Bill Summary – FastDemocracy

LEGISLATIVE FISCAL ESTIMATE
                                SENATE, No. 427
                             STATE OF NEW JERSEY
                              220th LEGISLATURE
                                           DATED: MARCH 20, 2023
                                                  SUMMARY
    Synopsis:                   Provides CBT tax credit for retrofit of existing warehouses with solar-
                                ready zone once solar panels are installed.
    Type of Impact:             Multi-Year State revenue loss of $25 million; multi-year State cost
                                increase.
    Agencies Affected:          Department of the Treasury.
                                       Office of Legislative Services Estimate
    Fiscal Impact                                              Duration of Program
    State Revenue Loss                                        Maximum of $25 million
    Annual State Cost Increase                                  $58,000 to $160,000
    The Office of Legislative Services (OLS) concludes that the bill will result in a maximum State
     revenue loss of $25 million, which will likely occur over a multi-year period, to provide the
     corporation business tax credit.
    The OLS estimates that the Department of the Treasury will have to dedicate employee
     resources of between 0.5 and 1.0 full-time equivalent employees over the duration of the tax
     credit program at a cost of between $58,000 and $160,000 annually to administer the program.
                                            BILL DESCRIPTION
    The bill provides a corporation business tax credit for the costs incurred as a result of
retrofitting an existing warehouse with a solar-ready zone. The bill limits the cumulative total
amount of tax credits that may be awarded to $25 million.
    The amount of the tax credit shall not exceed the lesser of (1) 50 percent of the cost incurred
to retrofit an existing warehouse with a solar-ready zone, or (2) $250,000. A taxpayer may claim
the credit for up to eight existing warehouses owned or operated by the same taxpayer in a single
privilege period.
    A taxpayer that retrofits an existing warehouse with a solar-ready zone would be eligible to
receive the tax credit if: (1) the warehouse meets the required size criteria; (2) the warehouse has
      Office of Legislative Services                                    Legislative Budget and Finance Office
           State House Annex                                                    Phone (609) 847-3105
              P.O. Box 068                                                       Fax (609) 777-2442
      Trenton, New Jersey 08625                                                  www.njleg.state.nj.us
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been retrofitted with a solar-ready zone; and (3) solar panels have been installed on the
warehouse’s solar-ready zone. The bill requires a taxpayer to demonstrate to the Department of
the Treasury that solar panels have been installed on the warehouse prior to receiving a tax credit.
                                       FISCAL ANALYSIS
EXECUTIVE BRANCH
   None received.
OFFICE OF LEGISLATIVE SERVICES
    The OLS concludes that the provision of credits against the corporation business tax for costs
incurred due to the retrofitting of an existing warehouse with a solar-ready zone will result in a
multi-year loss of State revenues not to exceed $25 million. Because the bill does not limit the
time period during which tax credits may be awarded and permits unused tax credits to be carried
forward for up to seven privilege periods, the State may experience revenue losses over multiple
fiscal years until the $25 million tax credit cap is reached. The OLS estimates that the Department
of the Treasury will have to dedicate employee resources of between 0.5 and 1.0 full-time
equivalent employees over the duration of the tax credit program at a salary and benefit cost of
between $58,000 and $160,000 annually to administer the program.
    The cost of installing a solar-ready zone and solar panels on a commercial property, such as a
warehouse, will vary depending on several factors, including its size, component options,
configuration, labor and local permitting costs, and the property’s energy needs. In September
2022, the National Research Energy Laboratory, a component of the U.S. Department of Energy,
estimated that the cost of installing a 200-kilowatt rooftop commercial photovoltaic system was
about $1.84 per watt (or a total cost of $368,000). This benchmark accounts for the cost of the
system’s components, installation, labor, and other costs (such as the transmission line, sales tax,
and administrative overhead).
    To be eligible for a tax credit, a taxpayer is required to retrofit an existing warehouse with a
solar-ready zone and install solar panels on the warehouse. The bill defines a warehouse to include
any building, room, structure, or facility of at least 100,000 square feet used primarily for the
storage of goods intended for sale. The OLS has identified approximately 2,800 parcels of at least
100,000 square feet that are classified as warehouse property. However, the OLS cannot determine
how many of these properties have a rooftop or building overhang that may be suitable for
retrofitting with a solar-ready zone and the installation of solar panels.
  Section:      Revenue, Finance, and Appropriations
  Analyst:      Scott A. Brodsky
                Staff Fiscal & Budget Analyst
  Approved:     Thomas Koenig
                Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).