I have been working tirelessly to understand the intricacies of the Destiny USA dispute. It is quite a mind-bender, which I hope to illuminate for you in the coming days. But I am sure of one thing:
This is easily the most important green building policy story to date.
- The dispute centers around a much ballyhooed Green Bonds program created in 2004. I am going to do my best to avoid the political issues involved with the Green Bonds program, but if you are interested in that side of the story, I suggest you review this Boston Globe article.
- In its simplest form, the Green Bonds program works because both investors and developers get substantial tax breaks to create green building projects that benefit the public. For example, it is estimated that the Green Bonds program saved the Destiny USA project upwards of $120 million.
- Tax breaks come at the expense of the taxpayer. In exchange, the public benefit comes in the form of an environmentally-friendly project — in this case, Destiny USA made promises about LEED certification and renewable energy features that reportedly will not be included in the completed project.
The IRS is faced with a difficult question — did the Destiny USA project comply with the Green Bonds green building and renewable energy requirements? If the IRS rules that the requirements were not met, then the project could be penalized millions, the tax exempt status of the bonds could be stripped, and widespread litigation will likely ensue. If the IRS rules that the requirements were met, then the developer and investors will retain the tax benefits but the public will reportedly not receive the benefit of the promised green building and renewable energy systems.
In order to tell the story of the Destiny USA Debacle, I have written nine blog posts to be published in the coming days:
- What is Destiny USA? – a review of the Destiny USA project as originally proposed.
- How Green Building Sausage is Made – a review of the Green Bonds program that was passed in 2004.
- The USGBC’s Role in Destiny USA – a review of the USGBC’s participation in the Destiny USA project and the Green Bonds program.
- Why the IRS is Key – a review of the Bulletin issued by the IRS that will be essential in deciding this dispute.
- Destined for Trouble – a review of disputes and litigation that have arisen from the Destiny USA project.
- May it Please the IRS – a review of the letter prepared by the local bond issuer to the IRS arguing that the project complied with the Green Bonds requirements.
- LEEDigation on Steroids – what happens if the IRS rules against the Destiny USA developer and strips tax-exempt status?
- How to Avoid LEEDigation Liability – some thoughts on how contractors and design professionals could get dragged into the Destiny USA dispute; and how to make sure your company avoids this type of scenario.
If you do not want to wait for each blog post, then please check back on Monday, when I will be publishing a full e-book that contains all nine posts — plus bonus coverage — of the Destiny USA Debacle.