Why EPAct Benefits Public Entities
Several Architectural firms have discussed EPAct with their School and City clients. When a Public Entity agrees to sign the EPAct gifting letter, the Architect is then able to take advantage of the EPAct tax deductions, which allows the Architectural firm to work to maximize energy savings for that Entity.
The maximization of the savings has the effect of helping generate tax benefits for the Architect (these are the EPAct 179D Tax Deductions). The benefit of the energy savings to the Public Entity is usually quite substantial.
For example, with a middle school campus, the Architect worked to find an additional 12% savings in the cost, to light the interior of the buildings. This 12% savings was sufficient to gain the Architect an additional $0.60 per square foot in tax deductions for the Architect, but what does this modest 12% savings in the cost of running their lighting mean to the school district? Quite a lot, not just for this year, but for ongoing years as well.
The following table shows the savings of the middle school campus for the school district:
In summary: The School District incurred no additional cost to the design of the buildings or costs in construction to obtain these significant savings.
Over the next 10 years this school stands to gain $165,080 or more in energy savings. This example highlights just ONE of 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 over $1,650,000!
It is easy to see why Architectural firms are investing their own time and resources, going above and beyond, to look for ways to maximize the 179D EPAct benefits while maximizing the energy efficiency of the building. The modest one-time gain of $0.60 per square foot, in tax deductions gained by the Architect, is pale in comparison to the $1.6 MILLION that the District gains over the next few years, or the annual savings of $165,000. On average, the School District will receive an approximate 20% permanent reduction in each building’s operational costs, each year.
What is 179D EPAct
Each building component (Building Envelope, HVAC, and Lighting) can qualify for a federal tax deduction of up to $0.60 per square foot. These deductions can come about due to new construction or renovation. In order to qualify for these deductions, an analysis of your energy savings is required by a qualified firm (such as a licensed engineering firm like Engineered Tax Services). The savings are significant can additional tax benefits are often identified through the engineering process. Contact ETS here for more information or for a free benefit analysis.