81R793 CBH-D

By: Ellis S.B. No. 128

A BILL TO BE ENTITLED

AN ACT

relating to a franchise tax credit for certain investments made in relation to sustainable commercial building projects.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 171, Tax Code, is amended by adding Subchapter V to read as follows:

SUBCHAPTER V. TAX CREDIT FOR INVESTMENTS IN SUSTAINABLE COMMERCIAL

BUILDING PROJECTS

Sec. 171.901. DEFINITIONS. In this subchapter:

(1) "Commercial building" means a building that will be used in connection with a trade or business.

(2) "Commercial building project" means:

(A) the construction of a new commercial building;

(B) a renovation of an existing commercial building that:

(i) provides additional square footage;

(ii) changes the functional use of the building; or

(iii) begins not later than the 180th day after the date the ownership of the building changes; or

(C) a major renovation of at least 50 percent of the square footage of a commercial building that involves a change in at least three of the building's systems, including the building's envelope, space conditioning, lighting, or water heating and process.

(3) "Sustainable commercial building project" means a commercial building project that is designed and implemented so that the commercial building or the renovated portion of the commercial building achieves certification under a high-performance building standard that:

(A) is developed and revised through a consensus-based process;

(B) provides minimum requirements for energy use, natural resources use, and indoor air quality;

(C) requires substantiating documentation for certification;

(D) employs third-party, postconstruction or postrenovation review and verification for certification; and

(E) is determined by the state energy conservation office to be nationally recognized in the building industry.

Sec. 171.902. ENTITLEMENT TO CREDIT. A taxable entity is entitled to a credit in the amount and under the conditions and limitations provided by this subchapter against the tax imposed under this chapter.

Sec. 171.903. QUALIFICATION. Except as provided by Section 171.905, a taxable entity qualifies for a credit under this subchapter only if:

(1) the taxable entity completes a sustainable commercial building project to construct or renovate a commercial building in this state that the taxable entity owns or has contracted to purchase; and

(2) the commercial building or the renovated portion of the commercial building to which the credit relates receives the appropriate certification before the original due date of the first report on which the taxable entity may claim the credit under Section 171.904(c) or (d).

Sec. 171.904. AMOUNT; LIMITATIONS. (a) The amount of a credit under this subchapter is equal to 35 percent of an amount equal to the sum of:

(1) $10 per square foot for the first 10,000 square feet added or affected by the sustainable commercial building project;

(2) $5 per square foot for the next 40,000 square feet added or affected by the sustainable commercial building project; and

(3) $2 per square foot for any additional square feet added or affected by the sustainable commercial building project.

(b) In determining the square footage that may be included under Subsection (a), a taxable entity:

(1) may include:

(A) temperature-conditioned floor areas; and

(B) the ground-level footprint areas of parking structures or parking structure elements of the building; and

(2) may not include:

(A) exterior square footage under overhangs, awnings, or canopies; or

(B) walkways or unconditioned plaza areas beneath a temperature-conditioned portion of the building.

(c) Except as provided by Subsection (d), a taxable entity must claim a credit under this subchapter over five consecutive reporting periods beginning with the report based on the period during which the sustainable commercial building project to which the credit relates was completed. The amount of the credit a taxable entity may claim on a report is equal to:

(1) on the first two reports for which the taxable entity may claim the credit, 35 percent of the total amount of the credit; and

(2) on the last three reports on which the taxable entity may claim the credit, 10 percent of the total amount of the credit.

(d) A taxable entity may claim the entire amount of the credit on the report based on the period during which the sustainable commercial building project to which the credit relates was completed if the sum of the amounts determined under Subsections (a)(1)-(3) does not exceed $20,000.

(e) The total credit claimed under this subchapter for a report may not exceed the amount of franchise tax due after any other applicable credits.

(f) A taxable entity may not carry any unused credit forward to a subsequent report.

Sec. 171.905. SALE OF TAX CREDIT. (a) An entity that is not a taxable entity accrues a credit under this subchapter if the entity completes a sustainable commercial building project to construct or renovate a commercial building in this state that the entity owns or has contracted to purchase.

(b) An entity that accrues a credit under this section may sell the rights to the credit to one or more taxable entities. A taxable entity must purchase the rights with a lump-sum cash payment after the date the entity accrues the credit but before the original due date of the first report on which the taxable entity may claim the credit under Section 171.904(c) or (d). The total compensation an entity receives for the rights to a credit must be at least equal to:

(1) 25.5 percent of the sum of the amounts determined under Sections 171.904(a)(1)-(3) if the sum is equal to more than $20,000; or

(2) 30.5 percent of the sum of the amounts determined under Sections 171.904(a)(1)-(3) if the sum is equal to not more than $20,000 and each taxable entity purchasing the rights intends to claim the entire amount of the purchased credit on only one report.

(c) An entity that sells the rights to an accrued credit to more than one taxable entity may divide those rights in any manner the entity believes is appropriate provided that:

(1) the entity sells the rights to the entire credit; and

(2) the entity receives total compensation for that credit that is at least equal to the appropriate amount required under Subsection (b).

Sec. 171.906. CERTIFICATION OF ELIGIBILITY. (a) For the initial and each succeeding report on which a credit is claimed under this subchapter, the taxable entity must file with its report, on a form prescribed by the comptroller, information that sufficiently demonstrates that the taxable entity is eligible for the credit. If the taxable entity purchases the rights to a credit under Section 171.905, the taxable entity must also file information that sufficiently demonstrates that the entity that sold the credit was eligible for the credit.

(b) The burden of establishing eligibility for, entitlement to, and the value of the credit is on the taxable entity.

Sec. 171.907. ASSIGNMENT PROHIBITED. A taxable entity may not convey, assign, or transfer the credit allowed under this subchapter to another entity unless all of the assets of the taxable entity are conveyed, assigned, or transferred.

SECTION 2. This Act applies only to a report originally due on or after the effective date of this Act.

SECTION 3. This Act takes effect January 1, 2010.