The EPAct Tax Aspects of Hispanic Commercial Property Owners
The 2010 census confirmed the prediction of huge increases in the U.S. Hispanic population. Businesses serving the Hispanic population are experiencing rapid growth and expanding their facilities. This article describes the Hispanic population growth, the tax savings opportunity, and some of the major Hispanic property owners’ eligibility for tax savings.
In the past decade, Hispanics accounted for over half of all population growth in the U.S., increasing their numbers by 27 million. Today, approximately one-in-six Americans are Hispanic, with southern states like Texas showing some of the biggest gains, although states as far North as Wisconsin saw massive increases as well.
With such impressive gains nationwide, Hispanic company property owners, no matter the state of domicile, are poised to capitalize on Federal tax incentives for energy efficiency. Some of the companies we will be covering include Goya Foods, Diaz Foods, Univision, and various supermarket chains (Compare, Superior Super Warehouse, Sedano’s, and Fiesta Mart).
Hispanic property owners are eligible for large tax incentives for both commercial building energy efficiency investments and alternative energy investments.
The EPAct Tax Opportunities
Pursuant to Energy Policy Act (EPAct) Section 179D, Hispanic property owners making qualifying energy-reducing investments in their new or existing locations can obtain immediate tax deductions of up to $1.80 per square foot.
If the building project doesn't qualify for the maximum EPAct $1.80 per square foot immediate tax deduction, there are tax deductions of up to $0.60 per square foot for each of the three major building subsystems: lighting, HVAC (heating, ventilating, and air conditioning), and the building envelope. The building envelope is every item on the building’s exterior perimeter that touches the outside world including roof, walls, insulation, doors, windows and foundation.
Warehouses that combine energy-efficient lighting and heating have become, by far, the largest category of buildings qualifying for the $1.20 to $1.80 EPAct tax deductions.
Alternative Energy Tax Credits and Grants
There are multiple 30% or 10% tax credits available for a variety of alternative energy measures with varying credit termination dates. For example, the 30% solar tax credit expires January 1st, 2017 and the 10% Combined Power tax credit also expires January 1st, 2017. The 30% closed loop and open loop biomass credit expires January 1st, 2014.
All Alternative energy measures that are eligible for the 30% and 10% tax credits are also eligible for equivalent cash grants for the three years starting January 1st, 2009 and ending December 31st, 2011.
Univision
A greater Hispanic population means increased viewers for Spanish-language Univision, the fifth largest television network in the U.S. As growth has stalled for the English-language titans, Univision experienced a 14% increase in its marketing revenue and plans to increase investment in additional growth accordingly. The following table presents the potential EPAct tax benefits for some of Univision’s facilities.
Potential EPAct 179D Tax Deductions Available for Energy Efficient Building Improvements
Goya
As the largest Hispanic food company in the U.S., Goya has enjoyed similar growth, including 5% employment increases in recent years. Below is a table presenting the EPAct potential benefits for seven of Goya’s sixteen properties, including their newest in Bollingbrook, Illinois. Goya facilities are typically warehouse/distribution type facilities where achieving the maximum $1.80 per square foot EPAct tax deduction is more easily attainable.1
Once energy efficient retrofits are accomplished, these large roof facilities are ideal candidates for the solar P.V. 30% solar credit or cash grants.
Potential EPAct 179D Tax Deductions Available for Energy Efficient Building Improvements
Diaz
Boasting annual growths of over 20%, Diaz Foots has 250,000 square feet of facilities available for energy investments that can qualify for EPAct tax savings as predicted below:
Potential EPAct 179D Tax Deductions Available for Energy Efficient Building Improvements
Large Regional Hispanic Supermarket Chain EPAct Opportunities
Hispanic food companies are particularly well-suited for the large EPAct tax deduction for both non-conditioned and refrigerated warehouses. A number of Hispanic supermarkets have also experienced substantial growth. The table below presents the potential EPAct opportunities for some of the larger regional Hispanic supermarkets in three major Hispanic markets, namely Texas, California, and Florida.2
Supermarkets in Florida, Texas, California, and elsewhere should be eligible for 30% alternative energy, solar P.V., and fuel cell tax credits or cash grants. Texas, California, and Florida are three of the nation’s top ten solar growth states.3
Conclusion
In the current difficult economy, the Hispanic commercial property market provides one of the rare high-growth business opportunities. As these successful Hispanic businesses build more facilities, they are perfectly situated to take advantage of the large energy cost and tax saving opportunities available from energy efficient building design. With larger chains, looking to capitalize on these same trends (Publix, the big Florida grocer, now has four Publix Sabor Hispanic stores), regional chains have an added incentive to stay cost competitive by finding efficiencies and reducing operating costs.
Citations
1 - Charles Goulding, Jacob Goldman, and Joseph Most, Complete Warehouse Tax-Enhanced Energy-Efficient Design, Published on Google Knol at http://knol.google.com/k/charles-goulding/complete-warehouse-tax-enhanced-energy/1xedf26uc9hpj/4# , February 2011
2 - Charles Goulding, Taylor Goulding, and Sweety Christian, The Energy Tax Aspects of Texas Warehouses, Published on Google Knol at http://knol.google.com/k/charles-goulding/the-energy-tax-aspects-of-texas/1xedf26uc9hpj/19# , April 2011
3 - Charles R. Goulding and Charles G. Goulding, EPAct Tax Savings for the Top Ten U.S. Solar States, Published on Google Knol at http://knol.google.com/k/charles-goulding/epact-tax-planning-for-the-top-ten-u-s/1xedf26uc9hpj/31# , May 2011
