By Craig Kneeland

On this year's New York State Taxes, building owners and property lessees can claim tax credits for their Green Buildings efforts. In May 2001, Governor George Pataki signed into law the nation's first Green Building Tax Credit (GBTC). The GBTC is a 25 million dollar income tax credit for owners and tenants of buildings that meet energy, indoor air quality, materials, commissioning, water conservation, appliance, and size criteria as set out in the State regulations, maintained by the NYS Department of Environmental Conservation. Taxpayers receive 20% of the credits for which they are eligible each year for a five year period, provided they continue to meet the criteria established in the regulations.

Multiple dwellings (permanent and transient occupancy, seniors, adult residential care), business, mercantile (display and sale of merchandise), assembly (amusement, civic, dining, patriotic, political, religious, social and sports), and institutional qualify. The minimum building size is 20,000 square feet; the minimum tenant space size is 10,000 square feet.

The energy efficiency component is performance-based, requiring new buildings and tenant spaces to use 65% of the energy that a 1991 New York State Energy Conservation Construction Code (Energy Code) -compliant building would. Rehabilitated tenant space and buildings may use 75% of the energy allowed by the Energy Code. The energy use requirements for office buildings range from 55% to 75% of the Energy Code, depending on the percentage of office space in the building and whether the application is for a tenant space or a whole building.

New York's Green Building Tax Credit offers three compliance paths. The first is a green base building, where those areas not intended for occupancy by a tenant or owner are designated as green. Because developers typically have no control over what tenants do in their leased space, this option was created to ensure that developers do not have to depend on their tenants to receive the benefits of the GBTC. The base building tax incentive is 5% of allowable costs, which are capped at $150 per square foot. This makes the green base building tax incentive worth a maximum of $7.50 per square foot.

The second path is a green tenant space, which may or may not be within a green base building. The individual tenant space tax incentive is 5% of allowable costs, which are capped at $75 per square foot. This makes the green tenant space tax credit worth a maximum of $3.75 per square foot. There can be multiple green tenant spaces within a single building; any owner-occupied space in a green base building must be green tenant space.

The third path is green whole building tax credit where a tax credit of 7% of the allowable costs is permitted, so that the base building receives $10.50 per square foot ($150 x .07) in incentives and the tenant space receives $5.25 per square foot ($75 x .07). If a green base building, green tenant space or green whole building is located in an economic development zone, the incentives increase by one percent (5% becomes 6%, 7% becomes 8%).

Additional credits are available for fuel cells, photovoltaics, and air-conditioning equipment that uses green refrigerants, if installed in a green base building, tenant space or whole building. The tax credit cannot be used for these measures alone; all other green criteria must also be met.

The Green Building Tax Credit requires that licensed architects and professional engineers certify compliance with the GBTC. The regulations require record keeping of performance measures such as annual energy consumption, yearly results of air monitoring, annual confirmation that smoking requirements have been maintained, tenant green building guidelines, requests to remedy indoor air quality problems, as well as initial and monthly results of photovoltaic and fuel cell performance.

As for government building compliance, Governor Pataki has signed Executive Order 111 that calls for the green building guidelines in State properties to be based upon thosein the GBTC regulations and in the Leadership in Energy and Environmental Design (LEED™) program, developed by the US Green Building Council. These efforts ensure that
future major State building construction programs will have Green Building benchmarks to achieve.

For more information see the New York State Energy Research and Development Agency's web site at http://www.nyserda.org/green.html or call me at 518-862-1090, ext.3311.

Craig Kneeland is Project Manager for Green Buildings at NYSERDA

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