MISSISSIPPI LEGISLATURE

2005 Regular Session

To: Finance

By: Senator(s) Dawkins, Tollison, Williamson

Senate Bill 3105

AN ACT TO CREATE THE "SMART GROWTH TAX CREDIT ACT" TO AUTHORIZE INCOME TAX CREDITS FOR DEVELOPERS AND OWNERS WHO DESIGN AND BUILD RESIDENTIAL AND MIXED-USE DEVELOPMENTS THAT MEET SPECIFIC SMART GROWTH AND GREEN BUILDING CRITERIA; TO PROVIDE THE AMOUNT OF THE CREDIT; TO AUTHORIZE THE CREDIT TO BE CARRIED FORWARD FOR FIFTEEN YEARS FOLLOWING THE CREDIT'S FIRST ELIGIBLE TAX YEAR; TO LIMIT THE DOLLAR AMOUNT OF CREDITS THAT MAY BE GRANTED IN ANY ONE FISCAL YEAR; TO PROVIDE THAT THE STATE TAX COMMISSION, IN CONSULTATION WITH THE DEPARTMENT OF ENVIRONMENTAL QUALITY, SHALL ADMINISTER THE CREDIT; TO PROVIDE FOR THE CERTIFICATION OF DEVELOPMENTS AND THE MANNER IN WHICH A CREDIT MAY BE CLAIMED; TO PROVIDE THE STANDARDS THAT BUILDINGS AND DEVELOPMENTS MUST MEET IN ORDER TO BE ELIGIBLE FOR THE TAX CREDIT; AND FOR RELATED PURPOSES.

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

     SECTION 1.  This act shall be known and may be cited as the "Smart Growth Tax Credit Act."

     SECTION 2.  As used in this act:

          (a)  "Adequate bus transit service" means at least one (1) bus transit stop within a one-quarter (1/4) mile radius of the geographic center of the development, with service of no less than one (1) bus either:

              (i)  Every sixty (60) minutes, eighteen (18) hours per day, seven (7) days per week; or

              (ii)  Thirty (30) times per weekday and fifteen (15) times per weekend day, provided that there are no physical impediments that prevent pedestrians from walking from the development to the transit stop.

          (b)  "Adequate rail transit service" means at least one (1) rail or light-rail transit stop within a one-half (1/2) mile radius of the geographic center of the development, with service of no less than five (5) trains during weekday peak periods, provided that there are no physical impediments that prevent pedestrians from walking from the development to the transit stop.

          (c)  "Allowable costs" means amounts properly chargeable to a capital account, other than for purchase of land or any remediation costs, which are paid or incurred for construction or rehabilitation; commissioning costs; interest paid during the construction or rehabilitation period; legal, architectural, engineering, and other professional fees allocable to construction or rehabilitation; closing costs for construction or mortgage loans; recording taxes and filing fees incurred with respect to construction or rehabilitation; site costs, such as temporary electric wiring, scaffolding, demolition costs, and fencing and security facilities; and costs of carpeting, partitions, walls and wall coverings, ceilings, lighting, plumbing, electrical wiring, and ventilation, provided that such costs shall not include the cost of telephone systems and computers other than electrical wiring costs.  For commercial space, allowable costs shall not exceed Two Hundred Fifty Dollars ($250.00) per square foot of interior space, except that the State Tax Commission may raise the maximum allowable costs by up to ten percent (10%) on each of up to two (2) occasions in the seven-year period next following the date of enactment of this act.  For residential space, allowable costs shall not exceed one hundred ten percent (110%) of the amount set by the U.S. Department of Housing and Urban Development (HUD) as per unit limits, codified in 12 USCA 1715l(d)(3)(ii).

          (d)  "ASHRAE" means the American Society of Heating, Refrigeration, and Air-Conditioning Engineers.

          (e)  "Brownfield site" means any former or current commercial or industrial site that is currently vacant or underutilized, and on which there has been, or there is suspected to have been, a discharge of a hazardous substance, a hazardous waste, or a pollutant.

          (f)  "Carpet and Rug Institute Green Label Indoor Air Quality Test Program" means the testing program developed by the Carpet and Rug Institute, as recognized by the Department of Environmental Quality, to aid in the selection of carpet, adhesives, and cushion materials which minimize adverse impacts to indoor air quality.

          (g)  "Critical habitat" means a biologically diverse area containing habitats of endangered and threatened plant or animal species, as determined by the federal Endangered Species Act, Section 3(5).

          (h)  "Critical slope area" means an area predominantly characterized by either an average change in elevation greater than fifteen percent (15%) of the corresponding horizontal distance through the slope, otherwise referred to as a fifteen percent (15%) slope, or by a very high erosion hazard as indicated by an erodability factor "k" computed by the U.S. Department of Agriculture (USDA), Soil Conservation Service for soils of 0.40 or greater.

          (i)  "Developer" means the legal or beneficial owner or owners of a lot or of any land proposed to be included in a proposed development, including the holder of an option or contract to purchase, or other person having an enforceable proprietary interest in such land.

          (j)  "Development" means the division of a parcel of land into two (2) or more parcels; the construction, reconstruction, conversion, structural alteration, relocation, or enlargement of any building or other structure, or of any mining excavation or landfill; or any change in the use of any building or other structure, or land, or extension of use of land for which permission may be required pursuant to zoning ordinances.

          (k)  "Energy Star®" means the voluntary labeling program administered by the U.S. Environmental Protection Agency (EPA) designed to identify and promote energy-efficient products, equipment, and buildings.

          (l)  "Forest Stewardship Council" means the international nonprofit organization founded in 1993 to support environmentally appropriate, socially beneficial, and economically viable management of the world's forests.

          (m)  "Highly urbanized area" means:

              (i)  An area where thirty percent (30%) of the ground within one thousand (1,000) feet of the perimeter of a development site consists of impervious surface; or

              (ii)  An area located in a municipality, which the State Tax Commission has determined, according to guidelines established by the commission, to be built out.

          (n)  "Impervious surface" means a surface that has been compacted or covered with a layer of material so that it is highly resistant to infiltration by water.

          (o)  "Improvement" means any constructed element that becomes part of, is placed upon, or is affixed to real estate.

          (p)  "LEED™ Green Building Rating System" means the Leadership in Energy and Environmental Design green building rating system developed by the U.S. Green Building Council (USGBC).

          (q)  "LEED™ Residential Green Building Rating System" means the completed version of the Leadership in Energy and Environmental Design green building rating system for residential buildings, as may be developed by the U.S. Green Building Council (USGBC).

          (r)  "Lot" means a designated parcel, tract, or area of land established by a plat, or otherwise permitted by law, to be used, developed, or built upon as a unit.

          (s)  "Mixed-use development" means a development that includes residential use and no more than seventy-five percent (75%) by interior square footage of one or more of the following uses:

              (i)  Commercial space;

              (ii)  Office space;

              (iii)  Retail space; or

              (iv)  Such other nonresidential uses that the State Tax Commission has determined do not pose a public health threat or nuisance to nearby residential areas.

          (t)  "Old-growth timber" means timber of a forest from the late successional stage of forest development as defined by the Department of Environmental Quality.

          (u)  "Plat" means a map or maps of a subdivision or site plan.

          (v)  "Potentially eligible development" means a residential or mixed-use development or redevelopment project located within Mississippi.

          (w)  "Site improvements" means any construction work on, or improvement in connection with, a development limited to streets, roads, parking facilities, sidewalks, drainage structures and utilities.

          (x)  "Smart growth development" means a potentially eligible development that meets the criteria set forth in Section 6 of this act.

          (y)  "Stormwater management measures" means structural and nonstructural control of stormwater runoff and nonpoint pollution.

          (z)  "Total cumulative rides available" means the sum of:

              (i)  The number of rides available by bus within a one-half (1/2) mile radius of the geographic center of the development; and

              (ii)  The number of rides available by rail or light-rail within a one-half (1/2) mile radius of the geographic center of the development, multiplied by the average number of cars on each train.

          (aa)  "Transit stop" means any stop for a bus or train as the case may be, which may be along either intercity routes, or intracity routes, or both.  A transit stop serving more than one (1) route, or serving routes in more than one (1) direction, shall constitute a discrete stop for each directional route of service; and, if a location has one (1) bus or train, as the case may be, per hour heading in one (1) direction, and one (1) bus or train, as the case may be, available in that same hour heading in the other direction, this shall constitute one (1) bus or train per hour at two (2) separate stops.

          (bb)  "Tropical hardwood" means hardwood scientifically classified as angiosperm, which grows in tropical moist forest, as determined by Department of Environmental Quality.  "Tropical hardwood" shall include, but not be limited to, the following species:

     Scientific Name                       Common Name

  Voracious americana               Acapu

  Pericopsis elata                  Afrormosis

  Shorea almon                      Almon

  Peltogyne spp.                    Amaranth

  Guibourtia ehie                   Amazaque

  Aningeris spp.                    Aningeria

  Dipterocarpus grandiflorus        Apilong

  Ochroma lagopus                   Balsa

  Virola spp.                       Banak

  Anisoptera thurifera              Bella Rose

  Guibourtis arnoldiana               Benge

  Deterium Senegalese               Boire

  Priora copaifera                  Cativo

  Antiaris africana                 Chenchen

  Dalbergis retusa                  Concobola

  Cordia spp.                       Cordia

  Diospyros spp.                    Ebony

  Aucoumes klaineana                Gaboon

  Chlorophors excelsa               Iroko

  Acacia koa                        Koa

  Pterygota macrocarpa              Koto

  Shorea negrosensis                Red Lauan

  Pentacme contorta                 White Lauan

  Shores ploysprma                  Tanguile

  Terminalia superba                Limba

  Aniba duckei                      Louro

  Kyaya ivorensis                   Africa Mahogany

  Swletenia macrophylla               Amer. Mahogany

  Tieghemella leckellii               Makora

  Distemonanthus benthamianus       Movingui

  Pterocarpus soyauxii             African Padauk

  Pterocarpus angolensis            Angola Padauk

  Aspidosperma spp.                 Peroba

  Peltogyne spp.                    Purpleheart

  Gonystylus spp.                   Ramin

  Dalbergia spp.                    Rosewood

  Entandrophragm a cylindricum      Sapela

  Shores phillippinensis            Sonora

  Tectona grandis                   Teak

  Lovoa trichilloides               Tigerwood

  Milletia laurentii                Wenge

  Microberlinia brazzavillensis     Zebrawood

          (cc)  "Weekday peak period" means 5:30 a.m. to 10:30 a.m. and 3:30 p.m. to 8:30 p.m. on a weekday.

          (dd)  "Wetland" means:

              (i)  Land that has a predominance of hydric soils and is inundated or saturated by surface or groundwater at a frequency and duration sufficient to support a prevalence of hydrophytic vegetation typically adapted for life in saturated soil conditions; or

              (ii)  Any area so designated bythe Department of Environmental Quality.

     SECTION 3.  (1)  A taxpayer shall be granted a credit, to be computed as provided in this Section, against the tax imposed pursuant to Chapter 7, Title 27, Mississippi Code of 1972.  The credit shall be an amount equal to the sum of the following; however, that amount shall not exceed the amount set forth in the credit reservation certificate obtained pursuant to Section 4 of this act:

          (a)  Four percent (4%) of allowable costs;

          (b)  One-half percent (0.5%), one percent (1%), one and one-half percent (1.5%), or two percent (2%) of allowable costs, attributable to buildings, but not to other site improvements, for developments qualifying as Certified, Silver, Gold, or Platinum status, respectively, under the LEED™ Green Building Rating System or the LEED™ Residential Green Building Rating System;

          (c)  One-half percent (0.5%) of allowable costs for mixed-use developments;

          (d)  One-half percent (0.5%) of allowable costs for developments located on brownfield sites;

          (e)  One-tenth percent (0.1%) of allowable costs for developments in which less than ten percent (10%) of the land of the development, not including shared open spaces, is devoted to parking areas, garages and driveways;

          (f)  One-tenth percent (0.1%) of allowable costs for developments with respect to which variances are secured from the relevant municipalities to permit fifty percent (50%) or less parking than is required by applicable local zoning codes, and are built in accordance with such variances;

          (g)  Up to two and four-tenths percent (2.4%) of allowable costs for developments with higher than required residential density, depending on the density level as set forth below; and

   Dwelling Units            Multiplier         Additional Credit, As

Per Residential Acre           Value         Percentage of Allowable Costs

      7-10                  .05                   0.2%

     11-17                  .10                   0.4%

     18-29                  .30                   1.2%

     30-39                  .50                   2.0%

  40 or higher              .60                   2.4%

          (h)  Up to one and four-tenths percent (1.4%) of allowable costs for developments with higher than required transit service, depending on total cumulative rides available per weekday as set forth below:

Total Cumulative                           Multiplier    Additional Credit, As

Rides Available            Value        Percentage of Allowable Costs

    60-124                  .05                    0.2%

   125-249                 .10                    0.4%

   250-499                  .15                    0.6%

   500-999                  .20                    0.8%

1000 or more                .35                    1.4%

     (2)  A taxpayer may only apply for a credit under this section with respect to allowable costs paid or incurred by the taxpayer in connection with the construction or rehabilitation of a smart growth development.

     (3)  For any taxable year, a taxpayer may apply no more than twenty percent (20%) of the total amount allowable under subsection (1) of this section.

     (4)  The amount of tax credit otherwise allowable under this section, which cannot be applied during a tax year, may be carried forward to the fifteen (15) tax years following a credit's first eligible tax year.

     (5)  If a credit is owed to a building owner under this act with respect to property, and such property, or an interest therein, is sold, the credit for the period after the sale, which would have been allowed under this act to the prior owner had the property not been sold, shall be allowed to the successor owner if such right is specified in the deed transferring the property.

     (6)  For any taxable year, a taxpayer may apply for a credit under this section only if:

          (a)  The taxpayer has, as described in Section 4 of this act, obtained and filed a location certificate, a credit reservation certificate, and an eligibility certificate; and

          (b)  A certificate of occupancy, for the building or buildings that as the subject of the credit, has been issued and the building or buildings remains in service during such year.

     (7)  For each taxpayer who is eligible for a credit under this section, the State Tax Commission shall grant a credit, provided that the credits, in the aggregate, shall not exceed Twenty Million Dollars ($20,000,000.00) for the first fiscal year of tax credit availability and, in each of the subsequent six (6) fiscal years, shall not exceed Fifty Million Dollars ($50,000,000.00).  Any unused allocable amounts shall roll over to subsequent fiscal years.

     SECTION 4.  (1)  Location certificate.  Upon application by a taxpayer, the Department of Environmental Quality, in consultation with the State Tax Commission, shall issue a location certificate with respect to a specific property, where the taxpayer has shown that the property meets the location criteria set forth in Section 6(2) of this act.  A taxpayer's application for a location certificate shall include plats, and such other information that the State Tax Commission and/or the Department of Environmental Quality may require the State Tax Commission and/or the Department of Environmental Quality may issue a location certificate without presentation by the taxpayer of a deed for the proposed site.

     (2)  Credit reservation certificate.  Upon application by a taxpayer, the State Tax Commission shall issue a credit reservation certificate, where the taxpayer has filed a copy of a location certificate and made a showing that the taxpayer is likely, within a reasonable time, to place in service the development with respect to which the location certificate was issued, and that the development is likely to qualify for the allowance of a credit under this act.  The certificate shall state:

          (a)  The earliest taxable year for which the credit may be applied;

          (b)  The maximum amount of the total credit allowed and the maximum amount of credit allowed in any single tax year;

          (c)  An expiration date; and

          (d)  Such other information as the State Tax Commission may prescribe.  The certificate shall apply only to the development placed in service by the specified expiration date.  The expiration date may be extended at the discretion of the Chairman of the State Tax Commission, in order to avoid undue hardship.  Certificates may be issued in the first fiscal year following the effective date of this act, and in each of the six (6) subsequent fiscal years.

     (3)  Eligibility certificate.  For the first taxable year for which a taxpayer applies a credit under this act, the taxpayer shall obtain an eligibility certificate from an architect or professional engineer licensed to practice in Mississippi.  The certificate shall consist of a certification, under the seal of such architect or engineer, that, except for any provision for which the taxpayer has obtained a waiver from the State Tax Commission pursuant to Section 6(5) of this act, the building or development with respect to which the credit is applied:

          (a)  Meets the neighborhood design criteria set forth in Section 6(3) of this act; and

          (b)  Meets either the green building criteria set forth in Section 6(4) of this act or the criteria required for Certified, Silver, Gold or Platinum status under the LEED™ Green Building Rating System or the LEED™ Residential Green Building Rating System.  The certification shall be made in accordance with the standards and guidelines in effect at the time the credit reservation for the development was issued.  The certificate shall set forth the specific findings upon which the certification was based.  The certificate shall include sufficient information to identify each building or development, and such other information as the State Tax Commission may prescribe.  The taxpayer shall file with the State Tax Commission the eligibility certificate, and the associated location certificate and credit reservation certificate, with the application for credit.

     (4)  Wrongful certification.  If the State Tax Commission has reason to believe that an architect or professional engineer, in making any certification under this section, engaged in professional misconduct, the State Tax Commission shall inform the appropriate state licensure board and the Attorney General.

     SECTION 5.  (1)  Each taxpayer shall, for any taxable year for which a credit is claimed under this act, maintain records of such information as the State Tax Commission shall determine necessary, and report that information to the State Tax Commission in the form and at the time that the commission shall determine.

     (2)  The State Tax Commission and/or the Department of Environmental Quality shall adopt such rules and regulations as may be necessary to implement this act.  These rules and regulations shall be designed to encourage the implementation of smart growth principles and maintain high but commercially reasonable standards for obtaining tax credits under this act.  The rules and regulations shall establish a reasonable time for submission of applications and shall establish a method certifying proposed locations and allocating credit reservation certificates among eligible applicants, which shall generally be on a first-come, first-serve basis.

     (3)  On or before six (6) years after the effective date of this act, the Chairman of the State Tax Commission, in consultation with the Executive Director of the Department of Environmental Quality shall prepare and submit a written report regarding the number of certificates and taxpayers applying the credit provided for under this act; the amount of the credits granted; the geographical distribution of the credits granted; and any other information that the commission and/or the Department of Environmental Quality may deem useful or appropriate.  A preliminary draft of the report shall be so issued within the first four (4) years following of the effective date of this act.  The report shall be submitted to the Governor, the Lieutenant Governor and the Speaker of the House.

     SECTION 6.  (1)  Except as set forth in subsection (5) of this section, all buildings and developments with respect to which a tax credit is applied pursuant to this act shall be considered a smart growth development if they meet the standards set forth in this section; however, with respect to residential and tenant space, compliance with standards set forth in paragraphs (a), (b), (c), (d) and (h) of subsection 4 of this section shall not be required where the taxpayer does not incur or pay the cost of the equipment, appliances, fixtures, materials, finishes, furnishings, or other items relevant to compliance with the standard.

     (2)  Location.

          (a)  All buildings and developments with respect to which a tax credit is applied under this act shall be located in urban or suburban areas or centers designated by guidelines established by the State Tax Commission;

          (b)  All buildings and developments with respect to which a tax credit is applied under this act shall be served either by adequate bus transit service or adequate rail transit service;

          (c)  No building or development with respect to which a tax credit is claimed under this act shall be located:

              (i)  Within areas designated as reserves by the federal or state government;

              (ii)  In public parkland;

              (iii)  Within one thousand (1,000) feet of any critical habitat site within public parkland;

              (iv)  In or within three hundred (300) feet of a wetland;

              (v)  In or within one hundred (100) feet of a critical slope area, unless the site is located on a brownfield site or within a highly urbanized area;

              (vi)  Within the one hundred-year floodplain, unless the site is located on a brownfield site or within a highly urbanized area; or

              (vii)  Within one thousand (1,000) feet of the mean high-water mark for any saltwater body, unless the site is located on a brownfield site or within a highly urbanized area; and

          (d)  No building or development with respect to which a tax credit is applied under this act shall require:

              (i)  A water and sanitary sewer line extension of one thousand (1,000) feet or greater, unless sited in an area that has been approved for water and sanitary sewer service prior to the date of enactment of this act; or

              (ii)  A septic system.

     (3)  Neighborhood design.  Within six (6) months after the date of enactment of this act, the State Tax Commission, in consultation with the Department of Environmental Quality, shall adopt standards for the purpose of this act with respect to:

          (a)  Land use.  The standards shall require, at a minimum, that average residential density shall be six (6) or more dwelling units per residential acre.  Residential acreage shall be the calculated net of any land on the lot that is used for public green space, public sidewalks, or public roads.  For lots occupied by residential buildings, residential acres used in the density calculation shall be the footprint area of buildings, plus any associated driveways, yards, and parking areas except for on-street parallel parking.  For sites occupied by mixed-use buildings, residential acres used in the density calculation shall be a percentage of the footprint area of building that equals the percentage of interior space devoted to residential use, plus any associated driveways, yards, and the percentage of associated parking areas used by residents;

          (b)  Streets and sidewalks.  The standards shall require, at a minimum, that, if new streets are constructed as part of a development with respect to which a credit is applied under this act, the new streets shall meet the following standards:

              (i)  No more than one cul-de-sac shall be constructed for every four (4) new intersections within the development;

              (ii)  At least fifty percent (50%) of any new intersections and crossings within the development shall be equipped with traffic controls or such traffic-calming measures that the State Tax Commission shall approve, including, but not limited to, speed bumps, stop signs and vegetative barriers;

              (iii)  The width of pavement of new streets shall not exceed forty-two (42) feet, consisting of a maximum of ten (10) feet per lane of motor vehicle traffic, four (4) feet per bicycle lane, and seven (7) feet per lane designated for on-street parallel parking.  New streets shall not consist of more than two (2) lanes devoted to motor vehicle traffic, two (2) lanes devoted to bicycle traffic, and two (2) lanes devoted to on-street parallel parking; and

              (iv)  Sidewalks of no less than four (4) feet in width shall be provided along frontage of all buildings and along all streets that connect buildings within the development; and

          (c)  Parking.  The standards shall require, at a minimum, that the number of parking spaces associated with the development shall not exceed the number required by parking ratios specified in applicable local zoning codes.

     (4)  Green buildings.  Within six (6) months of the date of enactment of this act, the State Tax Commission, in consultation with the Department of Environmental Quality, shall adopt standards for the purpose of this act, and shall review and update such standards at least every two (2) years from the date on which they are adopted with respect to:

          (a)  Energy efficiency.  The standards shall require, at a minimum, that:

              (i)  Single-family homes comply with the energy standards of the U.S. Environmental Protection Agency Energy Star Homes program;

              (ii)  Energy use in all other buildings shall not exceed sixty-five percent (65%) of the energy use permitted by the relevant state energy code;

              (iii)  Equipment and appliances, for which Energy Star® standards exist, including, but not limited to, refrigerators, dishwashers, and washing machines, shall meet those Energy Star® standards; and

              (iv)  No less than forty percent (40%) of high-use lighting fixtures shall meet Energy Star® standards;

          (b)  Building materials.  The standards shall, at a minimum, specify requirements regarding minimum percentages of recycled content and renewable source material and maximum levels of toxicity and volatile organic compounds.  Standards shall be developed for building materials, finishes and furnishings, including, but not limited to, concrete and concrete masonry units; millwork substrates; insulation; ceramic, ceramic or glass and cementitious tiles; ceiling tiles and panels; flooring and carpet; paints, coatings sealants and adhesives; and furniture.  The LEED™ Green Building Rating System and the LEED™ Residential Green Building Rating System shall inform the development of the standards;

          (c)  Wood use.  The standards shall, at a minimum:

              (i)  Specify requirements to minimize wood use in wood-framed houses; and

              (ii)  Require that old-growth timber and tropical hardwood, except recycled wood and tropical hardwood certified in accordance with the protocol of the Forest Stewardship Council or, in lieu thereof, of another organization deemed by the Department of Environmental Quality to be authorized and capable of providing an equivalent protocol, shall not be used;

          (d)  Heat island reduction.  The standards shall require, at a minimum, that:

              (i)  At least fifty percent (50%), by square footage, of nonroof impervious surfaces, including driveways, parking areas, walkways, and plazas, be light-colored or covered with specified coatings that improve reflectance; and

              (ii)  Roofs shall be composed of Energy Star®-labeled roof products, except where solar panels or roof gardens are installed;

          (e)  Water efficiency.  The standards shall require, at a minimum, that:

              (i)  Each showerhead shall not exceed two (2) gallons per minute;

              (ii)  Each faucet shall not exceed one (1) gallon per minute;

              (iii)  Toilet flush volume shall not exceed one and six-tenths (1.6) gallons; and

              (iv)  For commercial buildings, the drift rate of any cooling tower shall not exceed one percent (1%);

          (f)  Heating and cooling.  The standards shall require, at a minimum, that central air conditioning refrigerant charge and air flow shall be documented to be within ten percent (10%) of manufacturer recommendations;

          (g)  Durability.  The standards shall require, at a minimum, that:

              (i)  Roofs shall have a warranty of no less than forty (40) years;

              (ii)  Insulated windows shall have a warranty of no less than ten (10) years;

              (iii)  Overhangs shall include at least eighty percent (80%) of full attic or roof-slope insulation R-value; and

              (iv)  Head-casing flashing shall be installed for all windows and exterior doors;

          (h)  Indoor air quality.  The standards shall require, at a minimum, that:

              (i)  Interior paints shall contain no more than one hundred (100) grams per liter of volatile organic compounds;

              (ii)  Sealants and adhesives used for interior applications shall contain no more than two hundred fifty (250) grams per liter of volatile organic compounds;

              (iii)  Carpets, carpet cushions, and any necessary adhesives shall meet the standards set forth in the Carpet and Rug Institute Green Label Indoor Air Quality Test Program;

              (iv)  Carpets shall not be installed in basements, bathrooms, kitchens, or within a four-foot radius of the center of any doorway which leads outdoors;

              (v)  Only direct-vent, closed-combustion, or power-vented space heating and water heating equipment shall be used, and vent-free space heating or water heating equipment shall not be used;

              (vi)  Any wood stoves shall have ducted combustion air;

              (vii)  Carbon monoxide detectors shall be installed consistent with Consumer Product Safety Commission recommendations, and with at least one (1) detector per five hundred (500) square feet of interior space;

              (viii)  Enclosed parking shall be completely air-sealed from attached indoor spaces;

              (ix)  Every building shall be furnished with a ventilation system and for commercial buildings the sizing of the system shall conform with the ASHRAE standard known as ASHRAE G2-2001; and

              (x)  Foundations of residential units shall be constructed according to the following requirements, unless the State Tax Commission approves alternative plans to ensure dry basements:

                   1.  The foundation shall have a continuous footing drain that is covered with stone, which, in turn, shall be covered with filter fabric, and which shall drain either to daylight or to an interior, sealed sump pump system;

                   2.  The foundation shall have porous backfill material;

                   3.  The vapor retarder shall be directly under slab; and

                   4.  The exterior of the below-grade foundation shall be waterproofed;

          (j)  Construction waste.  The standards shall require, at a minimum, development of and adherence to a waste reduction plan that provides for separation of materials which are reusable or recyclable, such that a minimum of thirty percent (30%) of waste by volume shall be diverted from the waste stream; and

          (k)  Stormwater management.  The standards shall require, at a minimum, that developments on parcels of undeveloped land of four (4) acres or more shall employ stormwater management measures in order to meet at least one (1) of the following requirements:

              (i)  Post-development runoff volume of the land area of the development shall not exceed predevelopment runoff volume; where runoff volume is defined as the one and one-half (1.5) year, twenty-four-hour peak discharge rate; or

              (ii)  The first inch of runoff or eighty percent (80%) of one hundred-year runoff produced by the impervious surfaces of the development shall be treated for total suspended solids, total phosphorous and total nitrogen.

     (5)  Waiver.  Upon application by a taxpayer, the State Tax Commission, in consultation with the Department of Environmental Quality, may issue a waiver of any regulatory provision adopted pursuant to subsection (2) of this section, where the taxpayer has made a showing that the development was in compliance with the provision at the time of the issuance to the taxpayer of a location certificate, and that the development is no longer in compliance because of circumstances out of the taxpayer's control; or of any regulatory provision adopted pursuant to subsection (3) or (4) of this section, where the taxpayer has made a showing that compliance with the provision is impracticable due to unique characteristics of the site, or that deviation from the provision produces no net negative environmental impact.

     SECTION 7.  The income tax credit authorized pursuant to this act shall be administered by the State Tax Commission, and will be available for seven (7) years.  The total of all credits that could be allocated in the first fiscal year after enactment would be no more than Twenty Million Dollars ($20,000,000.00) and, in subsequent years, Chairman of the State Tax Commission, in consultation with the State Treasurer, may authorize up to Fifty Million Dollars ($50,000,000.00) of credit allocations per year.  Developers and owners will collect one-fifth (1/5) of the credit due each year for the five (5) years following the smart growth development's certification of eligibility.

     SECTION 8.  This act shall take effect and be in force from and after July 1, 2005.