While the housing and construction industries haven’t fully rebounded by any stretch, recent indicators from the U.S. Census Bureau show improvement.

Residential housing permits in November 2011 were up 20.7 percent over November 2010. Commercial construction activity is showing a slight uptick year over year.

And, remodeling activity is up, too, according to the BuildFax Remodeling Index. Homeowners are investing in their existing homes, many with excess funds from refinancing at historically low rates.

In tandem with the recession, business lending has more or less dried up. Certainly, financing for spec building projects isn’t easy to come by at the moment. And many banks are revisiting revolving lines of credit in light of asset value declines supporting those loans.

So, if your company is like many right now, your cash reserves have been tapped just to keep the doors open while you wait for an industry turnaround. How will you be able to take on projects requiring working capital for labor and materials? Even with upfront deposits, a time will come when payables are due before

receivables arrive.Fortunately, the U.S. Small Business Admin­

istration is stepping up to address the credit shortfall, as it has since 1953. Although a reputation for cumbersome lending regulations and processes lingers, the SBA has revised and adapted its pro­grams to meet the needs of small businesses quite successfully.

The agency’s main role is as guarantor. A bank makes the loan, but the SBA guarantees payback of most of the loan should the business fail.

The latest in SBA improvements is to the CAPLines Program. Established as an SBA­backed revolving line of credit guarantee, the program has historically been underused because of the paper­work burden and requirement that businesses

without buildings or equipment pledge personal assets. Recognizing the current and urgent small business need for lines of credit, the SBA engaged lenders nationwide in redesigning the program.

The result is streamlined paperwork and several other important changes. The agency has removed the requirement to pledge personal assets, and the new loan limit is $5 million. Purchase orders, contracts, accounts receivable and inventory can be pledged as collateral.

Subcontractors can also obtain these lines of credit. The guarantee amount is up to 85 percent.

One of the CAPLines Programs – the Builders Line Program – is designed for the construction industry. This line of credit can be used for new construction or rehabilitation of both residential and commercial projects.

If you think this program could work for you, the first step is to discuss it with your banker. Banks vary in their use of SBA programs. Some don’t work with the agency at all while others specialize in it, becoming what are called preferred lenders.

Preferred lenders may use their own paperwork with the addition of a couple of SBA forms. They also have authority for approval, closing and servicing of SBA loans.

Preferred lenders can be identified through your state SBA district office. Find your state’s office on the SBA website, www.sba.gov.

See Lines of credit on page 2

I n s i d e

I n s i d e

May/June 2012➜How to take the

LEED in building green

➜Tax incentives encourage energy-efficient construction

A high percentage of U.S. homeowners still believe that it’s a smart long­term decision to own a home despite the current housing slump, according to a 2011 survey by the National Association of Realtors.

When considering a period of years, 95 percent of current homeowners and 72 percent of renters think it “makes more sense to own a home.” In fact, 93 percent of owners who participated in the survey said they would make the decision to purchase a home again.

Among renters, 63 percent are “at least somewhat likely” to buy a home in the future. Young adults between 18 and 24 years of age particularly are hoping to be homeowners someday.

In the survey, homeowners and aspiring homeowners also admitted that they have economic concerns. They consider the mortgage interest tax deduction important in encouraging homeownership and are concerned about any possible changes to the deduction.

Of the renters who are “extremely” or “very” likely to buy homes, 60 percent said they have concerns that job security and credit issues may stand in their way.

Given their concerns about today’s economy, it would be understandable if most owners and renters expressed reluctance to buy a home. But 78 percent of homeowners and 58 percent of renters think this is a good time to buy. A third of renters see them­selves buying a home in the next three to five years. ❚

Builders now can find streamlined loan process

HomeownershipSurvey reveals recent attitudes

Building For Success

An information bulletin to contractors from:

The technical information in this newsletter is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. Please be advised that, based on current IRS rules and standards, the information contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty assessed by the IRS. © 2012 CPAmerica International

100 Second Avenue South, Suite 600, St. Petersburg, Florida 33701 | (727) 821-6161 | www.gsscpa.com

100 Second Avenue South, Suite 600, St. Petersburg, Florida 33701www.gsscpa.com | gss@gsscpa.com

(727) 821-6161

If we may answer any of your questions on the information contained in this publication, please contact us.

With more and more buyers asking for “green” features in their homes, the green movement has seen solid growth, even in the current economic climate.

A number of concerns are driving this market trend. There are environmental and health concerns, such as allergies, asthma and chemical sensitivities. Global economic concerns emphasize the need to reduce U.S. dependence on foreign oil. And reduced energy consumption often equates to cost savings over the long term.

While there are other types of green certification, LEED (Leadership in Energy and Environmental Design) certifications are the most widely recognized standards for green building and measuring building sustainability. Arizona and California, for instance, now require that all new public buildings in those states be built to at least a LEED Silver certification level.

The city of Scottsdale, Ariz., requires at least a LEED Gold standard for new public buildings. In addition, some munic­ipalities, including Los Angeles and San Francisco, offer expedited permitting for LEED projects.

LEED was developed by the U.S. Green Building Council, a nonprofit coalition based in Washington, D.C.

The LEED rating system offers four certification levels: Certified, Silver, Gold and Platinum. These levels correspond to the number of credits bestowed in five green design categories:

1. Sustainable sites2. Water efficiency3. Energy and atmosphere4. Materials and resources5. Indoor environmental quality

In addition, LEED gives points for:➧ Location and transportation, e.g.,

proximity to mass transit and site location sensitivity

➧ Integrative process, such as team analyses and research and development, that leads to an improved outcome

➧ Performance, e.g., advanced water and energy metering

LEED standards cover new commercial construction, major renovation projects, interior projects and existing building operations. The standards are now avail­able or in development for everything from new construction to operation and maintenance of existing buildings to schools, retail, healthcare facilities and homes.

The LEED for Homes rating system measures the overall performance of a residential building in eight categories:

1. Innovation and design – Special design methods, unique regional credits and exemplary performance levels

2. Location and linkages – Placement of homes in socially and environmentally responsible ways in relation to the larger community

3. Sustainable sites – Use of the entire property in a manner that minimizes the project’s impact on the environment

4. Water efficiency – Both indoor and outdoor water usage

5. Energy and atmosphere – Energy efficiency, particularly in the building envelope (its shell) and heating and cooling design

6. Materials and resources – Efficient use of materials, selection of environ­mentally preferable materials and waste minimization during construction

7. Indoor environmental quality – Reduction of the creation of pollutants and exposure to pollutants

8. Awareness and education – Educa­tion of the homeowner, tenant and/or building manager about the operation and maintenance of the green features of a LEED­certified home

There are minimum standards for each of the areas measured for certification. These cannot be waived in any category if the home is to qualify for certification.

Going beyond the minimum standard earns the home points in the LEED rating system. In addition to meeting the mini­mum standard, some categories require a certain number of points to be earned.

For instance, the indoor environmental quality category requires a home to earn at least six points out of a possible 21. Other categories, such as location and linkages, innovation and design process, energy and atmosphere, and awareness and education, do not have a minimum point requirement.

As long as the prerequisite is met and the project receives enough total points, no points in these categories are needed to achieve certification.

For more information about LEED certification, visit the National Resources Defense Council (www.nrdc.org) and the U.S. Green Building Council (www.usgbc.org/) websites. – Yvonne Aileen

Many of the tax credits and incentives for energy efficiency originally enacted as part of the American Recovery and Reinvestment Act have expired.

Included among the provisions that expired at the end of 2011 were the $2,000 per unit tax credit for builders of energy­efficient homes and the $1,000 per unit tax credit for builders of manufactured homes.

In the past, Congress has allowed energy incentives to expire, only to re­enact them through extensions lasting from one to two years. It remains to be seen whether Congress will act to retroactively extend any of these expired provisions.

Moving into 2012, the focus is on those energy­saving tax provisions that remain in effect and may be of benefit to builders or owners of residential and commercial buildings.

The Energy Policy Act of 2005 (EPACT) offered businesses tax deductions for the cost of improving energy efficiency of commercial and residential buildings. The Emergency Economic Stabilization Act of 2008 extended provisions of EPACT.

These tax incentives are currently available under this act:

Commercial BuildingsTax deduction for energy-efficient property

A tax deduction of up to $1.80 per square foot is available for buildings constructed or retrofitted to save at least 50 percent of the heating and cooling energy of a building that meets ASHRAE (originally American Society of Heating, Refrigeration and Air­Conditioning Engineers) Standard 90.1­2001.

To qualify for the full deduction, the energy­efficient construction or retrofit must address:

1. The building envelope2. Lighting3. HVAC systemsPartial deductions of up to 60 cents per square foot can be

taken for measures affecting each one of these three systems. For the partial deduction, building retrofits in one of the

three categories must reduce building energy use beyond the ASHRAE 90.1­2001 requirements by 10 percent for the building envelope and 20 percent for interior lighting and HVAC systems. For property placed in service after Feb. 23, 2012, the IRS has announced alternate energy savings percentages of 10 percent for the building envelope, 25 percent for interior lighting and 15 percent for HVAC systems.

Qualifying buildings must be within the scope of ASHRAE Standard 90.1­2001, including addenda 90.1a­2003, 90.1b­2002, 90.1c­2002, 90.1d­2002 and 90.1k­2002 (in effect as of April 2, 2003) and within the control of the building designer.

The deduction is usually available to the building owner, but in some situations, the building tenant can claim it. For public buildings, the designers of the retrofit may claim the deduction. This deduction is available through Dec. 31, 2013.Energy investment tax credits

The 30 percent investment tax credit for solar energy and qualified fuel cell properties is available through Dec. 31,

2016. The 30 percent credit also applies to qualified small wind energy property.

The cap for qualified fuel cells is $1,500 per half kilowatt of capacity. A 10 percent investment tax credit is available for combined heat and power systems and geothermal pumps.SmartMeters and Smart Grid systems

The cost of smart electric meters and smart electric grid equipment can be recovered using a depreciable life of 10 years, rather than the normal 20­year recovery period.

Residential BuildingsRenewable energy tax credits

Homeowners can receive a tax credit of 30 percent of the cost of the following renewable energy technologies with no upper limit:

➨Geothermal heat pumps➨Photovoltaic systems➨Solar water heaters➨Small wind energy systems

The credit is available for both new and existing homes. Both principal residences and second homes qualify for the credit, but rental properties do not qualify.

Fuel cells are also eligible for the 30 percent tax credit but with a cap of $500 per 0.5 kilowatts of power capacity. The fuel cell credit is only available for primary residences.

Qualifying solar heating property is any property used to heat water for use in a dwelling unit that receives at least half of its energy from the sun. None of the cost allocated to heat a swimming pool or a hot tub qualifies.

The qualifying property must be placed in service by Dec. 31, 2016.

Other IncentivesThe federal tax credits listed above may be combined with

other state, local and utility incentives. A database of state incen­tives is available at www.dsireusa.org/. – Michael Redemske, CPA

How your company can take the LEED in building green

Tax incentives encourage energy-efficient construction

On the SBA website, you can also find the SBA Loan Appli­cation Checklist. The checklist details the forms and business and personal information you will need to provide to your loan officer.

In addition to an application, SBA­specific forms include a personal background history and financial statement that anyone with over 20 percent ownership in the business should fill out. To obtain an SBA loan, owners must be either U.S. citizens or permanent resident aliens.

Business financials to submit include the last three years of balance sheets and income statements, current statements,

and projections for one year. Explanations for how you derived projected revenue and expense are required, as is an overview and history of the business.

The overview should include why you need the SBA loan, e.g., bank funding can’t be obtained because of financial position of business or collateral value. You will need both business and personal tax returns for the past three years, too.

Despite streamlining, SBA loans still require more paper­work than standard commercial loans. But with bank lending so tight, obtaining an SBA Builders Line may be the key to getting your company growing again. – Elizabeth Penney, M.B.A.

Lines of credit continued from page 1

Q�ualifying�solar�

heating�property�

is�any�property�

used�to�heat�

water�for�use�in�a�

dwelling�unit�that�

receives�at�least�

half�of�its�energy�

from�the�sun.

May/June 2012 Building For Success2 May/June 2012 Building For Success 3

With more and more buyers asking for “green” features in their homes, the green movement has seen solid growth, even in the current economic climate.

A number of concerns are driving this market trend. There are environmental and health concerns, such as allergies, asthma and chemical sensitivities. Global economic concerns emphasize the need to reduce U.S. dependence on foreign oil. And reduced energy consumption often equates to cost savings over the long term.

While there are other types of green certification, LEED (Leadership in Energy and Environmental Design) certifications are the most widely recognized standards for green building and measuring building sustainability. Arizona and California, for instance, now require that all new public buildings in those states be built to at least a LEED Silver certification level.

The city of Scottsdale, Ariz., requires at least a LEED Gold standard for new public buildings. In addition, some munic­ipalities, including Los Angeles and San Francisco, offer expedited permitting for LEED projects.

LEED was developed by the U.S. Green Building Council, a nonprofit coalition based in Washington, D.C.

The LEED rating system offers four certification levels: Certified, Silver, Gold and Platinum. These levels correspond to the number of credits bestowed in five green design categories:

1. Sustainable sites2. Water efficiency3. Energy and atmosphere4. Materials and resources5. Indoor environmental quality

In addition, LEED gives points for:➧ Location and transportation, e.g.,

proximity to mass transit and site location sensitivity

➧ Integrative process, such as team analyses and research and development, that leads to an improved outcome

➧ Performance, e.g., advanced water and energy metering

LEED standards cover new commercial construction, major renovation projects, interior projects and existing building operations. The standards are now avail­able or in development for everything from new construction to operation and maintenance of existing buildings to schools, retail, healthcare facilities and homes.

The LEED for Homes rating system measures the overall performance of a residential building in eight categories:

1. Innovation and design – Special design methods, unique regional credits and exemplary performance levels

2. Location and linkages – Placement of homes in socially and environmentally responsible ways in relation to the larger community

3. Sustainable sites – Use of the entire property in a manner that minimizes the project’s impact on the environment

4. Water efficiency – Both indoor and outdoor water usage

5. Energy and atmosphere – Energy efficiency, particularly in the building envelope (its shell) and heating and cooling design

6. Materials and resources – Efficient use of materials, selection of environ­mentally preferable materials and waste minimization during construction

7. Indoor environmental quality – Reduction of the creation of pollutants and exposure to pollutants

8. Awareness and education – Educa­tion of the homeowner, tenant and/or building manager about the operation and maintenance of the green features of a LEED­certified home

There are minimum standards for each of the areas measured for certification. These cannot be waived in any category if the home is to qualify for certification.

Going beyond the minimum standard earns the home points in the LEED rating system. In addition to meeting the mini­mum standard, some categories require a certain number of points to be earned.

For instance, the indoor environmental quality category requires a home to earn at least six points out of a possible 21. Other categories, such as location and linkages, innovation and design process, energy and atmosphere, and awareness and education, do not have a minimum point requirement.

As long as the prerequisite is met and the project receives enough total points, no points in these categories are needed to achieve certification.

For more information about LEED certification, visit the National Resources Defense Council (www.nrdc.org) and the U.S. Green Building Council (www.usgbc.org/) websites. – Yvonne Aileen

Many of the tax credits and incentives for energy efficiency originally enacted as part of the American Recovery and Reinvestment Act have expired.

Included among the provisions that expired at the end of 2011 were the $2,000 per unit tax credit for builders of energy­efficient homes and the $1,000 per unit tax credit for builders of manufactured homes.

In the past, Congress has allowed energy incentives to expire, only to re­enact them through extensions lasting from one to two years. It remains to be seen whether Congress will act to retroactively extend any of these expired provisions.

Moving into 2012, the focus is on those energy­saving tax provisions that remain in effect and may be of benefit to builders or owners of residential and commercial buildings.

The Energy Policy Act of 2005 (EPACT) offered businesses tax deductions for the cost of improving energy efficiency of commercial and residential buildings. The Emergency Economic Stabilization Act of 2008 extended provisions of EPACT.

These tax incentives are currently available under this act:

Commercial BuildingsTax deduction for energy-efficient property

A tax deduction of up to $1.80 per square foot is available for buildings constructed or retrofitted to save at least 50 percent of the heating and cooling energy of a building that meets ASHRAE (originally American Society of Heating, Refrigeration and Air­Conditioning Engineers) Standard 90.1­2001.

To qualify for the full deduction, the energy­efficient construction or retrofit must address:

1. The building envelope2. Lighting3. HVAC systemsPartial deductions of up to 60 cents per square foot can be

taken for measures affecting each one of these three systems. For the partial deduction, building retrofits in one of the

three categories must reduce building energy use beyond the ASHRAE 90.1­2001 requirements by 10 percent for the building envelope and 20 percent for interior lighting and HVAC systems. For property placed in service after Feb. 23, 2012, the IRS has announced alternate energy savings percentages of 10 percent for the building envelope, 25 percent for interior lighting and 15 percent for HVAC systems.

Qualifying buildings must be within the scope of ASHRAE Standard 90.1­2001, including addenda 90.1a­2003, 90.1b­2002, 90.1c­2002, 90.1d­2002 and 90.1k­2002 (in effect as of April 2, 2003) and within the control of the building designer.

The deduction is usually available to the building owner, but in some situations, the building tenant can claim it. For public buildings, the designers of the retrofit may claim the deduction. This deduction is available through Dec. 31, 2013.Energy investment tax credits

The 30 percent investment tax credit for solar energy and qualified fuel cell properties is available through Dec. 31,

2016. The 30 percent credit also applies to qualified small wind energy property.

The cap for qualified fuel cells is $1,500 per half kilowatt of capacity. A 10 percent investment tax credit is available for combined heat and power systems and geothermal pumps.SmartMeters and Smart Grid systems

The cost of smart electric meters and smart electric grid equipment can be recovered using a depreciable life of 10 years, rather than the normal 20­year recovery period.

Residential BuildingsRenewable energy tax credits

Homeowners can receive a tax credit of 30 percent of the cost of the following renewable energy technologies with no upper limit:

➨Geothermal heat pumps➨Photovoltaic systems➨Solar water heaters➨Small wind energy systems

The credit is available for both new and existing homes. Both principal residences and second homes qualify for the credit, but rental properties do not qualify.

Fuel cells are also eligible for the 30 percent tax credit but with a cap of $500 per 0.5 kilowatts of power capacity. The fuel cell credit is only available for primary residences.

Qualifying solar heating property is any property used to heat water for use in a dwelling unit that receives at least half of its energy from the sun. None of the cost allocated to heat a swimming pool or a hot tub qualifies.

The qualifying property must be placed in service by Dec. 31, 2016.

Other IncentivesThe federal tax credits listed above may be combined with

other state, local and utility incentives. A database of state incen­tives is available at www.dsireusa.org/. – Michael Redemske, CPA

How your company can take the LEED in building green

Tax incentives encourage energy-efficient construction

On the SBA website, you can also find the SBA Loan Appli­cation Checklist. The checklist details the forms and business and personal information you will need to provide to your loan officer.

In addition to an application, SBA­specific forms include a personal background history and financial statement that anyone with over 20 percent ownership in the business should fill out. To obtain an SBA loan, owners must be either U.S. citizens or permanent resident aliens.

Business financials to submit include the last three years of balance sheets and income statements, current statements,

and projections for one year. Explanations for how you derived projected revenue and expense are required, as is an overview and history of the business.

The overview should include why you need the SBA loan, e.g., bank funding can’t be obtained because of financial position of business or collateral value. You will need both business and personal tax returns for the past three years, too.

Despite streamlining, SBA loans still require more paper­work than standard commercial loans. But with bank lending so tight, obtaining an SBA Builders Line may be the key to getting your company growing again. – Elizabeth Penney, M.B.A.

Lines of credit continued from page 1

Q�ualifying�solar�

heating�property�

is�any�property�

used�to�heat�

water�for�use�in�a�

dwelling�unit�that�

receives�at�least�

half�of�its�energy�

from�the�sun.

May/June 2012 Building For Success2 May/June 2012 Building For Success 3

While the housing and construction industries haven’t fully rebounded by any stretch, recent indicators from the U.S. Census Bureau show improvement.

Residential housing permits in November 2011 were up 20.7 percent over November 2010. Commercial construction activity is showing a slight uptick year over year.

And, remodeling activity is up, too, according to the BuildFax Remodeling Index. Homeowners are investing in their existing homes, many with excess funds from refinancing at historically low rates.

In tandem with the recession, business lending has more or less dried up. Certainly, financing for spec building projects isn’t easy to come by at the moment. And many banks are revisiting revolving lines of credit in light of asset value declines supporting those loans.

So, if your company is like many right now, your cash reserves have been tapped just to keep the doors open while you wait for an industry turnaround. How will you be able to take on projects requiring working capital for labor and materials? Even with upfront deposits, a time will come when payables are due before

receivables arrive.Fortunately, the U.S. Small Business Admin­

istration is stepping up to address the credit shortfall, as it has since 1953. Although a reputation for cumbersome lending regulations and processes lingers, the SBA has revised and adapted its pro­grams to meet the needs of small businesses quite successfully.

The agency’s main role is as guarantor. A bank makes the loan, but the SBA guarantees payback of most of the loan should the business fail.

The latest in SBA improvements is to the CAPLines Program. Established as an SBA­backed revolving line of credit guarantee, the program has historically been underused because of the paper­work burden and requirement that businesses

without buildings or equipment pledge personal assets. Recognizing the current and urgent small business need for lines of credit, the SBA engaged lenders nationwide in redesigning the program.

The result is streamlined paperwork and several other important changes. The agency has removed the requirement to pledge personal assets, and the new loan limit is $5 million. Purchase orders, contracts, accounts receivable and inventory can be pledged as collateral.

Subcontractors can also obtain these lines of credit. The guarantee amount is up to 85 percent.

One of the CAPLines Programs – the Builders Line Program – is designed for the construction industry. This line of credit can be used for new construction or rehabilitation of both residential and commercial projects.

If you think this program could work for you, the first step is to discuss it with your banker. Banks vary in their use of SBA programs. Some don’t work with the agency at all while others specialize in it, becoming what are called preferred lenders.

Preferred lenders may use their own paperwork with the addition of a couple of SBA forms. They also have authority for approval, closing and servicing of SBA loans.

Preferred lenders can be identified through your state SBA district office. Find your state’s office on the SBA website, www.sba.gov.

See Lines of credit on page 2

I n s i d e

I n s i d e

May/June 2012➜How to take the

LEED in building green

➜Tax incentives encourage energy-efficient construction

A high percentage of U.S. homeowners still believe that it’s a smart long­term decision to own a home despite the current housing slump, according to a 2011 survey by the National Association of Realtors.

When considering a period of years, 95 percent of current homeowners and 72 percent of renters think it “makes more sense to own a home.” In fact, 93 percent of owners who participated in the survey said they would make the decision to purchase a home again.

Among renters, 63 percent are “at least somewhat likely” to buy a home in the future. Young adults between 18 and 24 years of age particularly are hoping to be homeowners someday.

In the survey, homeowners and aspiring homeowners also admitted that they have economic concerns. They consider the mortgage interest tax deduction important in encouraging homeownership and are concerned about any possible changes to the deduction.

Of the renters who are “extremely” or “very” likely to buy homes, 60 percent said they have concerns that job security and credit issues may stand in their way.

Given their concerns about today’s economy, it would be understandable if most owners and renters expressed reluctance to buy a home. But 78 percent of homeowners and 58 percent of renters think this is a good time to buy. A third of renters see them­selves buying a home in the next three to five years. ❚

Builders now can find streamlined loan process

HomeownershipSurvey reveals recent attitudes

Building For Success

An information bulletin to contractors from:

The technical information in this newsletter is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. Please be advised that, based on current IRS rules and standards, the information contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty assessed by the IRS. © 2012 CPAmerica International

100 Second Avenue South, Suite 600, St. Petersburg, Florida 33701 | (727) 821-6161 | www.gsscpa.com

100 Second Avenue South, Suite 600, St. Petersburg, Florida 33701www.gsscpa.com | gss@gsscpa.com

(727) 821-6161

If we may answer any of your questions on the information contained in this publication, please contact us.