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WHO IS THE VER-SUS GROUP?
Founded in 2011, Ver-Sus Group is a professional services firm focused on providing financial benefits to investors in commercial and residential rental buildings. The Ver-Sus Group exclusively focuses on the patented Green Zip® demountable drywall partition technology. The Ver-Sus Group has offices in Dallas, Texas and Little Rock, Arkansas.
WHAT DOES THE NAME "VER-SUS" MEAN?
The name “Ver-Sus” is derived from “verdant” and “sustainable” in recognition of the environmental motivation that led to the creation of Green Zip® technology.
WHAT IS GREEN-ZIP TECHNOLOGY?
Green Zip® is a patented, demountable and reusable drywall partition technology that offers significant financial benefits and increased cash flow for investors in commercial and residential rental buildings.
WHO INVENTED GREEN-ZIP?
Green Zip® was created by W. Frank Little, AIA, ASID, NCAR Board Certified. Mr. Little, a former Gensler & Associates architect, holds a Master of Science in Architecture / Tax Law from Texas A&M University. His master’s degree was awarded on “Emphasis on Methods of Deconstruction and Reuse of Materials in a manner to qualify for funding by Architecture related Tax Law.”
WHAT ARE THE FINANCIAL BENEFITS TO GREEN-ZIP?
By using the patented Green Zip® technology, non-load bearing drywall partitions may be classified as personal property and depreciated over 5 years as opposed to 27.5 years for residential rental property or 39 years for commercial buildings. For taxpaying investors in new or renovation projects, Green Zip® demountable drywall partition technology may:
- Reduce near-term tax liability
- Increase Cash Flow
- Reduce retrofitting costs
Installation of removable drywall partitions using the patented Green Zip® technology in new construction or renovation projects may provide investors of commercial real estate projects with improved cash flow and is a cost- efficient and environmentally responsible alternative to demolishing the interior space of buildings to satisfy tenant retrofitting requirements. The patented process allows for the installation of drywalls that can be removed and reused. The IRS has ruled that removable drywalls qualify for shorter life depreciation — five years as opposed to 27.5 or 39 years for drywalls installed conventionally. Green Zip is environmentally friendly and cost efficient, especially in situations where there is frequent retrofitting of the interior space for tenant improvements.
IS GREEN-ZIP JUST ANOTHER TAX SCHEME? IS IT LEGITIMATE?
In 2014, the IRS issued a Private Letter Ruling affirming the shorter-life depreciation classification for removable walls installed with the zip-type process. In an article published in Bloomberg BNA Daily Tax Report, David Burton, a tax attorney and partner at Akin Gump Strauss Hauer & Feld LLP, affirms the accelerated 5-year depreciation classification for removable drywalls.
WHAT DOES A TOP-FIVE ACCOUNTING FIRM HAVE TO SAY?
One of the largest national accounting firms in the US spent the better part of a year vetting the Green Zip® technology for purposes of determining its tax treatment in general terms, not on the basis of a specific set of facts or circumstances. They concluded that Green Zip® “. . . will achieve shorter depreciation lives in the proper circumstances . . .”
WHAT IS A COST SEGREGATION ANALYSIS & WHY IS IT REQUIRED TO CLAIM THE BENEFITS?
A cost segregation study identifies and reclassifies personal property assets to shorten the depreciation time for taxation purposes, which reduces current income tax obligations According to the American Society of Cost Segregation Professionals a cost segregation is “the process of identifying property components that are considered “personal property” or “land improvements” under the federal tax code.” A cost segregation study is needed to determine the value of the assets, including demountable drywall partitions, that can be treated as personal property and depreciated over a five-year period as opposed to 27.5 years for residential rental property or 39 years for commercial buildings.
WHAT OTHER BENEFITS DOES GREEN-ZIP OFFER?
Green Zip® has been recognized by the Environmental Protection Agency (EPA) in its new product category. Green Zip® is an environmentally friendly technology. Green Zip® is classified UL and is eligible for a LEED credit for Innovative Design.
HOW DOES GREEN-ZIP CONTRIBUTE TO SUSTAINABLE ENVIRONMENT?
Green Zip® may reduce landfill / greenhouse gas by 70% to 90%. It provides a means to comply with local landfill diversion and green building requirements.
WHEN A BUILDING IS SOLD, HOW DOES THE ACCELERATED DEPRECIATION AFFECT THE NEW OWNERS?
The new owner will be able to claim the total amount of the accelerated depreciation identified in the cost segregation study, including the demountable drywall partitions, recalculated on the basis of the property’s purchase price. This may provide the seller with a competitive advantage during the sale process.
IS GREEN ZIP ONLY BENEFICIAL IN NEW CONSTRUCTION?
No, Green Zip® provides the same financial benefits (accelerated depreciation) in renovation projects. Importantly, Green Zip® may help reduce the cost of future renovation, which occurs quite often (every three to five years) in office buildings. In a documented case study for British Petroleum, Turner Construction, an international construction services firm known for embracing new technologies, estimated that the cost savings achieved with Green Zip® amounted to $110 per linear foot.
HOW DOES GREEN-ZIP WORK?
Green Zip Tape was invented by a Houston architect, who also patented the process of installing demountable walls. Removable walls are installed using conventional materials – gypsum board, removable screws and mudding compound. Instead of mudding over the screws and joints, the self-adhesive Green Zip Tape is applied. The joint compound is then applied over the Green Zip Tape. A tab at the bottom of the joint is left exposed, later covered by the base board or carpet. To remove and reuse the drywall partition, this tab is exposed and the tape is “zipped up” to reveal the screws when the wall panel need to be removed for retrofitting, renovation or repair electrical and plumbing problems.
CAN ANY JOINT TAPE BE USED WITH GREEN-ZIP TECHNOLOGY?
No. Only Green Zip Tape works and is authorized for use with Green Zip® technology. To allow for the possible demounting of gypsum walls for reuse — a requirement for shorter life asset classification, Green Zip Tape, a carbon- fiber joint tape, was developed with precise horizontal and vertical threads to control the amount of joint compound applied in the mudding process. In a 2008 video audit conducted by the IRS, Green Zip Tape was the only joint compound tape among 20 competitive brands that performed to IRS specifications.
WHAT TYPE OF COMMERCIAL REAL ESTATE PROJECTS QUALIFY?
Any property constructed or purchased after 1986. In the IRS Private Letter Ruling, Business Activity Asset Class 57.0 Distributive Trades and Services was noted as applicable to a zip type drywall partition system. Asset Class 57.0 encompasses a large number of property owners, including hotel, motels, medical facilities, professional services activities such as bankers, teachers, accountants, architects, engineers, and wholesale, retail, rental businesses and more.
WHAT IS THE PROCESS TO PURCHASE GREEN ZIP TECHNOLOGY?
The first step is to estimate the assets that qualify for reclassification to shorter-life depreciation. Ver-Sus Group will engage a cost segregation specialist to prepare an estimate at no charge. To do so, we need a copy of architectural drawings, construction budget and an appraisal, if available. It takes about 48 hours to complete the estimate. If there is interest in proceeding, an engagement letter will be prepared, which will include the license fee. A license will be issued. Green Zip Tape, provided at no additional cost, will be sent to the construction site or the client’s designated location at the time specified in the construction schedule. A thorough cost segregation study will be prepared and delivered once the property is placed into service. It takes about four weeks to complete the final cost segregation report.
CAN DEVELOPERS WITH NON-TAX PAYING INVESTORS TAKE THE ACCELERATED DEPRECIATION?
Yes, the shorter-life depreciation can be allocated to the tax-paying investors. Reference: IRS Sec 704 B Special Allocation.
DO APARTMENTS QUALIFY FOR THE GREEN ZIP TAX BENEFIT?
Yes, apartments qualify. The IRS Private Letter Ruling (PLR 110197-13), August 2013, stipulates that depreciation classification “. . . depends on whether the partitions are inherently permanent structures . . .” Thus, the owners’ intent is not a determining factor in qualifying the asset for shorter-life depreciation. The drywalls only have to present a possibility of the drywall being removed due to a change in ownership, reconfiguration of the individual units, such as from three to two bedrooms, or a need to access electrical and plumbing for repairs. There are numerous examples of properties being updated to remain competitive — from the 1970s trend to larger bedrooms and smaller living areas to the 2010s trend toward large open living spaces — that alone provide ample evidence of the unforeseen need to remove and reuse drywalls in apartments.
CAN GREEN ZIP BE USED IN WOOD-FRAMED BUILDINGS?
Yes. Green Zip can be installed on both metal and wood studs with removable screws.
HAS GREEN-ZIP BEEN RECOGNIZED BY ANY ENVIRONMENTAL OR ARCHITECTURAL ORGANIZATIONS?
Yes, Green Zip has received new product awards from the Environmental Protective Agency (EPA) and the American Institute of Architects (Professional Build Component category). In 2010, Green Zip® received the prestigious R+D Award from The Journal of the American Institute of Architects.
WHO ARE SOME OF GREEN ZIP'S CUSTOMERS?
Although Green Zip is still a relatively new technology, satisfied clients include Bank of the Ozarks, Koch Industries, City of Houston, International Paper, Fina/BP . . . to name a few.
HAS ANYONE ENDORSED GREEN ZIP?
“We are so satisfied . . . that we subsequently engaged Green Zip to assist (in) the construction of two branch banks (and) our operations center.” – Mark D. Ross, COO, Bank of the Ozarks.