Green building tax credit act

Green Building Tax Credit Act

An Act providing businesses with a gross income tax credit for green building developments that meet certain criteria as set forth in this Act.

Be it enacted by the Legislature of <insert your state here>:

Section 1. Short Title.

This Act shall be known and may be cited as the “Green Building Tax Credit Act.”

Section 2. Findings and Declarations.

The Legislature finds and declares the following:

It is the policy of <insert your state here> to encourage the construction, rehabilitation, and maintenance of buildings in this state in such a manner as to:

(A) Promote better environmental standards for the construction, rehabilitation, and maintenance of buildings in the state;

(B) Improve energy efficiency and increase generation of energy through renewable and clean energy technologies;

(C) Increase the demand for environmentally preferable building materials, finishes, and furnishings;

(D) Improve the environment by decreasing the discharge of pollutants from buildings;

(E) Create industry and public awareness of new technologies that can improve the quality of life for building occupants; and

(F) Improve the health and productivity of building occupants by meeting advanced criteria for indoor environmental quality.

In order to facilitate the foregoing policies, the Legislature hereby creates an income tax credit to promote the construction, rehabilitation, and maintenance of buildings that meet the criteria set forth in this Act.

Section 3. Definitions.

(A) “Applicant” means a taxpayer who is either the owner or contract purchaser of a building, and is applying for a green building tax credit for the building.

(B) “Base building” means all areas of a building not intended for occupancy by a tenant or owner, including, but not limited to, the structural components of the building, exterior walls, floors, windows, roofs, foundations, chimneys and stacks, parking areas, mechanical rooms and mechanical systems, and owner-controlled and/or operated service spaces, sidewalks, main lobby, shafts and vertical transportation mechanisms, stairways, and corridors.

(C) “Commissioner” means the head of the Department of Energy <or insert your state’s equivalent>.

(D) “Commissioning” means the process of verifying and ensuring that the entire building and the systems within are designed, constructed, functionally tested, and calibrated to operate as intended.

(E) “Credit allowance year” means the year as stated on the preliminary credit certificate by the Commissioner (as defined in subsection (C) of this Section).

(F) “Department” means the Department of Energy <or insert your state’s equivalent>.

(G) “Economic development area” means an economic development zone <or your state’s equivalent> as defined in <insert applicable state statutes here>.

(H) “Eligible building” means a building located in <insert your state here>, which is:

(1) A residential multi-family building with at least four habitable stories that contain at least 10,000 square feet of interior space;

(2) One or more residential multi-family buildings with at least four habitable stories that are part of a single or phased construction project that contains, in the aggregate, at least 20,000 square feet of interior space, provided that, in any single phase of such project, at least 10,000 square feet of interior space is under construction or rehabilitation;

(3) A building used for commercial or industrial purposes; or

(4) Any combination of buildings described in paragraphs (1) through (3).

(I) “Energy and Atmosphere Credit Number One” means the credit awarded by the LEED Green Building Rating System, which requires increased energy performance above the standard as defined in the most current version of the LEED-NC or LEED-EB rating system.

(J) “Energy and Atmosphere Credit Number Three” means the credit awarded by the LEED Green Building Rating System, which requires additional commissioning above the fundamental commissioning prerequisite as defined in the most current version of the LEED-NC or LEED-EB rating system.

(K) “Gold rating” means the rating in compliance with, or exceeding, the second highest rating awarded by the USGBC LEED certification process.

(L) “Green Base Building” means a base building (as defined in subsection (B) of this Section) that meets all requirements in the most current version of the U.S. Green Building Council’s Leadership in Energy and Environmental Design Rating System for Core and Shell (LEED-CS).

(M) “Green building” or “high-performance building” means a building that is designed to achieve integrated systems design and construction so as to significantly reduce or eliminate the negative impact of the built environment on the following:

(1) Site conservation and sustainable planning;

(2) Water conservation and efficiency;

(3) Energy efficiency and renewable energy;

(4) Conservation of materials and resources; and

(5) Indoor environmental quality and human health.

(N) “Green tenant space” means a tenant space (as defined in subsection (V) of this Section) that meets all requirements in the most current version of the U.S. Green Building Council’s Leadership in Energy and Environmental Design Rating System for Commercial Interiors (LEED-CI).

(O) “Green whole building” means a whole building (as defined in subsection (X) of this Section) that meets all requirements in the most current version of the U.S. Green Building Council’s Leadership in Energy and Environmental Design Rating System for New Building Construction and Major Renovations (LEED-NC or LEED 2.1, currently) or which meets all requirements in the most current version of the U.S. Green Building Council’s Leadership in Energy and Environmental Design Rating System for Existing Buildings (LEED-EB).

(P) “LEED-CI” or “LEED Green Building Rating System Version LEED-CI” means the most current Leadership in Energy and Environmental Design Green Building Rating System guidelines developed and adopted by the United States Green Building Council for commercial interiors.

(Q) “LEED-CS” or “LEED Green Building Rating System Version LEED-CS” means the most current Leadership in Energy and Environmental Design Green Building Rating System guidelines developed and adopted by the United States Green Building Council for the core and shell of buildings (base building).

(R) “LEED-EB” or “Green Building Rating System Version LEED-EB” means the most current Leadership in Energy and Environmental Design Green Building Rating System guidelines developed and adopted by the United States Green Building Council for existing buildings.

(S) “LEED-NC” or “LEED Green Building Rating System Version LEED-NC” means the most current Leadership in Energy and Environmental Design Green Building Rating System developed and adopted by the United States Green Building Council for new buildings and major renovations.

(T) “Platinum rating” means the rating in compliance with, or exceeding, the highest rating awarded by the USGBC LEED certification process.

(U) “Silver rating” means the rating in compliance with, or exceeding, the third highest rating awarded by the USGBC LEED certification process.

(V) “Tenant space” means the portion of a building intended for occupancy by a tenant or occupying owner.

(W) “United States Green Building Council” or “USGBC” means the specific council which measures and evaluates the energy and environmental performance of a building according to its own Leadership in Energy and Environmental Design (LEED) rating system.

(X) “Whole building” means the entire building, as comprised of the base building and tenant space.

Section 4. Green Building Credit.

(A) The green building tax credit shall be available to a taxpayer for either the construction of a green building or the rehabilitation of a building, which is not a green building, into a green building; for the construction or rehabilitation of a base building, which is not a green base building, into a green base building; or, for the construction or rehabilitation of a tenant space, which is not green tenant space, into green tenant space.

(B) A taxpayer may apply for a green building tax credit provided that the facility subject to the green building tax credit is in <insert your state name here> and the applicant will be the owner or contract purchaser of the facility at the time of erection, construction, installation, or acquisition of the proposed facility.

(C) If a credit is allowed to a building owner pursuant to this Section with respect to property, and such property (or an interest therein) is sold, the credit for the period after the sale, which would have been allowable under this Section to the prior owner, shall be allowable to the new owner. Credit for the year of sale shall be allocated between the parties on the basis of the number of days during such year that the property or interest was held by each.

(D) If a credit is allowed to a tenant pursuant to this Section with respect to property, and if such tenancy is terminated but such property remains in use in the building by a successor tenant, the credit for the period after such termination, which would have been allowable under this Section to the prior tenant, shall be allowable to the successor tenant. Credit for the year of termination shall be allocated between the parties on the basis of the number of days during such year that the property was used by each.

(E) Notwithstanding any other provision of law to the contrary, in the case of allowance of credit under this Section to a successor owner or tenant, as provided in subsection (C) or (D) of this Section, the commissioner shall have the authority to reveal to the successor owner or tenant any information, with respect to the credit of the prior owner or tenant, which is the basis for the denial in whole or in part of the credit claimed by such successor owner or tenant.

Section 5. Credit Components.

(A) Green Building Credit - A taxpayer is eligible for a green building tax credit against an eligible tax provided that they comply with the requirements of Section 6 and provided that the building owned or occupied meet the requirements of an eligible building as set forth in Section 3(H). The amount of the credit shall be determined pursuant to Section 7.

(B) The credit shall be the sum of the following credit components, whichever are applicable:

(1) Green Whole-Building Credit Component - The green whole-building credit component shall be available to a taxpayer (whether owner or tenant) for either the construction of a green building or the rehabilitation of a building, which is not a green whole building, into a green whole building. The green whole-building credit component may not be allowed for any taxable year unless all the requirements under Section 6 are met, and the whole building achieves a Silver, Gold, or Platinum rating as approved by the LEED-NC Green Building Rating System (currently LEED 2.1), or the most recent version, for a new building and for major renovations; or, LEED Green Building Rating System Version LEED-EB, or the most recent version, for an existing building.

(2) Green Base Building Credit Component - The green base building credit component shall be available to a taxpayer who is the owner for either the construction of a green building or the rehabilitation of a building, which is not a green base building, into a green base building. The green base building credit component may not be allowed for any taxable year unless all the requirements under Section 6 are met, and the base building achieves a Silver, Gold, or Platinum rating as approved by the LEED-CS (Core and Shell) Green Building Rating System, or the most recent version thereof.

(3) Green Tenant Space Credit Component - The green tenant space credit component shall be available to a taxpayer (whether owner or tenant) for constructing tenant space or rehabilitating tenant space, which is not green tenant space, into green tenant space. The green tenant space credit component may not be allowed for any taxable year unless all the requirements under Section 6 are met, and the tenant space achieves a Silver, Gold, or Platinum rating as approved by the LEED-CI (Commercial Interiors) Green Building Rating System, or the most recent version thereof.

(C) For each component eligible to receive credit, such credit component amount shall not exceed the maximum amount specified in the preliminary certificate issued pursuant to Section 8.

Section 6. Requirements.

(A) The green building tax credit may not be allowed for any taxable year unless all of the following are met:

(1) The whole building, base building, or tenant space has achieved a Silver, Gold, or Platinum rating as approved by the applicable and most recent LEED Green Building Rating System as determined in Section 5(A-C);

(2) In achieving its LEED rating, the whole building, base building, or tenant space must earn at least four LEED points for Energy and Atmosphere Credit Number One, or the equivalent points under any subsequent version of LEED;

(3) In achieving its LEED rating, the whole building, base building, or tenant space must earn the point for Energy and Atmosphere Credit Number Three, or the equivalent points under any subsequent version of LEED;

(4) The taxpayer has obtained and filed a preliminary credit certificate issued pursuant to Sections 8-11 of this Act; and

(5) The building is in service, as shown by a certificate of occupancy.

(B) For each component eligible to receive credit in Section 5, once construction is complete and an occupancy certificate is received, such credit component amount shall be allowed for each of the next four succeeding taxable years provided that the taxpayer obtains an eligibility certificate that meets all requirements for an eligibility certificate as described in Section 10(C)(2).

(C) The taxpayer shall file the eligibility certificate and the preliminary credit component certificate, with the claim for credit. Allowable costs in this subsection and for all five years that the credit may be available shall not exceed, in the aggregate, the amount determined pursuant to Section 7.

Section 7. Rulemaking.

Within 60 days of the enactment of this act, the Department shall promulgate rules to:

(A) Determine he amount of green building tax credit available to a taxpayer based on the following:

(1) The amount of floor space in the building;

(2) The square footage of the building;

(3) The level of LEED rating achieved by the building (Silver, Gold, or Platinum), with higher ratings corresponding to greater tax credits; and

(4) Whether the building is located in an economic development area, as defined in Section 3(G), with a higher tax credit corresponding to those buildings located in an economic development area.

(B) Determine allowable credit for each of:

(1) The whole green building credit component;

(2) The base green building credit component; and

(3) The green tenant space credit component.

(C) Determine the criteria by which the Department will determine the maximum aggregate credits allowed for each eligible building, which shall be set forth in the preliminary credit certificate issued pursuant to Section 8.

(D) Determine the maximum amount of the total credit allowed and the maximum amount of credit allowed in any single tax year for all taxpayers.

Section 8. Preliminary Certification.

(A) Prior to construction of a proposed facility, an applicant may apply to the Department for preliminary certification if the applicant will be the owner or contract purchaser of the facility at the time of construction.

(B) An application for preliminary certification shall be made in writing on a form prepared by the Department and shall contain:

(1) A statement that the applicant plans to construct a facility that meets the requirements under Section 6;

(2) A detailed description of the proposed facility and its operation and information showing that the facility will operate as represented in the application;

(3) The estimated start and finish date of the construction of the facility;

(4) Evidence of official registration in the LEED system; and

(5) Any other information determined by the Commissioner to be necessary prior to issuance of an initial certificate.

(C) The Commissioner may allow an applicant to file the preliminary application after the start of the construction of the facility if the Commissioner finds that filing the application before the start of construction is inappropriate because special circumstances render filing earlier unreasonable.

(D) If the Commissioner determines that the proposed construction is technically feasible and should operate in accordance with the representations made by the applicant, and is in accordance with the provisions under Section 6 and any applicable rules or standards adopted by the Commissioner, the Commissioner shall issue a preliminary credit certificate approving the construction of the facility. The preliminary credit certificate shall state the following:

(1) The first taxable year for which the credit may be applied;

(2) The expiration date of the tax credit. Such expiration date may be extended at the discretion of the Commissioner in order to avoid unwarranted hardship; and

(3) The maximum amount of the total credit allowed and the maximum amount of credit allowed in any single tax year.

(E) If the Commissioner determines that the construction does not comply with the provisions under Section 6 and applicable rules and standards, the Commissioner shall issue an order denying certification.

Section 9. Changes Between Preliminary Certification and Final Certification.

(A) To change a project that has already received preliminary certification, the applicant shall file a written request to the Commissioner which states:

(1) A detailed description of the changes;

(2) The reasons for the changes; and

(3) The effects that the changes will have on the amount of tax credit stated by the preliminary certification.

(B) The Commissioner must decide if the changed project complies with the requirements under Section 6.

(1) If the changed project complies with the requirements under Section 6, then the Commissioner shall issue an amended preliminary certification.

(2) If the changed project does not comply with the requirements under Section 6 then the Commissioner shall issue an order that revokes the preliminary certification.

Section 10. Final Certification.

(A) No final certification shall be issued by the Commissioner under this Section unless the facility was constructed under a preliminary certificate of approval issued under Section 8.

(B) An applicant may apply to the Department for final certification of a facility:

(1) If the Department issued preliminary certification for the facility under Section 8; and

(2) After completion of construction of the proposed facility.

(C) An application for final certification shall be made in writing on a form prepared by the Department and shall contain:

(1) A statement that the conditions of the preliminary certification have been complied with;

(2) An eligibility certificate from the project architect or professional engineer licensed to practice in <insert your state name here> that consists of:

(a) A certification by the United States Green Building Council that the building with respect to which the credit is claimed is LEED certified;

(b) A statement of the level of LEED performance achieved by the building (Silver, Gold, or Platinum), to permit determination of the proper credit amount under Section 7;

(c) A certification that, in achieving its LEED rating, the building has earned at least four LEED points for Energy and Atmosphere Credit Number One; and

(d) A certification that, in achieving its LEED rating, the building has earned the Energy and Atmosphere Credit Number Three;

(3) A statement that the facility is in operation; and

(4) Any other information determined by the Commissioner to be necessary prior to issuance of a final certificate, including inspection of the facility by the Department.

Section 11. Revocation of Certificate.

(A) The Commissioner may order the revocation of the final certificate issued under Section 10 of this Act if the Commissioner finds that:

(1) The certification was obtained by fraud or misrepresentation; or

(2) The holder of the certificate has failed substantially to construct the facility in compliance with the plans, specification, and procedures in such certificate.

(B) As soon as the order of revocation under this Section becomes final, the Commissioner shall notify the Department of Revenue <or insert your state’s equivalent> of such order.

(C) If the certificate is ordered revoked pursuant to subsection (A)(1) of this Section, all prior tax credits provided to the holder of the certificate by virtue of such certificate shall be forfeited, and upon notification under subsection (B) of this Section, the Department of Revenue immediately shall proceed to collect those taxes not paid by the certificate holder as a result of the tax credits provided to the holder under this Act.

(D) If the certificate is ordered revoked pursuant to subsection (A)(2) of this Section, the certificate holder shall be denied any tax credit under this Act in connection with such facility after the date that the order of revocation becomes final.

Section 12. Effective Date.

The provisions of this Act shall be effective immediately upon passage.

Section 13. Severability.

If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity shall not affect other provisions or applications of this Act, which can be given effect without regard to the invalid provision or application and, to this end, the provisions of the Act are severable.