SENATE FILE 331

BY  HOGG

A BILL FOR

An Act relating to energy efficiency by providing income tax credits, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  NEW SECTION.  422.11Y  Green building tax credit.
   The taxes imposed under this division, less the credits allowed under sections 422.12 and 422.12B, shall be reduced by a green building tax credit under section 473B.4.
   Sec. 2.  Section 422.33, Code 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  29.  The taxes imposed under this division shall be reduced by a green building tax credit under section 473B.4.
   Sec. 3.  NEW SECTION.  473B.1  Definitions.
   As used in this chapter, unless the context otherwise requires:
   1.
  a.  “Allowable costs” means amounts properly chargeable to a capital account, other than for land, that are paid or incurred on or after January 1, 2011, for all of the following:
   (1)  Construction or rehabilitation.
   (2)  Commissioning costs allocable to construction or rehabilitation.
   (3)  Interest paid or incurred during the construction or rehabilitation period.
   (4)  Architectural, engineering, and other professional fees allocable to construction or rehabilitation.
   (5)  Closing costs for construction, rehabilitation, or mortgage loans.
   (6)  Recording taxes and filing fees incurred with respect to construction or rehabilitation.
   (7)  Finishes and furnishings consistent with rules adopted by the department under this chapter for lighting, plumbing, electrical wiring, and ventilation for construction or rehabilitation.
   b.  “Allowable costs” does not include any of the following:
   (1)  The cost of telephone systems and computers other than electrical wiring costs.
   (2)  Legal fees allocable to construction or rehabilitation.
   (3)  Site costs, including temporary electric wiring, scaffolding, demolition costs, and fencing and security facilities.
   (4)  Finishes or furnishings that are not consistent with rules adopted by the department under this chapter.
   2.  “Commissioning” means the testing and fine-tuning of heat, ventilating, and air-conditioning systems and other systems to assure proper functioning and adherence to design criteria.
   3.  “Credit allowance year” means the taxable year during which the property, construction, completion, or rehabilitation on which the credit allowed under this chapter is based is originally placed in service.
   4.  “Department” means the department of economic development.
   5.  “Eligible building” means a building located in this state that is used exclusively for commercial or industrial purposes, or is a residential multifamily building with at least twelve dwelling units.
   Sec. 4.  NEW SECTION.  473B.2  Provisional green building certificate.
   1.  A person may apply to the department for provisional certification of eligibility for a green building tax credit by submitting a completed application to the department containing all of the following information:
   a.  Sufficient information to identify each building or space as the department shall require.
   b.  Proof of the person’s ownership or tenancy of the building.
   c.  An itemization of estimated allowable costs with supporting documentation.
   d.  Any other information the department may require.
   2.  If upon receipt of the completed application the department finds that the applicant has shown that the applicant is likely within a reasonable time to place in service property which would warrant the allowance of a credit under section 473B.4, the department shall issue a provisional green building certificate. The provisional green building certificate shall describe the property for which the certificate was issued and shall contain an expiration date. The certificate shall apply only to property placed in service by such expiration date which may be extended at the discretion of the department, in order to avoid unwarranted hardship.
   3.  A person whose application for a provisional green building certificate is denied may file an appeal with the department within sixty days from the date of denial pursuant to the provisions of chapter 17A.
   Sec. 5.  NEW SECTION.  473B.3  Eligibility certificate.
   1.  For each taxable year for which a person claims a green building tax credit under this chapter, the person shall obtain from an architect or professional engineer licensed to practice in this state an eligibility certificate.
   2.  The eligibility certificate shall consist of a certification, under the seal of such architect or engineer, that the building meets the minimum standards of the United States green building council’s leadership in energy and environmental design rating system, or the United States green building council’s leadership in energy and environmental design silver rating standard. The eligibility certification shall be made in accordance with the standards and guidelines adopted by rule by the department and in effect at the time the property which is the basis for the credit was placed in service. The eligibility certificate shall set forth the specific findings upon which the certification was based.
   3.  The eligibility certificate shall include sufficient information to identify each building or space, and such other information as the department shall require.
   4.  The taxpayer shall file a copy of each eligibility certificate with the department.
   Sec. 6.  NEW SECTION.  473B.4  Tax credits.
   A green building tax credit shall consist of one of the following:
   1.  For new construction of any building that meets the minimum standards of the United States green building council’s leadership in energy and environmental design rating system, a tax credit equal to five percent of the cost of the construction, subject to a maximum credit of one million dollars.
   2.  For new construction of any building that achieves the United States green building council’s leadership in energy and environmental design silver rating standard, a tax credit equal to ten percent of the cost of the construction, subject to a maximum credit of two million dollars.
   3.  For rehabilitation of a building constructed and placed in service prior to January 1, 2011, that meets the minimum standards of the United States green building council’s leadership in energy and environmental design rating system, a tax credit equal to ten percent of the cost of the rehabilitation, subject to a maximum credit of one million dollars.
   4.  For rehabilitation of a building constructed and placed in service prior to January 1, 2011, that achieves the United States green building council’s leadership in energy and environmental design silver rating standard, a tax credit equal to twenty percent of the cost of the rehabilitation, subject to a maximum credit of two million dollars.
   5.  The department of economic development, in consultation with the department of public safety, the department of natural resources, and the department of revenue, may adopt rules authorizing the tax credits issued pursuant to subsections 1 through 4 for construction and rehabilitation that achieves superior energy efficiency and environmental performance comparable to the United States green building council’s leadership in energy and environmental design certification.
   6.  Any credit issued pursuant to subsections 1 through 4 in excess of tax liability for the credit allowance year is refundable.
   Sec. 7.  NEW SECTION.  473B.5  Application for tax credit certificate.
   1.  To receive a green building tax credit described in section 473B.4, a taxpayer shall file an application with the department for a tax credit certificate. The application shall contain all of the following:
   a.  All applicable provisional green building certificates.
   b.  All applicable eligibility certificates.
   c.  A certificate of occupancy if required.
   d.  Documentation supporting actual allowable costs incurred.
   e.  Any other information required by the department.
   2.  If upon receipt of a completed application, the department finds that the person is qualified for a green building tax credit, the department shall calculate the amount of the tax credit for which the person is eligible and shall issue a green building tax credit certificate to the person or notify the person in writing of its refusal to do so. The tax credit certificate may be applied against tax owed pursuant to chapter 422, division II and division III, for the year in which the property which is the basis for the credit was placed in service.
   3.  The green building tax credit certificate shall state all of the following:
   a.  The year for which the credit may be claimed and a description of the property for which eligibility was granted.
   b.  The certificate’s expiration date and applicability only to property placed in service by such expiration date. Such expiration date may be extended at the discretion of the department, in order to avoid unwarranted hardship.
   c.  The maximum amount of the tax credit allowable.
   4.  The amount of each green building tax credit shall not exceed the limit set forth in the provisional green building certificate obtained pursuant to section 473B.2.
   5.  A person whose application for a green building tax credit certificate is denied may file an appeal with the department within sixty days from the date of denial pursuant to the provisions of chapter 17A.
   6.  If the department has reason to believe that an architect or professional engineer in making any eligibility certification under this chapter engaged in professional misconduct, the department may revoke a provisional green building certificate or green building tax credit certificate issued pursuant to this chapter and report the misconduct to the appropriate professional board or commission.
   Sec. 8.  NEW SECTION.  473B.6  Successor owner or tenant.
   1.  If a green building tax credit is allowed to a building owner pursuant to this chapter 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 chapter to the prior owner had the property not been sold shall be allowable to the new owner. A tax 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.
   2.  If a tax credit is allowed to a tenant pursuant to this chapter with respect to property, and if such tenancy is terminated but such property remains in use in the building by a successor tenant, the tax credit for the period after such termination which would have been allowable under this chapter to the prior tenant had the tenancy not been terminated shall be allowable to the successor tenant. A tax 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.
   3.  Notwithstanding any other provision of law to the contrary, in the case of allowance of a tax credit under this section to a successor owner or tenant, as provided in subsection 1 or 2, the department 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.
   Sec. 9.  NEW SECTION.  473B.7  Reporting.
   On or before January 1, annually, the department shall submit a written report to the director of the office of energy independence, the governor, and the general assembly regarding all of the following:
   1.  The number and value of provisional green building certificates and green building tax credit certificates issued under this chapter.
   2.  The amount of the green building tax credits redeemed.
   3.  The geographical distribution of the provisional green building certificates and green building tax credit certificates issued and redeemed.
   4.  Any other such available information the department may deem meaningful and appropriate.
   Sec. 10.  EFFECTIVE AND APPLICABILITY DATES.  This Act, being deemed of immediate importance, takes effect upon enactment and is retroactively applicable to tax years beginning on or after January 1, 2011.
EXPLANATION
   This bill provides for a tax credit on personal and corporate income tax for the construction or rehabilitation of certain buildings certified under specified building standards that promote energy efficiency. Tax credits are available in an amount equal to a percentage of the costs for the construction or rehabilitation of commercial, industrial, or specified residential multifamily buildings. An immediate effective date and retroactive applicability provision is included relating to application of the tax credits.
   The bill provides that new construction of any building that meets the minimum standards of the United States green building council’s leadership in energy and environmental design rating system shall be eligible for a tax credit equal to five percent of the cost of the construction, subject to a maximum credit of $1 million. For rehabilitation of a building constructed and placed in service prior to January 1, 2011, that meets the minimum standards of the United States green building council’s leadership in energy and environmental design rating system, the bill authorizes a tax credit equal to 10 percent, subject to a maximum credit of $1 million. In the event a newly constructed or rehabilitated building achieves the United States green building council’s leadership in energy and environmental design silver rating standard, the bill doubles these tax credit amounts and maximums. The bill permits the department of economic development, in consultation with the departments of public safety, natural resources, and revenue, to adopt rules authorizing tax credits for construction and rehabilitation that achieves superior energy efficiency and environmental performance comparable to the United States green building council’s leadership in energy and environmental design certification. The bill states that any credit issued in excess of tax liability for the credit allowance year is refundable.
   The bill specifies procedures regarding obtaining a provisional green building certificate and an eligibility certificate, tax credit application procedures, and provisions regarding allowance of a tax credit with regard to successor owners or tenants. The bill directs the department of economic development to submit a report by January 1 annually regarding the number and value of tax credit certificates issued, the amount redeemed, and their geographical distribution.
   The bill takes effect upon enactment and applies retroactively to January 1, 2011.