BILL NUMBER: S5600

SPONSOR: KENNEDY
 
TITLE OF BILL:

An act to amend the tax law, in relation to allocation letters

 
PURPOSE OR GENERAL IDEA OF BILL:

The purpose of this bill is to prevent public building owners and their
employees from using tax-incentivizing allocation letters for their own
benefit, in relation to energy efficient commercial buildings.

 
SUMMARY OF PROVISIONS:

Section 1: Amends the tax law by adding a new section 45 establishing
that an owner of a public building or their respective employees are
prohibited from seeking, accepting, or soliciting payment or other forms
of consideration for providing a written allocation letter.  Addi-
tionally details the required process for granting and filing an allo-
cation letter.
              

Section 2: Sets the effective date.

 
JUSTIFICATION:

Authorized by Title XIII of the Energy Policy Act of 2005's IRS-enacted
Section 179D, allocation letters for the design and installation of
energy-efficient interior lighting, HVAC, hot water or building envelope
systems in commercial buildings geared at providing tax incentives in
the form of deductions. This federal incentive provided businesses
completing energy efficient design and construction up to $1.80 per
square foot in tax deductions for eligible government projects. Such an
environmentally conscious initiative materialized as a response to ener-
gy issues facing the country - emphasized by both Congress and recent
presidential administrations.

As reported by Congressional inquiry into the matter, some state and
local government entities have leveraged Section 179D allocation letters
to receive benefits in return. Such bartering of federally-allocated
deductions goes against the letter's intended purpose of improving ener-
gy efficiency in public housing buildings, and in subsequence, further-
ing the goals of HUD's Public Housing program.

This legislation would curtail the extracurricular seeking, solicita-
tion, and profiting of benefits as a condition of issuing an allocation
letter. Such restriction would ensure that Section 179D tax deductions
are granted equally to eligible participants without gouging from public
building owners or their respective employees - championing the design,
retrofit, or construction of energy saving commercial buildings.

 
PRIOR LEGISLATIVE HISTORY:

New Bill

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

Minimal

 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law.