Last One Before The Break

Wanted to circulate the language for an Opportunity Zone Bill for California first

DRAFT

Here is the draft of a bill for catalyzing investments in disasters. Perhaps we can see what can be done with the remainder of this session. It is an early draft. A lot of work will still be done, but conceptually, it is what we have written about there…

Defer your taxes and allow that tax to be invested in disaster areas and Opportunity Zones.

Use those taxes for 7 years and then pay taxes at the conclusion.

Investment return taxes can be carried over and receive same treatment.

Keeps investments in California which otherwise the funds may go elsewhere.

A lot of work to still do but here is the thumbnail for feedback.

THE DISASTER INVESTMENT FUND ACT

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. PREAMBLE.

The legislature finds and declares the following:

(a) Disasters require innovative capital creation opportunities.

(b) The recent wildfires in Los Angeles County are unprecedented in the scale and scope of their reach.

(c) The needs to rebuild will require more than existing methods available.

(d) It is incumbent on the State of California to provide new sources of capital from the resources available.

SEC. 2. DISASTER INVESTMENT FUNDS.

(a) The State of California shall amend the [insert] Act to include the creation of a Disaster Investment Fund, hereinafter “Fund.”

(b) The Fund shall be administered by private entities following approval from Go-Biz.

1. Go-Biz shall establish procedures to limit the number of Funds through rulemaking.

2. Go-Biz shall establish procedures to determine which funds shall get approved taking into consideration experience with such investments and federal Opportunity Zone fund management.

(c) The Fund shall allow investors to allocate up to seventy percent (70%) of their capital gains due in a tax year for investment in qualified investments.

(d) The Fund shall charge a fee of up to 1% to investors to invest in allocated investments.

1. Fund charges shall be disclosed prior to approval from Go-Biz.

2. Go-Biz shall consider the cost of fund prior to approval of funds.

(e) The Fund shall invest in recent disaster areas declared under the Stafford Act [insert USC] in the State of California.

(f) The Fund may also invest in federally designated Opportunity Zones under [insert USC] in the State of California.

(g) The Fund shall not allocate more than thirty percent (30%) of its gross investable funds to real estate in the State of California.

SEC. 3. TAX TREATMENT.

(a) For qualified capital gains under this Act, investors may choose to invest taxable earnings in approved Funds annually for the previous tax year.

(b) Those taxes shall be deferred for a period of seven (7) years if invested in qualified Funds under this Act.

(c) At the conclusion of the seventh (7^th) year, the tax due shall be paid to the State at the end of the tax year under which the investment deferral was taken.

(d) Investors may elect to pay taxes on the investment returns in the Fund at the capital gain calculated at the seventh year.

a. Investors may elect to defer taxes on the investment final liquidity of the fund.

b. Capital gain taxes from investments under this Act may be reinvested in a qualified Fund and subject to treatment as found in this Act.