Construction, Nonprofits, and Real Estate

Tax incentives help prevent fire injuries

Phoenix Society installs new sprinkler system thanks to federal tax overhaul.

November 2, 2018
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Phoenix Society for Burn Survivors’ new space includes a fire sprinkler system, thanks in part to the nonprofit’s 14 years of legislative work. Courtesy Phoenix Society

The Phoenix Society for Burn Survivors recently was able to benefit from its years of work that led to new tax incentives for installing fire sprinkler systems.

The nonprofit, which supports burn victims all over the world, spent 14 years fighting on a coalition to allow tax benefits for property owners who install fire protection systems in pre-existing structures, according to Amy Acton, Phoenix Society executive director.

The coalition included such organizations as the National Fire Sprinkler Association and the National Fire Protection Association.

The work paid off with the approval of the federal tax overhaul of 2017, in which Congress amended two sections of the federal tax code to allow qualifying property owners to fully expense sprinkler installation worth up to $1 million the same year, according to a report by Grand Rapids-based law firm Varnum.

The previous law allowed 39-year depreciation schedules for all buildings.

The new ability to deduct 100 percent of costs immediately is effective until Jan. 1, 2023, after which depreciation amounts decrease by 20 percent each year. Without future action, the 39-year schedule will return in 2027.

After all the work and a celebratory victory, a sprinkler system was installed in the Phoenix Society’s new space, at 525 Ottawa Ave. NW in Grand Rapids.

Acton said the organization moved to the new 5,000-square-foot space from Wyoming to have a stronger presence in the community.

“The tax incentive, in a kind of weird twist, helped us be where we wanted to be,” Acton said.

Acton said Fred Steiner, who owns the building, would have allowed them to install sprinklers and would have charged the nonprofit over the 10-year lease. Since learning about the new law, Acton said he has made a lot of improvements to the building, and the nonprofit will not have to pay for the sprinklers.

“It just provides another incentive for a building owner to not just have a thriving business but to have a safe business,” she said.

“As a business owner, you never think it's going to happen to you until it does.”

The initiative was as a response to the Station nightclub fire that killed 100 people and injured 230 on Feb. 20, 2003, in West Warwick, Rhode Island.

“With sprinklers, we would have had maybe a few injuries, but there would not have been a catastrophic event that occurred,” Acton said.

After the accident, the Rhode Island community set aside resources for the Phoenix Society to train health care professionals on how to deal with burn victims.

“It's not just about helping to bury the dead, but it is how do we help people that survive that injury get back to life?” Acton said. “How do we give people the skills to go back out into the community when they look different?”

She said the Phoenix Society also provided personal finance training to those victims who won money in a lawsuit, as well as made health and mental health care professionals better aware of how emotional trauma can affect personal spending.

She said many of the victims of that fire have since benefitted from the Phoenix Society’s other support services and have been vocal about how to prevent another similar disaster.

Rhode Island still is recovering from that trauma, Acton said, so the advocates’ role has been to show: “Why do we care?”

A 2012 study from the Fire Protection Research Foundation found fire sprinkler presence is associated with a 29 percent reduction in injuries per 100 reported home fires, a 53 percent reduction in medical costs and a 41 percent reduction in total cost of injuries.

The study also found fire sprinklers have saved an average of six lives per year and a combined $9 million in health care costs.

A 2012 Sydney Medical School study called “The True Cost of a Burn” found the average cost of an adult burn injury is $73,532.

Acton said the minimum building code for commercial and residential properties now includes sprinkler systems, but there is a big push against that and other safety codes, particularly from the National Home Builders Association.

“We're trying to help people understand that the risk is real, and the best time to sprinkler homes or buildings is when they're being built,” she said.

The Phoenix Society has advocates it can connect with any community to promote any fire-preventative codes, according to Niki Acton, the organization’s communications manager.

“That human voice will often change the course of that particular discussion,” Niki Acton said.

The organization recently completed a $6-million capital campaign, using $216,000 of the funds to meet the $500,000 move-in cost.

The rest is going toward program expansion, including video streaming equipment that allows more convenient service to clients from around the world.

In recognition of the campaign’s success, the Phoenix Society will receive the Excellence in Fundraising award at the National Philanthropy Day event Nov. 15, hosted by the Association of Fundraising Professionals West Michigan.

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