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Federal and Local Incentives to Build Green

February 27, 2011 By apenner

Some framework is in place for green building tax deductions at both the national and the lower levels. At both the federal level and local level, tax benefits exist to help promote green buildings in Houston. These benefits not only affect owners, but some can also apply to the designers.

Federal Incentive- EPAct §179D Tax Deduction

 As part of the Energy Policy Act of 2005, the EPAct §179D Tax Deduction allows energy efficient construction or retrofitting expenses to be deduced for buildings in operation after December 31, 2005 and before January 1, 2014.  These may include lighting, HVAC, hot water systems, and building envelope. If such systems are installed and reduce the total energy and energy costs of the whole building by 50%, a maximum of $1.80 per square foot (of the area affected by an efficient system) can be deducted.

The beneficiary of the deduction is the company or person who pays for construction, typically the owner. However, if it is a government owned building, the designer (architect, engineer, environmental consultant, or energy service provider) can benefit from this tax deduction.  If the Better Building Initiatives proposed by President Obama become reality, then the tax deductions will become tax credits, potentially doubling the incentive.

For more information, please see http://www.sourcecorptax.com/energy/energy_efficiency.htm

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US40F&re=0&ee=1

Harris County Green Building Tax Abatement for LEED

 An owner of a new building that has registered and is pursuing LEED Certification can receive a partial tax abatement for up to ten years after construction is complete.  This ranges from 1-10% , depending on the certification level. 

LEED Certification Level Tax Abatement
Certified 1.0%
Silver 2.5%
Gold 5.0%
Platinum 10%

 Before construction is completed, the application for a LEED Certification Tax Abatement is due.  The amount spent on LEED related building components must be $100,000. Once processed and approved, one can receive the benefits for up to 10 years. This applies to projects outside of the incorporated area.  

 Harris County Guidelines:  http://www.hctx.net/CmpDocuments/103/Economic%20Development/2008-05-20%20Approved%20Tax%20Abatement%20Guidelines.pdf

Application: http://www.hctx.net/CmpDocuments/103/Economic%20Development/Harris%20County%20Green%20Building%20Tax%20Abatement%20Application.pdf 

City of Houston, Texas, Ordinance No. 2009-858:  Leadership in Energy and Environmental Design Tax Abatement

Like the Harris Country Tax Abatement, an owner of a new building that has registered and is pursuing LEED Certification can receive a partial tax abatement for up to ten years after construction is complete. For the percentage discounts available, these are the same as the Harris County Tax Abatement. Before construction is completed, the application for a LEED Certification Tax Abatement is due. The amount spent on LEED related building components must be $100,000. Once processed and approved, one can receive the benefits for up to 10 years.

Please note, a building can only take advantage of the city or the county tax abatement, not both.

http://www.codegreenhouston.org/tax-incentive-rebates/index.php

City of Houston Energy Efficiency Incentive Program
Sponsored by the City of Houston and the Green Office Challenge, the Energy Efficiency Incentive Program is the first program for commercial buildings in Houston. This incentive provides money to cover 20% of the initial material and labor costs, with monetary values ranging from $20,000 t0 $200,000 maximum for each building when the project is completed.
Eligible buildings will need to be audited by a certified energy manager, who will make recommendations to save a minimum of 15% energy.
Hopefully, this new incentive will have a huge impact, as it makes energy efficiency improvements more feasible to a new and much bigger segment of commercial properties in the city.
 
Please see the EEIP section of the Green Office Challenge website:  http://www.houstongoc.org/?q=node/47.

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Filed Under: Costs, LEED Rating Systems, Local Codes / Incentives / Legislation, Local Government Programs

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