A2890

An Act concerning rainwater capture systems and water conservation, and supplementing various sections of statutory law.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known, and may be cited, as the “Rainwater Capture and Water Conservation Incentives Act.”

2. The Legislature finds and declares that although New Jersey has preserved open space and farmland, protected the Highlands and the Pinelands from overdevelopment, and developed programs to conserve and protect its water supplies, many areas of the State are developed with impervious surfaces that greatly reduce the infiltration of water into groundwater and groundwater aquifers; that these impervious surfaces also produce unnecessary runoff into sewer systems of rainwater that could be captured and beneficially used; that rainwater, captured and properly managed, can contribute significantly to local water supplies by infiltrating and recharging groundwater aquifers and by reducing demands on potable water supplies through its use for non-potable water purposes that may be unnecessarily drawing from potable water supplies; that the Department of Environmental Protection has long promoted efforts to conserve water and promote the beneficial reuse of water wherever possible; that the Department of Environmental Protection administers the New Jersey Pollutant Discharge Elimination System program for the State and the permitting process within that program, including permits regulating stormwater runoff and the reuse of so-called “greywater” – wastewater generated from activities such as washing laundry, dishwashing, and bathing that does not contain human waste to the extent of water from toilets or sewage, but still requires treatment before it can be reused even for non-potable uses because its discharge is connected with commercial and residential sewer systems; that, as the most densely populated State in the country that continues to grow in population, New Jersey can significantly benefit from the reuse of rainwater to conserve on water usage; and that this reuse is more important than ever and conservation of water and reuse of rainwater should be facilitated and encouraged on a voluntary basis in the State.

The Legislature therefore determines it is in the best interest of the State and all its residents to further promote the beneficial reuse of rainwater and the water conservation it encourages by establishing incentives for the purchase and installation of systems to capture and store rainwater, and prohibiting any fees or taxation related to the purchase, installation and use of these systems.

3. As used in this act:

“Department” means the Department of Environmental Protection.

“Rain barrel” means a rainwater capture system that complies with nationally and municipally accepted standards for design and installation of rain barrels, does not use electricity, and is not connected with a pressurized water distribution system for the distribution of potable water.

“Rainwater” means any precipitation on public or private property that has not entered into an offsite storm drain system or channel, and has not been previously put to a beneficial use.

“Rainwater capture system” means any device, equipment, or group of devices and equipment, for the purpose of subsequent onsite use of rainwater, which: (1) is not attached to any public water system, including, but not limited to culverts, drainage ditches, or sewers, or any part thereof; (2) does not require a permit from the department; and (3) is designed to capture, retain, and store rainwater falling directly from the sky, flowing off of shrubs, trees, lawns, rocks, or other plants or natural parts of a property whether naturally occurring or placed at the location, or flowing off a building, parking lot, or other manmade impervious surface. “Rainwater capture system” shall include, but need not be limited to, rain barrels, gutters, and other systems that collect rainwater but do not use electricity, and are not connected with a pressurized water distribution system for the distribution of potable water. “Rainwater capture system” shall not include any stormwater runoff or capture and reuse system.

“Stormwater runoff or capture and reuse system” means any device, equipment, or group of devices and equipment, the use of which requires a permit from the department, or may require connection to a public water system or water distribution system to move, treat, or otherwise process wastewater in compliance with State law, and the rules and regulations adopted pursuant thereto.

4. a. Any residential, commercial, or public property owner may install, maintain and operate a rainwater capture system for non-potable water use outside the residence or other building on the property, or for infiltration into the groundwater.

b. No county, municipality, county or municipal agency, or agency or department of the State may impose or collect any fee for the installation or operation of a rainwater capture system that is installed, maintained or operated pursuant to subsection a. of this section.

5. The Department of Environmental Protection, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), may adopt any rules and regulations necessary for the implementation of P.L. , c. (C. ) (pending before the Legislature as this bill).

6. a. As used in this section:

“Board of appeals” means the construction board of appeals established under section 9 of P.L.1975, c.217 (C.52:27D-127), having jurisdiction in the municipality in which the property is located.

“Director” means the Director of the Division of Taxation in the Department of the Treasury.

“Local enforcing agency” means the enforcing agency in any municipality provided for under the “State Uniform Construction Code Act,” P.L.1975, c.217 (C.52:27D-119 et seq.) and rules and regulations adopted pursuant thereto.

“Rainwater” means any precipitation on public or private property that has not entered into an offsite storm drain system or channel, and has not been previously been put to a beneficial use.

“Rainwater capture real property improvement” means any part of a rainwater capture system involving underground pipes or other apparatus that may be construed to be fixtures to real property, and therefore may be improvements that cannot be easily moved and may require a municipal permit for installation and operation.

“Rainwater capture system” means rainwater capture system as defined pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).

b. Any part of a rainwater capture system that is easily moveable, personal property shall not be considered to be a fixture to real property, and therefore not subject to assessment of property taxes as a fixture and an improvement to real property pursuant to chapter 4 of Title 54 of the Revised Statutes.

c. Any part of a rainwater capture system that is a rainwater capture real property improvement may be certified by a local enforcing agency as such, but shall be exempt from taxation under chapter 4 of Title 54 of the Revised Statutes. The owner of real property which is equipped with a certified rainwater capture real property improvement may have exempted annually from the assessed valuation of the real property a sum equal to the assessed valuation of the real property with the rainwater capture real property improvement included, minus the assessed valuation of the real property without the rainwater capture real property improvement included.

d. No certification shall be made by the local enforcing agency as provided in this section, except upon written application therefor, which application shall be made under oath on a form prescribed by the director, and provided for the use of claimants by the local enforcing agency. The local enforcing agency may at any time inquire into the right of a claimant to the exemption, and for that purpose the local enforcing agency may require the filing of a new application or the submission of such proof as the local enforcing agency shall deem necessary to determine the right of the claimant to the continuance of the exemption. The local enforcing agency shall have the right to make an inspection of the premises which are the subject of the claim for exemption under this section.

e. The local enforcing agency, when requested for a certification pursuant to this section, shall certify a system as being a rainwater capture system or a rainwater capture real property improvement whenever the local enforcing agency finds that the improvement was installed and designed primarily as part of a rainwater capture system, in accordance with rules and regulations adopted by the Department of Environmental Protection pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill) or by the Commissioner of Community Affairs pursuant to subsection h. of this section. The certificate shall contain information identifying the rainwater capture real property improvement and the cost thereof and shall be in such form and detail as the director shall prescribe. The certificate shall be provided to the applicant therefor, with a copy retained on file by the local enforcing agency, and a copy of the certificate shall be sent to the assessor of the taxing district in which the property containing the rainwater capture real property improvement is located and has been installed. The exemption from taxation for the rainwater capture real property improvement shall become effective for the tax year following the year in which certification has been granted and thereafter during its use primarily for such purposes.

f. The local enforcing agency, after giving notice to the holder of a rainwater capture real property improvement, may revoke a certificate whenever any of the following appears or occurs:

(1) the certificate was obtained by fraud or misrepresentation;

(2) the claimant for tax exemption has failed substantially to proceed with the construction, reconstruction, installation or acquisition of a rainwater capture system;

(3) the structure or equipment or both to which the certificate relates has ceased to be used for the primary purpose of providing rainwater for beneficial use on the property and is being used for a different primary purpose; or

(4) the claimant for the tax exemption has so departed from the equipment, design and construction previously certified by the local enforcing agency that, in the opinion of the local enforcing agency, the rainwater capture real property improvement is not suitable and reasonably adequate for the purpose of using rainwater for beneficial reuse on the property.

g. (1) Any person aggrieved by any action of the local enforcing agency may seek review before the board of appeals.

(2) Any person aggrieved by any action of the assessor or of the county tax board may seek a review of such action in the State Tax Court by filing a complaint in the Tax Court, pursuant to rules of court.

h. Pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.):

(1) The director shall adopt any rules and regulations necessary for the proper certification of any tax exemption pursuant to this act, the form of any certificate to be issued, and any other matter related to the exemption; and

(2) The Commissioner of Community Affairs, in consultation with the Department of Environmental Protection, shall adopt standards with respect to the technical sufficiency of rainwater capture systems for the purposes of qualification for the exemption.

i. No fees may be charged for any certification, application, inspection, or any action related thereto, pursuant to any provision of this section.

7. a. Receipts from retail sales of rainwater capture systems are exempt from the tax imposed by the “Sales and Use Tax Act,” P.L.1966, c.30 (C.54:32B-1 et seq.).

b. Receipts from sales of services concerning the installation or maintenance of rainwater capture systems are exempt from the tax imposed by the “Sales and Use Tax Act,” P.L.1966, c.30 (C.54:32B-1 et seq.).

c. As used in this section:

“Rainwater” means any precipitation on public or private property that has not entered into an offsite storm drain system or channel, and has not been previously been put to a beneficial use.

“Rainwater capture system” means rainwater capture system as defined pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).

d. The director, in consultation with the Commissioner of Environmental Protection, shall adopt rules and regulations, in accordance with the "Administrative Procedure Act," P.L.1968, c. 410 (C.52:14B-1 et seq.), as may be necessary to effectuate the purposes of this section.

8. a. A taxpayer shall be allowed a credit against the tax otherwise due for the taxable year pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., in an amount equal to 100 percent of the purchase price, and any installation costs or charges, of any rainwater capture system purchased and installed by the taxpayer during the taxable year.

b. As used in this section:

“Rainwater” means any precipitation on public or private property that has not entered into an offsite storm drain system or channel, and has not been previously been put to a beneficial use.

“Rainwater capture system” means rainwater capture system as defined pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).

9. a. For the first privilege period beginning on or after the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), and for each privilege period beginning thereafter, a taxpayer shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for the amount paid during the privilege period to purchase and install a rainwater capture system to be used directly and exclusively by the taxpayer at the taxpayer’s place of business, trade, or occupation.

b. (1) To qualify for the tax credit allowed pursuant to this section, the taxpayer shall file an application for a certification from the Commissioner of Environmental Protection that the rainwater capture system purchased by the taxpayer qualifies for the tax credit provided by this section, and is used directly and exclusively by the taxpayer at the taxpayer’s place of business, trade, or occupation. The certification shall specifically indicate the date of purchase of the rainwater capture system, the amount paid for the rainwater capture system, proof of the completed installation of the rainwater capture system, and a description of how the rainwater capture system is used in the taxpayer’s place of business, trade, or occupation. The commissioner shall prescribe the form for the application and certification.

(2) The Commissioner of Environmental Protection shall have 90 days from the date of receipt of a complete application to make a determination as to the issuance of a certification.

(3) Upon certification, the Commissioner of Environmental Protection shall submit a copy thereof to the taxpayer and the director. In filing a tax return that includes a claim for the credit allowed pursuant to this section, the taxpayer shall include a copy of the certification.

c. The amount of the credit applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), for a privilege period, when taken together with any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162, shall not exceed 50% of the tax liability otherwise due and shall not reduce the tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162. The priority in which credits allowed pursuant to this section and any other credits shall be taken shall be as determined by the Director of the Division of Taxation. The amount of the credit otherwise allowable under this section which cannot be applied for the privilege period due to the limitations of this subsection or under other provisions of P.L.1945, c.162 may be carried over, if necessary, to the seven privilege periods following the privilege period for which the credit was allowed.

d. As used in this section:

“Rainwater” means any precipitation on public or private property that has not entered into an offsite storm drain system or channel, and has not been previously been put to a beneficial use.

“Rainwater capture system” means rainwater capture system as defined pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).

10. This act shall take effect immediately; provided however, that section 7 shall remain inoperative until the first day of the second calendar month beginning after the date of enactment, and sections 8 and 9 shall apply to the taxable years beginning on or after January 1 next following the date of enactment.

STATEMENT

This bill would establish several incentives for installation and operation of a rainwater capture system.

The bill defines a rainwater capture system as any device, equipment, or group of devices and equipment, for the purpose of subsequent onsite use of rainwater, which: (1) is not attached to any public water system, including, but not limited to, culverts, drainage ditches, or sewers, or any part thereof; (2) does not require a permit from the Department of Environmental Protection; and (3) is designed to capture, retain, and store rainwater falling directly from the sky, flowing off of shrubs, trees, lawns, rocks, or other plants or natural parts of a property whether naturally occurring or placed at the location, or flowing off a building, parking lot, or other manmade impervious surface. Rainwater capture systems would include rain barrels but not any stormwater runoff or capture and reuse system requiring a permit from the Department of Environmental Protection.

The bill would, in particular:

1) authorize any residential, commercial, or public property owner to install, maintain and operate a rainwater capture system for outside non-potable water use or infiltration into the groundwater;

2) prohibit a county, municipality, county or municipal agency, or any State agency from imposing or collecting any fee for the installation or operation of a rainwater capture system;

3) prohibit a municipality from assessing property tax on a rainwater capture system as an improvement to real property;

4) exempt from State sales and use tax the retail purchase of a rainwater capture system and the services concerning the installation or maintenance of a rainwater capture system;

5) establish a gross income tax credit for the purchase price of a rainwater capture system and any installation costs or charges; and

6) establish a corporation business tax credit for purchase and installation of a rainwater capture system for use at a place of business, trade, or occupation.