H 0286

H‑0286.1 _____________________________________________

HOUSE BILL 1377

_____________________________________________

State of Washington 57th Legislature 2001 Regular Session

By Representatives Santos, DeBolt, Gombosky, Anderson, Ruderman, Benson, Veloria, Hatfield, Keiser, Wood and Kenney

Read first time 01/24/2001. Referred to Committee on Financial Institutions & Insurance.

_1 AN ACT Relating to community development financial

_2 institutions; adding a new section to chapter 82.04 RCW; adding a

_3 new section to chapter 48.14 RCW; creating a new section; and

_4 providing an expiration date.

_5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

_6 NEW SECTION. Sec. 1. (1) The legislature finds that:

_7 (a) The overall goal of the state=s economic development

_8 strategy is to raise the standard of living for all residents by

_9 enhancing income and employment opportunities;

10 (b) The effectiveness of any regional or local economic

11 development strategy depends on a partnership between the

12 community, business, and government;

13 (c) The need to nurture entrepreneurs and entrepreneurship is

14 vital to the growth of Washington=s economy; and

15 (d) The need to improve access to capital is vital to the

16 development or expansion of these smaller community-based

17 businesses.

18 (2) It is the intent of the legislature to create incentives to

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_1 increase access to capital by providing a tax credit to businesses

_2 that make interest-free deposits into approved community

_3 development financial institutions that will use the deposits to

_4 make reduced interest rate loans to qualified community-based

_5 businesses.

_6 NEW SECTION. Sec. 2. A new section is added to chapter 82.04

_7 RCW to read as follows:

_8 (1) In computing the tax imposed under this chapter, a credit

_9 is allowed for each qualified deposit made by a person or company

10 during the taxable year into a community development financial

11 institution. The credit is equal to twenty-five percent of each

12 qualified deposit and must be taken, in equal installments, over

13 the calendar year each qualified deposit is made, plus the four

14 subsequent consecutive years.

15 (2) No credit shall be allowed under this section unless the

16 department of financial institutions certifies that the deposit

17 described in this section qualifies for the credit under this

18 section and certifies the total amount of the credit allocated to

19 the person or company. The person or company must provide

20 information on the proposed qualified deposit that includes, but

21 is not limited to a description of terms and conditions of the

22 deposit or equity investment.

23 (3)(a) If a qualified deposit is withdrawn before the end of

24 the sixty-month period and not redeposited or reinvested in

25 another community development financial institution within thirty

26 days, the entire amount of the tax credit allowed under this

27 section shall be due and payable to the department of revenue

28 within thirty days of the withdrawal.

29 (b) If the qualified deposit is reduced before the end of the

30 sixty-month period, but not below fifty thousand dollars, the

31 amount of the tax credit attributed to the portion withdrawn shall

32 be due and payable to the department of revenue within thirty days

33 of the withdrawal.

34 (c) If the qualified deposit is reduced before the end of the

35 sixty-month period, below fifty thousand dollars, the entire

36 amount of the tax credit allowed under this section shall be due

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_1 and payable to the department of revenue within thirty days of the

_2 withdrawal.

_3 (4) The credit allowed under this section shall be limited to

_4 the amount of tax imposed by this chapter. The department of

_5 revenue shall not approve any qualified deposit that causes the

_6 total credits allowed under this section and section 3 of this act

_7 to exceed two million dollars per calendar year.

_8 (5) This section applies only to qualified deposits in

_9 community development financial institutions that are approved by

10 the department of revenue after July 1, 2001.

11 (6) For the purposes of this section:

12 (a) "Community development financial institution" means a

13 private financial institution located in the state of Washington

14 that is certified by the department of financial institutions,

15 that has community development as its primary mission, and that

16 lends in a designated area in the state. A community development

17 financial institution may include a community development bank, a

18 community development loan fund, a community development credit

19 union, a microenterprise fund, a community development corporation-

20 based lender, and a community development venture fund;

21 (b) "Designated area" means:

22 (i) A community empowerment zone under chapter 43.31C RCW; or

23 (ii) A rural county under RCW 43.14.370; and

24 (c) "Qualified deposit" means a deposit that does not earn

25 interest, or an equity investment, that is equal to or greater

26 than fifty thousand dollars and is made for a minimum duration of

27 sixty months.

28 NEW SECTION. Sec. 3. A new section is added to chapter 48.14

29 RCW to read as follows:

30 (1) In computing the tax imposed by RCW 48.14.020, a credit is

31 allowed for each qualified deposit made by a person or company

32 during the taxable year into a community development financial

33 institution. The credit is equal to twenty-five percent of each

34 qualified deposit and must be taken, in equal installments, over

35 the calendar year each qualified deposit is made, plus the four

36 subsequent consecutive years.

37 (2) No credit shall be allowed under this section unless the

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_1 department of financial institutions certifies that the deposit

_2 described in this section qualifies for the credit under this

_3 section and certifies the total amount of the credit allocated to

_4 the person or company. The person or company must provide

_5 information on the proposed qualified deposit that includes, but

_6 is not limited to a description of terms and conditions of the

_7 deposit or equity investment.

_8 (3)(a) If a qualified deposit is withdrawn before the end of

_9 the sixty-month period and not redeposited or reinvested in

10 another community development financial institution within thirty

11 days, the entire amount of the tax credit allowed under this

12 section shall be due and payable to the department of revenue

13 within thirty days of the withdrawal.

14 (b) If the qualified deposit is reduced before the end of the

15 sixty-month period, but not below fifty thousand dollars, the

16 amount of the tax credit attributed to the portion withdrawn shall

17 be due and payable to the department of revenue within thirty days

18 of the withdrawal.

19 (c) If the qualified deposit is reduced before the end of the

20 sixty-month period, below fifty thousand dollars, the entire

21 amount of the tax credit allowed under this section shall be due

22 and payable to the department of revenue within thirty days of the

23 withdrawal.

24 (4) The credit allowed under this section shall be limited to

25 the amount of tax imposed by this chapter. The department of

26 revenue shall not approve any qualified deposit that causes the

27 total credits allowed under this section and section 2 of this act

28 to exceed two million dollars per calendar year.

29 (5) This section applies only to qualified deposits in

30 community development financial institutions that are approved by

31 the department of revenue after July 1, 2001.

32 (6) For the purposes of this section:

33 (a) "Community development financial institution" has the same

34 meaning as in section 2 of this act;

35 (b) "Designated area" has the same meaning as in section 2 of

36 this act; and

37 (c) "Qualified deposit" has the same meaning as in section 2 of

38 this act.

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_2 NEW SECTION. Sec. 4. This act expires July 1, 2005.

‑‑‑ END ‑‑‑

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