CREJ - Healthcare Properties - JANUARY 2017
All joking aside, this is a really important question. With the drive to improve patient experience for both attraction and retention, a push to embrace advanced technologies and a move to modernization in health care properties, I invite you to consider what it takes to change the lights in your facility to LED. And, more importantly, recognize the reasons that 2017 is the time to do it. I’d like to believe the answer to the proposed question is just one. When you do the math on this limited time opportunity, it really does sell itself. As a lighting and sustainability professional, I have been involved with starting rebate programs across the country and helped write the guidelines for the Energy Policy Act of 2005. Based on my experience, I believe LED is the healthy choice for health care facilities. In many ways, I see all of the benefits of LED amplified in the health care environment. Improved consistency and lighting quality makes for a safer, more comforting and capable work environment. This is true for patients, doctors and visitors. Lower energy and maintenance cost benefits the owners and occupants’ bottom line. This is on top of all of the utility demand management, reduction of carbon emissions and extended life LEDs. This has a positive effect on profitability, the environment and helps to significantly reduce monthly energy costs. I have been completing large projects on a citywide and nationwide scope for municipalities and commercial entities for 15 years. As such, I have overseen many successful retrofitting and new construction projects using LED. One of the companies I represent, Bravo Lighting, was responsible for part of the LED lighting upgrades at Children’s Hospital Colorado in Aurora. As a Colorado distributor that focuses on LED lighting, we were pleased to see a resulting saving of 70 percent on energy, a three times extended lamp life, improved lighting levels, improved lighting quality, reduced maintenance and the financial benefits garnered from utility rebates and tax certifications. For this project, and many others, Bravo Lighting, in part, utilized enviro-glo LEDs, a specialized LED brand that maximizes efficiency and quality while remaining one of the most cost-effective LED retrofits available. Additionally Green Efficiency Solutions helped maximize the value of the Xcel Energy utility rebate to offset upfront cost and certified an Energy Policy Act accelerated depreciation to speed up payback time. The resulting return on investment is much better than one would expect to see from investment packages from anyone. The continued energy savings and maintenance savings often create returns on investment of 12 to 30 percent-plus annually. Many hospitals and health care facilities have recognized these obvious benefits and have already upgraded to LED. The largest group that has not made the switch is tenants and landlords dealing with triple net leases. In the case of a triple net lease, all the costs of utilities, maintenance and operating the space are passed on to the tenant. The savings are not gained by the owner, so they opt out of the cost to upgrade. Since the tenants don’t own the property, they may chose not to invest in the location. In the triple net space, the incentive can make the difference. With rebates and tax benefits combined, large percentages, sometimes over 100 percent of the total cost, can be covered. The tenant may want to pay for the remaining costs to complete the upgrade if the payback period is faster than the terms of the lease. There are also finance programs such as performance contracts, leases and Commercial Property Assessed Clean Energy. C-PACE is available in certain areas, such as Denver, which can help offset upfront costs and the loan repayment is tied to the property taxes for the building, rather than to an individual or business, and can be paid back over 20 years. The time to capitalize on this facility improvement is now. Large rebates from utility companies can cover more than half of your turnkey project cost. And these cash benefits are not guaranteed to last. They will most likely decrease every year, and can stop all together if the program is stopped. The EPAct that allows for the total cost to be written off as an accelerated depreciation based on square footage is also not guaranteed to last. It will need to be extended again in 2018 to make this special tax allocation available to those who use energy-efficient design like incorporating LED. These incentives are likely to go away while LED will become the standard lighting choice. So at some point this transition will need to happen. Be the one who sees the light and makes the recommendation to make the change to LED at your facility. Make the transition and have a financial incentive to do so, or wait, and have to pay for it on your own. The changing of the guard in Washington, D.C., is also adding to the uncertainty of what will happen with government’s mandate to provide this kind of incentive to help consumers, property owners and tenants make these transitions. And there will likely be added penalties for not reaching energy standards in your facility. This is becoming the case in Boulder. The exterior parking lot lighting throughout the city will need to be LED by July to meet the city’s forward-thinking standard. Similar standards are being set in Florida and around the country. We can expect a heavy push to adopting LED while also seeing the incentives of utility rebates and tax deductions go away.