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CHICAGO — Uncle Sam, in the form of our tax laws, wants to reward every laundry business that improves the energy efficiency of the building housing its business or plant. In fact, all so-called “commercial buildings” may qualify for this unique tax deduction. Even those that only partially improve energy efficiency may qualify, albeit with a smaller deduction.

While there is some question whether tenants can claim this credit, new guidelines from the Internal Revenue Service make it easier than ever to claim even the partial deduction.

ENERGY-EFFICIENT COMMERCIAL BUILDING DEDUCTIONS

Our tax rules allow a deduction for a portion of the costs of installing energy-efficient systems in a commercial building. The maximum deduction is generally $1.80 per square foot, less the total amount of any deductions claimed in earlier years. Qualified systems include interior lighting, heating, cooling, ventilation, hot water systems, and the building’s envelope. Best of all, the deductions don’t expire until Dec. 31, 2013.

The deduction of up to $1.80 per square foot is available to owners or tenants of new or existing commercial buildings that are constructed or reconstructed to save at least 50% of the heating, cooling, ventilation, water heating, and interior lighting energy costs.

Partial deductions of 60 cents per square foot are also available for improvements to any building system that reduces total heating, cooling, ventilation, water heating and interior lighting energy use by a specified—and recently changed—percentage.

COMMERCIAL BUILDING DISCRIMINATION

It is no secret that our tax rules have long treated commercial property less favorably than residential property. Today, however, tax breaks are available that create significant incentives for making “commercial” buildings more energy-efficient.

The incentive comes in the form of a tax deduction. The unique Energy Efficient Commercial Building Deduction (EECBD) is already rewarding many commercial building owners—and tenants.

Under EECBD, a laundry or dry cleaning business can claim tax deductions for new or renovated buildings that save 50% or more of projected annual energy costs for heating, cooling and lighting compared to model national standards. Partial deductions are available for efficiency improvements to individual lighting, HVAC and water heating, or envelope systems.

Commercial property is generally defined as property intended for use by retail, wholesale, office, hotel or service users or for manufacturing or other industrial purposes. Examples include shopping centers, office buildings, hotels and motels, resorts or restaurants, and, of course, laundry and dry cleaning buildings and plants.

THE REFERENCE BUILDING

Before any laundry owner can claim the EECBD deduction for energy-efficient systems installed in a commercial building, they must obtain certification. Although guidance issued by IRS explains how to calculate a building’s square footage, when a building is considered placed in service, and more, a licensed contractor or engineer must verify the building or portion of the building being submitted is better than the American Society of Heating, Refrigeration and Air Conditioning Engineers’ (ASHRAE) Standard 90-1-2001.

For purposes of the EECBD, the “Reference Building” is a building that is located in the same climate zone as the laundry or dry cleaning plant building and is otherwise comparable to it except that its interior lighting systems, heating, cooling, ventilation, and hot water systems, and building envelope meet the minimum requirements of the ASHRAE 90.1-2001 standards.

WRITE-OFF COMPLEXITIES

Rather than a deduction for the actual cost of the systems or equipment purchased to make a commercial building at least 50% more energy efficient, a flat tax deduction of up to $1.80 per square foot is available. Remember, however, the improvement must save at least 50% of the heating, cooling, ventilation, water heating and interior lighting energy cost. A partial deduction of 60 cents per square foot can be taken for improvements made to one of three building systems—the building envelope, lighting or heating, and cooling system.

The deduction applies to “energy-efficient commercial building property,” defined as depreciable property installed as part of a building’s (1) interior lighting systems, (2) heating, cooling, ventilation and hot water systems, or (3) the building’s envelope as part of a certified plan to reduce the total annual energy and power costs to a reference building that meets specified minimum standards.

The Department of Energy maintains a list of the software that must be used to calculate power consumption and energy costs for purposes of certifying the required energy savings necessary to claim the deduction. With only buildings covered by the scope of the ASHRAE Standard 90-1-2001 eligible, seeking professional assistance is almost mandatory.

The person or organization that makes the expenditure for construction is generally the recipient of the allowed tax deductions. This is usually the building’s owner, but for some HVAC or lighting efficiency projects, it could be the tenant.

Thursday in Part 2: Write-off complexities, partial deduction basics, and who gets the credit?

Information in this article is provided for educational and reference purposes only. It is not intended to provide specific advice or individual recommendations. Consult a tax adviser for advice regarding your particular situation.

CHICAGO — The specter of ever-rising utility costs should be enough to spur the average laundry owner to track this expense and explore ways to minimize it.

In response to a series of questions from American Coin-Op, Gary Dixon, national sales manager for Huebsch, and Kent Walters, national sales manager for Maytag® Commercial Laundry, discuss the role that tracking energy usage and maximizing its effectiveness plays in a successful self-service laundry, and offered some important tips for corralling costs.

Often, the battle against rising utility costs starts with your equipment.

Q: What is the average life expectancy of today’s washers and dryers?

Dixon: Life expectancy will vary depending on machine usage, installation, preventive maintenance and other factors. However, it is not uncommon for laundry owners to get 12-15 years of life out of their machines.

Walters: The average life expectancy of today’s single- and multi-load washers is seven to 10 years. As a result of fewer moving parts, single- and multi-load dryers typically have a slightly longer life expectancy of 10 to 12 years. If washers or dryers are used more or less frequently, life expectancy fluctuates.

Q: How much impact can following a regular equipment maintenance schedule make in a store’s efficiency?

Walters: Store owners who want to maximize equipment performance must regularly perform proactive and preventive maintenance tasks. In washers, cleaning equipment and surrounding areas, tightening bolts that hold machines in place, and looking for leaks, checking belts, bearings, and seals for standard wear and tear, etc., are important. By performing regularly scheduled maintenance, store owners are less likely to incur a major breakdown, costing them additional money for parts and downtime. When maintaining dryers, it is critical to keep vents clean and make sure the dryers have enough make-up air.

Dixon: By following a recommended maintenance schedule, the laundry owner is ensuring that their equipment is operating at optimum efficiency. This translates to lower utility costs and keeps down time to a minimum. The result is happier customers and more profit.

Q: If a store’s energy efficiency begins to decline, where should the owner first look to make changes?

Dixon: The first place to look is in the washer-extractor control software. Are the water levels set where you wanted them? Is the water temperature different than where it was? Is the software notifying you of potential leaks?

Walters: If energy efficiency begins to decline, the first place a store owner should investigate is the dryers. Specifically, an owner needs to ensure all ventilation is free of lint, which can cut down on the amount of air getting to the dryer, as well as make-up air.

Q: Does water usage impact energy efficiency, and vice versa?

Walters: Yes, water is a big expense for store owners and using newer, low-water-use washers can save a lot of money in both water and sewage savings. High-spin-speed washer-extractors are necessary to maximize cleaning performance by spinning out additional water from laundry so dryers don’t have to work as hard to dry the load.

Dixon: It most certainly does. The amount of water in each bath and the number of baths in a cycle has a direct impact on water and sewer costs. Equipment designs that minimize wasted water below the wash cylinder will also have a favorable impact on water usage. Water-level adjustability is critical for optimizing water settings at a minimum level that is still acceptable to your customers.

Q: How can a store owner “train” their customers and attendants so their laundry’s energy efficiency is optimal?

Dixon: In any business, the culture and message that is communicated comes from the top down. If you are adamant with your employees about maximizing efficiency and provide a mission statement and guidance to them for realizing your goals, you will create the culture. This will, in turn, be communicated to your customers.

Walters: Having a trained attendant who can show the customers the proper way to use the equipment is always the best. Signage is another great way to train customers and attendants on use of machines, proper amount of detergent, operating instructions, etc. Signage should include simple-to-follow instructions located in easy-to-read places.

Q: Besides laundry equipment choice and usage, where are some other opportunities to shore up energy efficiency?

Walters: Store owners should obtain an energy analysis of the store through their local laundry equipment supplier to help determine areas that need improvement. In addition to equipment, owners should consider incorporating energy-efficient options, such as high-efficiency water heaters, T-8s, electronic ballasts, light sensors and task lighting.

Dixon: There are many variables that impact energy efficiency. Some things to consider: alternative sources for energy needs, type of water heaters, choice of lighting and fixtures, window tinting, the thermostat setting, and even landscaping are just a few things to look at.

Q: To whom may a store owner turn for assistance in improving their store’s energy efficiency?

Walters: Whether shopping for new equipment, looking to upgrade existing equipment, or needing some assistance related to a store’s laundry operations, it is important to connect with a reliable, established distributor for guidance. The best laundry distributors are those that have a long history in the business and have received positive reviews for the customer service they provide.

Dixon: The relationship a laundry owner has with their local distributor can pay dividends into the future. The local distributor is well versed in what is available from the equipment manufacturer. They also have an intimate knowledge of the area they serve.

Q: Do you have any other comments to add regarding energy efficiency in the self-service laundry?

Dixon: Over the past several years, many laundry owners have postponed upgrading their equipment to products that are more energy-efficient; this is certainly understandable. However, when the time comes and it makes good business sense to do so, it is important to not just look at the price of the products. It is also important to look at the cost of ownership of the equipment and energy efficiency is a major factor in this cost.

Click here for Part 1!

FALL RIVER, Mass. — American Dryer Corp., which has manufactured dryers for the commercial coin-operated, on-premise and industrial laundry markets for nearly 50 years, has officially entered the commercial washer market, the company announced.

“We now offer the same quality you expect from ADC in energy-efficient washer-extractors,” says Joe Bazzinotti, the company’s president and CEO. “After nearly five decades of providing superior drying solutions, it simply felt like the right time to offer a companion for them—EcoWash is just that.

“At ADC, we want to be able to provide the same quality and innovation in a complete package.”

ADC designed and tested its EcoWash units to ensure the best quality and key features to meet even the toughest demands, the company says. Simple controls and a selection of rigid-mount (90-200 G-force) and freestanding, high-spin units (350 G-force) can match a laundry specific’s needs.