2007-2008 Bill 377 Text of Previous Version (May. 16, 2007)

South Carolina General Assembly
117th Session, 2007-2008

Download This Version in Microsoft Word format

Bill 377

~~Indicates Matter Stricken~~
Indicates New Matter

(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

COMMITTEE REPORT

May 16, 2007

S. 377

Introduced by Senators Ritchie, McConnell, Leventis, Martin, Hayes, Gregory, Richardson, Malloy, Sheheen, Campsen, Cleary, Setzler and Alexander

S. Printed 5/16/07--S.

Read the first time January 31, 2007.

THE COMMITTEE ON FINANCE

To whom was referred a Bill (S. 377) to amend Chapter 52, Title 48 of the 1976 code by enacting the "Energy Independence and Sustainable Investment Act of 2007" to provide that a resident taxpayer who constructs a, etc., respectfully

REPORT:

That they have duly and carefully considered the same and recommend that the same do pass with amendment:

Amend the bill, as and if amended, by striking all after the enacting words and inserting:

/ SECTION 1. Chapter 52, Title 48 of the 1976 Code is amended by adding:

"Article 10

Energy Independence and Sustainable Investment

Section 48-52-1000. This article may be cited as the 'Energy Independence and Sustainable Investment Act of 2007'.

Section 48-52-1010. As used in this article:

(1) 'Building project' means the design, construction, renovation, operation and maintenance of any inhabited physical structure used for commercial purposes and its associated project building site.

(2) 'Commercial facility project' means:

(a) a new construction building project in which the building to be constructed is larger than 10,000 conditioned square feet; or

(b) a building renovation project where the project involves more than fifty percent of the replacement value of the facility or a change in occupancy; or

'Commercial facility project' does not mean a building, regardless of size, that does not have conditioned space as defined by Standard 90.1 of the American Society of Heating, Refrigerating and Air-Conditioning Engineers. Also, 'commercial facility project' does not mean a residence.

(3) 'Commercial interior fit-out' means interior design and installation by owners or tenants of new or existing office space, typically exclusive of structural components and core and shell elements.

(4) 'GBI' means the Green Building Initiative.

(5) 'Globes' means the level of a building's sustainability and energy efficiency performance as determined by GBI's Green Globes Rating System.

(6) 'Green Globes Rating System' means the environmental building rating systems established by the Green Building Initiative.

(7) 'High-performance building' means a building designed to achieve integrated systems design and construction so as to significantly reduce or eliminate the negative impact of the built environment.

(8) 'LEED' means the U.S. Green Building Council's Leadership in Energy and Environmental Design Rating Systems.

(9) 'LEED Silver standard' means the Silver standard as set forth by USGBC's LEED Green Building Rating Systems.

(10) 'Permitting Agency' means a governmental authority that issues the certificate of occupancy for a commercial facility project.

(11) 'Renovation project' means a building project involving the modification or adaptive reuse of an existing facility.

(12) 'USGBC' means the United States Green Building Council.

Section 48-52-1020. The purpose of this article is to promote effective energy and environmental standards for construction, rehabilitation and maintenance of buildings in this State; thereby, improving the State's capacity to design, build and operate high-performance buildings, thus creating new jobs and contributing to economic growth and increasing the State's energy independence. To accomplish the objectives of this article, the State shall adopt policies and procedures that:

(1) optimize the energy performance of buildings throughout this State;

(2) increase the demand for environmentally preferable building materials, finishes and furnishings;

(3) improve environmental quality in this State by decreasing the discharge of pollutants from buildings and their manufacture;

(4) create public awareness of new technologies that can improve the health and productivity of building occupants by meeting advanced criteria for indoor air quality;

(5) improve working conditions and reduce building-related health problems;

(6) reduce the State's dependence upon imported sources of energy through buildings that conserve energy and utilize local and renewable energy sources;

(7) protect and restore this State's natural resources by avoiding development of inappropriate building sites;

(8) reduce the burden on municipal water supply and treatment by reducing potable water consumption;

(9) reduce waste generation and to manage waste through recycling and diversion from landfill disposal; and

(10) ensure commercial buildings in this State have building systems that are designed, installed, and tested to perform according to the building's design intent and its operational needs through third-party, post-construction review and verification.

Section 48-52-1030. (A) A resident taxpayer who constructs a commercial facility project in this State that is designed, constructed, and at least certified as receiving three globes using the Green Globes Rating System or receiving the LEED Silver standard may receive a credit against income taxes pursuant to Section 12-6-3630.

(B) The South Carolina Energy Office may petition the General Assembly to require a commercial facility project be certified to a high-performance building rating system standard in addition to or instead of the systems provided in this article in order to receive the credit. However, any alternate rating system adopted by the General Assembly must be no less stringent than the systems provided in this article.

Section 48-52-1040. (A) In order to become certified using a LEED rating system, a commercial facility project shall register with USGBC prior to filing the first building construction permit application with the Permitting Agency. USGBC shall have the sole discretion in determining whether a commercial facility project receives certification.

(B) In order to become certified using a Green Globes Rating System, a commercial facility project shall register with GBI prior to filing the first building construction permit application. GBI shall have the sole discretion in determining whether a commercial facility project receives certification.

Section 48-52-1050. (A)(1) A taxpayer who intends to construct a commercial facility project so as to receive three globes using the Green Globes Rating System or to receive the LEED Silver standard, or higher, may provide an environmental performance bond that is due and payable to the Permitting Agency. The environmental performance bond must be provided prior to filing the first building construction permit application with the Permitting Agency.

(2) Upon receipt of the environmental performance bond, the Permitting Agency has twenty-one days to render a decision regarding the application of all necessary permits regarding the commercial facility project. If the application is not complete, the Permitting Agency shall notify the applicant of the incomplete application and include in the notice an itemized list of the information or materials that are necessary to complete the application. The Permitting Agency shall make a good faith determination of the completeness of any application made. If the Permitting Agency fails to render a decision regarding a complete application, the Permitting Agency shall immediately return the bond to the taxpayer. Despite the return of the bond, the taxpayer is still afforded the rights allowed in this article.

(B) Upon proof of posting an environmental performance bond, any additional required building permit from the same Permitting Agency shall be free of charge.

(C) The amount of the environmental performance bond allowed in this section shall be three percent of the total cost of the commercial facility project. The maximum amount of a performance bond shall be three million dollars.

(D) The Permitting Agency shall retain the environmental performance bond until it is determined whether the commercial facility project meets the certification requirements set forth in Section 48-52-1040. If the commercial facility project is certified by a system provided in this article, the Permitting Agency shall refund the environmental performance bond to the taxpayer. If the commercial facility project fails to be certified by a system provided in this article, the taxpayer forfeits twenty percent of the environmental performance bond to the Permitting Agency as consideration for the expedited permit process. The Permitting Agency has ten calendar days to refund the applicable amount of the environmental performance bond.

(E)(1) In lieu of the bond allowed by this section, the Permitting Agency may accept an irrevocable letter of credit from a financial institution authorized to do business in this State or evidence of cash deposited in an escrow account in a financial institution in this State in the name of the licensee and the Permitting Agency.

(2) In the event that the environmental performance bond earns interest, the taxpayer and the Permitting Agency shall equally divide the interest when the bond is returned to the taxpayer.

Section 48-52-1060. Upon recommendation of the South Carolina Chapter of the USGBC, the General Assembly shall annually honor not more than five taxpayers with the South Carolina Energy Independence Leadership Award. The award shall be given to the five taxpayers who best exemplify the goals of this article as set forth in Section 48-52-1020."

SECTION 2. Article 25, Title 12 of the 1976 Code is amended by adding:

"Section 12-6-3630. (A) A resident taxpayer, whether owner or tenant, who constructs a commercial facility project in this State that is designed, constructed, and at least certified as receiving three globes using the Green Globes Rating System or receiving the LEED Silver standard is allowed a nonrefundable credit against state income taxes pursuant to Section 48-52-1030 equal to:

(1) for the first ten thousand conditioned square feet, one dollar and fifty cents of tax credit per square foot;

(2) for up to the next forty thousand conditioned square feet, seventy-five cents of tax credit per square foot; and

(3) for the next fifty thousand conditioned square feet or greater, fifty cents of tax credit per square foot.

(B) In order to qualify for the credit, a commercial facility project obtaining certification as receiving three globes using the Green Globes Rating System must earn at least twenty percent of the available points for energy performance under 'C.1.1 Energy Consumption.' A commercial facility project obtaining certification as meeting the LEED Silver standard must earn at least forty percent of the available points for energy performance under 'EA Credit 1: Optimize Energy Performance'.

(C) A taxpayer may claim the credit in the taxable year in which the commercial facility project first receives certification. The credit shall be claimed in the first year of certification and for each of the three succeeding tax years. The credit shall be distributed in four equal amounts over each of the four years. In order to claim the credit allowed by this section, the taxpayer must attach to the return a copy of the certification obtained by USGBC or GBI verifying that the commercial facility project has been certified in accordance with this section and documentation verifying that the commercial facility project met the energy performance requirements of subsection (B), along with all information that the Department of Revenue determines is necessary for the calculation of the credit provided by this section.

(D) If a commercial facility project, to which a credit is allowed to a building owner pursuant to this section, is sold or transferred with any allowable credit remaining, the remaining credit may be claimed by the new owner. The 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 commercial facility project was held by each.

(E) If a commercial facility project to which a credit is allowed to a tenant pursuant to this section and the tenancy is terminated with any allowable credit remaining, the remaining credit may be claimed by the successor tenant. The 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 commercial facility project was used by each.

(F) The Department of Revenue shall annually submit a report regarding commercial facility projects to the General Assembly that includes:

(1) the number and types of buildings designed and constructed;

(2) the amount of credit claimed in the previous taxable year; and

(3) any conflicts or barriers that hinder the effectiveness of this article."

SECTION 3. This act takes effect upon approval by the Governor and applies to commercial facility projects receiving certification after December 31, 2007. /

Renumber sections to conform.

Amend title to conform.

HUGH K. LEATHERMAN, SR. for Committee.

STATEMENT OF ESTIMATED FISCAL IMPACT

REVENUE IMPACT 1/

This bill is expected to have no impact on state revenues in FY2007-08.

Explanation

This bill would add Section 12-6-3630(A) to allow a nonrefundable state income tax credit to a resident taxpayer who constructs a commercial facility in this State that is designed, constructed, and certified to at least the LEED Silver or the LEED for Existing Buildings Silver standards set forth by the U.S. Green Building Council. The commercial facility project must have also earned at least forty percent of the available "Energy and Atmosphere Credit 1: Optimize Energy Performance" points LEED allows for energy performance in each year of certification or re-certification in order for the taxpayer to qualify for the tax credit. According to the United States Green Building Council LEED database, there are currently no commercial facilities in South Carolina that qualify for the tax credit based upon these criteria. The revenue projection anticipates that no commercial facilities will meet the criteria of the provision. This bill, therefore, is expected to have no impact on state revenues in FY2007-08.

Approved By:

William C. Gillespie

Board of Economic Advisors

1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact by the BEA, or Section 2-7-76 for a local revenue impact or Section 6-1-85(B) for an estimate of the shift in local property tax incidence by the Office of Economic Research.

STATEMENT OF ESTIMATED FISCAL IMPACT

ESTIMATED FISCAL IMPACT ON GENERAL FUND EXPENDITURES:

$0 (No additional expenditures or savings are expected)

ESTIMATED FISCAL IMPACT ON FEDERAL & OTHER FUND EXPENDITURES:

$0 (No additional expenditures or savings are expected)

EXPLANATION OF IMPACT:

State Budget and Control Board

A review of this Bill by the Board indicates there will be no impact on the General Fund of the State or on Federal and/or other funds.

Department of Revenue

The Department reports this Bill will have a minimal cost, but the cost can be absorbed by the agency.

LOCAL GOVERNMENT IMPACT:

Section 48-52-1050 (B) may have a negative impact in local government revenue. However, responses indicate such an impact would be minimal.

SPECIAL NOTES:

The Board of Economic Advisors is the appropriate entity to address any revenue impact associated with this Bill.

Approved By:

Harry Bell

Office of State Budget

A BILL

TO AMEND CHAPTER 52, TITLE 48 OF THE 1976 CODE BY ENACTING THE "ENERGY INDEPENDENCE AND SUSTAINABLE INVESTMENT ACT OF 2007" TO PROVIDE THAT A RESIDENT TAXPAYER WHO CONSTRUCTS A COMMERCIAL BUILDING THAT MEETS THE STANDARDS SET FORTH BY THE U.S. GREEN BUILDING COUNCIL SHALL RECEIVE A TAX CREDIT, TO PROVIDE THAT A TAXPAYER WHO APPLIES FOR THE TAX CREDIT MAY PARTICIPATE IN AN EXPEDITED PERMIT PROCESS UPON THE POSTING OF AN ENVIRONMENTAL PERFORMANCE BOND, TO PROVIDE THAT THE DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL SHALL ADMINISTER THE ARTICLE, AND TO PROVIDE THAT ANNUALLY THE GENERAL ASSEMBLY SHALL HONOR NOT MORE THAN FIVE TAXPAYERS WHO PROMOTE EFFECTIVE ENERGY AND ENVIRONMENTAL STANDARDS.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Chapter 52, Title 48 of the 1976 Code is amended by adding:

"Article 10

Energy Independence and Sustainable Investment

Section 48-52-1000. This article may be cited as the 'Energy Independence and Sustainable Investment Act of 2007'.

Section 48-52-1010. As used in this article:

(1) 'Building project' means the design, construction, renovation, operation and maintenance of any inhabited physical structure used for commercial purposes and its associated project building site.

(2) 'Commercial facility project' means:

(a) a new construction building project in which the building to be constructed is larger than 10,000 gross square feet; or

(b) a building renovation project where the project involves more than fifty percent of the replacement value of the facility or a change in occupancy; or

(4) 'Department' means the Department of Health and Environmental Control.

(5) 'High-performance building' means a building designed to achieve integrated systems design and construction so as to significantly reduce or eliminate the negative impact of the built environment.

(6) 'LEED' means the U.S. Green Building Council's Leadership in Energy and Environmental Design.

(7) 'LEED for Existing Buildings Silver standard' means the Silver standard as set forth by the LEED Green Building Rating System for Existing Buildings.

(8) 'LEED Silver standard' means the Silver standard as set forth by the LEED Green Building Rating System for New Construction and Major Renovations.

(9) 'Permitting Agency' means a governmental authority that issues the certificate of occupancy for a commercial facility project.

(10) 'Renovation project' means a building project involving the modification or adaptive reuse of an existing facility.

Section 48-52-1020. The purpose of this article is to promote effective energy and environmental standards for construction, rehabilitation and maintenance of buildings in this State; thereby, improving the State's capacity to design, build and operate high-performance buildings thus creating new jobs and contributing to economic growth and increasing the State's energy independence. To accomplish the objectives of this article, the State shall adopt policies and procedures that: