The incentive would be larger, and it would include outdoor lighting as well as indoor. However, it would be much harder for new lighting systems to qualify for the deduction, as the new system would have to achieve a higher standard of savings.
Moreover, with little support among Republicans, it is highly uncertain whether the bill will be signed into law.
The Interim Lighting Rule
The Interim Rule permits owners of commercial buildings to deduct the full cost of new interior lighting—up to $0.60/sq ft —based on achieving 25% to 40% power savings.
The exception to the sliding scale is warehouses. The interior lighting power consumption must be reduced by at least 50% to earn a CBTD deduction.
Besides achieving a 25% to 40% reduction in power consumption, the project must satisfy these conditions:.
• Bi-level switching must be installed—which may be A/B, step dimming or continuous dimming in all rooms — except hotel and motel guest rooms, storerooms, restrooms, public lobbies and garages.
• The project must achieve minimum calculated light levels as prescribed in the Ninth Edition of the IES Lighting Handbook.
• Additionally, if more than 50 percent of the light fixtures are replaced, the lighting controls must also be replaced.Lighting systems
All lighting fixture must be permanently installed, so portable task lighting does not contribute to qualification. The law exempts also exit signs from interior power calculations, so exit sign upgrades do not contribute either. In both cases, however, good energy savings may result, so the upgrades nonetheless should be considered.
The law requires the maximum-labeled wattage of the ballast to be used in interior lighting power calculations.
However, to avoid penalizing lower actual wattages achieved in retrofits through energy-saving lamps such as 25W and 28W T8 lamps, the standard recognizes the maximum-labeled wattage of the light fixture as an alternative value.
This would entail producing a new fixture label with the lamp-ballast information that would affix in the existing fixture, according to NEMA on its lightingtaxdeduction.org website:
“If you are using a system with a lower wattage than the maximum labeled wattage, then you will need to have a label made and installed in the luminaries indicating the actual system wattage and the appropriate replacement lamp for the project.
This will provide information to the certifier and the maintenance personnel performing maintenance on the system in the future. Remember, the complete bill of material used in a project must be supplied to the certifier so he/she can confirm that the equipment specified is installed.”
Alternately, a ballast could be specified with a custom ballast factor that tunes light output and input watts at the ballast, not the lamp.
At a minimum, lamps and ballasts must be replaced or new fixtures installed; a simple lamp retrofit (e.g., an upgrade from incandescent to screw-base compact fluorescent lamps) would not comply because the installation is not permanent and the resulting expense is considered maintenance and not a capital expense for tax purposes.
Project certification
For a building owner to claim the deduction, a qualified contractor or engineer must certify the project. The individual must demonstrate in writing to the owner that he or she has the qualifications to do the certification. The National Electrical Manufacturers Association (NEMA) has published a series of sample certification letters on its CBTD website: http://www.lightingtaxdeduction.org/tax_deduction.html#P9.
The qualified individual must document the reduction in lighting power density, with the certification including:
• Contact information for the qualified individual performing the certification;
• Address of the building to which the certification applies; and3
• A statement by the qualified individual that the interior lighting systems have been, or are planned to be, incorporated into the building that meet all of the requirements of the Interim
Lighting Rule
The certification must also include a statement by the qualified individual that:
• Field inspections were performed by a qualified individual after the lighting was placed in service;
• Inspections must confirm that the building is meeting the specified reduction in lighting power density.The qualified individual must also provide a:
• List showing the energy-efficient lighting components and features of the building and projected power density;
• A statement that the building owner has received an explanation of the energy efficiency features of the building and projected power density; and
• This declaration: “Under penalties of perjury, I declare that I have examined this certification, including accompanying documents, and to the best of my knowledge and belief, the facts presented in support of this certification are true, correct and complete.”The certification must include a spreadsheet used to calculate energy and power consumption and costs.The building owner should keep a copy of the certification in their tax records.
Last chance
This is the last year the Commercial Buildings Tax Deduction will be in effect in its current form, offering a potentially valuable tool to help make lighting retrofit projects more economically attractive.
If the Commercial Buildings Modernization Act introduced in the Senate is passed as written today, the maximum deduction would increase and exterior lighting would be covered, but the standard would tougher to beat. Again, given the current state of Congress, there is a great deal of uncertainty about whether it will become law.
For more information, visit www.lightingtaxdeduction.org.
