Commercial Building Energy Project Credit

(a)

In general

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business related credits) is amended by adding at the end the following new section:

45R.

Commercial Building Energy Project Credit

(a)

Allowance of credit

For purposes of section 38, the commercial building energy project credit is an amount equal to 35 percent of the cost of energy conservation commercial building property placed in service by the taxpayer. (b)

Maximum amount of credit

The credit under subsection (a) with respect to any building for any taxable year shall not exceed the excess (if any) of— (1)the product of— (A)$4.00, and (B)the square footage of the building, over (2)the aggregate credit allowed under subsection (a) with respect to the building for all prior taxable years. (c)

Energy conservation commercial building property

For purposes of this section, the term energy conservation commercial building property means property— (1)with respect to which depreciation (or amortization in lieu of depreciation) is allowable, (2)which is installed on or in any building which is located in the United States, and (3)which is installed as part of a commercial building energy project. (d)

Commercial building energy project

For purposes of this section, the term commercial building energy project means a project— (1)(A)to install energy efficient commercial building property (as defined in section 179D(c)), or (B)with respect to a building, to achieve an energy consumption rate which is not more 60 percent of the energy consumption rate under the ASHRAE Standard 90.1–2007 for commercial buildings, and (2)with respect to which credit amounts have been allocated by an energy credit agency under subsection (e). (e)

Allocations of credit amounts

(1)

Credit limitation with respect to project

The amount of credit determined under this section for any taxable year with respect to any project shall not exceed the State energy credit dollar amount allocated to such project under this subsection. (2)

Credit dollar amount for agencies

(A)

In general

The aggregate credit dollar amount which an energy credit agency may allocate for any calendar year is the limitation allocated under subparagraph (B) for such calendar year to such agency. (B)

Credit limitation allocated to State energy agencies

(i)

In general

The Secretary shall allocate for each calendar year the national energy credit limitation among the States in proportion to the population of the State. Such limitation shall be allocated to the energy credit agency of each such State. If there is more than 1 energy credit agency of a State, all such agencies shall be treated as a single agency. (ii)

National energy credit limitation

There is a national energy credit limitation for each calendar year of $100,000,000. (iii)

Population

For purposes of this paragraph, population shall be determined in accordance with section 146(j). (3)

Special rules

(A)

Building must be located within jurisdiction of credit agency

An energy credit agency may allocate its aggregate energy credit dollar amount only to projects with respect to buildings located in the jurisdiction of the governmental unit of which such agency is a part. (B)

Agency allocations in excess of limit

If the aggregate energy credit dollar amounts allocated by an energy credit agency for any calendar year exceed the portion of the national energy credit limitation allocated to such agency for such calendar year, the energy credit dollar amounts so allocated shall be reduced (to the extent of such excess) for projects in the reverse of the order in which the allocations of such amounts were made. (4)

Energy credit agency

The term energy credit agency means any agency authorized to carry out this subsection. (f)

Responsibilities of energy credit agencies

(1)

In general

Notwithstanding any other provision of this section, the energy credit dollar amount with respect to any project shall be zero unless such amount was allocated pursuant to a qualified allocation plan of the energy credit agency which is approved by the governmental unit (in accordance with rules similar to the rules of section 147(f)(2) (other than subparagraph (B)(ii) thereof)) of which such agency is a part. (2)

Qualified allocation plan

For purposes of this subsection— (A)

In general

The term qualified allocation plan means any plan which meets the requirements of subparagraphs (B) through (E). (B)

Selection criteria

The requirements of this subparagraph are met if such plan sets forth selection criteria to be used to determine priorities of the energy credit agency which are appropriate to local conditions. An energy credit agency may establish selection criteria which are more stringent than the requirements under subsection (d)(1)(B). (C)

Project preference

The requirements of this subparagraph are met if such plan gives preference in allocating energy credit dollar amounts among selected projects to those projects which achieve the most energy savings. A plan shall not be treated as failing to meet the requirements of this subsection solely by reason of allocating credit dollar amounts ratably among projects with proportionally more allocated to those projects which achieve higher energy savings. (D)

Compliance monitoring

The requirements of this subparagraph are met if such plan establishes a program which— (i)is certified by the Secretary as meeting the requirements of this subparagraph, and (ii)provides for monitoring by the agency (or an agent or other private contractor of such agency) for noncompliance with the provisions of this section and notifying the Internal Revenue Service of any such noncompliance of which such agency becomes aware. (E)

Certification methods

(i)

In general

The requirements of this subparagraph are met if such plan has a certification procedure for inspection and testing by qualified individuals under which only projects complying with energy-savings plans and targets are certified. (ii)

Qualified individuals

Individuals qualified to determine compliance shall be only those individuals who are recognized by the energy credit agency for such purposes. (iii)

Pre-certification

The requirements of this subparagraph shall be treated as met if the plan includes a pre-certification procedure for commercial building energy projects, unless application fees with respect to a project under such pre-certification procedure exceeds 1 percent of the estimated cost of such project. (g)

Transfer of credit

(1)

In general

A person described in paragraph (4) may transfer the credit which would (but for the tax-exempt status of such person) be allowable under subsection (a) with respect to energy conservation commercial building property placed in service by such person. A credit may only be transferred once and may only be transferred to another person not described in such paragraph. (2)

Treatment of transferee

The person to whom the credit is transferred under this subsection shall be treated for purposes of this title as the taxpayer with respect to whom the credit is allowable under subsection (a). (3)

Treatment of transferor

(A)

Transfer proceeds treated as arising from essential government function

Any proceeds derived by a person described in paragraph (4)(B) from the transfer of any credit under this subsection shall be treated as arising from the exercise of an essential government function. (B)

Credit not income

Any proceeds derived from the transfer of a credit under this subsection shall not treated as income for purposes of this title. (4)

Persons described

A person is described in this paragraph if the person is— (A)an organization exempt from tax under section 501(a), or (B)any State or political subdivision thereof, the District of Columbia, any possession of the United States, or any agency or instrumentality of any of the foregoing. (h)

Denial of double benefit

No credit shall be allowed under this section for any expense for which a deduction is allowed under any other provision of this chapter. (i)

Basis reduction

For purposes of this subtitle, if a credit is allowed under this section with respect to any energy conservation commercial building property, the basis of such property shall be reduced by the amount of the credit so allowed. (j)

Regulations

The Secretary may prescribe such regulations as may be necessary or appropriate to carry out this section.

(b)

State guidance

The Secretary of Energy, in consultation with the Secretary of Treasury, shall develop and provide guidance to States and energy credit agencies (as defined in section 45R(e) of the Internal Revenue Code of 1986) for establishing methods of measuring overall energy savings of commercial building energy projects (as defined in section 45R(e) of such Code), including methods for comparing energy savings ratings under industry energy standards for commercial buildings other than ASHRAE Standard 90.1–2007 with such ASHRAE standard. (c)

Credit treated as part of general business credit

Subsection (b) of section 38 of such Code is amended by striking plus at the end of paragraph (33), by striking the period at the end of paragraph (34) and inserting , plus, and by adding at the end the following new paragraph:

(35)commercial building energy credit determined under section 45R(a).

(d)

Conforming amendment

Subsection (a) of section 1016 of such Code is amended by striking and at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting , and, and by adding at the end the following new paragraph:

(38)to the extent provided in section 45R(i).

(e)

Clerical amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

Sec. 45R. Commercial building energy project credit.

(f)

Effective date

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.