Bill Text: NJ A2223 | 2022-2023 | Regular Session | Introduced
Bill Title: Provides credit under corporation business tax and gross income tax for construction of buildings in accordance with certain energy and environmental performance standards.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2022-02-07 - Introduced, Referred to Assembly Commerce and Economic Development Committee [A2223 Detail]
Download: New_Jersey-2022-A2223-Introduced.html
Sponsored by:
Assemblywoman PAMELA R. LAMPITT
District 6 (Burlington and Camden)
SYNOPSIS
Provides credit under corporation business tax and gross income tax for construction of buildings in accordance with certain energy and environmental performance standards.
CURRENT VERSION OF TEXT
As introduced.
An Act providing a credit under the corporation business tax and the gross income tax for construction of certain buildings, and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.) and chapter 4 of Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in sections 1 through 4 of this act:
"Eligible building" means a building located in the State, which is: (1) a residential multi-family building, with at least four habitable stories, that contains 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 the 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).
"Gold level building" means a building that meets a level of performance that is equivalent to or higher than the second highest level of performance certified under the LEED Rating System.
"LEED Green Building Rating System" means the Leadership in Energy and Environmental Design building rating system developed and published by the United States Green Building Council.
"LEED Rating System" means the LEED Green Building Rating System or the LEED Residential Green Building Rating System, as appropriate.
"LEED Residential Green Building Rating System" means the Leadership in Energy and Environmental Design building rating system for residential buildings, as may be developed by the United States Green Building Council.
"Platinum level building" means a building that meets a level of performance that is equivalent to or higher than the highest level of performance certified under the LEED Rating System.
"Silver level building" means a building that meets a level of performance that is equivalent to or higher than the third highest level of performance certified under the LEED Rating System.
2. a. A taxpayer shall be allowed a credit against the tax otherwise due pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) in an amount as may be allowed pursuant to rules and regulations adopted pursuant to subsection b. of section 3 of this act for certain costs of construction paid by the taxpayer for the construction of an eligible building qualifying as a silver level building, a gold level building, or a platinum level building during the privilege period. The amount of credit claimed in a privilege period that cannot be applied for that privilege period due to limitations in this section may be carried over, if necessary, to the five privilege periods following the privilege period for which the credit is first allowed.
b. The order of priority of the application of the credit allowed under this section and any other credits allowed by law shall be as prescribed by the Director of the Division of Taxation. The amount of the credit claimed for the privilege period in which the cost is incurred shall not exceed 50 percent of the tax liability otherwise due and shall not reduce the amount of the tax liability to less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5).
c. To claim the credit authorized under this section, a taxpayer shall apply to the Commissioner of Environmental Protection for certification of credit eligibility. The commissioner shall certify to the Division of Taxation that the property meets the definition of an eligible building, that the construction has been completed in compliance with the requirements for rating as a silver, gold or platinum level building, and the amount of the credit allowed pursuant to the rules and regulations adopted pursuant to subsection b. of section 3 of this act. The taxpayer shall attach the certification to the tax return on which the credit is claimed.
d. For any privilege period, a taxpayer may apply a credit under this section only if: (1) the taxpayer has obtained and filed a credit reservation certificate, as described in section 3 of this act, and an eligibility certificate, as described in subsection c. of this section; (2) a certificate of occupancy, for the eligible building that is the subject of the credit, has been issued; and (3) the eligible building remains in service and performs as a silver, gold or platinum level building during that year.
e. For each taxpayer who is eligible for a credit under this section, the Commissioner of Environmental Protection shall grant a credit, provided that the credits, in the aggregate and together with those granted pursuant to section 6 of this act, shall not exceed $10,000,000; provided further that any unused allocable amounts shall roll over to subsequent fiscal years.
3. a. Upon application by a taxpayer, the Commissioner of Environmental Protection shall issue a credit reservation certificate, where the taxpayer has made a showing that the eligible building qualifies for the allowance of a credit under section 2 of this act. The certificate shall state: (1) the earliest privilege period for which the credit may be applied; (2) the maximum amount of the total credit allowed and the maximum amount of credit allowed in any single privilege period; (3) an expiration date; and (4) such other information as the Commissioner of Environmental Protection may prescribe. The certificate shall apply only to the eligible building placed in service by the specified expiration date. Certificates may be issued in the first State fiscal year following the date of adoption of the rules and regulations required pursuant to subsection b. of this section and in the five State fiscal years thereafter.
b. Within one year after the date of enactment of this act, the Commissioner of Environmental Protection, in consultation with the President of the Board of Public Utilities, shall adopt rules and regulations in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to establish the amount of the credit available to a taxpayer pursuant to section 2 of this act. The amount of the credit shall be based on the number of square feet of floor space in the eligible building, the overall size of the building, and the level of certification as a silver, gold or platinum level building. The tax credit shall only be available for eligible buildings qualifying as a silver level building, a gold level building, or a platinum level building. These rules and regulations shall be developed based on the LEED Rating System and any rules and regulations adopted by other states for similar tax credit programs, and shall take into account how construction of the eligible building impacts the local natural environment, uses recycled or recyclable materials, incorporates renewable and energy efficient power generation systems, uses water resources more efficiently, and produces less waste than traditional building practices. These rules and regulations shall set forth requirements for determining the continued performance of the eligible building as a silver, gold or platinum level building.
4. a. Each taxpayer shall, for any privilege period for which a credit is claimed under section 2 of this act, maintain records of such information as the Commissioner of Environmental Protection and the Director of the Division of Taxation shall determine, and report that information to those agencies in the form and at the time that they shall determine.
b. The Commissioner of Environmental Protection and the Director of the Division of Taxation shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), such rules and regulations as may be deemed necessary to implement sections 1 through 4 of this act. These rules and regulations shall be designed to maintain high but commercially reasonable standards for obtaining tax credits under sections 1 through 4 of this act. The rules and regulations shall establish a reasonable time for submission of applications and shall establish a method allocating credit reservation certificates among eligible applicants, which shall generally be on a first-come, first-served basis.
c. On or before four years after the date of enactment of this act, the Commissioner of Environmental Protection, in consultation with the Director of the Division of Taxation, shall prepare and submit a report to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature regarding the number of certificates and taxpayers applying the credit provided for under sections 1 through 4 of this act, the amount of the credits granted, the geographical distribution of the credits granted, and any other information that the Commissioner of Environmental Protection or the Director of the Division of Taxation may deem useful or appropriate, including an evaluation of the effectiveness of the credit as an incentive for the construction of buildings in New Jersey meeting the highest level of performance under the LEED Rating System and any recommendations for the continuation of this credit.
5. As used in sections 5 through 8 of this act:
"Eligible building" means a building located in the State, which is: (1) a residential multi-family building, with at least four habitable stories, that contains 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 the 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).
"Gold level building" means a building that meets a level of performance that is equivalent to or higher than the second highest level of performance certified under the LEED Rating System.
"LEED Green Building Rating System" means the Leadership in Energy and Environmental Design building rating system developed and published by the United States Green Building Council.
"LEED Rating System" means the LEED Green Building Rating System or the LEED Residential Green Building Rating System, as appropriate.
"LEED Residential Green Building Rating System" means the Leadership in Energy and Environmental Design building rating system for residential buildings, as may be developed by the United States Green Building Council.
"Platinum level building" means a building that meets a level of performance that is equivalent to or higher than the highest level of performance certified under the LEED Rating System.
"Silver level building" means a building that meets a level of performance that is equivalent to or higher than the third highest level of performance certified under the LEED Rating System.
6. a. A taxpayer shall be allowed a credit against the tax otherwise due pursuant to N.J.S.54A:1-1 et seq. in an amount as may be allowed pursuant to rules and regulations adopted pursuant to subsection b. of section 7 of this act for certain costs the cost of construction paid by the taxpayer for the construction of an eligible building qualifying as a silver level building, a gold level building, or a platinum level building during the taxable year. The amount of credit claimed in a taxable year that cannot be applied for that taxable year due to limitations in this section may be carried over, if necessary, to the five taxable years following the taxable year for which the credit is first allowed.
b. The order of priority of the application of the credit allowed under this section and any other credits allowed by law shall be as prescribed by the Director of the Division of Taxation.
c. The amount of the credits applied under this section for a taxable year shall not exceed the amount of the taxpayer's liability for tax for the taxable year that bears the same proportional relationship to the total amount of such liability as the amount of the taxpayer's gross income, derived from New Jersey sources and attributable to the business or professional activity in which the taxpayer pays the cost of construction of an eligible building, bears to the taxpayer's entire gross income for that year. Credits allowed pursuant to this section shall be taken only after the taxpayer has taken all credits allowed under section 2 of P.L.2000, c.80 (C.54A:4-7). The amount of the credit otherwise allowable under this section which cannot be applied for the taxable year due to the limitations of this subsection may be carried over, if necessary to the five taxable years following the taxable year for which the credit was allowed.
d. A partnership shall not be allowed a credit under this section directly, but the amount of credit of a taxpayer in respect of a distributive share of partnership income under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., shall be determined by allocating to the taxpayer that proportion of the credit acquired by the partnership that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the partnership for its taxable year ending within or with the taxpayer's taxable year.
e. To claim the credit authorized under this section, a taxpayer shall apply to the Commissioner of Environmental Protection for certification of credit eligibility. The commissioner shall certify to the Division of Taxation that the property meets the definition of an eligible building, that the construction has been completed in compliance with the requirements for rating as a silver, gold or platinum level building, and the amount of the credit allowed pursuant to the rules and regulations adopted pursuant to subsection b. of section 7 of this act. The taxpayer shall attach the certification to the tax return on which the credit is claimed.
f. For any taxable year, a taxpayer may apply a credit under this section only if: (1) the taxpayer has obtained and filed a credit reservation certificate, as described in section 7 of this act, and an eligibility certificate, as described in subsection e. of this section; (2) a certificate of occupancy, for the eligible building that is the subject of the credit, has been issued; and (3) the eligible building remains in service and performs as a silver, gold or platinum level building during that year.
g. For each taxpayer who is eligible for a credit under this section, the Commissioner of Environmental Protection shall grant a credit, provided that the credits, in the aggregate and together with those granted pursuant to section 2 of this act, shall not exceed $10,000,000; provided further that any unused allocable amounts shall roll over to subsequent fiscal years.
7. a. Upon application by a taxpayer, the Commissioner of Environmental Protection shall issue a credit reservation certificate, where the taxpayer has made a showing that the eligible building qualifies for the allowance of a credit under section 6 of this act. The certificate shall state: (1) the earliest taxable year for which the credit may be applied; (2) the maximum amount of the total credit allowed and the maximum amount of credit allowed in any single taxable year; (3) an expiration date; and (4) such other information as the Commissioner of Environmental Protection may prescribe. The certificate shall apply only to the eligible building placed in service by the specified expiration date.
Certificates may be issued in the first State fiscal year following the date of adoption of the rules and regulations required pursuant to subsection b. of this section and in the five State fiscal years thereafter.
b. Within one year after
the date of enactment of this act, the Commissioner of Environmental
Protection, in consultation with the President of the Board of Public
Utilities, shall adopt rules and regulations in accordance with the
"Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to
establish the amount of the credit available to a taxpayer pursuant to section
6 of this act. The amount of the credit shall be based on the number of square
feet of floor space in the eligible building, the overall size of the building,
and the level of certification as a silver, gold or platinum level building.
These rules and regulations shall be developed based on the LEED Rating System
and any rules and regulations adopted by other states for similar tax credit
programs, and shall take into account how construction of the eligible building
impacts the local natural environment, uses recycled or recyclable materials,
incorporates renewable and energy efficient power generation systems, uses
water resources more efficiently, and produces less waste than traditional
building practices. These rules and regulations shall set forth requirements
for determining the continued performance of the eligible building as a silver,
gold or platinum level building.
8. a. Each taxpayer shall, for any taxable year for which a credit is claimed under section 6 of this act, maintain records of such information as the Commissioner of Environmental Protection and the Director of the Division of Taxation shall determine, and report that information to those agencies in the form and at the time that they shall determine.
b. The Commissioner of Environmental Protection and the Director of the Division of Taxation shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), such rules and regulations as may be deemed necessary to implement sections 5 through 8 of this act. These rules and regulations shall be designed to maintain high but commercially reasonable standards for obtaining tax credits under sections 5 through 8 of this act. The rules and regulations shall establish a reasonable time for submission of applications and shall establish a method allocating credit reservation certificates among eligible applicants, which shall generally be on a first-come, first-served basis.
c. On or before four years after the date of enactment of this act, the Commissioner of Environmental Protection, in consultation with the Director of the Division of Taxation, shall prepare and submit a report to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature regarding the number of certificates and taxpayers applying the credit provided for under sections 5 through 8 of this act, the amount of the credits granted, the geographical distribution of the credits granted, and any other information that the Commissioner of Environmental Protection or the Director of the Division of Taxation may deem useful or appropriate, including an evaluation of the effectiveness of the credit as an incentive for the construction of buildings in New Jersey meeting the highest level of performance under the LEED Rating System and any recommendations for the continuation of this credit.
9. This act shall take effect immediately and shall apply to qualified construction expenses of an eligible building incurred after the date of enactment of this act, and shall expire with privilege periods and taxable years beginning on and after July 1 of the sixth year thereafter.
STATEMENT
This bill establishes a corporation business tax credit and a gross income tax credit for costs incurred in the construction of an eligible building qualifying as a silver level building, a gold level building, or a platinum level building under the LEED Green Building Rating System or the LEED Residential Green Building Rating System, as appropriate. "LEED" refers to the Leadership in Energy and Environmental Design "green building" rating system developed and published by the United States Green Building Council.
The bill defines "eligible building" as a building located in the State, which is: (1) a residential multi-family building, with at least four habitable stories, that contains 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 the 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 (1) through (3) above.
The bill directs, within one year after the date of enactment of this bill into law, the Commissioner of Environmental Protection in consultation with the President of the Board of Public Utilities, to adopt rules and regulations to establish the amount of the tax credit available to a taxpayer pursuant to this bill. The amount of the credit would be based on the number of square feet of floor space in the eligible building, the overall size of the building, and the level of certification as a silver, gold or platinum level building under the LEED Green Building Rating System or the LEED Residential Green Building Rating System, as appropriate. These rules and regulations shall be developed based on the LEED Rating System and any rules and regulations adopted by other states for similar tax credit programs. In addition, these rules and regulations would take into account how construction of the eligible building impacts the local natural environment, uses recycled or recyclable materials, incorporates renewable and energy efficient power generation systems, uses water resources more efficiently, and produces less waste than traditional building practices. These rules and regulations would also set forth requirements for determining the continued performance of the eligible building as a silver, gold or platinum level building.
The total amount of the tax credits available under the bill would be $10 million. Lastly, the bill would require the Commissioner of Environmental Protection, in consultation with the Director of the Division of Taxation, to prepare a report regarding the number of certificates and taxpayers applying the tax credits, the amount of the credits granted, the geographical distribution of the credits granted, and any other information that the commissioner or the director may deem useful or appropriate, including an evaluation of the effectiveness of the tax credit as an incentive for the construction of buildings in New Jersey meeting the highest level of performance under the LEED Rating System and any recommendations for the continuation of the tax credit.
Because traditional building is one of the most resource-demanding industries in the United States, the use of "green" building practices has the potential to significantly reduce waste and dependence on finite resources. Green buildings use resources-energy, water, materials, and land more efficiently and effectively, and provide healthier environments for working, learning and living. Green buildings are more environmentally-friendly because the buildings minimize the negative environmental consequences by lessening changes to the local natural environment, using recycled or recyclable materials, incorporating renewable and energy efficient power generation systems, using water resources more efficiently, and producing less waste. Green buildings provide employees with a healthier indoor work environment by effectively controlling outdoor air ventilation systems and using alternative paints, finishes, adhesives, furniture and fabrics that do not negatively affect air quality.
