Creating a tax credit for insurers for certain investments in community development entities. (FE)

What it does

Summary by the Legislative Reference Bureau, the Legislature's nonpartisan drafting office. It's their wording, not ours.

Under this bill, an insurer that makes a qualified equity investment in a qualified community development entity may receive a credit against the state taxes imposed on insurers. In order for the insurer to claim the credit, a qualified community development entity must use the capital raised from the insurer’s qualified equity investment to make investments in or loans to qualified active low-income community businesses that have their principal business operations in this state. The credit is equal to zero percent of the insurer’s qualified equity investment for the first and second year after the issuance of the investment, and 10 percent of the qualified equity investment for the next five years. The bill defines “qualified community development entity” as generally an entity that has the primary mission of serving or providing investment capital for low-income communities or low-income persons and that has low-income persons represented on a governing or advisory board of the entity. The bill defines a “qualified active low-income community business” as generally an entity that 1) receives at least 50 percent of its gross income from certain business conducted within a low-income community; 2) uses a substantial portion of its tangible property within a low-income community; 3) performs a substantial portion of its services within a low-income community; 4) has less than 5 percent of its property attributable to debt collection; and 5) receives less than 15 percent of its revenue from the rental or sale of real estate.

Under the bill, qualified community development entities must apply to the Department of Revenue for authority to issue qualified equity investments to insurers. DOR may approve up to a total of $125,000,000 in qualified equity investment authority for investment in qualified active low-income community businesses in rural counties and up to a total of $125,000,000 in such authority for investments in such businesses in metro counties. Also, DOR may approve an amount of qualified equity investment that generates no more than $25,000,000 in total credits per tax year. Under the bill, DOR may recapture credits from insurers if 1) the qualified community development entity receiving capital from qualified equity investments fails to use all of the capital to make investments in or loans to qualified active low-income community businesses; 2) if the qualified community development entity redeems or makes principal payment with respect to the qualified equity investment before the seventh anniversary of issuance of the investment; or 3) if any amount of the federal new markets tax credit that is available for a qualified equity investment is rescinded. Each qualified community development entity that is authorized to issue qualified equity investments under the bill must submit an annual report to DOR containing various information regarding the qualified low-income community investments made, including employment information for the qualified active low-income community businesses invested in the entity.

Who's behind it

5 representatives are its authors⁠. All 5 are Republicans.

3 more lawmakers signed on in support⁠.

What it would cost

State agencies filed a cost estimate. Each opens as a PDF from the Legislature.

• Fiscal Estimate From OCI

Versions and amendments

Every text the Legislature printed for this bill, including proposed changes. Each opens on the Legislature's site.

• Amendment Histories
• LC Amendment Memo