Cities are urged to support the bill.The program offers a new economic development tool that would help stimulate private sector investments into lower income communities by providing a tax incentive to qualified entities.
This program would complement investments made through the federal New Markets Tax Credit (NMTC) program, and authorize up to $40 million in state tax credits to be allocated annually through the program, up to a cumulative total of no more than $200 million. Versions of this proposal have been advanced before. Last year when Gov. Jerry Brown vetoed a similar bill, AB 1399 (Medina), however, the door was left open to possibly revisiting this proposal in the context of the budget.
Under the federal NMTC program, there is no geographic, population or other criteria that directs how the federal tax credits are distributed to projects among the various states. As a result, those states and entities that have aggressively pursued these funds stand a better chance of receiving them. Fourteen states have established similar state-based NMTC programs, which reportedly have leveraged an average of $13 in combined federal-private investments for every dollar of state revenue.
California cities currently have few tools for job creation, especially in low-income communities. The creation of a NMTC in California would provide major incentives for additional private investment in our communities. The program should be seen as an important component of a package of economic development options that California desperately needs.
The bill will have its first policy committee hearing on April 21 in the Assembly Jobs, Economic Development and the Economy Committee meets. Cities are urged to send in letters of support of this important legislation. The League’s support letter, a sample support letter and bill language are available on the League’s website