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April 2017 — Property Management Quarterly — Page 25
Final Thoughts
I was in the local Ace Hardware
store last week shopping for
replacement light bulbs – T12
fluorescent bulbs, to be exact.
I noticed that since the old
incandescent bulbs were phased out
when production ended in 2014, we
now have lighting options ranging
from krypton, zenon, halogen, fluo-
rescent, compact fluorescent, halide
and LED lighting. Lots of choices.
Most of the new bulbs range from
$8 to $15, compared to the old
incandescent bulbs that you could
buy for about 75 cents. The bulbs
I needed cost about $8 for a two
pack. While I was there, I remem-
bered I needed a few indoor flood-
lights and a small halogen light
bulb as well. I ended up walking out
of Ace Hardware with a $90 receipt
for 10 light bulbs.
I realized that the high cost of
light bulbs is a great example of
one of the many expenses building
operators must factor in when con-
sidering going green and investing
in energy-improvement upgrades
for commercial buildings. I know
that the new light bulbs have ben-
efits, including lower energy usage
and longer life but, then again,
some of the lights and brightness
levels are lousy compared to the
incandescent light bulbs. Because
of these types of tradeoffs, we really
need to think about how we can
make energy improvements more
cost effective.
This topic is timelier than ever
because the city of Denver is adopt-
ing a municipal amendment that
requires buildings over 50,000 square
feet to track and
publicly report
their energy per-
formance through
the Energy Star
Portfolio Manager
program. The folks
up in Boulder
already are using
this benchmarking
approach.
In short, these
programs will
require building
owners to enter
operating and util-
ity data for their
buildings into the
program, which then evaluates how
the building performs as compared
to other buildings of similar size,
type and occupancy. For a score of 75
percent or greater, the building earns
the Energy Star rating and receives a
plaque. For a score falling below 75
percent, the goal is for the owner to
be motivated to improve the build-
ing. These improvements can range
from new lighting, extra insulation,
changing out the windows, upgrad-
ing the heating, ventilating and air-
conditioning system or doing what-
ever is needed to achieve a score of
75 percent or better.
I’m all for reducing energy con-
sumption, having more comfortable
buildings and reducing our carbon
footprint, but after my recent light
bulb excursion, I can’t help but won-
der about better ways to accomplish
these goals.
Back to the light bulb example.
What if you could get a dollar-for-
dollar tax credit on your
annual tax return if
you installed the
“good stuff” or
the most energy-
efficient light bulb
on the market?
Let’s say you buy
six LED 40-watt
light bulbs for the
lamps in your living
room, which are used
all the time. Six bulbs
multiplied by $9 each
equals $54 in light bulbs.
In this scenario, you could
save this receipt and apply
it to your tax return as a
credit next year.
On a larger scale, the
initial cost or investment
would be credited back
to the owner, the building
would be improved through
energy-efficiency improvements
and the savings would occur once
the improvements are completed.
This could be a “prescriptive” incen-
tive example for installing certified
products that reduce energy con-
sumption.
Staying with a performance-based
approach, we could focus on reduc-
ing annual building energy con-
sumption based on your Xcel bill by
comparing it to past performance or
to other buildings of similar size, use
and occupancy. That is, if you com-
pleted a project that reduced energy
consumption, you could secure a
tax credit to offset the capital cost
of the improvement. You would
demonstrate your reduction in
annual usage and be able
to receive a tax credit to
offset the investment
cost.
If the credit was
generous enough
and could pay for
the upgrades in a
short amount of
time, I believe it
would be very popu-
lar. For a commercial
building, it would be
great if the landlord and
tenants could split this tax
credit so they both have
an incentive for promoting
the improvements. Or from
a conservation standpoint,
any building that performs
better than a code minimum
standard would be allowed
to include a tax credit on next
year’s return.
Due to the challenges and costs
of reducing commercial building
energy consumption, I think the gov-
ernment could provide a more prac-
tical incentive to promote energy-
efficiency improvements and ener-
gy conservation through tax credits.
We currently have the EPACT Fed
179D deduction but, like the tax
code, it can be cumbersome and
difficult to apply. I say we create
an energy tax credit that is easy to
understand, easy to document, and
incentivizes building owners and
tenants to reduce energy consump-
tion. I’ll see if I can pitch this to
Gov. John Hickenlooper and Mayor
Michael Hancock the next time I see
them at the hardware store. s
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