Green buildings are economically viable and good for the environment
The Business Review (Albany) - by Rodney Aldrich For The Business Review
The moniker "green building" soon may have as much to do with saving greenbacks as with benefiting the environment.
On May 15, Gov. George Pataki signed a "green building" tax credit. Then, the New York state Department of Environmental Conservation published draft regulations that describe how a building will qualify for the credit.
Public buildings, including the state DEC headquarters in Albany, the Whitehall Ferry Terminal, the New York City Children's Services Center and Syracuse's Burnet Park Zoo, were some of the first built using green principles.
Several factors have inhibited the construction of green buildings. Often the developers will not be the occupants and receive the green benefits. The payback for energy and resource conserving systems is not realized near-term.
Potential leasers are primarily concerned about lighting, sub-divisibility, power, wiring for computers, ease of access, security, etc. Green issues have not historically been a priority when looking for suitable space.
Private investors have focused on the near term without considering that many green systems require years to achieve payback on the initial investment.
New York's green buildings tax credit provides new financial incentives for environmentally preferable building materials and energy-efficient technologies that are renewable and clean.
The building owner or tenant must apply to the DEC for "an initial credit component certificate" to be issued during the years 2001 through 2004. These will state the first taxable year for which the credit may be claimed and the maximum credit amount. The credit may be claimed for a total of five taxable years. Thus, the credit program will run through the taxable years 2001 through 2009.
The credit can be applied against taxes paid by corporations, utilities, banks, insurance companies and personal income taxpayers under various New York state tax law articles.
The owner or tenant will be allowed a credit of 7 percent of allowable costs for a whole building (actually 1.4 percent in each of five years) or 8 percent if located in an official economic development area. There is a cap of $150 per square foot for allowable aggregate costs for the base building, and $75 per square foot for tenant space.
The construction must involve more than 20,000 square feet of interior space for a hotel or office building; residential multi-family buildings having more than 12 units qualify; residential multi-family buildings having more than two units that are part of a single or phased construction, provided that more than 10,000 square feet is under construction or rehabilitation in any single phase qualify; as do any combination of the three conditions.
The "design building" (a new building) must use less than 65 percent of the energy that a building constructed to the New York State Energy Code would use for the same amount of interior space. In renovation, the target is to use less than 75 percent. These computerized comparisons use the DOE-2.1E software program, versions V86 through V110, or an equivalent program.
These comparisons can be done in the base building, tenant space or office space, or can be done for the whole building.
All reasonable steps must be taken to minimize or prevent human exposure to certain health impacts from the building or operations. Architectural coatings (paint, spackle, etc.), glues, carpets and furniture must be designed to release no volatile organic compounds--chemicals that enter the air relatively easily and are suspected or known to have an impact on health. Biological contaminants, such as viruses, bacteria, fungi, and mammal and bird antigens (proteins that can cause allergic reactions), must be prevented or removed--which is particularly important in building rehabilitation.
An annual eligibility certificate, including findings, must be submitted to New York state from a licensed architect or engineer certifying that the project meets the standards for green buildings for each taxable year that a credit is claimed.
Several additional components in a green building, including fuel cells, photovoltaic modules and air-conditioning equipment using Environmental Protection Agency or state DEC-approved refrigerants, are eligible for tax credits. Fuel cells convert fuels directly to electricity and photovoltaic modules convert sunlight directly to electricity.
The credit for fuel cells is 30 percent of the capitalized cost of fuel cells with a cap of $1,000 per kilowatt times the DC-rated capacity.
The credit for photovoltaic modules is 100 percent of the incremental cost of building-integrated photovoltaic modules or is 25 percent of the incremental cost of non-building integrated photovoltaic modules with a cap of $3 per watt times the DC-rated capacity.
The credit for green refrigerants is 10 percent of the cost of new air-conditioning equipment using an approved non-ozone-depleting refrigerant.
When an owner sells a building or a tenant terminates tenancy within the five years, the successor owner or tenant will be allowed the credit for the remainder of the 5 year period, assuming the property continues to meet the standards.
Any amount of the credit that is in excess of the taxpayer's tax liability for that year can carry over to future years.
Private companies are showing significant interest in the green building concept.
Green buildings are designed and operated to conserve energy and resources and to minimize the exposure of the building occupants to anything unhealthy from the building or building operations. The principles used to create green buildings are proven and are poised to change building construction.
New York has passed a tax credit law and proposed regulations that provide a framework to tip the balance toward the economic viability of these green building principles. Surely, those with the foresight to save money and help the environment will step forward and build green.
RODNEY ALDRICH, a professional engineer, is manager of environmental services at Sterling Environmental Engineering P.C. in Albany.
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