Developers get tax break for 'green' projects

Kermit the frog knows it isn't easy being green.

Commercial building developers know that, too.

That's why they haven't dug deeper into their pockets to install more costly energy- saving devices such as solar photovoltaic panels or made it a priority to use "green" building materials in their structures.

It simply takes too long, they say, to recover the cost of being green.

That may begin to change as a result of legislation signed into law by Gov.

Kenny Guinn last summer.

It could impact the way developers and architects think about spending more money to cut energy costs and alter some of the types of materials that would go into new buildings or existing ones.

The sweeping legislation addresses a lot of energy-related issues, but it is the potential of a tax incentive for the abatement of up to 50 percent of property taxes for up to 10 years that some feel will turn the tide.

In order to qualify for the tax incentives, however, a structure would have to meet stringent codes adopted by the United States Green Building Council's Leadership in Energy and Environmental Design (LEED) or an equivalent standard.

Once application is made to the Nevada Commission on Economic Development, it would then be routed on to the state Office of Energy which would govern the technical aspects of LEED.

Jason Geddes,manager of government affairs for the Economic Development Authority ofWestern Nevada, believes the legislation once the details have been worked out between the Nevada Commission for Economic Development and the state's Office of Energy provides what he calls "a tremendous opportunity for businesses."

"The cost of energy for most of our employers fall in right behind the cost of employees,"Geddes says,"so it makes sense for existing companies and developers looking at Northern Nevada to take a closer look at what this program can offer."

Tim Rubald is director of the Commission for Economic Development.He believes his organization can define the specific regulations shortly and send them off to the Legislative Council Bureau for review within the next several weeks.

Rubald said simplicity will be the hallmark of the application.

"We would then forward the application to the Office of Energy and if they say it's a go, the applicant would be entitled to tax abatement treatment.

But this is potentially really big for our state.

This legislation has put Nevada out in front of every other state in the nation.

It is cutting edge legislation.We think progressive companies will like it, and architects will absolutely love it."

Rubald said he doesn't think the tax abatement incentive alone will cause other companies to want to either retrofit their structures or move here from another state."But it can be helpful in helping a company making up its mind,"he says.

One company that long ago made up its mind about energy efficiency and environmental design is Patagonia which is going to expand its existing Reno distribution center and customer service facility by 170,000 square feet.

The company intends to apply for LEED certification and, at the same time, do a retrofit on its existing 193,000 square foot structure.

Close followers of this company believe it will be one of the first to benefit from the new legislation.

Stan Thomas, former economic development director for Sierra Pacific Power who is now working for in the commercial and industrial sector for Wade Development/Landmark Homes in Reno says the legislation will be interesting to some but not to all.

"If you ask if this will create a huge expansion of companies who want to take advantage of this incentive, I would have to say probably not, at least not right away,"he said."A company like Patagonia will absolutely love this.No doubt.

But most of the business people with whom I've worked are very bottom-line driven.

They want to know how quick the payback will be if they invest large sums of money into energy efficient or environmentally desirable structures."

An eight- to 10-year payback for Patagonia makes sense for that company because its executives believe strongly in environmentallyfriendly buildings, and they say they intend to be around here for many years to come.

But most developers, Thomas says, are looking to recover their investment in 18 to 24 months, some in even less time.

"If a company is green and progressive, this will be of great interest to them,"he says.

"One area I think the state will see quicker benefits is in the recruitment of those companies that produce the technologies that will drive energy efficiency and push the environmental envelope."

One example cited by Thomas was convincing Trex to locate its manufacturing plant to Fernley.

It took advantage of tax abatement offered to any company that used 50 percent or more recycled materials in its manufacturing process.

"That's all Trex does," says Thomas."They manufacture decking for commercial and residential use and use nothing but wood waste fibers and reclaimed polyethylene plastic bags.

It was a terrific fit for them and for our area."

State Sen.

Randolph Townsend,R-Reno, was one of the prime sponsors of the legislation and was also instrumental in getting a law passed in 2001 requiring utilities to increase use of renewable sources.

Townsend has called AB 3 the "strongest bill on renewable energy conservation and green building standards" to ever be passed in the nation.He thinks there will be serious focus on solar in Southern Nevada.

"Companies coming to the north will set their sights on geothermal," he says.