By Stan Provus
A number of members have inquired about the status of the 'Green Bond" demonstration. As a result, this This article covers what is known about Green Bonds and encourage readers who may know additional details to contact us.
Green Bonds Overview
Section 701 of the American Jobs Creation Act of 2004 authorizes up to $2,000,000,000 of tax-exempt private activity bonds (i.e. Exempt Facilities), not subject to the volume cap, for qualified green building and sustainable design projects. Qualified green building and sustainable design projects are projects so designated by the Secretary of the Treasury, after consultation with the Administrator of the Environmental Protection Agency and that meet certain other requirements.
To date, the internal Revenue Service has not issued guidance (regulations) for the green bond demonstration project. It is expected, however, to issue regulations in the near future. State and local governments must nominate projects for designation by the Secretary of Treasury as qualified green building and sustainable design projects within 120 days of the IRS publication of its guidance. After this time, projects may not be submitted and only one project can be approved per state.
Projects must include the cleanup of Brownfield sites. Although the legislation permits the submission of any qualified project, Congress clearly had in mind four environmentally friendly entertainment and resort facilities, excluding sport facilities and facilities for the sale of food or alcoholic beverages for consumption on the premises. The four projects that appear eligible include: Destiny USA in Syracuse, N.Y.; the Atlantic Station project in Atlanta; the Belmar redevelopment project in Lakewood, Colo., and the Louisiana Riverwalk in Shreveport. Among a number of requirements, projects must include either 1 million square feet of building space or at least 20 acres. State and local governments that nominate projects must contribute at least $5 million to a project—tax abatements and in-kind contributions will count toward the $5 million.
Projects must meet a number of requirements. For example, at least 75 percent of the square footage of commercial buildings, which are part of a project, needs to be registered for the United States Green Building Council's LEED certification and is reasonably expected to receive such certification. The LEED (Leadership in Energy and Environmental Design) Green Building Rating System is a voluntary, consensus-based national standard for developing high-performance, sustainable buildings. Members of the U.S. Green Building Council representing all segments of the building industry developed LEED and continue to contribute to its evolution. LEED Certification distinguishes building projects that have demonstrated a commitment to sustainability by meeting the highest performance standards.
Project applications must describe in detail how the project contributes to the reduction of electric consumption compared to conventional construction as well as other energy measures.
In conclusion, it appears the Green Bond demonstration is intended for only four projects, although others may be submitted. Projects must be submitted with 120 days of the IRS publication of regulations.
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