$how Me the Money!

1. $how Me the Money! Hosted by: The Atlanta Chapter of the International Facility Management Association Presented by: William B. Hood, CPA

2. Presenter’s Background William B. Hood is the Business Development Executive for the Atlanta office of public accounting and advisory firm Carr, Riggs & Ingram, LLC (CRI), one of the Southeast’s ‘Top Four’ accounting and advisory firms and national top 40 firms. Bill holds a B.S. degree in Accounting from Seton Hall University and is a Certified Public Accountant. Bill is a member of the American Institute of Certified Public Accountants, Georgia Society of Certified Public Accountants, the Atlanta Commercial Board of Realtors and CREW.

3. Agenda • Doing more with less • Construction costs • Tax incentives (Federal/State) • Rental income sustainability • Alternative energy sources • Pay back on capital

4. Doing More With Less Facility owners’ demands Competition Tenant issues Cost reductions Service levels

5. Construction Costs • Conventional vs. “Green” building costs •  Leggett McCall Properties Headquarters • 15 day “LEED” construction program •  Tax and operating cost savings •  Atlanta leads the southeast in LEED certification seeking buildings • (140 + per U.S. Green Building Council) • e.g. Atlantic Station, One Overton Park, Southface ECO Office

6. Tax and Other Incentives (Federal/State) • Work Opportunity Tax Credits (IRC § 51(d)) • Targeted Groups for 2009-10 Only (e.g. Veterans) • 25-40% of the employee’s wages • Cost Segregation • Business energy reduction tax credits • Energy-efficient commercial buildings tax deductions • Various tax credits and grants for renewable energy (including rural energy programs) • Loans, loan guarantee, subsidies and bond programs • Georgia also offers certain tax credits and sales tax exemptions

7. Cost Segregation Creates higher after-tax cash flow 39 or 27.5 year depreciation write off vs. 15, 7, 5 year property Current Facilities Entire Facility Build Outs New Construction

8. Business Energy Reduction Tax Credits  Energy efficient appliance credits for manufacturers (dishwashers, refrigerators, clothes washers) (IRC § 45M)  Qualified fuel cell property, Solar energy to generate electricity for cooling or heating, geothermal systems etc. (IRC § 48)

9. Energy-Efficient Improvements-Commercial Buildings Tax Deductions Deductions under IRC Code Section 179D 1) Installed interior lighting systems 2) Heating, cooling, ventilation and hot water systems or 3) Envelope as part of a certified plan to reduce total annual energy and power costs of these systems by at least 50% in comparison to a reference building that meets specified minimum standards. The deduction is the product of $1.80 and the total square footage of the building e.g. $1.80 X 50,000 square feet = $90,000 deduction (reduced by section 179 deductions taken in previous years) for the building owner. In the case of a public building, the person(s) primarily responsible for the designing the property may claim the deduction.

10. Energy-Efficient Commercial Buildings Tax Deductions Deduction under IRC Code Section 179D A partial deduction may be claimed by the taxpayer for the costs of the property that meet energy saving targets set by the IRS. The deduction is determined by substituting $.60 for $1.80 e.g. $.60 X 50,000 square feet = $30,000 deduction (reduced by section 179 deductions taken in previous years) for the building owner. In the case of a public building, the person(s) primarily responsible for the designing the property may claim the deduction.

11. Energy-Efficient Commercial Buildings Tax Deductions Deduction under IRC Code Section 179D DOE maintains a list of the software that must be used to calculate power consumption and energy costs for the purpose of certifying the required energy savings necessary to claim the deduction. EnergyGauge, EnergyPlus, Green Building Studio, Hourly Analysis Program (HAP) etc. http://www1.eere.energy.gov/buildings/qualified_software.html

12. Rental Income Sustainability  Premium lease rates (varies) Tenants that pay rent obligations on time  Appealing to federal, state and local (GSE) and major companies e.g. Coca-Cola, IBM, Dell, UPS, Delta Airlines, GE, Home Depot, etc.

13. Alternative Energy Sources Receive tax credits (IRC § 48) and reduction of utility costs can offer an excellent ROI:  Wind  Solar  Geothermal, etc. And research (e.g. Siemens) has many other alternative energy sources in the pipeline

14. PAY BACK on CAPITAL • Investment (less tax incentives) divided by annual energy cost savings = payback (years). • Solar water heaters in Israel will save the country an estimated two million barrels of oil per year. • The typical 50 gallon electric water heater uses 11.1 barrels of oil per year. • Walgreens’, McDonalds’ initiatives

15. PAY BACK on CAPITAL • A wind appliance produces energy at an approximate cost of ($.09/kwh) that is lower then the rate of many utilities. Depending on the tower, installation costs, wind speed average, rebates, local electricity costs and tax incentives the wind appliance could pay for itself in 5-6 years. • The Lovett School, Six Feet Under, Atlanta Chamber of Commerce

16. Don Quixote: Dost not see? A monstrous giant of infamous repute whom I intend to encounter. Sancho Panza: It's a windmill. Don Quixote: A giant. Canst thou not see the four great arms whirling at his back? Sancho Panza: A giant? Don Quixote: Exactly.

19. For More Information, Contact: William B. Hood, CPA Business Development Executive 770-457-6606 - Office 678-428-9645 - Cell 770-255-6096 - Fax bhood@cricpa.com