Commissioner Jones Announces Community Investment Tax Credit Program Now a Success
News: 2011 Press Release
Insurance Commissioner Dave Jones announced today that since he took office in January, insurance companies and other investors have made $23.6 million in investments in under-served communities. Commissioner Jones sent a letter in February to insurance company CEOs encouraging them to make these types of investments and noting the availability of tax credits for such investments through the California Organized Investment Network (COIN), administered by the California Department of Insurance (CDI).
"I recently called on insurance companies to help rejuvenate the COIN tax credit program, which had been underused in recent years, and I am pleased that insurers have answered that call," Commissioner Jones said. "Through this program, nearly $24 million will be put to use in low-income and rural communities to provide important loans that financial institutions traditionally will not make."
Each year, the California Department of Insurance allocates $2 million in tax credits to support $10 million in community development investments. Since companies haven't taken advantage of this program in the last few years, in 2011 CDI's COIN had $4.7 million in tax credits available to support $23.6 million in community development investments.
Jones announced today that all of the tax credits have been allocated and the program is closed to new applications until January 1, 2012. Insurance company investors comprised 85% of the 2011 investments in the program - a marked improvement from recent years.
Under the COIN tax credit program, investors invest a minimum of $50,000 in zero interest loans with a Community Development Financial Institution (CDFI) for 60 months. In exchange, the investor receives a 20% state tax credit, which is approximately a 4.3% annual percentage rate of return.
CDFIs use these funds to bridge the growing gap between the loans and services available to the economic mainstream and those offered to low-income people and communities. These CDFIs include community development loan funds, credit unions, banks, microenterprise funds, corporation-based lenders and venture funds. Recently, CDFIs across the state have made notable investments, including:
- A mortgage loan for a nonprofit residential alcohol treatment facility;
- Micro-loans of $500 to $5,000 to self-employed business owners;
- Loans for six child care centers to serve 500 low-income children;
- Pre-development loans to Habitat for Humanity to construct affordable homes;
- A loan to a church to build a child care center for low income residents;
- A loan for 953 water hook-ups in two small, rural communities; and
- A short-term loan to close escrow on housing for low-income foster youth.
Assembly Bill 624, by Assembly Speaker John A. Pérez, would extend the law authorizing the CDFI Tax Credit Program, which is set to expire at the end of 2011.
For more information about the COIN CDFI Tax Credit Program, visit www.insurance.ca.gov/COIN.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $289 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.