179D tax allocations prove source of savings for University of Florida

July 15, 2014

GAINESVILLE, Fla. --- The University of Florida  has received $37,212 from Affiliated Engineering Inc. in return for the first of several 179D tax deduction allocations from its energy efficient buildings with the help of Efficiency Energy LLC, a consulting firm specializing the program.

“UF has secured more than $135,000 of savings including today’s announcement and we expect additional savings to be announced in the coming months,” said Curtis A. Reynolds, vice president for business affairs. “The university has made energy efficiency one of its highest priorities for our facilities, and 179D provides an additional source of savings that can be used to further those investments.”

The  2005 Energy  Policy  Act  created  the  179D Deduction of up to $1.80 per square foot  from qualifying building retrofits  and  new  construction  projects  placed  in  service  between Jan. 1, 2006, and Dec. 31, 2013.  While government entities do not pay taxes, under the 179D Special Rule for Government-Owned Buildings, they may allocate the benefit to a tax-paying ‘designer’ and receive savings in return for the allocation.   Former Sen. Jeff Bingaman, D-N.M., a sponsor of the original legislation, said the act aims "to reduce the cost to taxpayers of the project,” and provide savings similar to private owners making identical investments in building efficiency.

UF retained Efficiency Energy LLC, a consulting firm based in Denver and Washington, D.C., to administer its 179D allocation process and secure unclaimed resources as a new and unanticipated source for savings. Energy Efficiency LLC President William Volker said,  “The  result is  an  open  book  method  that  properly  accounts  for  and negotiates value, is flexible enough to accommodate various public oversight policies and procedures, and  will  incentivize  more  effective  investment  of  taxpayer  funds  in  a  similar manner as it does in the commercial realm.”

While the 179D law expired at the end of 2013, it still applies to projects completed between 2010 and 2013.   An extension of the program for 2014 and 2015 projects is currently under consideration in the U.S. Senate.  “Government entities need to partner with designer recipients to recoup retroactive savings before they disappear,” said Volker, “if the program is extended then the government entities will have the structure in place to capitalize.”