A Florida Senate committee has unanimously approved Senate Bill 90, which would implement Amendment 4 and eliminate property taxes on solar and other renewable energy devices installed at commercial and industrial facilities for 20 years. The same tax break already exists for residential property owners. Florida voters passed the Amendment 4 ballot initiative last summer with almost 75% of the vote. The legislation would go into effect in 2018, and would also exempt renewable energy devices from Florida’s tangible personal property tax, including storage tanks, rock beds, thermostats and control devices, and heat exchangers.
Institutional owners of office buildings continued to pursue green building certifications in the 30 largest U.S. markets during 2015. Continuing an upward trend over the past decade, green certifications are now held by 11.8 percent of all surveyed buildings, representing 40.2 percent of all office space. Both figures are slightly above last year’s results, according to the third annual Green Building Adoption Index study by CBRE Group, Inc. and Maastricht University. “Green” office buildings in the U.S. are defined as those that hold either an EPA ENERGY STAR label, USGBC LEED certification or both.
After placing second on the Green Building Adoption Index the two prior years, the San Francisco market claimed the top spot with 73.7 percent of its space qualified as green certified. Chicago claimed the second spot, narrowly trailing the leader at 72.3 percent and Minneapolis fell from the top into third spot at 60.6 percent. Houston, Atlanta and Los Angeles all also achieved more than 50 percent green certification in their office markets.
Florida voters approved a constitutional amendment by more than 70 percent in Tuesday’s primary election, which will exempt solar and other renewable energy devices on business and industrial property from property taxes for 20 years. The same tax break already exists for residential property owners. Amendment 4 also exempts renewable energy devices from Florida’s tangible personal property tax. The Legislature, which put Amendment 4 on the ballot, must pass a bill in the next session in 2017 carrying out the will of the voters.
Florida voters will be asked on the primary-election ballot on Aug. 30 to extend the residential solar energy tax break to commercial and industrial property owners, and thus significantly expand renewable-energy production in the state. Crafted by the Legislature, the broadly supported Amendment 4 proposal would exempt for 20 years the assessed value of solar and renewable-energy devices installed on businesses and industrial properties.
Data center are required to run uninterrupted 24 hours per day, 365 days per year, unlike any other property type, so it is no surprise that owners are actively investing energy-efficient features and green building techniques to reduce energy consumption. Anything that reduces costs goes straight to the bottom line for data centers, says David Rinard, senior director of global sustainability at Equinix. So Equinix uses a variety of strategies such as building tighter buildings, changing the operating temperature and using smarter control systems for lights and air conditioning to retain their competitive edge from a pricing perspective. “LEED-certified buildings are top-of-mind for customers and help attract and retain tenants as well as drive down costs,” according to Aaron Binkley, director of sustainability at Digital Realty Trust.
Lenders are recognizing the value of apartment properties that use less energy and are offering incentives to multifamily owners that go green. Both Fannie Mae and the Federal Housing Authority (FHA) have created loan programs for apartment properties that use less energy. Apartment buildings that include green design features typically have lower utility bills that can make them more profitable and less risky for lenders. Fannie Mae and FHA now recognize likely energy savings in their underwriting calculations and in the interest rates they offer. The incentives are gaining a lot of attention from multifamily owners planning new construction or extensive rehab projects. And while it can be challenging to get enough new insulation into an existing apartment building to meet green standards, there are incentive options for older affordable housing properties that want to make green improvements.
Building green industrial properties, and seeking LEED certification, is a growing trend for developers and property owners, as they begin to recognize the wide-range of benefits it provides for themselves and tenants alike. According to the U.S. Green Building Council, as of 2013 a total of 117 industrial manufacturing facilities had earned LEED certification. These buildings accounted for 41 million gross square feet of green industrial space. An additional 703 industrial projects had registered for LEED certification as of 2013, buildings that totaled 221 million square feet. The U.S. Green Building Council said that the market of green industrial buildings had grown by 375 percent in the four years leading up to 2013.
Recent findings from the Massachusetts Appellate Tax Court could provide solar developers statewide the opportunity to challenge their property tax payments. According to the Boston Business Journal, "the debate is whether solar arrays are subject to property taxes if the electricity they generate is used for power on property that's not located in the same place as the solar panels."
Energy benchmarking for large commercial buildings is fast becoming U.S. law. According to The International Council of Shopping Centers (ICSC), ten cities — Austin, Texas; Boston; Cambridge, Mass.; Chicago; Minneapolis; New York City; Philadelphia; San Francisco; Seattle; and Washington, D.C. — have enacted energy-benchmarking requirements, as have the states of California and Washington. This year Montgomery County, Md., became the first county to pass such a law, mandating a benchmark deadline of Dec. 1, 2016, for private buildings measuring at least 250,000 square feet and a deadline one year later for those measuring at least 50,000 square feet.
Last month, Texas comptroller Susan Combs stirred controversy when she said Texas' growing wind energy industry's tax credits and property tax limitations that helped grow the industry gives it an unfair market advantage over other power sources. Combs referenced a 15-page report that described wind power as a massive strain on taxpayer dollars. It cited state property tax reductions, a generous federal production tax credit and a nearly $7 billion power line build-out geared toward adding wind to the grid. Critics dismissed the report largely for what it did not say: that the new power lines have yielded benefits across the grid and that Texas has subsidized its moneymaking fossil fuels sector for a century. Critics argue if a discussion on energy infrastructure investment takes place, it needs to cover across the board. That conversation will likely take place soon.