Stimulus Tax Incentives For Green Building

Businesses can benefit from these "green" provisions in the stimulus bill.

Modified Accelerated Cost-Recovery System (MACRS).

This accelerated depreciation schedule covers a variety of renewable energy technologies that have five year MACRS schedules (solar PV and solar thermal, fuel cells and micro turbines, geothermal electric, direct use geothermal and geothermal heat pumps, small wind, and combined heat and power), and some biomass properties that have seven year MACRS schedules.

For details on MACRS review the Publication 946, IRS Form 4562: Depreciation and Amortization, and Instructions for Form 4562.

Bonus Depreciation

The federal Economic Stimulus Act of 2008, enacted in February 2008, included a 50% bonus depreciation provision for eligible renewable-energy systems acquired and placed in service in 2008. This provision was extended (retroactively to the entire 2009-tax year) under the same terms by The American Recovery and Reinvestment Act of 2009 enacted in February 2009.

To qualify for bonus depreciation, a project must satisfy these criteria:

• The property must have a recovery period of 20 years or less under normal federal tax depreciation rules;
• The original use of the property must commence with the taxpayer claiming the deduction;
• The property generally must have been acquired during 2008 or 2009; and
• The property must have been placed in service during 2008 or 2009 (or, in certain limited cases, in 2010). If the property meets these requirements, the owner is entitled to deduct 50% of the adjusted cost basis in the first year (2008 or 2009) and the remaining 50% along the ordinary depreciation schedule.

Refer to the IRS guidance document for bonus depreciation for details.

Energy Efficient Commercial Building Tax Deduction

Owners of new and existing buildings can receive $0.30 - %1.80 per square foot for energy efficiency upgrades to the Lights, HVAC system, building envelop, and the hot water system.

http://www.efficientbuildings.org/
http://www.energytaxincentives.org/uploaded_files/irs_notice2008-40.pdf

Corporate Energy Investment Tax Credit (ITC)

The corporate energy investment tax credit has been extended until 2016 for solar, fuel cells, and small wind: 30%, geothermal, micro turbines, and combined heat and power: 10%. Maximum incentive amounts apply depending on the technology.

Small wind and solar projects are not subject to an incentive cap.

Company is eligible for this tax credit may elect to take a grant from the U.S. Treasury Dept equal to the tax credit instead.

Renewable Energy Production Tax Credit (PTC)

Commercial and Industrial entities can receive a tax credit for the production of renewable electricity. The size of the credit depends on the technology: 2.1 cents per kWh for wind, geothermal, closed-loop biomass, 1.0 cents per kWh for other eligible technologies. The tax credit applies for the first 10 years of operation.

House passes bill protecting 2 million acres of wilderness

In what’s being called the most sweeping land protection law in a quarter century, the US House of Representatives Wednesday passed a conservation plan to set aside more than 2 million acres of desert and forest in nine states.
The Omnibus Public Lands Management Act, which cleared the Senate last week, was approved by a margin of 285 to 140 and has been sent to President Obama for his signature.
The bill would officially designate land in California, Colorado, Idaho, Michigan, New Mexico, Oregon, Utah, Virginia, and West Virginia wilderness. That means no logging, mining, drilling, or even vehicles.

The law will add 37,000 acres to the Dolly Sods Wilderness.

Coffee Maker Offers $800,000 in Climate Change Grants

Green Mountain Coffee Roasters is encouraging organizations to apply for grants to help respond to climate change.
Green Mountain Coffee will award four $200,000 grants, each payable over five years.

The grants will be part of Green Mountain Coffee’s campaign, “Changing Climate Change,” which includes operational changes, employee incentives to reduce carbon emissions and buying carbon offsets.

Read Entire Article

Have Faith in Green Building

What Would St. Francis Build?
01/26/09
From Green Source Magazine

In the late 1990s, the Felician Sisters in Coraopolis, Pennsylvania, members of a Franciscan order, began planning a building project.

The Felician Sisters are heirs to the Franciscan tradition of caring for the natural world, and their vows of poverty encourage conservation of energy and materials as well as money. Despite these values, green building was not on their radar when they embarked on their building plan. But when Sister Mary Christopher Moore, one of the convent’s leaders, happened upon a newspaper article about the LEED-certified Greater Pittsburgh Community Food Bank (among the first LEED buildings), she was intrigued. She brought the article to a meeting with Nettleton and the convent’s building committee, and a consensus quickly developed that green building should be part of their plan.

The Felician Sisters embody the trend toward an increasing interest in green building among religious groups. Fletcher Harper, who heads the interfaith environmental organization Green Faith, speaks regularly with congregations involved in building projects, and tells them that the only financially responsible way to build is to build green. But, he says, those with fiduciary responsibility for religious organizations tend to be risk-averse. They often assume that green building comes at a premium price, and frequently underestimate the savings that may be reaped over the life of a building. Furthermore, some politically conservative congregations may respond negatively to the idea of green building on ideological grounds, rejecting anything that smacks of environmentalism, Harper says. He also finds that many congregations use an informal process to choose an architect—going with someone a member knows, rather than putting out a request for proposals—and may not even bring up green building goals until the architect has been hired. By that time, he says, “the train’s left the station.”

READ ENTIRE ARTICLE

Working with Municipalities on the Green Movement

One potential avenue for green movement will be working with municipalities on green programs and legislation.

Here's an article from Jacksonville about a seminar given by Holland & Knight on sustainable development issues.

We should consider working on this. Not only do we get before potential municipal clients but we can also invite our clients and potenantial clients to be speakers under the general sustainable development unbrella.

http://www.jaxdailyrecord.com/showstory.php?Story_id=51687

Green-Retrofit Work Thrives In Uncertain Economic Times

As the recession grinds on, some consultants are finding an emerging outlet by updating older buildings from power hogs into green stewards. The trend is attracting a fresh round of eco-savvy tenants. Read entire article.

A substantial federal tax incentive is available to owners and tenants of commercial real estate. This tax incentive is also available to designers of energy efficient building systems installed in government owned buildings. Download my presentation on this topic from this page.

Prefab Fabulous?

Is there a prefab in your future? Check out this prefab cabin constructed in Lost River, WV

http://www.lostrivermodern.com/

Green Building Facts from the USGBC

Green Building by the Numbers
December 2008

The value of green building construction is projected to increase to $60 billion by 2010
(Source: McGraw-Hill Construction (2008). Key Trends in the European and U.S. Construction Marketplace: SmartMarket Report.)

The construction market accounts for 13.4% of the $13.2 trillion U.S. GDP
(Source: Department of Construction (2008). Annual Value of Construction Put in Place.)

By 2009, 82% of corporate America is expected to be greening at least 16% of their real estate portfolios; of these corporations, 18% will be greening more than 60% of their real estate portfolios
(Source: McGraw Hill Construction (2007). Greening of Corporate America SmartMarket Report.)

The green building products market is projected to be worth $30-$40 billion annually by 2010
(Source: Green Building Alliance (2006). Green Building Products: Positioning Southwestern Pennsylvania as the U.S. Manufacturing Center.)

U.S. Green Building Council:
Membership
• 17,846 member organizations including corporations, governmental agencies, nonprofits and others from throughout the industry.
• Since 2000, USGBC’s membership has more than tripled.

LEED® Green Building Certification System
• The LEED for New Construction rating system was first released in 2000.
• LEED for Commercial Interiors and Existing Buildings became available in 2004.
• LEED for Core & Shell became available in July 2006 for spec developments.
• LEED for Homes was launched in December 2007.
• LEED for Neighborhood Development, Retail and Healthcare are currently in pilot test.
• Over 4.2 billion square feet of commercial building space is involved with the LEED green building certification system.
• By 2010, approximately 10% of commercial construction starts are expected to be green, according to McGraw Hill Green Building Smart Market Report 2006.
• Every business day, $464 million worth of construction registers with LEED.


LEED Registered Projects

New Construction ---------- 9,555
Commercial Interiors------ 1,757
Existing Buildings----------- 2,063
Core & Shell---------------- 2,147
Neighb'd Devel't---------- 230
Schools--------------------- 534
Retail ----------------------- 107

LEED Certifiied Projects

New Construction ---------- 1,420

Commercial Interiors------ 397

Existing Buildings------------ 172

Core & Shell------------------ 127

Neighb'd Devel't------------- 12

Schools------------------------ 2

Retail --------------------------- 20

• There are LEED projects in all 50 states and 69 countries.
• Owners of LEED-registered and certified projects represent a diverse cross-section of the industry.

Education & Accreditation
• LEED workshop attendance: ----------------91,163
• LEED Accredited Professionals: ------------69,151
• Greenbuild Attendees 2008:----------------28,224
• Greenbuild Attendees 2007: ---------------22,835

Size and Impact of the U.S. Built Environment
Construction yields an annual output of U.S. $4.6 trillion, contributing to 8-10% of the global Gross Domestic Product encompassing a workforce of 120 million people and billions of transactions each day.

Source: McGraw-Hill Construction (2008). Key Trends in the European and U.S. Construction Marketplace: SmartMarket Report.

Comprises 13.4% of the $13.2 trillion U.S. GDP. This includes all commercial, residential, industrial and infrastructure construction. Commercial and residential building construction constitutes 6.1% of the GDP. Source: Department of Construction (2008). Annual Value of Construction Put in Place.

Energy consumption
• Buildings represent 38.9% of U.S. primary energy use (includes fuel input for production). Source: Environmental Information Administration (2008). EIA Annual Energy Outlook.
• Buildings are one of the heaviest consumers of natural resources and account for a significant portion of the greenhouse gas emissions that affect climate change. In the U.S., buildings account for 38% of all CO2 emissions.

Source: Energy Information Administration (2008). Assumptions to the Annual Energy Outlook
Electricity consumption
· Buildings represent 72% of U.S consumption.

Source: Environmental Information Administration (2008). EIA Annual Energy Outlook.
Water use:
• Buildings use 13.6% of all potable water, or 15 trillion gallons per year.

Source: U.S. Geological Survey (2000). 2000 data.

Materials use:
• Buildings use 40% of raw materials globally (3 billion tons annually).

Source: Lenssen and Roodman (1995). Worldwatch Paper 124: A Building Revolution: How Ecology and Health Concerns are Transforming Construction. Worldwatch Institute.
Waste:
• The EPA estimates that 136 million tons of building-related construction and demolition (C&D) debris was generated in the U.S. in a single year.

Source: U.S. Environmental Protection Agency (1997). U.S. EPA Characterization of Building-Related Construction and Demolition Debris in the United States.
• Compare that to 209.7 million tons of municipal solid waste generated in the same year.

Source: U.S. Environmental Protection Agency (1997). Characterization of Municipal Solid Waste in the United States. Report No. EPA 530/R-98-007.

Sectors Expected to Have Green Building Growth

· Education
· Government
· Industrial
· Office
· Healthcare
· Hospitality
· Retail
Source: McGraw Hill Construction (2008). Global Green Building Trends SmartMarket Report.

The three largest segments for nonresidential green building construction —office, education and health care—will account for more than 80 percent of total nonresidential green construction in 2008.

Source: FMI (2008). U.S. Construction Overview.

What’s Driving Green Building

These factors are expediting the growth of green building:
1. Unprecedented level of government initiatives
2. Heightened residential demand for green construction
3. Improvements in sustainable materials.
Source: FMI (2008). U.S. Construction Overview.