GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2009
H 4
HOUSE BILL 1829*
Committee
Substitute Favorable 6/3/10
Third Edition Engrossed 6/9/10
Senate Finance Committee Substitute Adopted 6/29/10
Short Title: Renewable Energy Incentives. |
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Sponsors: |
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Referred to: |
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May 20, 2010
A BILL TO BE ENTITLED
AN ACT to PROMOTE THE USE OF RENEWABLE ENERGY BY extending the credit for constructing renewable fuel FACILITIES and the credit for biodiesel producers, REVISING THE TAX CREDIT FOR INVESTING IN RENEWABLE ENERGY PROPERTY, REINSTATING and expanding THE TAX CREDIT FOR CONSTRUCTING A RENEWABLE ENERGY PROPERTY FACILITY, CLARIFYING THE AUTHORITY OF LOCAL GOVERNMENTS TO FINANCE ENERGY PROGRAMS, clarifying That real property donated for a conservation purpose can be used only for that purpose, and ensuring that homeowners ASSOCIATION restrictions do not prevent the use of solar energy systems.
The General Assembly of North Carolina enacts:
TO EXTEND THE CREDIT FOR CONSTRUCTING RENEWABLE FUEL FACILITIES AND THE CREDIT FOR BIODIESEL PRODUCERS
SECTION 1.(a) G.S. 105-129.16D(d) reads as rewritten:
"§ 105-129.16D. Credit for constructing renewable fuel facilities.
…
(d) Sunset. - This
section is repealed effective for facilities placed in service on or after
January 1, 2011.2013."
SECTION 1.(b) G.S. 105-129.16F(b) reads as rewritten:
"§ 105-129.16F. Credit for biodiesel producers.
…
(b) Sunset. - This
section is repealed for taxable years beginning on or after January 1, 2010.2013."
CHANGES TO CREDIT FOR INVESTING IN RENEWABLE ENERGY PROPERTY
SECTION 2.(a) G.S. 105-129.15 reads as rewritten:
"§ 105-129.15. Definitions.
The following definitions apply in this Article:
…
(2) Cost. - In the
case of property owned by the taxpayer, cost is determined pursuant to
regulations adopted under section 1012 of the Code, subject to the limitation
on cost provided in section 179 of the Code. In the case of property the
taxpayer leases from another, cost is value as determined pursuant to G.S. 105-130.4(j)(2).G.S. 105-130.4(j)(2),
unless the property is renewable energy property for which the taxpayer claims
either a federal energy credit under section 48 of the Code or a federal grant
in lieu of that credit and makes a lease pass-through election under the Code.
In this circumstance, the cost of the leased renewable energy property is the
cost determined under the Code.
…
(4b) Installation of renewable energy property. - Renewable energy property that, standing alone or in combination with other machinery, equipment, or real property, is able to produce usable energy on its own.
...
(7) Renewable energy property. - Any of the following machinery and equipment or real property:
a. Biomass equipment that uses renewable biomass resources for biofuel production of ethanol, methanol, and biodiesel; anaerobic biogas production of methane utilizing agricultural and animal waste or garbage; or commercial thermal or electrical generation. The term also includes related devices for converting, conditioning, and storing the liquid fuels, gas, and electricity produced with biomass equipment.
b. Combined heat and power system property. - Defined in section 48 of the Code.
c. Geothermal equipment that meets either of the following descriptions:
1. It is a heat pump that uses the ground or groundwater as a thermal energy source to heat a structure or as a thermal energy sink to cool a structure.
2. It uses the internal heat of the earth as a substitute for traditional energy for water heating or active space heating or cooling.
b.d. Hydroelectric
generators located at existing dams or in free-flowing waterways, and related
devices for water supply and control, and converting, conditioning, and storing
the electricity generated.
c.e. Solar
energy equipment that uses solar radiation as a substitute for traditional
energy for water heating, active space heating and cooling, passive heating,
daylighting, generating electricity, distillation, desalination,
detoxification, or the production of industrial or commercial process heat. The
term also includes related devices necessary for collecting, storing,
exchanging, conditioning, or converting solar energy to other useful forms of
energy.
d.f. Wind
equipment required to capture and convert wind energy into electricity or
mechanical power, and related devices for converting, conditioning, and storing
the electricity produced.produced or relaying the electricity by
cable from the turbine motor to the power grid.
e. Geothermal
heat pumps that use the ground or groundwater as a thermal energy source to
heat a structure or as a thermal energy sink to cool a structure.
f.
Geothermal equipment that uses the internal heat of the earth as a
substitute for traditional energy for water heating or active space heating and
cooling."
SECTION 2.(b) G.S. 105-129.16A reads as rewritten:
"§ 105-129.16A. Credit for investing in renewable energy property.
(a) Credit. - If a
taxpayer that has constructed, purchased, or leased renewable energy property
places it in service in this State during the taxable year, the taxpayer is
allowed a credit equal to thirty-five percent (35%) of the cost of the
property. In the case of renewable energy property that serves a single-family
dwelling,nonbusiness purpose, the credit must be taken for the
taxable year in which the property is placed in service. For all other
renewable energy property, the entire credit may not be taken for the taxable
year in which the property is placed in service but must be taken in five equal
installments beginning with the taxable year in which the property is placed in
service. Upon request of a taxpayer that leases renewable energy property,
the lessor of the property must give the taxpayer a statement that describes
the renewable energy property and states the cost of the property.
(b) Expiration. - If, in one of the years in which the installment of a credit accrues, the renewable energy property with respect to which the credit was claimed is disposed of, taken out of service, or moved out of State, the credit expires and the taxpayer may not take any remaining installment of the credit. The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105-129.17. No credit is allowed under this section to the extent the cost of the renewable energy property was provided by public funds.
(c) Ceilings. - The credit allowed by this section may not exceed the applicable ceilings provided in this subsection.
(1) Nonresidential
Property. Business. - A ceiling of two million five hundred thousand
dollars ($2,500,000) per installation applies to each installation of
renewable energy property placed in service for any purpose other than
residential. a business purpose. Renewable energy property is placed in
service for a business purpose if the useful energy generated by the property
is offered for sale or is used on-site for a purpose other than providing
energy to a residence.
(2) Residential
Property.Nonbusiness. - The following ceilings apply to each
installation of renewable energy property placed in service for residential
purposes: a nonbusiness purpose. The ceiling applies to each residence:
a. One
thousand four hundred dollars ($1,400) per dwelling unit for solar
energy equipment for domestic water heating, including pool heating.
b. Three
thousand five hundred dollars ($3,500) per dwelling unit for solar
energy equipment for active space heating, combined active space and domestic
hot water systems, and passive space heating.
c. Ten
thousand five hundred dollars ($10,500) per installation for any other
renewable energy property for residential purposes.Eight thousand four
hundred dollars ($8,400) for geothermal equipment.
d. Eight
thousand four hundred dollars ($8,400) per installation for a geothermal heat
pump or geothermal equipment.Ten thousand five hundred dollars ($10,500)
for any other renewable energy property.
(d) No Double Credit. - A taxpayer that claims any other credit allowed under this Chapter with respect to renewable energy property may not take the credit allowed in this section with respect to the same property. A taxpayer may not take the credit allowed in this section for renewable energy property the taxpayer leases from another unless the taxpayer obtains the lessor's written certification that the lessor will not claim a credit under this Chapter with respect to the property.
(e) Sunset. - This section is repealed effective for renewable energy property placed into service on or after January 1, 2016."
SECTION 2.(c) G.S. 105-259(b) is amended by adding the following new subdivision to read:
"(40) To furnish to a taxpayer claiming a credit under G.S. 105-129.16A information used by the Secretary to adjust the amount of the credit claimed by the taxpayer."
SECTION 2.(d) This section is effective for taxable years beginning on or after January 1, 2010.
REINSTATE AND EXPAND CREDIT FOR A RENEWABLE ENERGY PROPERTY FACILITY
SECTION 3.(a) Article 3B of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-129.16I. Credit for a renewable energy property facility.
(a) Credit. - A taxpayer that places in service in this State a commercial facility for the manufacture of renewable energy property or a major component subassembly for a solar array or a wind turbine is allowed a credit. A taxpayer places a facility in service if it constructs the facility or converts its existing manufacturing facility to change the product it manufactures. For a taxpayer that constructs a facility, the credit is twenty-five percent (25%) of the taxpayer's cost to construct and equip the facility. For a taxpayer that converts a facility, the credit is twenty-five percent (25%) of the taxpayer's cost to convert and equip the existing facility. A taxpayer that claims any other credit allowed under this Chapter with respect to the facility may not take the credit allowed in this section with respect to that facility.
(b) Installments. - The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in five equal annual installments beginning with the taxable year in which the facility is placed in service. If, in one of the years in which the installment of a credit accrues, the facility with respect to which the credit was claimed is disposed of or taken out of service, the credit expires and the taxpayer may not take any remaining installment of the credit. The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105-129.17.
(c) Sunset. - This section is repealed effective for a renewable energy property facility placed in service on or after January 1, 2014."
SECTION 3.(b) This section is effective for taxable years beginning on or after January 1, 2011.
CLARIFY LOCAL GOVERNMENT AUTHORITY TO FINANCE ENERGY PROGRAMS
SECTION 4.(a) G.S. 153A-455 reads as rewritten:
"§ 153A-455.
Revolving loan program for energyProgram to finance energy
improvements.
(a) Purpose. - The General Assembly finds it is in the best interest of the citizens of North Carolina to promote and encourage renewable energy and energy efficiency within the State in order to conserve energy, promote economic competitiveness, and expand employment in the State. The General Assembly also finds that a county has an integral role in furthering this purpose by promoting and encouraging renewable energy and energy efficiency within the county's territorial jurisdiction. In furtherance of this purpose, a county may establish a program to finance the purchase and installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently affixed to residential, commercial, or other real property.
(b) Revolving
Loan Fund.Financing Assistance - A county may establish a revolving
loan fund and a loan loss reserve fund for the purpose of providing
loans to financefinancing or assisting in the financing of the
purchase and installation of distributed generation renewable energy sources or
energy efficiency improvements that are permanently fixed to residential,
commercial, or other real property. A county may establish other local
government energy efficiency and distributed generation renewable energy source
finance programs funded through federal grants. A county may use Energy
Efficiency and Conservation Block Grant Funds State and federal grants
and loans and its unrestricted general revenue to fund the
revolving loan fund.for this financing. The annual interest rate
charged for the use of funds from the revolving fund may not exceed eight
percent (8%) per annum, excluding other fees for loan application review and
origination. The term of any loan originated under this section may not be
greater than 15 years.20 years.
(c) Definition. - As used in this Article, "renewable energy source" has the same meaning as "renewable energy resource" in G.S. 62-133.8."
SECTION 4.(b) G.S. 153A-149(c) is amended by adding a new subdivision to read:
"(10c) Energy Financing. - To provide financing for renewable energy and energy efficiency in accordance with a program established under G.S. 153A-455."
SECTION 4.(c) G.S. 160A- 459.1 reads as rewritten:
"§ 160A-459.1.
Revolving loan program for Program to finance energy
improvements.
(a) Purpose. - The General Assembly finds it is in the best interest of the citizens of North Carolina to promote and encourage renewable energy and energy efficiency within the State in order to conserve energy, promote economic competitiveness, and expand employment in the State. The General Assembly also finds that a city has an integral role in furthering this purpose by promoting and encouraging renewable energy and energy efficiency within the city's territorial jurisdiction. In furtherance of this purpose, a city may establish a program to finance the purchase and installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently affixed to residential, commercial, or other real property.
(b) Revolving
Loan Fund Financing Assistance. - A city may establish a revolving
loan fund and a loan loss reserve fund for the purpose of providing
loans to finance financing or assisting in the financing of the
purchase and installation of distributed generation renewable energy sources or
energy efficiency improvements that are permanently fixed to residential,
commercial, or other real property. A city may establish other local
government energy efficiency and distributed generation renewable energy source
finance programs funded through federal grants. A city may use Energy
Efficiency and Conservation Block Grant Funds State and federal grants
and loans and its unrestricted general revenue to fund the
revolving loan fund. for this financing. The annual interest rate
charged for the use of funds from the revolving fund may not exceed eight
percent (8%) per annum, excluding other fees for loan application review and
origination. The term of any loan originated under this section may not be
greater than 15 years.20 years.
(c) Definition. - As used in this Article, "renewable energy source" has the same meaning as "renewable energy resource" in G.S. 62-133.8."
SECTION 4.(d) G.S. 160A-209(c) is amended by adding a new subdivision to read:
"(10b) Energy Financing. - To provide financing for renewable energy and energy efficiency in accordance with a program established under G.S. 160A-459.1."
CLARIFY THAT REAL PROPERTY DONATED FOR A CONSERVATION PURPOSE CAN BE USED ONLY FOR THAT PURPOSE
SECTION 5.(a) G.S. 105-130.34(a) reads as rewritten:
"(a) Any C
Corporation that makes a qualified donation of an interest in real property
located in North Carolina during the taxable year that is useful for (i) public
beach access or use, (ii) public access to public waters or trails, (iii) fish
and wildlife conservation, (iv) forestland or farmland conservation, (v)
watershed protection, (vi) conservation of natural areas as that term is
defined in G.S. 113A-164.3(3), (vii) conservation of natural or scenic
river areas as those terms are used in G.S. 113A-34, (viii) conservation
of predominantly natural parkland, or (ix) historic landscape conservation is
allowed a credit against the tax imposed by this Part equal to twenty-five
percent (25%) of the fair market value of the donated property interest. To be
eligible for this credit, the interest in real property must be donated in
perpetuity to and accepted by for one of the qualifying uses listed
in this subsection and accepted in perpetuity for the qualifying use for which
the property is donated. The person to whom the property is donated must be the
State, a local government, or a body that is both organized to receive and
administer lands for conservation purposes and qualified to receive charitable
contributions pursuant to G.S. 105-130.9. Lands required to be dedicated
pursuant to local governmental regulation or ordinance and dedications made to
increase building density levels permitted under a regulation or ordinance are
not eligible for this credit.
The credit allowed under this section for one or more qualified donations made in a taxable year may not exceed five hundred thousand dollars ($500,000). To support the credit allowed by this section, the taxpayer must file with the income tax return for the taxable year in which the credit is claimed the following:
(1) A certification by the Department of Environment and Natural Resources that the property donated is suitable for one or more of the valid public benefits set forth in this subsection.
(2) A self-contained appraisal report or summary appraisal report as defined in Standards Rule 2-2 in the latest edition of the Uniform Standards of Professional Appraisal Practice as promulgated by the Appraisal Foundation for the property. For fee simple absolute donations of real property, a taxpayer may submit documentation of the county's appraised value of the donated property, as adjusted by the sales assessment ratio, in lieu of an appraisal report."
SECTION 5.(b) G.S. 105-151.12(a) reads as rewritten:
"(a) An individual
or pass-through entity that makes a qualified donation of an interest in real
property located in North Carolina during the taxable year that is useful for
(i) public beach access or use, (ii) public access to public waters or trails,
(iii) fish and wildlife conservation, (iv) forestland or farmland conservation,
(v) watershed protection, (vi) conservation of natural areas as that term is
defined in G.S. 113A-164.3(3), (vii) conservation of natural or scenic
river areas as those terms are used in G.S. 113A-34, (viii) conservation
of predominantly natural parkland, or (ix) historic landscape conservation is
allowed a credit against the tax imposed by this Part equal to twenty-five
percent (25%) of the fair market value of the donated property interest. To be
eligible for this credit, the interest in property must be donated in perpetuity
to and accepted by for one of the qualifying uses listed in this
subsection and accepted in perpetuity for the qualifying use for which the
property is donated. The person to whom the property is donated must be the
State, a local government, or a body that is both organized to receive and
administer lands for conservation purposes and qualified to receive charitable
contributions under the Code. Lands required to be dedicated pursuant to local
governmental regulation or ordinance and dedications made to increase building
density levels permitted under a regulation or ordinance are not eligible for
this credit.
To support the credit allowed by this section, the taxpayer must file with the income tax return for the taxable year in which the credit is claimed the following:
(1) A certification by the Department of Environment and Natural Resources that the property donated is suitable for one or more of the valid public benefits set forth in this subsection. The certification for a qualified donation made by a pass-through entity must be filed by the pass-through entity.
(2) A self-contained or summary appraisal report as defined in Standards Rule 2-2 in the latest edition of the Uniform Standards of Professional Appraisal Practice as promulgated by the Appraisal Foundation for the property. For fee simple absolute donations of real property, a taxpayer may submit documentation of the county's appraised value of the donated property, as adjusted by the sales assessment ratio, in lieu of an appraisal report."
ENSURE THAT HOMEOWNERS ASSOCIATION RESTRICTIONS DO NOT PREVENT THE USE OF SOLAR ENERGY SYSTEMS
SECTION 6.(a) G.S. 22B-20 reads as rewritten:
"§ 22B-20. Deed restrictions and other agreements prohibiting solar collectors.
(a) The intent of the General Assembly is to protect the public health, safety, and welfare by encouraging the development and use of solar resources and by prohibiting deed restrictions, covenants, and other similar agreements that could have the ultimate effect of driving the costs of owning and maintaining a residence beyond the financial means of most owners.
(b) Except as
provided in subsection (d) of this section, anyA deed restriction,
covenant, or similar binding agreement that runs with the land that would
prohibit, or have the effect of prohibiting, the installation of a solar
collector that gathers solar radiation as a substitute for traditional energy
for water heating, active space heating and cooling, passive heating, or
generating electricity for a residential property on land subject to the deed
restriction, covenant, or agreement is void and unenforceable. As used in this
section, the term "residential property" means property where the
predominant use is for residential purposes. The term "residential
property" does not include any condominium created under Chapter 47A or
47C of the General Statutes located in a multi-story building containing units
having horizontal boundaries described in the declaration. As used in this
section, the term "declaration" has the same meaning as in
G.S. 47A-3 or G.S. 47C-1-103, depending on the chapter of the General
Statutes under which the condominium was created.
(c) This section
does not prohibit aA deed restriction, covenant, or similar binding
agreement that runs with the land that would regulatemay not place
unreasonable restrictions on the location or screening of solar collectors
as described in subsection (b) of this section, provided the deed
restriction, covenant, or similar binding agreement does not have the effect of
preventing the reasonable use of a solar collector for a residential property. section.
As used in this subsection, "unreasonable restrictions" means any
restriction that would increase the installation costs of a solar collector by
more than ten percent (10%) of the total initial installation costs, including
labor and equipment. If an owners' association is responsible for exterior
maintenance of a structure containing individual residences, a deed
restriction, covenant, or similar binding agreement that runs with the land may
provide that (i) the title owner of the residence shall be responsible for all
damages caused by the installation, existence, or removal of solar collectors;
(ii) the title owner of the residence shall hold harmless and indemnify the
owners' association for any damages caused by the installation, existence, or
removal of solar collectors; and (iii) the owners' association shall not be
responsible for maintenance, repair, replacement, or removal of solar
collectors unless expressly agreed in a written agreement that is recorded in
the office of the register of deeds in the county or counties in which the
property is situated. As used in this section, "owners' association"
has the same meaning as in G.S. 47F-1-103.
(d) This
section does not prohibit a deed restriction, covenant, or similar binding
agreement that runs with the land that would prohibit the location of solar
collectors as described in subsection (b) of this section that are visible by a
person on the ground:
(1) On the
facade of a structure that faces areas open to common or public access;
(2) On a
roof surface that slopes downward toward the same areas open to common or
public access that the façade of the structure faces; or
(3) Within
the area set off by a line running across the façade of the structure extending
to the property boundaries on either side of the façade, and those areas of
common or public access faced by the structure.
(e) In any civil action arising under this section, the court may award costs and reasonable attorneys' fees to the prevailing party."
SECTION 6.(b) This section becomes effective December 1, 2010, and applies to deed restrictions, covenants, or similar binding agreements that run with the land and that are recorded on or after that date.
EFFECTIVE DATE
SECTION 7. Except as otherwise provided, this act is effective when it becomes law.