Page 129 - Green Building Through Integrated Design

106 THE BUSINESS CASE FOR GREEN BUILDINGS

up to $3.75 per square foot for interior work and $7.50 per square foot for exterior
work against their state tax bill. To qualify for the credit, in new buildings, energy use
cannot exceed 65 percent of use permitted under the New York State energy code; in
rehabilitated buildings, energy use cannot exceed 75 percent.*
The state of Nevada offers a property tax abatement of up to 35 percent reduction,
for up to 10 years, for private development projects achieving a LEED Silver certifi-
cation. Assuming the property tax is assessed at 1 percent of value, this abatement
could be worth as much as 3.5 percent of the building cost, typically far more than the
actual cost of achieving LEED Silver on a large project. As a result, a large number of
†
Nevada projects are pursuing LEED certification. The Nevada law also provides for
sales tax abatement for green materials used in LEED Silver–certified buildings.
The 2005 federal Energy Policy Act offers two major tax incentives for aspects of
green buildings: a tax credit of 30 percent on both solar thermal and electric systems
and a tax deduction of up to $1.80 per square foot for projects that reduce energy use
for lighting, HVAC and water heating systems by 50 percent compared with a base-
‡
line standard. This law is scheduled to expire at the end of 2008, and as of the spring
of 2008, the deadline had not yet been extended by the Congress, although many
expect it to occur.

PRODUCTIVITY GAINS
In the service economy, productivity gains for healthier indoor spaces are worth any-
where from 1 to 5 percent of employee costs, or about $3.00 to $30.00 per square foot
of leasable or usable space. This estimate uses average employee costs of $300 to
$600 per square foot per year (based on $60,000 average annual salary and benefits
§
and 100 square feet to 200 square feet per person). With energy costs typically less
than $3.00 per square foot per year, it appears that productivity gains from green build-
ings could easily equal or exceed the entire energy cost of operating a building.
Figure 6.3 shows that median productivity gains from high-performance lighting
are 3.2 percent in 11 studies analyzed by Carnegie-Mellon University in Pittsburgh, or
about $1 to $2 per square foot per year, an amount nearly equal to the cost of energy. ¶
This benefit is in addition to a reported average savings of 18 percent on total energy
bills from proper lighting. For corporate and institutional owners and occupiers of
buildings, that is too much benefit to ignore during the design process.

*Natural Resources Defense Council [online] www.nrdc.org/cities/building/nnytax.asp[0], accessed March 6,
2007.
† Personal communication, Lynn Simon, Simon & Associates, February 2, 2007. Also see US Department of
Energy [online], www.eere.energy.gov/states/news_detail.cfm/news_id=9149, accessed March 6, 2007 and
http://www.leg.state.nv.us/22ndSpecial/bills/AB/AB3_EN.pdf, accessed March 6, 2007.
‡ U.S. Department of Energy [online], www.energy.gov/taxbreaks.htm, accessed March 6, 2007.
§ Eleven case studies have shown that innovative daylighting systems can pay for themselves in less than 1 year
due to energy and productivity benefits. Vivian Loftness et al., Building Investment Decision Support (BIDS)
(Pittsburgh: Center for Building Performance and Diagnostics, Carnegie Mellon University, n.d.), available at
http://cbpd.arc.cmu.edu/ebids, accessed March 6, 2007.
¶ Carnegie Mellon University, http://cbpd.arc.cmu.edu/ebids/images/group/cases/lighting.pdf, accessed March 6,
2007.