Tax Policies that Encourage Tenant Medical Office Building Green Utility Retrofits
Billie A Brotman
Kennesaw State University
Billie Ann Brotman is a professor of finance at Kennesaw State University. Her fields of research are real estate and healthcare finance. Published articles and presentations include an interest in sustainable buildings and healthcare funding.
Abstract
AbstractThis paper exams the financial impact of upgrading an existing medical office building with an energy efficient design or equipment from a tenant/lessee perspective. The empirical study highlights the importance of... [ view full abstract ]
Abstract
This paper exams the financial impact of upgrading an existing medical office building with an energy efficient design or equipment from a tenant/lessee perspective. The empirical study highlights the importance of utility cost, credit availability and producer price index for office construction on the amount of medical office building spending put in place. The independent variables prime interest rate, cost of natural gas per therm and electricity cost per KWH are significant variables. A cost-benefit model is developed that inputs several personal income tax rates, incorporates a debt-service coverage ratio, analyzes investment tax credit and rebate scenarios and varies the level of energy savings. The cost- benefit case study results provide insight into which factors enable higher net construction spending when considering a green energy retrofit project. Both the regression model and the case study model focused on the tenant who rents medical office space using a triple net lease. The tenant paradigm limits the analysis to energy savings, the tax implications of having these savings and benefits associated with borrowing when financing the green retrofit. The availability of low cost borrowing and increased investment tax credit (ITC) rates increases net retrofit construction spending.
Authors
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Billie A Brotman
(Kennesaw State University)
Topic Area
Topics: SEINFORMS@SEDSI
Session
SS9 » Accounting Education/Tax (08:45 - Friday, 24th February, Cooper)
Paper
SEINFORMS_2016_brotman.pdf
Presentation Files
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