Senators push tax breaks for LEED buildings in Michigan

April 12, 2010
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LANSING — The Upper Peninsula is already a green place, but a new Senate proposal might encourage it to go even greener.

Lawmakers have introduced several bills, pending in the Commerce and Tourism Committee, that would give tax breaks for building projects that are LEED-certified.

Jim Ebli, president of Gundlach Champion, a construction firm based in Iron Mountain, said LEED certification considers several categories, including waste disposal.

"One of the requirements is that a certain percentage of the discarded material must go into a recyclable facility. Another is that the raw materials provided must be manufactured within 300 miles of the project site," he said.

A building can be certified when it passes an accreditation exam by the Green Building Certificate Institute, a part of the U.S. Green Building Council, a nonprofit based in Washington.

Sponsors of the pending bills include Sens. Patricia Birkholz, R-Saugatuck; Wayne Kuipers, R-Holland; Hansen Clarke, D-Detroit; and Jason Allen, R-Traverse City.

"This is to allow for local government to give tax credits for buildings upwards to 10 or 20 percent of the total cost of the project. It makes energy efficiency more affordable," said Allen.

He added that the tax incentives also would apply to updated buildings.

"What you can do is called a historical rehabilitation," he said. "It means you take an old building and gut it, re-engineer it, and then you can apply for the breaks. There are certain standards for re-modeling, but it would have to be something significant."

The Senate committee is holding hearings about the bills and trying to establish what the state's tax revenue loss would be. Allen said they expect to see action on the bills this spring.

Ebli said that building green makes sense.

"We mostly do LEED certification on larger projects," he said. "Of the projects we did last year that were over $1 million, over half of them were LEED-certified.

"It's more advantageous for the owner as far as the energy savings go," he said. "There's a higher initial cost going in, but there's probably a seven- or eight-year payback. If a building lasts 25 years, the payback is three times the cost of construction."

Eco-friendly construction has one major disadvantage, he said, which is the higher initial cost.

Tony Retaskie, executive director of the Upper Peninsula Construction Council in Escanaba, said that there's also a cost associated with becoming certified.

"A lot of folks will build LEED buildings but won't go for accreditation," he said. "For instance, some builders and architects only build bits and pieces of buildings in sustainable ways. There's a cost factor there for some folks."

Retaskie said that the U.P. Construction Council holds seminars to educate local architects and builders about LEED certification. "What's most important is more education to developers, builders and architects," he said. "We need more education from the standpoint of why LEED is good practice to follow in construction activity.

"Education is first, and there's still some folks out there who still aren't really familiar with what LEED is all about," Retaskie said.

Ebli said that if the legislation passes, more LEED-certified buildings are likely to be built.

"We're seeing more and more of that now," he said. "Three or four years ago, you might see one LEED green project out there. Now you're seeing that about 30 percent of the construction work going on is LEED-certified."

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