HOUSE BILL NO. 5186

October 19, 2023, Introduced by Reps. Roth, MacDonell, Neyer, BeGole and Steckloff and referred to the Committee on Local Government and Municipal Finance.

A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

(MCL 206.1 to 206.847) by adding section 677.

the people of the state of michigan enact:

Sec. 677. (1) For tax years that begin on and after January 1, 2024, a taxpayer that incurs allowable costs attributable to an eligible project may claim a credit against the tax imposed under this part equal to the following percentages of those allowable costs:

(a) 3% for an eligible project that receives a Silver LEED certification from the USGBC.

(b) 5% for an eligible project that receives a Gold LEED certification from the USGBC.

(c) 7% for an eligible project that receives a Platinum LEED certification from the USGBC.

(2) To be eligible for a credit under this section, the taxpayer shall obtain an eligibility certificate from the commission based on the submission of evidence from the USGBC of the LEED certification rating for the eligible project and submit documentation of allowable costs in the form and manner as prescribed by the department. The taxpayer shall attach the eligibility certificate received from the commission that provides the LEED certification rating and the amount of the credit approved to the annual return on which a credit under this section is claimed.

(3) The total amount of credits allowed under this section shall not exceed $30,000,000.00 each fiscal year. For each fiscal year, the commission shall approve and certify credits based on the date of the eligibility certificate. The certification of any credit for an eligible project that is deferred due to the cap under this subsection must be approved and certified for the immediately succeeding tax year.

(4) If the credit allowed under this section for the tax year and any unused carryforward of the credit allowed by this section exceed the taxpayer's tax liability for the tax year, that portion that exceeds the tax liability for the tax year shall not be refunded but may be carried forward to offset tax liability in subsequent tax years for 3 years or until used up, whichever occurs first.

(5) As used in this section:

(a) "Allowable costs", except as provided under subparagraph (vi), means the following amounts attributable to an eligible project and expended during the tax year for which the credit is being claimed and the immediately preceding 3 tax years for that eligible project, including, but not limited to:

(i) Construction or rehabilitation costs.

(ii) Commissioning costs.

(iii) Architectural and engineering fees allocable to the eligible project, including energy modeling and certification fees.

(iv) Site costs, such as temporary electric wiring, scaffolding, demolition costs, and fencing and security facilities.

(v) Costs of carpeting, partitions, walls and wall coverings, ceilings, lighting, plumbing, electrical wiring, heating, cooling, ventilation, and mechanical costs.

(vi) Allowable costs does not include the purchase of real property, any remediation costs, or any costs attributable to telephone systems or computers.

(b) "Commission" means the new state tax commission created within the department under Executive Reorganization Order No. 2009-36, MCL 209.131.

(c) "Eligible project" means the construction or renovation of commercial property, including, but not limited to, multifamily residential property consisting of 5 or more units located in this state that earns LEED certification from the USGBC under the LEED green building rating system at the silver or higher level or other green building certification determined by the commission to be equivalent with respect to climate mitigation and resilience outcomes.

(d) "LEED certification" means the Leadership in Energy and Environmental Design certification level assigned under the LEED green building rating system.

(e) "LEED green building rating system" means the Leadership in Energy and Environmental Design green building rating system developed by the USGBC as of the date that the eligible project is registered with the USGBC.

(f) "USGBC" means the United States Green Building Council, which measures and evaluates the energy and environmental performance of a building according to its own Leadership in Energy and Environmental Design rating system.