BOMA International fully supports tax incentives to promote the installation of fire sprinklers in existing buildings. BOMA also supports a reduced depreciation schedule for the installation of these systems.
Fire safety is a critical building performance issue for BOMA International, its members and their tenants. Providing an incentive to accelerate the depreciation for fire sprinkler systems is a useful tool for encouraging the installation of fire sprinklers in many buildings and will assist in reducing the number of fires in which there is loss of life and property.
The economics of building management are complex. This is true for all buildings no matter what their age. Older structures do have the disadvantage of being designed and constructed under different requirements. Therefore, in older buildings, installation of a fire sprinkler system may not have been included in the initial building specifications. Due to financial obligations, many of which are competing, property owners are often unable to install sprinklers within these older structures. By providing a tax incentive, Congress would make a very positive impact on the places that our tenants and employees work, shop, dine, and relax. This tax incentive would also act as an economic stimulus since it would provide much needed investment in real property and jobs for those who install the sprinkler systems.
According to the National Fire Sprinkler Association (NFSA), fire sprinkler retrofit is very labor intensive – on average about 65 percent of the total cost of retrofit. NFSA also estimates that the average cost of retrofitting a fire sprinkler system in an existing high-rise can range from approximately $2.00 per square foot to $3.00 per square foot. In some parts of the country, some estimates are as high as $10.00 per square foot. A tax incentive would provide some encouragement to overcome this cost impediment.
In the 111th Congress, Rep. James Langevin (D-R.I.) introduced the Fire Sprinkler Incentive Act of 2009 (H.R. 1194) in the House, and Sen. Tom Carper (D-Del.) introduced companion legislation (S. 2947) in the Senate. Legislation that would reduce the depreciation schedule for automated fire sprinklers from 39 years to 5 years was introduced in both chambers. Unfortunately neither bill received significant attention. In the 112th Congress, the Fire Sprinkler Incentive Active has been introduced in both the House and Senate. The bills would allow building owners to choose whether to take a section 179 tax deduction or to depreciate over 15 years newly installed automated sprinkle systems. No action has been taken on either bill thus far.
BOMA will continue to urge Congress to pass this very important tax incentive.