Energy-efficiency Program Under the auspices of the California Statewide Communi- ties Development Authority, the state’s joint powers au- thority, 14 California counties and 126 cities have launched
the nation’s largest PACE program, an innovative financing tool to help commercial property owners reduce their buildings’ energy and water use. ¶ The CaliforniaFIRST program allows commercial property owners to use municipal bonds to finance energy and water efficiency, as well as renewable-energy upgrades, which the owners repay through a special assessment on their annual property-tax bill. Through a public-private partnership, private capital will be used to supply the upfront funding for the work, so local government budgets will not be burdened. ¶ There is huge potential for energy and cost savings in the commercial building market. According to Washington, D.C.-based U.S. Department of Energy researchers, if all U.S. businesses and institutions conducted cost-effective upgrades, they could reduce their average energy use by 25 percent. The total cost of this work would be more than $100 billion, which would be offset as a result of lower energy bills. ¶ The financing mechanism, called Property Assessed Clean Energy (PACE), was first pioneered by the city of Berkeley, Calif., for its resi- dential owners in 2008. The promising residential energy-upgrade platform ran into regulatory headwinds in 2010. However, commer- cial PACE programs have since been launched in San Francisco; Los Angeles County; and Washington, D.C. The CaliforniaFIRST program is the first multi-jurisdictional program of its kind to be essentially statewide in scale. With the CaliforniaFIRST program, many people view California as the state with the greatest potential to unlock the promising energy-efficiency market. ¶ For more information, visit californiafirst.org.
SMACNA SUPPORTS COMMERCIAL BUILDING
MODERNIZATION ACT A long-awaited reform of the IRS Section 179D tax incentive was introduced in the U.S. Senate and put on a fast track for consider- ation in the lame duck session of Congress after the November elections. ¶ The Chantilly, Va.-based Sheet Metal and Air Conditioning Contractors’ National Association endorsed the legislation, S.3591, The Commercial Build- ing Modernization Act of 2012, in anticipation that passage of the incentive by December could lead construction’s high-efficiency retrofit sector to improved economic activity for building owners, contractors and their workforce. ¶ Sen. Jeff Bingaman (D-N.M.) and Sen. Olympia Snowe (R-Maine), two lead- ers on energy-efficiency policy and tax policy, joined forces with three Senate co-sponsors to champion a priority of the commercial building efficiency retrofit community. It is more probable the incentive will be added to the large package of tax provisions set to ex- pire late this year and next year. ¶ Proposed 179D changes include the following:
• Extending the expiration date of the tax benefit from Dec. 31, 2013, to Dec. 31, 2016.
• Increasing the maximum amount of the deduction from $1.80 to $3 per square foot.
• Allowing deductions to be allocated to other parties not only when the property is owned by a government, but also for not- for-profit and privately owned commercial properties.
Energy and Environment Technology Services to Grow By 2015, large firms in the U.S. market will spend $2.5 billion annually on technology consulting and systems integration relating to their energy, environment and sustainability initiatives, ac- cording to a new report from independent analyst firm Verdantix, New York. The forecasted level of investment reflects a 47 percent increase from spending of $1.7 billion in 2012 and a compound annual growth rate of 11 percent over the 2011-15 period. This compares with a total U.S. market size for all energy, environment and sustainability spending of $39.8 billion in 2012, making technology services 4 percent of the total market. ¶ The Verdantix report, “U.S. Sustainable Technology Services Spend 2011-15,” covers spend by 1,833 firms across 11 different energy, environment and sustainability initiatives. Spending on technology services related to six energy-management initiatives dominates the market opportunity, representing $1.4 billion of the $1.7 billion total in 2012. Technology services in the environmental man- agement and water stewardship market segments will be worth $218 million in 2012. Strong environmental technology services practices will benefit from this spending. The embryonic market for sustainability technology services—climate change, sustainability performance management and low-carbon transport—captures just $151 million of corporate IT spending in 2012. ¶ For more information or to access the report, visit www.verdantix.com.
14 RETROFIT // November-December 2012
• Allowing an allocation of the deduction not only to designers of energy-efficient improvements, but also building tenants, financiers, professional engineers, licensed contractors, energy-services companies or other building professionals.
• Permitting a partial allowance for some energy-efficient upgrades with an increase from $1 to $3 and $2.20 to $3 for the rel- evant energy-efficient part of the upgrade.
By expanding incentives for whole and partial retrofits to encourage a wider variety of retrofit projects and by including real-estate investment trusts in the pool of projects eli- gible for allocation of 179D, the incentive will jumpstart many projects previously sidelined while industry employment suffered. ¶ To learn more about SMACNA’s endorsement, visit smacna.org. To read about how 179D can benefit retrofit projects, see “Guidance,” page 16.