The University of Florida announced last week that it had received $37,000 under a special tax benefit program for businesses, architects and contractors that build new buildings or retrofit existing ones to be more energy efficient.
“UF has secured more than $135,000 of savings, including (the) announcement, and we expect additional savings to be announced in the coming months,” Curtis Reynolds, vice president of business affairs at UF, said about the tax benefit.
UF has made energy savings one of its top priorities, Reynolds said. Under its Green Building Program, it has designed many of its newer buildings and recent renovations of existing buildings with the goal of saving energy and getting LEED certified.
The 2005 Energy Policy Act created the 179D deduction, which allows a tax rebate on each new or retrofitted energy-efficient building put in use between Jan. 1, 2006, and Dec. 31, 2013. The business can apply for a rebate of 60 cents per square foot for each of the following categories: HVAC, electrical and envelope (windows, roof, insulation) — up to $1.80 per square foot if all three components are included.
“If you do a green building, you get the benefit for all three … they automatically follow that category because they are doing all three elements,” said Bahar Armaghani, assistant director of building, design and construction at UF and director of its Green Building Program.
She credited Reynolds with supporting her effort to lead the 179D program and make it a reality.
Government entities like UF don’t pay taxes, but under a special rule they can designate the benefit to a tax-paying “designer” and receive savings in return for the allocation, Armaghani said.
“The rule actually says a federal, state or public entity that is tax exempt can get those benefits through the designer and contractor who designs and builds these buildings and does these retrofits for you,” she said.
Once the building or renovation is completed, the designer has an independent contractor inspect and verify the building, the system and the energy model, compare its energy use to the prior system, and report that information to the IRS.
The designer submits the application to the IRS, and when it sends the refund, the designer splits it with UF 50/50, Armaghani said.
The tax rebate is an incentive for the designer, and UF is essentially getting a rebate on the project, based on the energy efficiencies integrated into the building.
“It is a process we have to go through, but it’s worth it in terms of the benefit you get from it,” Armaghani said.
The $37,000 refund was for the Biomedical Sciences Building, designed by Affiliated Engineering Inc., she said. Other projects AEI or other contractors worked on as “designers” to get a tax savings for UF include the Institute on Aging Clinical and Translational Research Building, which netted a $40,000 savings for UF; the Lake Nona Research and Conference Center for a $39,000 tax savings; and Hough Hall, which netted UF an additional $18,788.
“We have more projects in the pipe for saving between $100,000 to $200,000 in the next few months,” she said, but declined to give an exact number until the third party verification for those buildings was completed.
UF hired Efficiency Energy LLC, a tax consultant out of Denver, in 2013 to help administer its 179D program to claim any savings it can get. Even though the program has expired, it still applies to projects completed between 2010 and 2013.
The U.S. Senate is considering extending the program to projects completed in 2014 and 2015 and increasing the tax credit to $1 per square foot per category, or up to $3 a square foot total, Armaghani said.
Current projects that could benefit if the program is extended include the renovation of the Reitz Union and the construction of Heavener Hall and Cypress Hall.
“As a matter of fact, we have integrated this into our contracts, meaning that every project will benefit,” Armaghani said.
Also, UF has integrated this feature into several Energy Service Company contracts. ESCOs are business enterprises that develop, install and finance projects designed to improve energy efficiency and reduce operations and maintenance costs for its customers’ facilities, she said.