“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.  The following stories are examples of how enterprising groups worked together using these tax incentives to make green schools a reality in their communities:

Tax Incentives Subsidize Design/Commissioning Fees

A growing town in Southern California passed an ordinance that all new construction must be LEED certified.  This requirement placed responsibility on owners and designers to determine a way to comply with regulations while considering appropriate design and commissioning requirements. One industrious architect decided to use his EPAct knowledge to differentiate his firm during the RFP phase of a K-5 school.  The firm introduced the tax incentives and suggested using the benefits to pay for design and commissioning fees, ultimately reducing his quote.  Consultants were introduced during the design stage of the project to help maximize the benefits of $1.80 sq/ft.  The required allocation letter was authorized as an addendum to the construction agreement and provided over $35,000 in relief, an EPAct certification, and earned the architect future business with the school district and property owners in the area.

Administration Saves $1.6M 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 $1.6M in energy costs over the next ten years.

The following table shows the savings of the middle school campus for the school district:

In summary: There was no outlay by the School District.

They had no additional cost to the design of the buildings or costs in construction.  They spent nothing to obtain these significant savings.

Over the next 10 years however,  one single school stands to gain $165,080 or more in savings.

This example highlights just ONE of the 10 campuses that this particular School District has either constructed or renovated

For all 10 campuses over the next 10 years the District could realistically save more than $1,650,000, or $165,000 a year.

This example is typical of the savings a School District could expect in a similar situation.

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.

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/sf 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.

It’s Not Too Late

Whether you’re considering renovations, in design stage, or have opened a green school, it is not too late to explore and capture these federal tax incentives.  Contact a qualified, licensed firm with expertise in this area to determine the possibilities available to your firm or community.

Don McDougall and Brian Gilboy are  Directors with Engineered Tax Services, a firm specializing in capturing tax incentives available through EPAct 2005.

For more information, contact

Brian at bgilboy@engineeredtaxservices.com or phone: 847.530.3666.

Don at dmcdougall@engineeredtaxservices.com or phone: 213-280-2266.

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