Tax incentives are a major catalyst for the green schools initiative

"Green schools for everyone within this generation" requires a variety of people with different viewpoints to agree on one vision. Administrators, architects, parents, politicians and funders not only need to agree on this idea, they all must generate results while representing their groups' interests. The question is rarely about the positive impact of greening our schools, but rather on presenting a financially viable solution that satisfies all parties. Few experts will argue the long term operational, environmental, and academic benefits of a high performing school. The challenges usually center on funding the capital required to design, purchase and properly maintain the technology. Weighing and measuring short term costs against long term benefits is a reasonable dialogue that needs to occur, especially when public funds are considered. Those committed to green schools understand that creating significant results requires creativity, collaboration and ingenuity. One method utilized to generate additional revenue streams is tapping into federal tax incentives such as those available through the Energy Policy Act of 2005. This legislation allows architects and engineers the opportunity to capture significant tax deductions for their design work on energy efficient publicly funded projects. Community Benefits from EPAct It is not uncommon to find architects entrenched in one community throughout their career. In many cases, designers help shape the personality of the town or institution by providing design continuity and artistic harmony. One trusted and respected architect of a college town decided to utilize the incentives to invest in the community that has supported his business for over 25 years. This architect was prominently involved in the growth of a college town. Project included renovations, campus housing, new construction and building expansions. Many of the projects were designed and built to LEED silver and gold specifications. Due to the concentration on efficient systems, these projects also qualified for tax deductions available through EPAct. The architect considered the tax benefits, a bonus to the revenue already generated from the projects. He chose to certify several large projects and used the benefits to help fund and expand the firms' existing scholarship program to the school of architecture. Administration Saves $1.6 million in Energy Costs Progressive architects and administrators are working together to find creative ways to reduce expenses and long term costs. Electricity is a substantial line-item cost on any school operating budget. The superintendant of schools in a west coast community understood the benefits available to the design firm for meeting the required thresholds. This knowledge allowed the district and the contractor to work together to maximize efficiencies to reduce long term expenses without additional capital out-lay. During a major lighting retrofit, the design team was challenged with reducing energy usage for ten schools by an additional 12% originally indicated without exceeding the budget previously established. The reward: A signed allocation letter for over $400,000 in tax deductions for the firm. The design team met this goal by allocating additional resources to the project as well experiencing significant out-of-pocket expenses. The school reduced its expected yearly energy cost by over $15,000 per school, saving the district over $1.6 million in energy costs over the next ten years. EPAct Incentives Solution to Meeting Construction Deadlines Designing a high-performing school takes the combined effort from several entities. Architects, MEP firms and general contractors, all play an important role in managing budgets and meeting deadlines. During construction of a middle school in the Midwest, a series of unfortunate circumstances threatened to delay the opening of the school causing increased costs, and inconveniencing parents, teachers and administrators. To meet the deadline, all parties would have to invest additional time and resources. The architect of record and school worked together to determine a solution to properly compensate contractors without adding additional costs. The architect used the tax benefits to create an incentive plan for timely completion as well as cover overtime costs. The project was completed on time and on budget without increased costs to the school district or construction team. What is EPAct? Building components (shell, HVAC, and lighting) can qualify for a federal tax deduction of up to $0.60 per s/f for each system. These deductions can come about due to new construction or renovation. To qualify for these deductions, an analysis must be performed by an independent, qualified engineering firm. The savings are calculated using IRS guidelines that are related to ASHRE standards. Don McDougall is a director at Engineered Tax Services, Inc., Los Angeles, Ca. and Joe Abate is an associate at Engineered Tax Services, Inc., New York, N.Y.