt rules and regulations for purposes of implementing the provisions of this article.(b) The office of the Treasurer shall adopt forms and notices necessary to implement this article.(c) The office of the Treasurer shall notify the Department of Insurance of the name of any insurance company allocated tax credits under this article and the amount of those credits. | |
411 | - | ||
412 | - | ||
413 | - | ||
414 | - | 12277. (a) The office of the Treasurer may adopt rules and regulations for purposes of implementing the provisions of this article. | |
415 | - | ||
416 | - | (b) The office of the Treasurer shall adopt forms and notices necessary to implement this article. | |
417 | - | ||
418 | - | (c) The office of the Treasurer shall notify the Department of Insurance of the name of any insurance company allocated tax credits under this article and the amount of those credits. | |
419 | - | ||
420 | - | SEC. 3. For purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Article 6 (commencing with Section 12264) of Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code as added by this act, hereafter the credit, the Legislature finds as follows:(a) The purpose of the credit, also known as the California Jumpstart Act, is to address the growing economic hardships California small businesses, workers, and vulnerable communities are grappling with and provide a long-term recovery solution. The purpose of the credit is also to incentivize and mobilize rapid and scalable private sector investment that encourages economic growth beyond the initial relief provided under the federal small business stimulus programs, enabling small business growth, job creation, and relief for families in communities where such economic assistance is needed the most.(b) To measure whether the credit achieves its intended purpose, the office of the Treasurer shall, by December 1 of each year this article is in effect, submit a report, in compliance with Section 9795 of the Government Code, to the Legislature containing all of the following:(1) The name, location, and industry class of each business that received a relief investment from the relief fund and evidence that the business qualified as a small business at the time the investment was made, if applicable.(2) A verifiable number of jobs created and retained as a result of each relief investment.(3) The cumulative amount of relief investments made in each small business as a result of this credit.(4) The number of relief investments made in small businesses of interest, disaggregated by classifications, including, but not limited to, those owned by minority, women, disabled veterans, lesbian, gay, bisexual, or transgender persons, and other disadvantaged groups.(c) The office of the Treasurer shall submit the report required by this section to the Senate Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Senate and Assembly Committees on Appropriations, the Senate Committee on Governance and Finance, the Assembly Committee on Revenue and Taxation, the California Legislative Black Caucus, the California Latino Legislative Caucus, the California Asian Pacific Islander Legislative Caucus, the California Legislative Womens Caucus, and the California Legislative LGBTQ Caucus. | |
421 | - | ||
422 | - | SEC. 3. For purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Article 6 (commencing with Section 12264) of Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code as added by this act, hereafter the credit, the Legislature finds as follows:(a) The purpose of the credit, also known as the California Jumpstart Act, is to address the growing economic hardships California small businesses, workers, and vulnerable communities are grappling with and provide a long-term recovery solution. The purpose of the credit is also to incentivize and mobilize rapid and scalable private sector investment that encourages economic growth beyond the initial relief provided under the federal small business stimulus programs, enabling small business growth, job creation, and relief for families in communities where such economic assistance is needed the most.(b) To measure whether the credit achieves its intended purpose, the office of the Treasurer shall, by December 1 of each year this article is in effect, submit a report, in compliance with Section 9795 of the Government Code, to the Legislature containing all of the following:(1) The name, location, and industry class of each business that received a relief investment from the relief fund and evidence that the business qualified as a small business at the time the investment was made, if applicable.(2) A verifiable number of jobs created and retained as a result of each relief investment.(3) The cumulative amount of relief investments made in each small business as a result of this credit.(4) The number of relief investments made in small businesses of interest, disaggregated by classifications, including, but not limited to, those owned by minority, women, disabled veterans, lesbian, gay, bisexual, or transgender persons, and other disadvantaged groups.(c) The office of the Treasurer shall submit the report required by this section to the Senate Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Senate and Assembly Committees on Appropriations, the Senate Committee on Governance and Finance, the Assembly Committee on Revenue and Taxation, the California Legislative Black Caucus, the California Latino Legislative Caucus, the California Asian Pacific Islander Legislative Caucus, the California Legislative Womens Caucus, and the California Legislative LGBTQ Caucus. | |
423 | - | ||
424 | - | SEC. 3. For purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Article 6 (commencing with Section 12264) of Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code as added by this act, hereafter the credit, the Legislature finds as follows: | |
432 | + | SEC. 3. For purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Article 6 (commencing with Section 12264) of Chapter 3 of Part 7 of Division 2 of the Revenue and Taxation Code as added by this act, the Legislature finds as follows: | |
425 | 433 | ||
426 | 434 | ### SEC. 3. | |
427 | 435 | ||
428 | - | (a) The | |
436 | + | (a) The California Jobs and Upward Mobility Progression (JUMP) Act concerns communities underserved by traditional small business lending and flexible growth capital. Despite having the worlds fifth largest economy, California has the second fastest growing income inequality of all 50 states and the largest wage gap between middle-income and high-wage earners, often forcing workers in underserved areas to commute long distances to find suitable employment or affordable housing. This tax credit addresses these issues by incentivizing federally licensed Small Business Administration (SBA) and United States Department of Agriculture (USDA) investors to raise funds exclusively for investment in California small businesses located in distressed areas throughout the state, including all 879 designated opportunity zones. This tax credit will enable small businesses to grow and create quality well-paying jobs, thereby accelerating wage mobility and improving quality of life for California residents. | |
429 | 437 | ||
430 | - | (b) To measure whether the credit achieves its intended purpose, the | |
438 | + | (b) To measure whether the credit achieves its intended purpose, the Treasurer shall, on July 1, 2022, and annually thereafter in each year the program is in effect, submit a report, in compliance with Section 9795 of the Government Code, to the Legislature containing all of the following: | |
431 | 439 | ||
432 | - | (1) | |
440 | + | (1) Bank statements evidencing each funds growth investments. | |
433 | 441 | ||
434 | - | (2) | |
442 | + | (2) The name, location, and industry of each growth business receiving a growth investment. | |
435 | 443 | ||
436 | - | (3) | |
444 | + | (3) A verifiable number of full-time employees at each growth business receiving a growth investment on the date of the growth funds initial growth investment. | |
437 | 445 | ||
438 | - | (4) | |
446 | + | (4) A verifiable average salary of new full-time employees at each growth business that demonstrates a new full-time employee is a targeted employee in accordance with the program. | |
439 | 447 | ||
440 | - | (c) The office of the Treasurer shall submit the report required by this section to the Senate Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Senate and Assembly Committees on Appropriations, the Senate Committee on Governance and Finance, the Assembly Committee on Revenue and Taxation, the California Legislative Black Caucus, the California Latino Legislative Caucus, the California Asian Pacific Islander Legislative Caucus, the California Legislative Womens Caucus, and the California Legislative LGBTQ Caucus. | |
448 | + | (5) A calculation of the growth funds employment offset for that year. | |
449 | + | ||
450 | + | (6) The cumulative amount of growth investments made in each growth business as a result of this credit. | |
451 | + | ||
452 | + | (c) The Treasurer shall submit the report required by this section to the Senate Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Senate and Assembly Committees on Appropriations, the Senate Committee on Governance and Finance, and the Assembly Committee on Revenue and Taxation. | |
441 | 453 | ||
442 | 454 | SEC. 4. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution. | |
443 | 455 | ||
444 | 456 | SEC. 4. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution. | |
445 | 457 | ||
446 | 458 | SEC. 4. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution. | |
447 | 459 | ||
448 | 460 | ### SEC. 4. | |
449 | 461 | ||
450 | 462 | SEC. 5. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. | |
451 | 463 | ||
452 | 464 | SEC. 5. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. | |
453 | 465 | ||
454 | 466 | SEC. 5. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. | |
455 | 467 | ||
456 | 468 | ### SEC. 5. |